8-K
OLD MARKET CAPITAL Corp (OMCC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 3, 2021
NICHOLAS FINANCIAL, INC.
(Exact name of registrant as specified in its Charter)
| British Columbia, Canada | 0-26680 | 59-2506879 |
|---|---|---|
| (State or Other Jurisdiction of<br><br><br>Incorporation or Organization) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 2454 McMullen Booth Road, Building C<br><br><br>Clearwater, Florida | 33759 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
(727) 726-0763
(Registrant’s telephone number, Including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | NICK | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 3, 2021 Nicholas Financial, Inc. (the “Company”) issued a press release announcing the Company’s financial results for its quarter ended December 31, 2020. A copy of this press release is attached hereto as Exhibit 99.1.
The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) is furnished pursuant to this Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.
| Item 9.01 | Financial Statements and Exhibits |
|---|---|
| Exhibit # | Description |
| --- | --- |
| 99.1 | Press release dated February 3, 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
| NICHOLAS FINANCIAL, INC. | ||
|---|---|---|
| (Registrant) | ||
| Date: February 3, 2021 | /s/ Irina Nashtatik | |
| Irina Nashtatik | ||
| Chief Financial Officer<br><br><br>(Principal Financial Officer) |
nick-ex991_6.htm
Exhibit 99.1
 |
FOR IMMEDIATE RELEASE | |
|---|---|---|
| Nicholas | Contact: Irina Nashtatik | NASDAQ: NICK |
| Nicholas Financial, Inc.<br><br><br>Corporate Headquarters<br><br><br>2454 McMullen-Booth Rd.<br><br><br>Building C, Suite 501<br><br><br>Clearwater, FL 33759 | CFO<br><br><br>Ph # (727)-726-0763 | Web site: www.nicholasfinancial.com |
Nicholas Financial Reports
3rd Quarter Fiscal Year 2021 Results
| • | Income year-over-year before income taxes for the three months ended December 31, 2020 increased by 821.3% compared to prior year third quarter |
|---|---|
| • | Pre-tax yield as a percentage of average finance receivables for the three months ended December 31, 2020 increased to 7.63% compared to 0.98% during the prior year third quarter |
| --- | --- |
| • | Net Portfolio Yield for the three months ended December 31, 2020 increased to 23.0% compared to 15.5% during the prior year third quarter |
| --- | --- |
| • | Originations year-over-year on new Contracts purchased for the three months ended December 31, 2020 decreased by 14.5% compared to prior year third quarter |
| --- | --- |
| • | Originations year-over-year on Direct Loans for the three months ended December 31, 2020 increased by 2.6% compared to prior year third quarter |
| --- | --- |
| • | Accounts 60+ days delinquent decreased to 3.9%, excluding Chapter 13 bankruptcy accounts, compared to 4.0% as of the prior year third quarter |
| --- | --- |
February 3, 2021 – Clearwater, Florida - Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended December 31, 2020 of $3.8 million compared to $0.3 million for the three months ended December 31, 2019. Diluted net income per share was $0.49 for the three months ended December 31, 2020 as compared to $0.04 for the three months ended December 31, 2019. Total revenue decreased 3.3% to $14.5 million for the three months ended December 31, 2020 as compared to $15.0 million for the three months ended December 31, 2019, which included realized gains of $0.2 million and unrealized gains of $1.1 million on equity investments during the three months ended December 31, 2020. The Company reported income before income taxes for the three months ended December 31, 2020 of $5.0 million compared to $0.5 million for the three months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.2 million during the three months ended December 31, 2020 compared to an income tax expense of $0.2 million during the three months ended December 31, 2019.
The Company announced net income for the nine months ended December 31, 2020 of $6.5 million compared to $1.2 million for the nine months ended December 31, 2019. Diluted net income per share was $0.85 for the nine months ended December 31, 2020 as compared to $0.15 for the nine months ended December 31, 2019. Total revenue decreased 9.5% to $42.7 million for the nine months ended December 31, 2020 as compared to $47.2 million for the nine months ended December 31, 2019, which included realized and unrealized gains of $1.3 million on equity investments during the nine months ended December 31, 2020. The Company reported income before income taxes for the nine months ended December 31, 2020 of $8.2 million compared to $1.7 million for the nine months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.7 million during the nine months ended December 31, 2020 compared to $0.5 million during the nine months ended December 31, 2019.
