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 6, 2020
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 6, 2020 Nicholas Financial, Inc. (the “Company”) issued a press release announcing the Company’s financial results for its quarter ended December 31, 2019. 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 6, 2020 |
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 6, 2020 | /s/ Irina Nashtatik | |
| Irina Nashtatik | ||
| Interim 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 | Interim CFO<br><br><br>Ph # (727)-726-0763 | Web site: www.nicholasfinancial.com |
Nicholas Financial Reports
3rd Quarter Fiscal Year 2020 Results
| • | Originations year-over-year on new Contracts purchased for the three months ended December 31, 2019 increased by 15.2% compared to prior year third quarter, which included a bulk portfolio purchase of $1.1 million |
|---|---|
| • | Originations year-over-year on Direct Loans for the three months ended December 31, 2019 increased by 49.7% compared to prior year third quarter |
| --- | --- |
| • | Accounts 60+ days delinquent decreased to 4.0%, excluding Chapter 13 bankruptcy accounts, compared to 5.7% as of the prior year third quarter |
| --- | --- |
| • | Gross Portfolio Yield for the three months ended December 31, 2019 increased to 27.3% compared to 25.7% during the prior year third quarter |
| --- | --- |
| • | Interest and fee income on finance receivables for the three months ended December 31, 2019 decreased 10.6% due to a 15.9% decrease in average finance receivables, compared to prior year third quarter |
| --- | --- |
| • | Average APR on new Contracts purchased for the three months ended December 31, 2019 decreased to 23.3% compared to 23.5% during the prior year third quarter |
| --- | --- |
| • | Average APR on Direct Loan originations for the three months ended December 31, 2019 increased to 28.4% compared to 25.9% during the prior year third quarter |
| --- | --- |
February 6, 2020 – Clearwater, Florida - Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended December 31, 2019 of $0.3 million compared to net loss of $0.9 million for the three months ended December 31, 2018. Diluted net income per share was $0.04 for the three months ended December 31, 2019 as compared to net loss per share of $0.12 for the three months ended December 31, 2018. Revenue decreased 10.6% to $15.0 million for the three months ended December 31, 2019 as compared to $16.7 million for the three months ended December 31, 2018. The Company reported income before income taxes for the three months ended December 31, 2019 of $0.5 million compared to net loss of $1.3 million for the three months ended December 31, 2018. The Company recorded an income tax expense of approximately $0.2 million during the three months ended December 31, 2019 compared to an income tax benefit of $0.4 million during the three months ended December 31, 2018.
Net income for the nine months ended December 31, 2019 of $1.2 million compared to $1.1 million for the nine months ended December 31, 2018. Diluted net income per share was $0.15 for the nine months ended December 31, 2019 as compared to $0.14 for the nine months ended December 31, 2018. Revenue decreased 14.0% to $47.2 million for the nine months ended December 31, 2019 as compared to $54.9 million for the nine months ended December 31, 2018. The Company reported income before income taxes for the nine months ended December 31, 2019 of $1.7 million compared $1.4 million for the nine months ended December 31, 2018. The Company recorded an income tax expense of approximately $0.5 million during the nine months ended December 31, 2019 compared to $0.3 million during the nine months ended December 31, 2018.
“We are very pleased with the progress we have been making overall, and particularly pleased with the progress in our 3^rd^ Quarter of Fiscal Year 2020. On both new indirect contract purchases and direct loan volume we have outpaced year over year results for the 3^rd^ Quarter and Year to Date,” Said Doug Marohn, CEO and president of Nicholas Financial, Inc. “Our targeted efforts to improve same store sales, rollout our Direct Loan product to more states, continue new market expansion and be open to other strategic partnerships is yielding positive results.”
“In the 3rd Quarter we saw more than a 15% increase on Indirect purchases and nearly 50% increase on the Direct Loan production,” Marohn continued. “We also added an additional $1.1 million by way of a bulk portfolio purchase from another company in our space. Our expansion efforts are underway in Las Vegas, Nevada in addition to the other areas previously identified. We are in the process of initiating expansion in Salt Lake City, Utah; Boise, Idaho; and Des Moines, Iowa; just to name a few.”
