AmeriCredit Reports Second Quarter Operating Results
FORT WORTH, Texas--Jan. 2, 20063, 2006--AmeriCredit Corp. :-- Net income increased to $87 million, $0.59 per share
-- Credit losses of 5.9% improved from prior year
-- Loan originations increased 20% from the December 2004 quarter
AmeriCredit Corp. today announced net income of $87 million, or $0.59 per share, for its fiscal second quarter ended December 31, 2005. AmeriCredit reported net income of $65 million, or $0.39 per share, for the same period a year earlier. For the six months ended December 31, 2005, AmeriCredit reported net income of $141 million, or $0.93 per share, versus earnings of $133 million, or $0.80 per share, for the six months ended December 31, 2004.
Net income for the six months ended December 31, 2005, included a $6 million after-tax gain ($9 million pre-tax), or $0.04 per share, related to the partial sale of AmeriCredit's investment in DealerTrack Holdings, Inc., which was offset by $6 million of after-tax charges ($10 million pre-tax), or $0.04 per share, related to Hurricane Katrina.
Automobile loan purchases increased to $1.34 billion for the second quarter of fiscal year 2006, compared to $1.12 billion in the same period a year earlier. Loan purchases for the six months ended December 31, 2005, were $2.86 billion compared to $2.21 billion for the same period last year. Managed auto receivables totaled $11.00 billion at December 31, 2005.
Annualized net charge-offs were 5.9% of average managed auto receivables for the December 2005 quarter compared to 7.0% for the December 2004 quarter. Annualized net charge-offs for the six months ended December 31, 2005, were 5.8% compared to 6.6% for the same period last year.
Managed auto receivables 31-to-60 days delinquent were 6.5% of the portfolio at December 31, 2005, compared to 6.6% at December 31, 2004. Accounts more than 60 days delinquent were 2.8% of the portfolio at December 31, 2005, compared to 2.6% at December 31, 2004.
Unrestricted cash totaled $586 million at December 31, 2005. During the December quarter, the Company purchased $195 million of its common stock. As of December 31, 2005, $794 million in aggregate repurchases have been made since the inception of the Company's stock repurchase program in April 2004. At December 31, 2005, the Company had $206 million remaining under its board approved stock repurchase plan. Shareholders' equity was $1.92 billion at December 31, 2005, resulting in a managed assets-to-equity ratio of 5.7.
"Historically, the December quarter is our most challenging quarter due to seasonal pressures in terms of credit performance and loan origination volume. We did see some seasonal impact, but overall our performance was very good," said AmeriCredit President and CEO Dan Berce. "Our credit performance was solid, our loan volume was right about where we thought it would be and net income increased 34% over the same quarter last year. Our balance sheet remains strong, and we believe we are well positioned for the second half of fiscal year 2006."
Regulation FD
Pursuant to Regulation FD, the Company provides its expectations regarding future business trends to the public via a press release or 8-K filing. The Company anticipates some risks and uncertainties with its business.
The following net income and earnings per share forecasts were revised from guidance provided on October 24, 2005, for the sale of a portion of the Company's investment in DealerTrack Holdings, Inc., and the effect of share repurchase activity through December 31, 2005, on net income and earnings per share.
Net income and EPS forecasts
12 mos. ending 6/30/06
------------------------
Net income ($ millions)
Previous $257 - $287
Revised $263 - $293
Earnings per share
Previous $1.67 - $1.85
Revised $1.78 - $1.96
The forecasts for fiscal year 2006 incorporate, but are not limited to, the following assumptions, which remained unchanged from October 24, 2005:
-- New loan volume of $5.8 to $6.2 billion;
-- Net interest margin of 13.0% to 13.5% of average on-book receivables;
-- Operating expenses of 2.8% to 3.2% of the managed portfolio;
-- Managed portfolio-level credit losses to average between 5.0% and 6.0% overall for fiscal year 2006, but varying seasonally by quarter; and
-- Annualized provision for loan losses to average on-book receivables to average in the high 5% to low 6% range, excluding the impact of Hurricane Katrina.