For the nine months ended December 31, 2020, the Company originated $60.3 million in finance receivables, collected $87.5 million in principal payments, reduced debt by a net amount of $29.8 million, repurchased $0.7 million of common stock, and increased cash by $4.6 million.
“For the third consecutive Quarter we recognized near-record low losses and strong portfolio performance in terms of organic delinquency control,” stated Doug Marohn, President and CEO of Nicholas Financial, Inc. “We continue to enjoy these results without any increase in deferments and without the use of any special Covid-19 related customer assistance programs. Indirect sales finance originations continue to be soft, but our direct loan originations are strong.”
“The increase in core earnings is exciting and is a testament to our successful implementation and execution of Nicholas’ business strategy,” Marohn continued. “This unique and disciplined business model is being replicated in new markets as we look to continue our expansion. We have just completed several new offices expansions, and continue to initiate expansion in several others states including Texas, Arizona, Utah, Idaho and New Mexico. This will allow us to be prepared to maximize originations potential when the market starts to return to normal levels.”
| Key Performance Indicators on Contracts Purchased | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Purchases in thousands) | |||||||||||||||
| Number of | Average | ||||||||||||||
| Fiscal Year | Contracts | Principal Amount | Amount | Average | Average | Average | |||||||||
| /Quarter | Purchased | Purchased# | Financed*^ | APR* | Discount%* | Term* | |||||||||
| 2021 | 4,878 | $ | 49,388 | $ | 10,132 | 23.5 | % | 7.4 | % | 46 | |||||
| 3 | 1,483 | 15,285 | 10,307 | 23.4 | % | 7.5 | % | 46 | |||||||
| 2 | 1,709 | 17,307 | 10,127 | 23.5 | % | 6.8 | % | 46 | |||||||
| 1 | 1,686 | 16,796 | 9,962 | 23.5 | % | 8.0 | % | 46 | |||||||
| 2020 | 7,647 | $ | 76,696 | $ | 10,035 | 23.4 | % | 7.9 | % | 47 | |||||
| 4 | 1,991 | 19,658 | 9,873 | 23.5 | % | 7.9 | % | 46 | |||||||
| 3 | 1,753 | 17,880 | 10,200 | 23.3 | % | 7.6 | % | 47 | |||||||
| 2 | 2,011 | 20,104 | 9,997 | 23.5 | % | 7.9 | % | 46 | |||||||
| 1 | 1,892 | 19,054 | 10,071 | 23.4 | % | 8.3 | % | 47 | |||||||
| 2019 | 7,684 | $ | 77,499 | $ | 10,086 | 23.5 | % | 8.2 | % | 47 | |||||
| 4 | 2,151 | 21,233 | 9,871 | 23.5 | % | 8.0 | % | 46 | |||||||
| 3 | 1,625 | 16,476 | 10,139 | 23.5 | % | 8.1 | % | 47 | |||||||
| 2 | 1,761 | 17,845 | 10,133 | 23.5 | % | 8.4 | % | 47 | |||||||
| 1 | 2,147 | 21,945 | 10,221 | 23.7 | % | 8.3 | % | 48 | |||||||
| Key Performance Indicators on Direct Loans Originated<br><br><br>(Originations in thousands) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Number of | Principal | ||||||||||||||
| Fiscal Year | Loans | Amount | Average Amount | Average | Average | ||||||||||
| /Quarter | Originated | Originated | Financed*^ | APR* | Term* | ||||||||||
| 2021 | 2,744 | $ | 10,864 | $ | 4,054 | 29.6 | % | 24 | |||||||
| 3 | 1,265 | 4,605 | 3,641 | 30.9 | % | 22 | |||||||||
| 2 | 924 | 3,832 | 4,147 | 29.2 | % | 25 | |||||||||
