• Atlanticus Reports First Quarter 2022 Financial Results

    المصدر: Nasdaq GlobeNewswire / 10 مايو 2022 16:25:00   America/New_York

    First Quarter 2022 Revenues up 59.7% over prior year, with robust new account growth allowing for continued strong results

    ATLANTA, May 10, 2022 (GLOBE NEWSWIRE) -- Atlanticus Holdings Corporation (NASDAQ: ATLC) (“Atlanticus,” “the Company”, “we,” “our” or “us”), a financial technology company which enables its bank, retail and healthcare partners to offer more inclusive financial services to millions of everyday Americans, today announced its financial results for the first quarter ended March 31, 2022.

    First Quarter 2022 Highlights (all comparisons to the prior year period)

    • Total operating revenue increased 59.7% to $229.8 million, 6.1% over fourth quarter 2021.
    • Purchase volume increased 55.2% to $594.1 million.
    • Number of total customers served(1) at period end increased 58.1% to 2.9 million.
    • Over 395,000 new customers serviced during the quarter.
    • Managed receivables(2) at period end associated with Credit as a Service Segment increased 53.6% to $1.7 billion, and 4.1% over fourth quarter 2021.
    • Earnings per diluted common share increased 2.6% to $1.96 per diluted common share.
    • Over 1 million shares retired during the quarter.

    (1) In our calculation of total customers, we include all customers with account activity and customers who have open lines of credit at the end of the referenced period.

    (2) Managed receivables is a non-GAAP financial measure. See Non-GAAP Financial Measures for important additional information.

    Management Commentary

    Jeff Howard, President and Chief Executive Officer, stated, "The first quarter of 2022 continued to show strong growth in revenue, managed receivables, and both new and total accounts serviced. We generated a 2.6% increase in earnings per share year-over-year even with a significant increase in our marketing investment and comparing against historically low charge-offs in 2021. We are off to a great start in the second quarter, exceeding a meaningful milestone in early April 2022 as we now serve over 3.0 million card customers. This is yet another indication of the success our team is having in enabling our partners to offer more inclusive financial solutions as we continue to execute on our Purpose of Empowering Better Financial Outcomes for Everyday Americans.”

    Mr. Howard continued, “While we are pleased with our results, we are mindful of rising interest rates and the potential for economic stress. Today, over 90% of our receivables-based debt is fixed-rate financing, providing us with meaningful protection from rising rates. The customers we serve continue to exhibit strong purchasing and payment activity, and delinquency rates remain below levels seen in the first quarter of 2020, prior to the pandemic. Our partners continue to enjoy strong customer engagement and repeat purchase behavior. Purchase volume was up 55.2%, while payment rates continue to reflect a healthy consumer. Given these recent consumer performance trends and the value our partners continue to place on our credit-as-a-service platform, we remain optimistic about what lies ahead. Our technology, 25 years of data aggregation, diversity of product offerings and marketing channels, and history of managing through economic cycles provide for a truly differentiated platform from which to continue our growth.

    “Finally, we retired over 1 million shares of our common stock during the quarter. At current market prices, these repurchases represent a strong return opportunity for our shareholders.”  

    First Quarter 2022 Financial Results (all comparisons to the prior year period)

      For the Three Months Ended
    March 31,
     Income
    Increases
    (Decreases)
     Percentage
    Increases
    (Decreases)
     ($ in thousands) 2022   2021  Change Change
     Total operating revenue$229,770  $143,895  85,875  59.7%
     Other non-operating revenue 61   840  (779) -92.7%
      Total revenue 229,831   144,735  85,096  58.8%
     Interest expense (17,410)  (12,298) (5,112) 41.6%
     Provision for losses on loans, interest and fees receivable recorded at net realizable value  (147)  (4,135) 3,988  -96.4%
     Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value (104,680)  (27,491) (77,189) 280.8%
     Net margin 107,594   100,811  6,783  6.7%
     Total Operating Expense 69,960   41,207  (28,753) 69.8%
     Loss on repurchase of convertible senior notes    7,807  7,807   
     Net income$44,755  $44,027  728  1.7%
     Net income attributable to controlling interests$45,010  $44,075  935  2.1%
     Preferred dividends and discount accretion (6,206)  (4,687) (1,519) 32.4%
     Net income attributable to controlling interests to common shareholders$38,804  $39,388  (584) -1.5%
     Net income attributable to common shareholders per common share—basic $2.62  $2.62                     —    0.0%
     Net income attributable to common shareholders per common share—diluted $1.96  $1.91  0.05  2.6%

    Managed Receivables

    Managed receivables increased 53.6% to $1.7 billion as of March 31, 2022, from $1.1 billion as of March 31, 2021 as total customers served increased 58.1% to 2.9 million. Managed receivables also increased 4.1% or $66.6 million from December 31, 2021. Continued strong consumer spending behavior on our general purpose credit cards during the first quarter of 2022 helped grow our period-end managed receivables. This growth was offset slightly by seasonal declines in demand for private label credit products. We expect growth in both our general purpose credit card and private label credit products to continue into 2022.