The forecasts for fiscal year 2006 earnings per share do not assume additional share repurchases after December 31, 2005, or any possible future disposition of all or a portion of the Company's investment in DealerTrack Holdings, Inc.
AmeriCredit will host a conference call for analysts and investors today at 5:30 p.m. Eastern Time. For a live Internet broadcast of this conference call, please go to the Company's web site to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
About AmeriCredit
AmeriCredit Corp. is a leading independent auto finance company. Using its branch network and strategic alliances with auto groups and banks, the Company purchases retail installment contracts entered into by auto dealers with consumers who are typically unable to obtain financing from traditional sources. AmeriCredit has approximately one million customers and $11 billion in managed auto receivables. The Company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit www.americredit.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties detailed from time to time in the Company's filings and reports with the Securities and Exchange Commission including the Company's annual report on Form 10-K for the period ended June 30, 2005. Such risks include -- but are not limited to -- variable economic conditions, adverse portfolio performance, volatile wholesale values, reliance on warehouse financing and capital markets, the ability to continue to securitize its loan portfolio, the continued availability of credit enhancement for its securitization transactions on acceptable terms, fluctuating interest rates, increased competition, regulatory changes and exposure to litigation. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially.
AmeriCredit Corp.
Consolidated Income Statements
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenue:
Finance charge
income $394,075 $291,675 $767,811 $561,603
Servicing income 21,445 40,372 46,786 99,729
Other income 32,608 12,720 53,794 23,391
------------ ------------ ------------ ------------
448,128 344,767 868,391 684,723
------------ ------------ ------------ ------------
Costs and
expenses:
Operating
expenses 83,919 80,001 161,784 154,002
Provision for
loan losses 125,865 100,197 291,725 198,913
Interest expense 101,179 61,976 191,450 119,492
Restructuring
charges 93 105 252 611
------------ ------------ ------------ ------------
311,056 242,279 645,211 473,018
------------ ------------ ------------ ------------
Income before
income taxes 137,072 102,488 223,180 211,705
Income tax
provision 50,498 37,921 82,573 78,331
------------ ------------ ------------ ------------
Net income $86,574 $64,567 $140,607 $133,374
============ ============ ============ ============
Earnings per
share:
Basic $0.65 $0.42 $1.02 $0.86
============ ============ ============ ============
Diluted $0.59 $0.39 $0.93 $0.80
============ ============ ============ ============
Weighted average
shares 133,701,322 154,062,587 138,218,408 154,861,396
============ ============ ============ ============
Weighted average
shares and
assumed
incremental
shares 148,325,483 168,617,089 152,958,115 169,486,045
============ ============ ============ ============
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
December 31, June 30, December 31,
2005 2005 2004
------------ ------------ ------------
Cash and cash equivalents $586,145 $663,501 $487,831
Finance receivables, net 9,264,566 8,297,750 7,162,368
Interest-only receivables from
Trusts 8,705 29,905 70,472
Investments in Trust receivables 138,682 239,446 373,895
Restricted cash -- gain on sale
Trusts 143,761 272,439 418,922
Restricted cash --
securitization notes payable 698,321 633,900 489,406
Restricted cash -- warehouse
credit facilities 526,300 455,426 83,552
