Onyx Acceptance Reports Second Quarter Earnings
28 July 2000
Onyx Acceptance Reports Second Quarter Earnings
FOOTHILL RANCH, Calif. - Onyx Acceptance Corporation announced today its
financial and operational results for the quarter ended June 30, 2000. Net
income and earnings per diluted share were $1.6 million and $0.25 respectively,
compared to $2.4 million and $0.37 for the same period in 1999. Total revenues
increased by 7.0% to $24.3 million from $22.7 million in the second quarter of
1999. The reduction in net income and earnings per share was the result of an
increase in the loss reserve rate coupled with interest rate spread compression
on contracts securitized in the second quarter.
During the second quarter, the company issued $12 million in unsecured,
subordinated notes. The notes pay interest quarterly at a coupon rate of
12 1/2% and were issued at a 4% discount to par without warrants. Principal
on the notes is due at maturity in June 2006. Net proceeds from the issuance
are being used for general corporate purposes and were used to pay down an
existing line of credit that Onyx used to finance residual interests from its
securitizations.
The increase in revenues was principally due to the growth of the
Company's servicing portfolio and volume of contracts purchased resulting from
the continued development of business with its dealer relationships in new and
existing markets. Service fee income increased 77% to $10.3 million for the
second quarter 2000 compared to $5.8 million for the same period in 1999.
Service fee income comprised 42.3% of total second quarter revenues, up from
25.6% during the second quarter of 1999. The increase is due primarily to
higher amounts of contractual service fees, late fees and document fees
related to the growth in the servicing portfolio. Contract purchases
increased by 16% to $434.1 million for the quarter ended June 30, 2000,
compared to $374.1 million for the same quarter in 1999. The reduction in net
interest income was primarily due to the prefunded structure of the
securitization executed during the second quarter. A prefunded securitization
reduces the time period that the contracts are held for sale, and as a result,
reduces the interest income earned on the related contracts. A prefunded
structure allows the Company to mitigate its interest rate risk in a rising
rate environment by locking in the rate for future fixed rate contract
acquisitions. Additionally, it permits the Company to time its
securitizations earlier in the quarter when transaction volumes are lower,
thus enabling the Company to take advantage of market conditions. Higher
market interest rates and an increase in the loss reserve rate resulted in
lower net margins on the sale of contracts. Management believes that the
increase in the loss reserve rate on its securitized contracts was warranted
given the inherent risk a rising interest rate environment has on credit
quality. Onyx recorded a gain on sale of $14.0 million (3.1% of the issue
amount) on its second quarter securitization of $450 million, compared to a
gain of $14.5 million (4.1% of the issue amount) on $350 million of contracts
securitized during the same period of 1999.
Total operating expenses as a percentage of average servicing portfolio
declined to 3.5% for the second quarter 2000, compared to 4.5% for the quarter
ended June 30, 1999. Total delinquencies as a percentage of the period-end
servicing portfolio declined to 2.57% from 3.24% at year-end 1999, while
annualized net charge-offs as a percent of the average servicing portfolio
increased to 2.23% during the second quarter of 2000, from 1.71% for the same
period in 1999. Off balance sheet reserves as a percentage of securitized
assets were 4.3% as of June 30, 2000.
During the second quarter, the Company purchased approximately 891,000
shares of its Common Stock as a part of its stock repurchase program
authorized by its Board of Directors in May. The Company has expended
approximately $4.1 million of the authorized $7.5 million in connection with
this program. Repurchases may continue from time to time at prevailing market
prices, through open market or unsolicited negotiated transactions, depending
upon market conditions. The Company may discontinue purchases at any time
that management determines additional purchases are not warranted.
Onyx Acceptance Corporation is a specialized automobile finance company
based in Foothill Ranch, CA. Onyx provides financing to franchised and select
independent dealerships throughout the United States.