| 1 | 555 | 2,427 | 4,373 | 28.7 | % | 26 | |||||||||
| 2020 | 3,142 | $ | 12,638 | $ | 4,017 | 28.2 | % | 25 | |||||||
| 4 | 720 | 3,104 | 4,310 | 28.6 | % | 25 | |||||||||
| 3 | 1,137 | 4,490 | 3,949 | 28.4 | % | 24 | |||||||||
| 2 | 739 | 2,988 | 4,043 | 27.4 | % | 25 | |||||||||
| 1 | 546 | 2,056 | 3,765 | 28.2 | % | 24 | |||||||||
| 2019 | 1,918 | $ | 7,741 | $ | 4,036 | 26.4 | % | 25 | |||||||
| 4 | 236 | 1,240 | 4,654 | 27.3 | % | 24 | |||||||||
| 3 | 738 | 2,999 | 4,063 | 25.9 | % | 25 | |||||||||
| 2 | 495 | 1,805 | 3,646 | 26.5 | % | 25 | |||||||||
| 1 | 449 | 1,697 | 3,779 | 25.7 | % | 28 |
*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.
#Bulk portfolio purchase excluded for period-over-period comparability
Nicholas Financial, Inc. (NASDAQ:NICK) is a specialized consumer finance company, operating branch locations in primarily Southeastern and Midwestern U.S. States. The Company engages primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. For an index of Nicholas Financial, Inc’s new releases or to obtain a specific release, please visit our website at www.nicholasfinancial.com.
Cautionary Note regarding Forward-Looking Statements
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements, including expectations regarding the impact of COVID-19 on the Company’s business, its ability to obtain the expected financial and tax benefits from the CARES Act, and its ability to obtain loan forgiveness under its PPP loan, that involve risks and uncertainties, including risk relating to competition and our ability to increase and maintain yield and profitability at desirable levels, as well as risks relating to general economic conditions, including in connection with the current COVID-19 pandemic, access to bank financing, our ability to expand the geographical scope of, and otherwise continue growing, our Direct Loan operations, and other risks 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 March 31, 2020. When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Such statements are based on the beliefs of Company management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially from those anticipated, estimated or expect. All forward-looking statements and cautionary statements included in this document are made as of the date hereof based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement or cautionary statement.
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Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)
| Three months ended | Nine months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||
| Revenue: | ||||||||||
| Interest and fee income on finance receivables | $ | 13,180 | $ | 14,973 | $ | 41,395 | $ | 47,199 | ||
| Realized gain on equity investments | 238 | - | 238 | - | ||||||
| Unrealized gain on equity investments | 1,056 | - | 1,101 | - | ||||||
| Total revenue | 14,474 | 14,973 | 42,734 | 47,199 | ||||||
| Expenses: | ||||||||||
| Operating expenses | 7,407 | 7,950 | 22,881 | 25,848 | ||||||
| Provision for credit losses | 650 | 4,597 | 7,000 | 12,982 | ||||||
| Interest expense | 1,442 | 1,886 | 4,660 | 6,672 | ||||||
| Total expenses | 9,499 | 14,433 | 34,541 | 45,502 | ||||||