Property and equipment, net 59,332 92,000 90,513
Deferred income taxes 41,705 53,759 13,610
Other assets 268,876 208,912 219,274
------------ ------------ ------------
Total assets $11,736,393 $10,947,038 $9,409,843
============ ============ ============
Warehouse credit facilities $1,232,907 $990,974 $948,937
Securitization notes payable 7,875,604 7,166,028 5,720,631
Senior notes 153,791 166,755 166,585
Convertible debt 200,000 200,000 200,000
Funding payable 225,801 158,210 78,652
Accrued taxes and expenses 114,756 133,736 128,205
Other liabilities 13,254 9,419 18,543
------------ ------------ ------------
Total liabilities 9,816,113 8,825,122 7,261,553
------------ ------------ ------------
Shareholders' equity 1,920,280 2,121,916 2,148,290
------------ ------------ ------------
Total liabilities and
shareholders' equity $11,736,393 $10,947,038 $9,409,843
============ ============ ============
Consolidated Statements of Cash Flows(a)
(Unaudited, Dollars in Thousands)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Restated) (Restated)
Cash flows from
operating activities:
Net income $86,574 $64,567 $140,607 $133,374
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 4,522 16,403 11,381 33,947
Provision for loan
losses 125,865 100,197 291,725 198,913
Deferred income
taxes 7,025 671 (2,084) 2,139
Accretion of
present value
discount (10,995) (14,544) (22,658) (41,670)
Impairment of
credit enhancement
assets -- 1,031 457 1,122
Stock-based
compensation
expense 5,095 2,089 9,298 2,718
Other (9,282) (336) (9,993) 238
Changes in assets and
liabilities:
Other assets 1,544 (57,076) 9,910 (33,794)
Accrued taxes and
expenses (30,903) (35,750) (19,047) (30,954)
----------- ----------- ----------- -----------
Net cash provided by
operating activities 179,445 77,252 409,596 266,033
----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of
receivables (1,524,704) (1,223,133) (3,146,643) (2,401,555)
Principal collections
and recoveries on
receivables 976,241 728,964 1,952,779 1,434,791
Distributions from
gain on sale Trusts,
net of swap payments 110,655 98,804 253,673 199,086
Net sales (purchases)
of property and
equipment (1,347) (1,027) 32,558 (1,662)
Net change in
restricted cash and
other (265,827) 453,606 (120,266) 146,300
----------- ----------- ----------- -----------
Net cash (used)
provided by investing
activities (704,982) 57,214 (1,027,899) (623,040)
----------- ----------- ----------- -----------
Cash flows from
financing activities:
Net change in
warehouse credit
facilities 128,167 (72,595) 241,933 448,937
Net change in
securitization notes 498,090 (16,993) 708,475 113,220
Net change in senior
notes and other (18,132) (12,703) (21,817) (20,995)
Repurchase of common
stock (194,815) (76,314) (398,929) (144,145)
Net proceeds from
issuance of common
stock 5,774 5,097 9,181 24,683
----------- ----------- ----------- -----------
Net cash provided
(used) by financing
activities 419,084 (173,508) 538,843 421,700
----------- ----------- ----------- -----------
Net (decrease)
increase in cash and
cash equivalents (106,453) (39,042) (79,460) 64,693
Effect of Canadian
exchange rate changes
on cash and cash
equivalents 122 600 2,104 1,688
Cash and cash
equivalents at
beginning of period 692,476 526,273 663,501 421,450
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $586,145 $487,831 $586,145 $487,831
=========== =========== =========== ===========
(a) On January 23, 2006, the Company will file a Form 8-K disclosing
that the consolidated statements of cash flows have been restated
to reclassify certain items including distributions from gain on
sale Trusts, net of swap payments between Net cash provided by
operating activities and Net cash (used) provided by investing
activities.