    Total revenue

    During the quarter ended March 31, 2022, total operating revenue increased 59.7% to $229.8 million. Total operating revenue consists of interest income, finance charges, fees and ancillary, interchange and servicing income on loan portfolios.

    Period-over-period increases in operating revenue primarily relate to growth in private label credit and general purpose credit card receivables. Additionally, on January 1, 2022, we adopted Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments. Upon adoption, we elected the fair value option for all remaining loans receivable associated with our private label credit and general-purpose credit card platform previously measured at amortized cost.    

    Given our expectation for continued period-over-period growth in private label credit and general purpose credit card receivables, coupled with increased revenue recognition as a result of our adoption of the fair value option for all remaining loans receivable associated with our private label credit and general purpose credit card platform measured at amortized cost, we expect continued net period-over- period growth in our total interest income and related fees and charges for these operations in 2022.

    Interest expense

    Interest expense was $17.4 million for the quarter ended March 31, 2022, compared to $12.3 million in the prior year period.

    Outstanding notes payable, net, associated with private label credit and general purpose credit card products increased to $1.2 billion as of March 31, 2022 from $781.1 million as of March 31, 2021 helping drive the increase in interest expense. Additionally, the issuance of $150.0 million of senior notes in November 2021 also served to increase interest expense during the period. Offsetting these increases in interest expense was an overall decrease in the weighted average cost of funds, coupled with the repurchase and redemption of our convertible senior notes. We anticipate additional debt financing over the next few quarters as we continue to grow coupled with increased effective interest rates resulting from anticipated federal funds rate increases, and as such, we expect our quarterly interest expense to be above that experienced in the prior periods for these operations.

    Provision for losses on loans, interest and fees receivable recorded at net realizable value

    Provision for losses on loans, interest and fees receivable recorded at net realizable value decreased to $0.1 million for the quarter ended March 31, 2022, compared to $4.1 million in the prior year period.

    We have experienced a period-over-period decrease in this category primarily reflecting: 1) the effects of our adoption of the fair value option under ASU 2016-13 on January 1, 2022, which has resulted in a significant decline in the outstanding receivables subject to this provision and 2) the overall reduction in delinquencies (and related charge-offs) associated with these receivables in part due to government stimulus programs, which have served to increase payments on outstanding receivables. Given our adoption of ASU 2016-13, our provision on loans will relate solely to our Auto Finance segment going forward.

    Total operating expense

    Total operating expense increased 69.8% to $70.0 million for the quarter ended March 31, 2022, compared to $41.2 million for the same period in 2021. Total annualized operating expense as a percentage of total assets increased to 14.6% from 13.7% in the prior year period.

    Certain operating costs are variable based on the levels of accounts and receivables we service (both for our own receivables and for others) and the pace and breadth of our growth in receivables. Increases in operating expenses were largely due to increases in receivables acquisition volume as well as increased marketing expenses that often precede the revenues generated from the subsequently acquired assets. The average cost to acquire this volume remained largely consistent between periods.

    Net Income Attributable to Common Shareholders

    Net income attributable to common shareholders decreased 1.5% to $38.8 million for the quarter ended March 31, 2022, compared to $39.4 million for the same period in 2021.

    Net Income Attributable to Common Shareholders Per Common Share basic and diluted

    Net income attributable to common shareholders per basic common share was $2.62 for both the quarter ended March 31, 2022, and March 31, 2021.

    Net income attributable to common shareholders per common share diluted increased to $1.96 for the quarter ended March 31, 2022, compared to $1.91 for the same period in 2021. The increase in our diluted earnings per share was largely driven by decreases in our outstanding share count both through open market purchases as well as shares of stock returned to us by employees in satisfaction of withholding tax requirements on exercised stock options and vested stock grants.

    Balance Sheet and Cash Flow Information

    At March 31, 2022, unrestricted cash and cash equivalents totaled $373.5 million.

    During the quarter ended March 31, 2022, cash flow from operations equaled $80.7 million, compared to $52.8 million during 2021. The increase in cash provided by operating activities was principally related to an increase in finance and fee collections associated with growing private label credit and general purpose credit card receivables and increased recoveries on charged-off receivables. Offsetting these collections were increased year over year payments made to pay federal and state taxes. Collections on receivables have generally benefited from increased consumer payments because of government stimulus payments. As the impact of these stimulus payments decreases, we expect consumer payments to return to historical levels.  We will continue to invest in the profitable assets generated in both our general purpose and retail credit operations throughout 2022.