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) (AUDITED)
June 30, December 31,
2000 1999
ASSETS
CASH & CASH EQUIVALENTS $11,063,593 $5,190,271
CONTRACTS HELD FOR SALE -
Net of Allowance (1) 235,500,653 229,991,667
CREDIT ENHANCEMENT ASSETS 121,065,478 142,883,970
OTHER ASSETS 12,987,818 15,769,202
TOTAL ASSETS $380,617,542 $393,835,110
LIABILITIES AND EQUITY
LIABILITIES
DEBT $285,865,667 $298,167,249
OTHER LIABILITIES 42,483,313 42,559,837
TOTAL LIABILITIES 328,348,980 340,727,086
TOTAL EQUITY 52,268,562 53,108,024
TOTAL LIABILITIES AND EQUITY $380,617,542 $393,835,110
(1) Net of Unearned Discounts
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
REVENUES:
Net Interest
Income $25,862 $2,391,960 $2,537,655 $3,923,129
Gain on Sale
of Contracts 13,988,845 14,469,784 26,745,499 26,797,368
Service Fee
Income 10,278,442 5,811,182 18,957,873 11,520,535
Total Revenues 24,293,149 22,672,926 48,241,027 42,241,032
EXPENSES:
Provision for
Credit Losses 284,893 249,068 718,457 748,982
Operating
Expenses 21,333,819 18,323,539 41,988,696 33,677,667
Total Expenses 21,618,712 18,572,607 42,707,153 34,426,649
NET INCOME BEFORE
INCOME TAXES 2,674,437 4,100,319 5,533,874 7,814,383
INCOME TAXES 1,109,800 1,701,633 2,296,460 3,242,969
NET INCOME $1,564,637 $2,398,686 $3,237,414 $4,571,414
NET INCOME PER
SHARE - BASIC $0.26 $0.39 $0.53 $0.74
NET INCOME PER
SHARE - DILUTED $0.25 $0.37 $0.51 $0.71
BASIC SHARES
OUTSTANDING 6,072,656 6,171,034 6,126,289 6,171,034
DILUTED SHARES
OUTSTANDING 6,224,764 6,512,022 6,287,141 6,463,234
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
DELINQUENCY AND LOSS RATES
(UNAUDITED)
(In Thousands)
June 30, December 31,
2000 1999
Delinquency
Experience Number of Number of
Contracts $ Contracts $
Servicing Portfolio 248,006 $2,500,207 209,745 $2,133,460
Serviced Delinquency
31 to 59 days 3,933 $37,600 3,963 $38,376
60 to 89 days 1,440 14,097 1,671 16,596
90 days or more 1,216 12,634 1,383 14,203
Total 6,589 $64,331 7,017 $69,175
Delinquency as a
percentage of
number and amount
of contracts 2.66% 2.57% 3.35% 3.24%
Three Months Ended Six Months Ended
June 30, June 30,
Loss Experience 2000 1999 2000 1999
Average Contracts
Serviced
during the
period $2,415,843 $1,629,129 $2,326,950 $1,532,269
Gross Charge-offs $15,895 $8,062 $30,950 $15,102
Recoveries $2,456 $1,108 $4,459 $1,927
Net Charge-offs $13,439 $6,954 $26,491 $13,175
Net Charge-offs as
a percentage
of contracts
outstanding during
the period 2.23% 1.71% 2.28% 1.72%
Onyx Acceptance Corporation
Static Pool Information for securitized pools outstanding for the period
from the date of securitization through June 30, 2000
Trust: 96-1 96-2 96-3 96-4 97-1 97-2
Month
1 0.00% 0.01% 0.00% 0.00% 0.00% 0.00%
2 0.03% 0.07% 0.02% 0.02% 0.00% 0.00%
3 0.05% 0.20% 0.07% 0.05% 0.03% 0.02%
4 0.11% 0.33% 0.16% 0.14% 0.06% 0.07%
5 0.23% 0.46% 0.43% 0.24% 0.13% 0.22%
6 0.40% 0.78% 0.54% 0.38% 0.26% 0.32%
7 0.69% 0.98% 0.74% 0.53% 0.37% 0.59%
8 0.82% 1.15% 0.97% 0.81% 0.52% 0.80%