| Income before income taxes | 4,975 | 540 | 8,193 | 1,697 | ||||||
| Income tax expense | 1,190 | 229 | 1,711 | 527 | ||||||
| Net income | $ | 3,785 | $ | 311 | $ | 6,482 | $ | 1,170 | ||
| Earnings per share: | ||||||||||
| Basic | $ | 0.49 | $ | 0.04 | $ | 0.84 | $ | 0.15 | ||
| Diluted | $ | 0.49 | $ | 0.04 | $ | 0.85 | $ | 0.15 |
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
| December 31, | March 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2020 | ||||||||||||
| Cash and restricted cash | $ | 29,261 | $ | 24,684 | |||||||||
| Equity investments with readily determinable fair values | 4,286 | - | |||||||||||
| Finance receivables, net | 172,386 | 199,781 | |||||||||||
| Repossessed assets | 805 | 1,340 | |||||||||||
| Operating lease right-of-use assets | 2,940 | 2,598 | |||||||||||
| Other assets | 5,015 | 10,415 | |||||||||||
| Total assets | $ | 214,693 | $ | 238,818 | |||||||||
| Credit facility, net of debt issuance costs | $ | 91,547 | $ | 124,255 | |||||||||
| Note payable | 3,244 | - | |||||||||||
| Operating lease liabilities | 2,929 | 2,652 | |||||||||||
| Other liabilities | 3,513 | 4,332 | |||||||||||
| Total liabilities | 101,233 | 131,239 | |||||||||||
| Shareholders’ equity | 113,460 | 107,579 | |||||||||||
| Total liabilities and shareholders’ equity | $ | 214,693 | $ | 238,818 | |||||||||
| Book value per share | $ | 14.69 | $ | 13.78 | |||||||||
| Three months ended | Nine months ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, | December 31, | ||||||||||||
| (In thousands) | (In thousands) | ||||||||||||
| Portfolio Summary | 2020 | 2019 | 2020 | 2019 | |||||||||
| Average finance receivables (1) | $ | 192,966 | $ | 219,618 | $ | 203,996 | $ | 230,527 | |||||
| Average indebtedness (2) | $ | 101,522 | $ | 119,518 | $ | 112,476 | $ | 136,164 | |||||
| Interest and fee income on finance receivables | $ | 13,180 | $ | 14,973 | $ | 41,395 | $ | 47,199 | |||||
| Interest expense | 1,442 | 1,886 | 4,660 | 6,672 | |||||||||
| Net interest and fee income on finance receivables | $ | 11,738 | $ | 13,087 | $ | 36,735 | $ | 40,527 | |||||
| Portfolio yield (3) | 27.32 | % | 27.27 | % | 27.06 | % | 27.30 | % | |||||
| Interest expense as a percentage of average finance receivables | 2.99 | % | 3.44 | % | 3.05 | % | 3.86 | % | |||||
| Provision for credit losses as a percentage of average finance receivables | 1.35 | % | 8.37 | % | 4.58 | % | 7.51 | % | |||||
| Net portfolio yield (3) | 22.98 | % | 15.46 | % | 19.43 | % | 15.93 | % | |||||
| Operating expenses as a percentage of average finance receivables | 15.35 | % | 14.48 | % | 14.96 | % | 14.95 | % | |||||
| Pre-tax yield as a percentage of average finance receivables (4) | 7.63 | % | 0.98 | % | 4.47 | % | 0.98 | % | |||||
| Net charge-off percentage (5) | 6.30 | % | 8.84 | % | 5.94 | % | 9.63 | % | |||||
| Finance receivables | $ | 188,626 | $ | 211,813 | |||||||||
| Allowance percentage (6) | 4.81 | % | 6.27 | % | |||||||||
| Total reserves percentage (7) | 8.76 | % | 10.35 | % |
Note: All three-month and nine-month statement of income performance indicators expressed as percentages have been annualized.