    About Atlanticus Holdings Corporation

    Empowering Better Financial Outcomes for Everyday Americans

    Atlanticus’ technology allows bank, retail, and healthcare partners to offer more inclusive financial services to everyday Americans through the use of proprietary analytics. We apply the experience gained and infrastructure built from servicing over 18 million customers and $27 billion in consumer loans over our 25 year operating history to support lenders that originate a range of consumer loan products. These products include retail and healthcare private label credit and general purpose credit cards marketed through our omnichannel platform, including retail point-of-sale, healthcare-point of-care, direct mail solicitation, internet-based marketing, and partnerships with third parties. Additionally, through our CAR subsidiary, Atlanticus serves the individual needs of automotive dealers and automotive non-prime financial organizations with multiple financing and service programs.

    Forward-Looking Statements

    This press release contains forward-looking statements that reflect the Company's current views with respect to, among other things, its business, operations, financial performance, managed receivables, total interest income and related fees and charges, debt financing and interest expense, interest rates, underwriting, consumer performance trends and economic developments. You generally can identify these statements by the use of words such as “outlook,” “potential,” “continue,” “may,” “seek,” “approximately,” “predict,” “believe,” “expect,” “plan,” “intend,” “estimate” or “anticipate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include those risks described in the Company's filings with the Securities and Exchange Commission and include, but are not limited to, risks related to the extent and duration of the COVID-19 pandemic and its impact on the Company, bank partners, merchant partners, consumers, loan demand, the capital markets, labor availability, supply chains and the economy in general; the Company's ability to retain existing, and attract new, merchant partners and funding sources; changes in market interest rates; increases in loan delinquencies; its ability to operate successfully in a highly regulated industry; the outcome of litigation and regulatory matters; the effect of management changes; cyberattacks and security vulnerabilities in its products and services; and the Company's ability to compete successfully in highly competitive markets. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, the Company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.

    Non-GAAP Financial Measure

    This press release presents information about managed receivables, which is a non-GAAP financial measure provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This non-GAAP financial measure aids in the evaluation of the performance of our credit portfolios, including our risk management, servicing and collection activities and our valuation of purchased receivables. The credit performance of our managed receivables provides information concerning the quality of loan origination and the related credit risks inherent with the portfolios. Management relies heavily upon financial data and results prepared on the “managed basis” in order to manage our business, make planning decisions, evaluate our performance and allocate resources.

    This non-GAAP financial measure is presented for supplemental informational purposes only. This non-GAAP financial measure has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, GAAP financial measures. This non-GAAP financial measure may differ from the non-GAAP financial measures used by other companies. The calculation of managed receivables is provided below under “Calculation of Non-GAAP Financial Measure” for each of the fiscal periods indicated.

    Contact:
    Investor Relations
    Karin Daly, Vice President The Equity Group Inc. (212) 836-9623
    kdaly@equityny.com

    Atlanticus Holdings Corporation and Subsidiaries
    Consolidated
    Statements of Operations (Unaudited)
    (Dollars in thousands, except per share data)

     For the Three Months Ended
     March 31,
      2022   2021 
    Revenue:   
    Consumer loans, including past due fees$164,806  $102,296 
    Fees and related income on earning assets 54,698   37,020 
    Other revenue 10,266   4,579 
    Total operating revenue, net 229,770   143,895 
    Other non-operating revenue 61   840 
    Total revenue 229,831   144,735 
        
    Interest expense (17,410)  (12,298)
    Provision for losses on loans, interest and fees receivable recorded at net realizable value (147)  (4,135)
    Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value (104,680)  (27,491)
    Net margin 107,594   100,811 
        
    Operating expense:   
    Salaries and benefits 11,426   8,239 
    Card and loan servicing 22,675   17,387 
    Marketing and solicitation 20,573   10,301 
    Depreciation 593   312 
    Other 14,693   4,968 
    Total operating expense 69,960   41,207 
    Loss on repurchase and redemption of convertible senior notes    7,807 
    Income before income taxes 37,634   51,797 
    Income tax benefit (expense) 7,121   (7,770)
    Net income 44,755   44,027 
    Net loss attributable to noncontrolling interests 255   48 
    Net income attributable to controlling interests 45,010   44,075 
    Preferred dividends and discount accretion (6,206)  (4,687)
    Net income attributable to common shareholders$38,804  $39,388 
    Net income attributable to common shareholders per common share—basic$2.62  $2.62 
    Net income attributable to common shareholders per common share—diluted$1.96  $1.91 



    Atlanticus
    Holdings Corporation and Subsidiaries
    Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands)

