AmeriCredit Reports First Quarter Operating Results
FORT WORTH, Texas--AmeriCredit Corp. :
- 1st Quarter earnings of $74 million, $0.54 per share
- $324 million of stock repurchased
- Unrestricted cash balance grew to $841 million
- FY07 earnings guidance updated
AmeriCredit Corp. today announced net income of $74 million, or $0.54 per share, for its fiscal first quarter ended September 30, 2006. AmeriCredit reported net income of $54 million, or $0.35 per share, for the same period a year earlier.
Automobile loan purchases increased to $1.68 billion for the first quarter of fiscal year 2007, compared to $1.52 billion for the September 2005 quarter. Managed receivables totaled $12.33 billion at September 30, 2006, compared to $11.05 billion at September 30, 2005.
Annualized net charge-offs totaled 5.4% of average managed receivables for the September 2006 quarter compared to 5.7% for the September 2005 quarter.
Managed receivables 31-to-60 days delinquent were 6.0% of the portfolio at September 30, 2006, and unchanged from September 30, 2005. Accounts more than 60 days delinquent were 2.5% of the portfolio at September 30, 2006, compared to 2.6% at September 30, 2005.
“Our September quarter was a solid beginning to fiscal year 2007, with new loan volume and credit performance improved from a year ago,” said President and Chief Executive Officer Dan Berce. “We have further developed our core subprime business as we continued to roll out a broader credit spectrum of product offerings through our Bay View platform.“
Unrestricted cash totaled $841 million at September 30, 2006. The Company issued $550 million of convertible senior notes with an average coupon of 1.44% in September 2006. During the quarter, the Company repurchased $324 million of its common stock, which brought total repurchase activity to $1.25 billion since the inception of its stock repurchase program in April 2004. In September, the Company’s Board of Directors authorized an additional $300 million of stock repurchases. Shareholders’ equity was $1.72 billion at September 30, 2006, resulting in a managed assets-to-equity ratio of 7.2 at September 30, 2006.
“We rebalanced our capital position and strengthened our balance sheet during the first quarter by issuing convertible senior notes and repurchasing a significant amount of common stock,” said Chief Financial Officer Chris Choate. “This better positions us for any opportunities or challenges that may lie ahead this fiscal year.”
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 have been updated from guidance provided on August 7, 2006, to reflect stock repurchased through September 30, 2006, and a pre-tax gain of $36 million on the sale of approximately 2 million shares of the Company’s investment in DealerTrack Holdings, Inc., in October 2006.
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Net income and EPS forecasts |
|||
| Revised | Previous | ||
| Fiscal year ending | Fiscal year ending | ||
| June 30, 2007 | June 30, 2007 | ||
| Net income ($ millions) | $325 - $355 | $305 - $335 | |
| Earnings per share | $2.45 - $2.65 | $2.15 - $2.35 |
The forecasts for fiscal year 2007 incorporate, but are not limited to, the following assumptions, which are unchanged from August 7, 2006:
- New loan origination volume of $7.2 to $7.8 billion;
- Net interest margin of 12.0% to 13.0% of average receivables;
- Operating expenses of 2.8% to 3.2% of the portfolio;
- Credit losses to average between 4.5% and 5.5% overall for the fiscal year, but varying seasonally by quarter; and
- Annualized provision for loan losses as a percent of average receivables to range between 5.0% and 6.0%.
These forecasts do not include any future share repurchase activity or additional disposition of all or a portion of the Company’s remaining investment in DealerTrack.
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 automobile finance company that provides financing solutions indirectly through auto dealers and directly to consumers in the United States and Canada. AmeriCredit has approximately one million customers and $12 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 year ended June 30, 2006. 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.
