CPS(US:CPSS)2019-05-08 21:10PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited condensed consolidated financial statements for Q1 2019, covering balance sheets, operations, cash flows, equity, and accounting notes Unaudited Condensed Consolidated Balance Sheets Unaudited Condensed Consolidated Balance Sheets - Assets (In thousands) | ASSETS (In thousands) | March 31, 2019 | December 31, 2018 | | :------------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $8,914 | $12,787 | | Restricted cash and equivalents | 135,508 | 117,323 | | Finance receivables, net | 1,296,164 | 1,454,709 | | Finance receivables measured at fair value | 997,552 | 821,066 | | Total Assets | $2,531,245 | $2,485,680 | Unaudited Condensed Consolidated Balance Sheets - Liabilities and Shareholders' Equity (In thousands) | LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands) | March 31, 2019 | December 31, 2018 | | :-------------------------------------------------- | :------------- | :---------------- | | Accounts payable and accrued expenses | $54,804 | $31,692 | | Warehouse lines of credit | 117,104 | 136,847 | | Securitization trust debt | 2,109,024 | 2,063,627 | | Total Liabilities | 2,333,117 | 2,288,562 | | Total Shareholders' Equity | 198,128 | 197,118 | | Total Liabilities and Shareholders' Equity | $2,531,245 | $2,485,680 | Unaudited Condensed Consolidated Statements of Operations Unaudited Condensed Consolidated Statements of Operations (Three Months Ended March 31, In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenues: | | | | Interest income | $85,845 | $100,906 | | Other income | 2,385 | 2,657 | | Total Revenues | 88,230 | 103,563 | | Expenses: | | | | Employee costs | 19,073 | 20,641 | | General and administrative | 8,174 | 7,495 | | Interest | 27,290 | 24,062 | | Provision for credit losses | 23,956 | 40,507 | | Total Expenses | 85,554 | 99,006 | | Income before income tax expense | 2,676 | 4,557 | | Income tax expense | 937 | 1,412 | | Net income | $1,739 | $3,145 | | Earnings per share: | | | | Basic | $0.08 | $0.15 | | Diluted | $0.07 | $0.12 | Unaudited Condensed Consolidated Statements of Comprehensive Income Unaudited Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31, In thousands) | (In thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------- | :-------------------------------- | :-------------------------------- | | Net income | $1,739 | $3,145 | | Comprehensive income | $1,739 | $3,145 | Unaudited Condensed Consolidated Statements of Cash Flows Unaudited Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, In thousands) | (In thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $58,504 | $63,198 | | Net cash used in investing activities | (62,223) | (48,338) | | Net cash provided by financing activities | 18,031 | 2,815 | | Increase (decrease) in cash and cash equivalents | 14,312 | 17,675 | | Cash and restricted cash at end of period | $144,422 | $142,371 | Unaudited Condensed Consolidated Statements of Shareholders' Equity Unaudited Condensed Consolidated Statements of Shareholders' Equity (Three Months Ended March 31, In thousands) | (In thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Common Stock (Shares Outstanding) | | | | Balance, beginning of period | 22,422 | 21,489 | | Repurchase of common stock | (366) | (355) | | Balance, end of period | 22,134 | 21,442 | | Common Stock (Value) | | | | Balance, beginning of period | $70,273 | $71,582 | | Repurchase of common stock | (1,440) | (1,419) | | Stock-based compensation | 638 | 1,186 | | Balance, end of period | $69,544 | $71,824 | | Retained Earnings | | |\n| Balance, beginning of period | $134,399 | $119,537 | | Net income | 1,739 | 3,145 | | Balance, end of period | $136,138 | $122,682 | | Total Shareholders' Equity | $198,128 | $187,324 | Notes to Unaudited Condensed Consolidated Financial Statements (1) Summary of Significant Accounting Policies Summarizes business, accounting policies, fair value for receivables, revenue recognition, lease accounting, stock compensation, and covenant compliance - The company specializes in purchasing and servicing retail automobile installment sale contracts, primarily for sub-prime customers, providing indirect financing to dealers25 - Effective January 1, 2018, the company adopted the fair value method for finance receivables acquired on or after that date, recognizing interest income on a level yield basis that includes anticipated credit losses2932 - Effective January 1, 2019, the company adopted ASU 2016-02, Leases (Topic 842), recognizing right-of-use assets of $21.9 million and lease liabilities of $23.3 million on the balance sheet, with no material impact on the statements of operations343551 Other Income Components (Three Months Ended March 31) | (In thousands) | 2019 | 2018 | | :------------- | :---- | :---- | | Direct mail revenues | $1,336 | $1,797 | | Convenience fee revenue | 700 | 450 | | Recoveries on previously charged-off contracts | 57 | 118 | | Sales tax refunds | 227 | 234 | | Other | 65 | 58 | | Total Other Income | $2,385 | $2,657 | Stock-based Compensation Costs (Three Months Ended March 31) | (In thousands) | 2019 | 2018 | | :------------- | :----- | :------ | | Compensation costs | $638 | $1,200 | | Unrecognized costs (as of March 31, 2019) | $3,000 | N/A | Common Stock Purchases (Three Months Ended March 31, 2019) | Purchase Type | Average Price per Share | Total Shares Purchased | | :------------ | :---------------------- | :--------------------- | | Open market purchases | $3.95 | 231,181 | | Shares redeemed upon net