     March 31, December 31,
      2022   2021 
        
    Assets   
    Unrestricted cash and cash equivalents (including $211.6 million and $209.5 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively)$373,468  $409,660 
    Restricted cash and cash equivalents (including $12.5 million and $75.9 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively) 32,009   96,968 
    Loans, interest and fees receivable:   
    Loans, interest and fees receivable, at fair value (including $1,293.2 million and $925.5 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively) 1,405,765   1,026,424 
    Loans, interest and fees receivable, gross (including $369.6 million associated with variable interest entities at December 31, 2021) 99,916   470,293 
    Allowances for uncollectible loans, interest and fees receivable (including $55.1 million associated with variable interest entities at December 31, 2021) (1,612)  (57,201)
    Deferred revenue (including $8.2 million associated with variable interest entities at December 31, 2021) (15,878)  (29,281)
    Net loans, interest and fees receivable 1,488,191   1,410,235 
    Property at cost, net of depreciation 6,819   7,335 
    Operating lease right-of-use assets 2,592   4,016 
    Prepaid expenses and other assets 18,558   15,649 
    Total assets$1,921,637  $1,943,863 
    Liabilities   
    Accounts payable and accrued expenses$50,905  $42,287 
    Operating lease liabilities 2,457   4,842 
    Notes payable, net (including $1,206.6 million and $1,223.4 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively) 1,268,821   1,278,864 
    Senior notes, net 143,310   142,951 
    Income tax liability 43,100   47,770 
    Total liabilities 1,508,593   1,516,714 
        
    Commitments and contingencies   
        
    Preferred stock, no par value, 10,000,000 shares authorized:   
    Series A preferred stock, 400,000 shares issued and outstanding at March 31, 2022 (liquidation preference - $40.0 million); 400,000 shares issued and outstanding at December 31, 2021(1) 40,000   40,000 
    Class B preferred units issued to noncontrolling interests 99,725   99,650 
        
    Shareholders' Equity   
    Series B preferred stock, no par value, 3,188,533 shares issued and outstanding at March 31, 2022 (liquidation preference - $79.7 million); 3,188,533 shares issued and outstanding at December 31, 2021(1)     
    Common stock, no par value, 150,000,000 shares authorized: 14,912,895 and 14,804,408 shares issued at March 31, 2022 and December 31, 2021, respectively; 14,912,895 and 14,804,408 shares outstanding at March 31, 2022 and December 31, 2021, respectively     
    Paid-in capital 160,242   227,763 
    Retained earnings 113,828   60,236 
    Total shareholders’ equity 274,070   287,999 
    Noncontrolling interests (751)  (500)
    Total equity 273,319   287,499 
    Total liabilities, preferred stock and equity$1,921,637  $1,943,863 

    (1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized.


    Calculation
    of Non-GAAP Financial Measure

    Loans, interest and fees receivable, at face value

     At or for the Three Months Ended
     20222021
    2020
    ($ in Millions)Mar. 31(1)Dec. 31(1)Sep. 30(1)Jun. 30(1)Mar. 31(1)Dec. 31(1)Sept. 30(1)Jun. 30(1)
    Loans, interest and fees receivable, at fair value$1,405.8$1,026.4$846.2$644.7$481.4$417.1$310.8$177.9
    Fair value mark against receivable (2)$272.9$208.9$182.2$148.6$112.3$99.0$71.8$42.7
    Loans, interest and fees receivable, at face value$1,678.7$1,235.3$1,028.4$793.3$593.7$516.1$382.6$220.6

    (1) We elected the fair value option to account for certain loans receivable associated with our private label credit and general purpose credit card platform that are acquired on or after January 1, 2020. On January 1, 2022, we elected the fair value option under ASU 2016-13 for those private label credit and general purpose credit card receivables that were accounted for under the amortized cost method.

    (2) The fair value mark against receivables reflects the difference between the face value of a receivable and the net present value of the expected cash flows associated with that receivable.

    Managed receivables

    Below is the calculation of managed receivables (in millions):

     At or for the Three Months Ended
      2022 2021
     2020
    ($ in Millions)Mar. 31 (1)Dec. 31Sep. 30Jun. 30Mar. 31Dec. 31Sept. 30Jun. 30
    Loans, interest and fees receivable, gross$$375.7$417.8$454.2$498.8$   574.3$   604.8$679.6
    Loans, interest and fees receivable, gross from fair value reconciliation above 1,678.7 1,235.3 1,028.4 793.3 593.7 516.1 382.6                                 220.6
    Total managed receivables$1,678.7$1,611.0$1,446.2$1,247.5$1,092.5$1,090.4$987.4$900.2

    (1) On January 1, 2022, we elected the fair value option under ASU 2016-13 for those private label credit and general purpose credit card receivables that were accounted for under the amortized cost method. 


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