| 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* | ||||||||
| 2020 | 5,656 | $ | 57,038 | $ | 10,089 | 23.4 | % | 7.9 | % | 47 | ||||
| 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 | ||||||
| 2018 | 9,767 | $ | 109,575 | $ | 11,219 | 22.4 | % | 7.4 | % | 54 | ||||
| 4 | 2,814 | 29,254 | 10,396 | 23.3 | % | 7.9 | % | 50 | ||||||
| 3 | 2,365 | 27,378 | 11,577 | 21.7 | % | 6.9 | % | 54 | ||||||
| 2 | 2,239 | 25,782 | 11,515 | 22.0 | % | 7.3 | % | 55 | ||||||
| 1 | 2,349 | 27,161 | 11,563 | 22.3 | % | 7.6 | % | 55 | ||||||
| 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* | |||||||||
| 2020 | 2,422 | 9,534 | 3,919 | 28.0 | % | 24 | ||||||||
| 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 | ||||||||
| 2018 | 2,036 | $ | 7,642 | $ | 3,754 | 25.2 | % | 29 | ||||||
| 4 | 380 | 1,445 | 3,752 | 25.0 | % | 29 | ||||||||
| 3 | 622 | 2,218 | 3,566 | 25.2 | % | 28 | ||||||||
| 2 | 501 | 1,953 | 3,897 | 25.1 | % | 29 | ||||||||
| 1 | 533 | 2,026 | 3,801 | 25.4 | % | 30 |
*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. is a publicly-traded specialty consumer finance company, operating branch locations in both Southeastern and Midwestern U.S. states. The Company has approximately 7.9 million shares of voting common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, visit our web site 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 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, 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, 2019. 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, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| Revenue: | |||||||||||
| Interest and fee income on finance receivables | $ | 14,973 | $ | 16,740 | $ | 47,199 | $ | 54,903 | |||
| Expenses: | |||||||||||
| Operating expenses | 7,950 | 7,848 | 25,848 | 24,615 | |||||||
| Provision for credit losses | 4,597 | 7,870 | 12,982 | 21,670 | |||||||
| Interest expense | 1,886 | 2,303 | 6,672 | 7,228 | |||||||
| Total expenses | 14,433 | 18,021 | 45,502 | 53,513 | |||||||
| Income (loss) before income taxes | 540 | (1,281 | ) | 1,697 | 1,390 | ||||||
| Income tax expense (benefit) | 229 | (376 | ) | 527 | 293 | ||||||
| Net income (loss) | $ | 311 | $ | (905 | ) | $ | 1,170 | $ | 1,097 | ||
| Earnings (loss) per share: | |||||||||||
| Basic | $ | 0.04 | $ | (0.12 | ) | $ | 0.15 | $ | 0.14 | ||
| Diluted | $ | 0.04 | $ | (0.12 | ) | $ | 0.15 | $ | 0.14 |
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
| December 31, | March 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2019 | |||||||||||||
| Cash and restricted cash | $ | 24,106 | $ | 37,642 | ||||||||||
| Finance receivables, net | 190,327 | 202,042 | ||||||||||||
| Other assets | 13,289 | 12,736 | ||||||||||||
| Intangibles | 65 | - | ||||||||||||
| Goodwill | 295 | - | ||||||||||||
| Total assets | $ | 228,082 | $ | 252,420 | ||||||||||
| Credit facility | $ | 116,768 | $ | 142,619 | ||||||||||
| Other liabilities | 5,322 | 4,916 | ||||||||||||
| Total liabilities | 122,090 | 147,535 | ||||||||||||
| Shareholders’ equity | 105,992 | 104,885 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 228,082 | $ | 252,420 | ||||||||||
| Book value per share | $ | 13.37 | $ | 13.26 | ||||||||||
| Three months ended | Nine months ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, | December 31, | |||||||||||||
| (In thousands) | (In thousands) | |||||||||||||
| Portfolio Summary | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Average finance receivables (1) | $ | 219,618 | $ | 261,036 | $ | 230,527 | $ | 279,023 | ||||||
| Average indebtedness (2) | $ | 119,518 | $ | 127,332 | $ | 136,164 | $ | 143,693 | ||||||
| Interest and fee income on finance receivables | $ | 14,973 | $ | 16,740 | $ | 47,199 | $ | 54,903 | ||||||
| Interest expense | 1,886 | 2,303 | $ | 6,672 | $ | 7,228 | ||||||||
| Net interest and fee income on finance receivables | $ | 13,087 | $ | 14,437 | $ | 40,527 | $ | 47,675 | ||||||
| Portfolio yield (3) | 27.27 | % | 25.65 | % | 27.30 | % | 26.24 | % | ||||||