9 0.93% 1.39% 1.13% 0.98% 0.60% 0.91%
10 1.15% 1.52% 1.32% 1.18% 0.76% 1.07%
11 1.25% 1.69% 1.47% 1.43% 0.92% 1.26%
12 1.47% 1.94% 1.60% 1.63% 1.02% 1.42%
13 1.65% 2.08% 1.77% 1.73% 1.13% 1.58%
14 1.79% 2.34% 1.94% 1.87% 1.23% 1.68%
15 2.02% 2.52% 2.09% 2.07% 1.40% 1.80%
16 2.25% 2.76% 2.27% 2.23% 1.56% 1.97%
17 2.43% 2.89% 2.42% 2.33% 1.68% 2.10%
18 2.59% 3.10% 2.57% 2.49% 1.75% 2.23%
19 2.77% 3.14% 2.70% 2.62% 1.85% 2.35%
20 2.93% 3.30% 2.83% 2.73% 1.92% 2.48%
21 3.06% 3.47% 2.94% 2.84% 1.98% 2.59%
22 3.15% 3.60% 3.00% 2.93% 2.09% 2.72%
23 3.21% 3.70% 3.08% 3.02% 2.17% 2.81%
24 3.28% 3.81% 3.17% 3.10% 2.22% 2.85%
25 3.40% 3.93% 3.28% 3.22% 2.31% 2.93%
26 3.43% 4.06% 3.38% 3.29% 2.38% 2.96%
27 3.55% 4.13% 3.43% 3.39% 2.44% 3.09%
28 3.60% 4.22% 3.54% 3.46% 2.50% 3.17%
29 3.73% 4.23% 3.59% 3.58% 2.55% 3.22%
30 3.75% 4.29% 3.69% 3.61% 2.63% 3.26%
31 3.79% 4.31% 3.77% 3.64% 2.67% 3.33%
32 3.85% 4.33% 3.75% 3.72% 2.73% 3.39%
33 3.88% 4.37% 3.77% 3.74% 2.77% 3.48%
34 3.90% 4.39% 3.79% 3.77% 2.84% 3.51%
35 3.94% 4.39% 3.81% 3.79% 2.86% 3.54%
36 3.94% 4.42% 3.83% 3.81% 2.85% 3.54%
37 3.94% 4.42% 3.84% 3.83% 2.89% 3.56%
38 3.97% 4.43% 3.88% 3.85% 2.91%
39 3.99% 4.45% 3.92% 3.89% 2.96%
40 3.96% 4.46% 3.92% 3.89% 2.99%
41 3.96% 4.45% 3.92% 3.89%
42 3.95% 4.45% 3.91% 3.89%
43 3.96% 4.45% 3.91% 3.89%
44 3.94% 4.48% 3.91%
45 3.97% 4.49% 3.90%
46 3.95% 4.52% 3.89%
47 3.92% 4.51%
48 3.90% 4.49%
49 3.89% 4.47%
50 3.86% 4.46%
51 3.86%
52 3.84%
53 3.84%
54 3.83%
Trust: 97-3 97-4 98-1 98-A 98-B 98-C
Month
1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.01% 0.01% 0.00% 0.02%
3 0.02% 0.01% 0.02% 0.03% 0.02% 0.02%
4 0.09% 0.04% 0.08% 0.07% 0.08% 0.04%
5 0.13% 0.11% 0.14% 0.14% 0.19% 0.15%
6 0.24% 0.20% 0.24% 0.23% 0.33% 0.27%
7 0.36% 0.28% 0.40% 0.37% 0.45% 0.46%
8 0.47% 0.43% 0.53% 0.42% 0.61% 0.57%
9 0.62% 0.55% 0.68% 0.51% 0.82% 0.74%
10 0.73% 0.72% 0.85% 0.70% 0.95% 0.94%
11 0.81% 0.87% 1.04% 0.85% 1.10% 1.12%
12 0.94% 0.95% 1.20% 1.01% 1.20% 1.30%
13 1.10% 1.08% 1.33% 1.17% 1.36% 1.54%
14 1.23% 1.19% 1.46% 1.37% 1.48% 1.73%
15 1.38% 1.36% 1.61% 1.48% 1.64% 1.90%
16 1.58% 1.42% 1.71% 1.59% 1.89% 2.10%
17 1.68% 1.52% 1.88% 1.76% 2.05% 2.28%
18 1.77% 1.64% 2.01% 1.96% 2.22% 2.51%
19 1.91% 1.75% 2.17% 2.07% 2.37% 2.71%
20 2.04% 1.85% 2.25% 2.25% 2.50% 2.83%
21 2.11% 1.97% 2.41% 2.37% 2.67%
22 2.20% 2.08% 2.52% 2.48% 2.79%
23 2.31% 2.12% 2.63% 2.65%
24 2.41% 2.23% 2.75% 2.76%
25 2.51% 2.36% 2.86% 2.81%
26 2.59% 2.41% 2.98%
27 2.71% 2.52% 3.06%
28 2.79% 2.55% 3.15%
29 2.92% 2.62%
30 2.94% 2.71%
31 3.01% 2.77%
32 3.04%
33 3.08%
34 3.11%
Trust: 99-A 99-B 99-C 99-D 00-A 00-B
Month
1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.01% 0.00% 0.00% 0.00%
3 0.02% 0.03% 0.03% 0.01% 0.02% 0.02%
4 0.05% 0.07% 0.06% 0.04% 0.04%
5 0.11% 0.14% 0.16% 0.09% 0.11%
6 0.21% 0.27% 0.28% 0.15%
7 0.35% 0.43% 0.47% 0.24%
8 0.49% 0.60% 0.64% 0.43%
9 0.63% 0.85% 0.83% 0.59%
10 0.81% 1.07% 1.09%
11 1.04% 1.34% 1.31%
12 1.29% 1.56%
13 1.49% 1.79%
14 1.72% 1.90%
15 1.90%
16 2.10%
17 2.26%