| (1) | Average finance receivables represent the average of finance receivables throughout the period. |
|---|---|
| (2) | Average indebtedness represents the average outstanding borrowings under the Credit Facility. |
| --- | --- |
| (3) | Portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables. Net portfolio yield represents (a) interest and fee income on finance receivables minus (b) interest expense minus (c) the provision for credit losses, as a percentage of average finance receivables. |
| --- | --- |
| (4) | Pre-tax yield represents net portfolio yield minus operating expenses, as a percentage of average finance receivables. |
| --- | --- |
| (5) | Net charge-off percentage represents net charge-offs (charge-offs less recoveries) divided by average finance receivables, outstanding during the period, annualized for 12 months. |
| --- | --- |
| (6) | Allowance percentage represents the allowance for credit losses divided by finance receivables outstanding as of ending balance sheet date. |
| --- | --- |
| (7) | Total reserves percentage represents the allowance for credit losses, purchase price discount, and unearned dealer discounts divided by finance receivables outstanding as of ending balance sheet date. |
| --- | --- |
The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts (“Contracts”) and direct consumer loans (“Direct Loans”), excluding any Chapter 13 bankruptcy accounts:
(In thousands, except percentages)
| Contracts | Balance | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Outstanding | 30 – 59 days | 60 – 89 days | 90 – 119 days | 120+ | Total | ||||||||||||
| December 31, 2020 | $ | 174,170 | $ | 12,914 | $ | 4,955 | $ | 2,117 | $ | 28 | $ | 20,014 | |||||
| 7.41 | % | 2.84 | % | 1.22 | % | 0.02 | % | 11.49 | % | ||||||||
| December 31, 2019 | $ | 200,092 | $ | 16,748 | $ | 5,993 | $ | 2,279 | $ | 47 | $ | 25,067 | |||||
| 8.37 | % | 3.00 | % | 1.14 | % | 0.02 | % | 12.53 | % | ||||||||
| Direct Loans | Balance | ||||||||||||||||
| Outstanding | 30 – 59 days | 60 – 89 days | 90 – 119 days | 120+ | Total | ||||||||||||
| December 31, 2020 | $ | 14,227 | $ | 442 | $ | 188 | $ | 110 | $ | 4 | $ | 744 | |||||
| 3.11 | % | 1.32 | % | 0.77 | % | 0.03 | % | 5.23 | % | ||||||||
| December 31, 2019 | $ | 11,423 | $ | 331 | $ | 123 | $ | 68 | $ | 3 | $ | 525 | |||||
| 2.90 | % | 1.08 | % | 0.60 | % | 0.03 | % | 4.60 | % |
The following table presents selected information on Contracts purchased and Direct Loans originated by the Company:
| Contracts | Direct Loans | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | Three months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (Purchases in thousands) | (Originations in thousands) | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Purchases/Originations | $ | 15,285 | $ | 17,880 | $ | 4,605 | $ | 4,490 | |||||
| Average APR | 23.4 | % | 23.3 | % | 30.9 | % | 28.4 | % | |||||
| Average discount | 7.5 | % | 7.6 | % | N/A | N/A | |||||||
| Average term (months) | 46 | 47 | 22 | 24 | |||||||||
| Average amount financed | $ | 10,307 | $ | 10,200 | $ | 3,641 | $ | 3,949 | |||||
| Number of contracts | 1,483 | 1,753 | 1,265 | 1,137 | |||||||||
| Contracts | Direct Loans | ||||||||||||
| Nine months ended | Nine months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (Purchases in thousands) | (Originations in thousands) | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Purchases/Originations | $ | 49,388 | $ | 57,038 | $ | 10,864 | $ | 9,534 | |||||
| Average APR | 23.5 | % | 23.4 | % | 29.6 | % | 28.0 | % | |||||
| Average discount | 7.4 | % | 7.9 | % | N/A | N/A | |||||||
| Average term (months) | 46 | 47 | 24 | 24 | |||||||||
| Average amount financed | $ | 10,132 | $ | 10,089 | $ | 4,054 | $ | 3,919 | |||||
| Number of contracts | 4,878 | 5,656 | 2,744 | 2,422 |
The following table presents selected information on the entire Contract and Direct Loan portfolios of the Company:
| Contracts | Direct Loans | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of | As of | ||||||||||||
| December 31, | December 31, | ||||||||||||
| Portfolio | 2020 | 2019 | 2020 | 2019 | |||||||||
| Average APR | 22.7 | % | 22.7 | % | 28.4 | % | 27.0 | % | |||||
| Average discount | 7.6 | % | 7.7 | % | N/A | N/A | |||||||
| Average term (months) | 51 | 51 | 26 | 26 | |||||||||
| Number of active contracts | 23,388 | 25,995 | 4,126 | 3,376 |