| Interest expense as a percentage of average finance receivables | 3.45 | % | 3.53 | % | 3.86 | % | 3.45 | % | ||||||
| Provision for credit losses as a percentage of average finance receivables (7) | 8.37 | % | 12.06 | % | 7.51 | % | 10.36 | % | ||||||
| Net portfolio yield (3) | 15.45 | % | 10.06 | % | 15.93 | % | 12.43 | % | ||||||
| Operating expenses as a percentage of average finance receivables | 14.48 | % | 12.03 | % | 14.95 | % | 11.76 | % | ||||||
| Pre-tax yield as a percentage of average finance receivables (4) | 0.97 | % | (1.97 | ) | % | 0.98 | % | 0.67 | % | |||||
| Net charge-off percentage (5) (7) | 8.84 | % | 10.84 | % | 9.63 | % | 10.49 | % | ||||||
| Allowance percentage (6) (7) | 6.04 | % | 7.65 | % | 5.76 | % | 7.16 | % |
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. |
| --- | --- |
| (6) | Allowance percentage represents the allowance for credit losses divided by average finance receivables outstanding during the period. |
| --- | --- |
| (7) | The Company completed bulk sales of charge-off accounts, which included $1.5 million of bankruptcy accounts and $0.1 million of non-performing accounts. These bulk sales impacted the provision for credit losses, net charge-off, and allowance percentages for December 31, 2019. |
| --- | --- |
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, 2019 | $ | 200,092 | $ | 16,748 | $ | 5,993 | $ | 2,279 | $ | 47 | $ | 25,067 | |||||
| 8.37 | % | 3.00 | % | 1.14 | % | 0.02 | % | 12.53 | % | ||||||||
| December 31, 2018 | $ | 238,183 | $ | 19,552 | $ | 7,577 | $ | 3,919 | $ | 2,439 | $ | 33,487 | |||||
| 8.21 | % | 3.18 | % | 1.65 | % | 1.02 | % | 14.06 | % | ||||||||
| Direct Loans | Balance | ||||||||||||||||
| Outstanding | 30 – 59 days | 60 – 89 days | 90 – 119 days | 120+ | Total | ||||||||||||
| December 31, 2019 | $ | 11,423 | $ | 331 | $ | 123 | $ | 68 | $ | 3 | $ | 525 | |||||
| 2.90 | % | 1.08 | % | 0.60 | % | 0.03 | % | 4.60 | % | ||||||||
| December 31, 2018 | $ | 8,470 | $ | 189 | $ | 95 | $ | 35 | $ | 68 | $ | 387 | |||||
| 2.23 | % | 1.12 | % | 0.41 | % | 0.80 | % | 4.57 | % |
As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which aligned with industry standards and the sub-prime nature of the customers. In the event of repossession, the charge-off will occur in the month in which the vehicle is repossessed. Based on these actions, improved servicing, and stricter underwriting policies, management has seen improvements in the delinquency rates.
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) | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||
| Purchases/Originations | $ | 17,880 | $ | 16,476 | $ | 4,490 | $ | 2,999 | |||||
| Average APR | 23.3 | % | 23.5 | % | 28.4 | % | 25.9 | % | |||||
| Average discount | 7.6 | % | 8.1 | % | N/A | N/A | |||||||
| Average term (months) | 47 | 47 | 24 | 25 | |||||||||
| Average amount financed | $ | 10,200 | $ | 10,139 | $ | 3,949 | $ | 4,063 | |||||
| Number of contracts | 1,753 | 1,625 | 1,137 | 738 | |||||||||
| Contracts | Direct Loans | ||||||||||||
| Nine months ended | Nine months ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (Purchases in thousands) | (Originations in thousands) | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||
| Purchases/Originations | $ | 57,038 | $ | 56,266 | $ | 9,534 | $ | 6,501 | |||||
| Average APR | 23.4 | % | 23.6 | % | 28.0 | % | 26.0 | % | |||||
| Average discount | 7.9 | % | 8.3 | % | N/A | N/A | |||||||
| Average term (months) | 47 | 47 | 24 | 26 | |||||||||
| Average amount financed | $ | 10,089 | $ | 10,164 | $ | 3,919 | $ | 3,829 | |||||
| Number of contracts | 5,656 | 5,533 | 2,422 | 1,682 |
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 | 2019 | 2018 | 2019 | 2018 | |||||||||
| Average APR | 22.7 | % | 22.7 | % | 27.0 | % | 26.0 | % | |||||
| Average discount | 7.65 | % | 7.46 | % | N/A | N/A | |||||||
| Average term (months) | 51 | 53 | 26 | 27 | |||||||||
| Number of active contracts | 25,995 | 29,061 | 3,376 | 2,641 |