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Loan originations $1,339,526 $1,120,252 $2,859,672 $2,205,038
Loans securitized 1,513,514 810,812 2,702,705 1,685,130
Average on-book
receivables $9,573,416 $7,394,990 $9,312,002 $7,174,033
Average gain on
sale receivables 1,445,804 3,876,658 1,708,097 4,302,322
------------ ------------ ------------ ------------
Average managed
receivables $11,019,220 $11,271,648 $11,020,099 $11,476,355
============ ============ ============ ============
December 31, June 30, December 31,
2005 2005 2004
------------ ------------ ------------
On-book
receivables $9,873,603 $8,838,968 $7,622,551
Gain on sale
receivables 1,125,188 2,163,941 3,487,166
------------ ------------ ------------
Managed
receivables $10,998,791 $11,002,909 $11,109,717
============ ============ ============
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Operating expenses $83,919 $80,001 $161,784 $154,002
Operating expenses
as a percent of
average managed
receivables 3.0% 2.8% 2.9% 2.7%
Tax rate 36.84% 37.00% 37.00% 37.00%
December 31, June 30, December 31,
2005 2005 2004
------------ ------------ ------------
Loan delinquency:
On-book:
(% of ending
on-book
receivables)
31 - 60 days 6.0% 4.3% 5.0%
Greater than
60 days 2.5 1.8 1.9
------------ ------------ ------------
Total 8.5% 6.1% 6.9%
============ ============ ============
Gain on sale:
(% of ending gain
on sale
receivables)
31 - 60 days 11.1% 8.8% 10.2%
Greater than
60 days 5.2 3.9 4.0
------------ ------------ ------------
Total 16.3% 12.7% 14.2%
============ ============ ============
Total portfolio:
(% of ending
managed
receivables)
31 - 60 days 6.5% 5.2% 6.6%
Greater than
60 days 2.8 2.2 2.6
------------ ------------ ------------
Total 9.3% 7.4% 9.2%
============ ============ ============
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Contracts
receiving a
payment deferral
as an average
quarterly
percentage of
average
receivables
outstanding:
On-book (% of
average on-book
receivables) 6.4% 5.4% 6.4% 5.0%
============ ============ ============ ============
Gain on sale (%
of average gain
on sale
receivables) 9.5% 9.9% 10.1% 9.7%
============ ============ ============ ============
Total portfolio
(% of average
managed
receivables) 6.8% 6.9% 7.0% 6.8%
============ ============ ============ ============
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net charge-offs:
On-book $128,343 $93,954 $237,516 $168,935
Gain on sale 36,657 103,583 84,639 214,895
--------- --------- --------- ---------
$165,000 $197,537 $322,155 $383,830
========= ========= ========= =========
Net charge-offs as a percent
of average
receivables:
On-book 5.3% 5.0% 5.1% 4.7%
========= ========= ========= =========
Gain on sale 10.1% 10.6% 9.8% 9.9%
========= ========= ========= =========
Total portfolio 5.9% 7.0% 5.8% 6.6%
========= ========= ========= =========
Net recoveries as a percent of
gross repossession charge-
offs:
On-book 48.0% 44.1% 47.8% 44.7%
========= ========= ========= =========
Gain on sale 40.8% 36.8% 40.3% 37.1%
========= ========= ========= =========
Total portfolio 46.4% 40.3% 45.8% 40.4%
========= ========= ========= =========
December 31, June 30, December 31,
2005 2005 2004
------------ ----------- ------------
On-book receivables:
Principal $9,873,603 $8,838,968 $7,622,551
Allowance for loan losses and
nonaccretable acquisition
fees (609,037) (541,218) (460,183)
------------ ----------- ------------
$9,264,566 $8,297,750 $7,162,368
============ =========== ============
Allowance as a percentage of
on-book receivables 6.2% 6.1% 6.0%
============ =========== ============
The Company's net margin as reflected on the consolidated statements
of income, excluding a $9 million pre-tax gain on the partial sale of
the Company's investment in DealerTrack Holdings, Inc., realized
during the three months ended December 31, 2005, is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Finance charge income $394,075 $291,675 $767,811 $561,603
Other income 23,761 12,720 44,947 23,391
Interest expense (101,179) (61,976) (191,450) (119,492)
--------- --------- --------- ---------
Net margin $316,657 $242,419 $621,308 $465,502
========= ========= ========= =========
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Finance charge income 16.3% 15.6% 16.3% 15.5%
Other income 1.0 0.7 1.0 0.7
Interest expense (4.2) (3.3) (4.1) (3.3)
--------- --------- --------- ---------
Net margin as a percent of
average on-book receivables 13.1% 13.0% 13.2% 12.9%
========= ========= ========= =========