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AmeriCredit Corp. Consolidated Income Statements (Unaudited, Dollars in Thousands, Except Per Share Amounts) |
||||
| Three Months Ended | ||||
| September 30, | ||||
| 2006 | 2005 | |||
| Revenue: | ||||
| Finance charge income | $484,357 | $373,736 | ||
| Servicing income | 7,459 | 25,341 | ||
| Other income | 31,805 | 21,186 | ||
| 523,621 | 420,263 | |||
| Costs and expenses: | ||||
| Operating expenses | 88,288 | 77,865 | ||
| Provision for loan losses | 173,905 | 165,860 | ||
| Interest expense | 143,471 | 90,271 | ||
| Restructuring charges | 309 | 159 | ||
| 405,973 | 334,155 | |||
| Income before income taxes | 117,648 | 86,108 | ||
| Income tax provision | 43,412 | 32,075 | ||
| Net income | $ 74,236 | $ 54,033 | ||
| Earnings per share: | ||||
| Basic | $ 0.59 | $ 0.38 | ||
| Diluted | $ 0.54 | $ 0.35 | ||
| Weighted average shares | 125,278,738 | 142,735,494 | ||
|
Weighted average shares and assumed incremental shares |
139,718,283 | 157,590,746 | ||
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Consolidated Balance Sheets (Unaudited, Dollars in Thousands) |
||||||
| September 30, |
June |
September 30, | ||||
| 2006 | 2006 | 2005 | ||||
| Cash and cash equivalents | $ 840,767 | $ 513,240 | $ 692,476 | |||
| Finance receivables, net | 11,520,531 | 11,097,008 | 8,857,389 | |||
| Credit enhancement assets | 24,075 | 104,624 | 399,015 | |||
| Restricted cash – securitization notes payable | 1,350,602 | 860,935 | 674,600 | |||
| Restricted cash – warehouse credit facilities | 759,411 | 140,042 | 271,849 | |||
| Property and equipment, net | 55,509 | 57,225 | 59,406 | |||
| Deferred income taxes | 95,625 | 78,789 | 62,883 | |||
| Other assets | 252,395 | 216,002 | 218,048 | |||
| Total assets | $14,898,915 | $13,067,865 | $11,235,666 | |||
| Warehouse credit facilities | $ 1,971,095 | $ 2,106,282 | $ 1,104,740 | |||
| Securitization notes payable | 10,081,115 | 8,518,849 | 7,377,648 | |||
| Senior notes | - | - | 166,841 | |||
| Convertible debt | 750,000 | 200,000 | 200,000 | |||
| Funding payable | 196,089 | 54,623 | 235,573 | |||
| Accrued taxes and expenses | 166,506 | 155,799 | 145,914 | |||
| Other liabilities | 10,964 | 23,426 | 15,583 | |||
| Total liabilities | 13,175,769 | 11,058,979 | 9,246,299 | |||
| Shareholders’ equity | 1,723,146 | 2,008,886 | 1,989,367 | |||
| Total liabilities and shareholders’ equity | $14,898,915 | $13,067,865 | $11,235,666 | |||
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Consolidated Statements of Cash Flows (Unaudited, Dollars in Thousands) |
||||
| Three Months Ended | ||||
| September 30, | ||||
| 2006 | 2005 | |||
| Cash flows from operating activities: | ||||
| Net income | $ 74,236 | $ 54,033 | ||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||
| Depreciation and amortization | 6,078 | 9,074 | ||
| Accretion and amortization of loan fees | (7,487) | (2,215) | ||
| Provision for loan losses | 173,905 | 165,860 | ||
| Deferred income taxes | (6,541) | (9,109) | ||
| Accretion of present value discount | (5,291) | (11,663) | ||
| Stock-based compensation expense | 3,886 | 4,203 | ||
| Other | 1,948 | (254) | ||
| Changes in assets and liabilities: | ||||
| Other assets | (35,822) | 8,366 | ||
| Accrued taxes and expenses | 11,425 | 11,856 | ||
| Net cash provided by operating activities | 216,337 | 230,151 | ||
| Cash flows from investing activities: | ||||
| Purchase of receivables | (1,790,828) | (1,621,939) | ||
| Principal collections and recoveries on receivables | 1,331,107 | 976,538 | ||
| Distributions from gain on sale Trusts | 76,017 | 143,018 | ||
| Net (purchases) sales of property and equipment | (1,064) | 33,905 | ||
| Net change in restricted cash and other | (1,104,797) | 145,561 | ||
| Net cash used by investing activities | (1,489,565) | (322,917) | ||
| Cash flows from financing activities: | ||||
| Net change in warehouse credit facilities | (135,187) | 113,766 | ||
| Net change in securitization notes payable | 1,561,410 | 210,385 | ||
| Net change in senior notes and other | (12,799) | (3,685) | ||
| Proceeds from issuance of convertible debt | 497,376 | - | ||
| Repurchase of common stock | (323,964) | (204,114) | ||
| Proceeds from issuance of common stock | 14,020 | 3,407 | ||
| Net cash provided by financing activities | 1,600,856 | 119,759 | ||
| Net increase in cash and cash equivalents | 327,628 | 26,993 | ||
|
Effect of Canadian exchange rate changes on cash and cash equivalents |
(101) | 1,982 | ||
| Cash and cash equivalents at beginning of period | 513,240 | 663,501 | ||
| Cash and cash equivalents at end of period | $ 840,767 | $ 692,476 | ||
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Other Financial Data (Unaudited, Dollars in Thousands) |
||||
| Three Months Ended | ||||
| September 30, | ||||
| 2006 | 2005 | |||
| Loan originations | $ 1,683,969 | $ 1,520,146 | ||
| Loans securitized | 2,373,941 | 1,189,191 | ||
| Average on-book receivables | $11,953,970 | $ 9,050,440 | ||
| Average gain on sale receivables | 304,795 | 1,970,313 | ||
| Average managed receivables | $12,258,765 | $11,020,753 | ||
|
September |
June |
September |
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| 2006 | 2006 | 2005 | ||
| On-book receivables | $12,218,713 | $11,775,665 | $ 9,462,883 | |
| Gain on sale receivables | 107,314 | 421,037 | 1,590,943 | |
| Managed receivables | $12,326,027 | $12,196,702 | $11,053,826 | |
| Three Months Ended | ||||
| September 30, | ||||
| 2006 | 2005 | |||
| Operating expenses | $88,288 | $77,865 | ||
|
Operating expenses as a percent of average managed receivables |
2.9% | 2.8% | ||
| Tax rate | 36.90% | 37.25% | ||
|
September 30,
2006 |
June 30,
2006 |
September 30,
2005 |
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| Loan delinquency: | ||||||
| On-book: | ||||||
| (% of ending on-book receivables) | ||||||
| 31 - 60 days | 6.0% | 5.0% | 5.3% | |||
| Greater than 60 days | 2.5 | 2.0 | 2.2 | |||
| Total | 8.5% | 7.0% | 7.5% | |||
| Gain on sale: | ||||||
| (% of ending gain on sale receivables) | ||||||
| 31 - 60 days | 7.5% | 9.2% | 10.1% | |||
| Greater than 60 days | 3.2 | 3.8 | 4.8 | |||
| Total | 10.7% | 13.0% | 14.9% | |||
| Total portfolio: | ||||||
| (% of ending managed receivables) | ||||||
| 31 - 60 days | 6.0% | 5.1% | 6.0% | |||
| Greater than 60 days | 2.5 | 2.1 | 2.6 | |||
| Total | 8.5% | 7.2% | 8.6% | |||
| Three Months Ended | |||
| September 30, | |||
| 2006 | 2005 | ||
| Contracts receiving a payment | |||
| deferral as an average quarterly | |||
| percentage of average receivables | |||
| outstanding: | |||
| On-book (% of average on-book | |||
| receivables) | 6.3% | 6.4% | |
| Gain on sale (% of average gain on | |||
| sale receivables) | 5.8% | 10.7% | |
| Total portfolio (% of average | |||
| managed receivables) | 6.3% | 7.2% | |
| Three Months Ended | |||
| September 30, | |||
| 2006 | 2005 | ||
| Net charge-offs: | |||
| On-book | $161,864 | $109,173 | |
| Gain on sale | 4,532 | 47,982 | |
| $166,396 | $157,155 | ||
| Net charge-offs as a percent of average | |||
| receivables: | |||
| On-book | 5.4% | 4.8% | |
| Gain on sale | 5.9% | 9.7% | |
| Total portfolio | 5.4% | 5.7% | |
| Net recoveries as a percent of gross | |||
| repossession charge-offs: | |||
| On-book | 48.8% | 47.6% | |
| Gain on sale | 43.6% | 39.9% | |
| Total portfolio | 48.6% | 45.2% | |
|
September 30,
2006 |
June 2006 |
September 30,
2005 |
||||
| On-book receivables: | ||||||
| Principal | $12,218,713 | $11,775,665 | $9,462,883 | |||
|
Allowance for loan losses and nonaccretable acquisition fees |
(698,182) | (678,657) | (605,494) | |||
| $11,520,531 | $11,097,008 | $8,857,389 | ||||
|
Allowance as a percentage of on-book receivables |
5.7% | 5.8% | 6.4% |
The Company’s net margin as reflected on the consolidated statements of income is as follows:
| Three Months Ended | |||
| September 30, | |||
| 2006 | 2005 | ||
| Finance charge income | $484,357 | $373,736 | |
| Other income | 31,805 | 21,186 | |
| Interest expense | (143,471) | (90,271) | |
| Net margin | $372,691 | $304,651 | |
| Three Months Ended | |||
| September 30, | |||
| 2006 | 2005 | ||
| Finance charge income | 16.1% | 16.4% | |
| Other income | 1.1 | 0.9 | |
| Interest expense | (4.8) | (3.9) | |
|
Net margin as a percent of average on-book receivables |
12.4% | 13.4% | |
The following table provides additional information for comparative purposes related to the Company’s acquisition of Bay View Acceptance Corporation on May 1, 2006:
| Three Months Ended | |||
| September 30, 2006 | |||
|
AmeriCredit
Core |
Total |
||
| Originations | $1,549,997 | $1,683,969 | |
| Average managed receivables | $11,437,542 | $12,258,765 | |
| Net charge-offs | $164,348 | $166,396 | |
| Net charge-offs as a percent of | |||
| average receivables | 5.7% | 5.4% | |
| Contracts receiving a payment | |||
| deferral as an average quarterly | |||
| percentage of average receivables |
|
|
|
| outstanding |
6.7% |
6.3% |
|
| Net margin | $364,986 | $372,691 | |
| Net margin as a percent of | |||
| average on-book receivables | 13.0% | 12.4% | |
| September 30, 2006 | ||||
|
AmeriCredit
Core |
Total |
|||
| Managed receivables | $11,481,748 | $12,326,027 | ||
| Loan delinquency: | ||||
| (% of ending managed receivables) | ||||
| 31 - 60 days | 6.4% | 6.0% | ||
| Greater than 60 days | 2.7 | 2.5 | ||
| Total | 9.1% | 8.5% | ||
|
Allowance as a percentage of on-book receivables |
6.0% | 5.7% | ||