Financial and Operating Highlights
First Quarter 2024 Highlights (all comparisons to the First Quarter 2023)
- Managed receivables2 increased 12.8% to
$2.3 billion - Total operating revenue increased 11.2% to
$290.2 million . - Return on average shareholders’ equity of 19.6%3
- Purchase volume of
$594.9 million . - Over 250,000 new accounts served during the quarter, 3.5 million total accounts served1
- Net income attributable to common shareholders of
$19.9 million , or$1.09 per diluted common share
1 ) In our calculation of total accounts served, we include all accounts with account activity and accounts that have open lines of credit at the end of the referenced period.
2) Managed receivables is a non-GAAP financial measure and excludes the results of our Auto Finance receivables. See calculation of Non-GAAP Financial Measures for important additional information.
3) Return on average shareholders’ equity is calculated using Net Income attributable to common shareholders as the numerator and the average of Total shareholders’ equity as of March 31, 2024 and
Management Commentary
“A major focus of this quarter has been planning for the late fee safe-harbor rule change. While an injunction has been granted which stays the implementation, and litigation may ultimately reverse the rule, we, along with our bank partners, have been planning for the potential change for months. These plans include increasing APR’s, increasing certain fees including annual and monthly fees, shifting offers, introducing paper statement fees, and offering new features for the customers we serve. We believe our plans provide for the complete recovery over time of the estimated impact from the new rule, if implemented.
“As we look ahead, we are excited about the long-term opportunities for our platform. Our ongoing investments in technology, growing breadth of product offerings, data driven decision making, and extensive experience position us well to expand our capabilities and provide a truly best in class experience to the consumers we serve.”
For the Three Months Ended | |||||||||||
Financial Results | |||||||||||
(Dollars in thousands, except per share data) | 2024 | 2023 | % Change | ||||||||
Total operating revenue | $ | 290,174 | $ | 260,982 | 11.2 | % | |||||
Other non-operating revenue | 532 | 59 | nm | ||||||||
Total revenue | 290,706 | 261,041 | 11.4 | % | |||||||
Interest expense | (35,063 | ) | (24,234 | ) | 44.7 | % | |||||
Provision for credit losses | (2,944 | ) | (704 | ) | nm | ||||||
Changes in fair value of loans | (159,171 | ) | (149,822 | ) | 6.2 | % | |||||
Net margin | $ | 93,528 | $ | 86,281 | 8.4 | % | |||||
Total operating expenses | ($ | 60,707 | ) | ($ | 52,199 | ) | 16.3 | % | |||
Net income | $ | 25,819 | $ | 25,894 | nm | ||||||
Net income attributable to controlling interests | $ | 26,170 | $ | 26,212 | nm | ||||||
Preferred stock and preferred unit dividends and discount accretion | (6,292 | ) | (6,227 | ) | nm | ||||||
Net income attributable to common shareholders | $ | 19,878 | $ | 19,985 | nm | ||||||
Net income attributable to common shareholders per common share—basic | $ | 1.35 | $ | 1.38 | (2.2 | %) | |||||
Net income attributable to common shareholders per common share—diluted | $ | 1.09 | $ | 1.08 | 0.9 | % |
*nm = not meaningful
Managed Receivables
Managed receivables increased 12.8% to
Total Operating Revenue
Total operating revenue consists of: 1) interest income, finance charges and late fees on consumer loans, 2) other fees on credit products including annual and merchant fees and 3) ancillary, interchange and servicing income on loan portfolios.
We are currently experiencing continued period-over-period growth in private label credit and general purpose credit card receivables and to a lesser extent in our CAR receivables—growth that we expect to result in net period-over-period growth in our total interest income and related fees for these operations for 2024. Future periods’ growth is also dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and the level of marketing investment for the general purpose credit card operations.
During the quarter ended
Recent rules enacted by the
Interest Expense
Interest expense was
Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased to
Changes in Fair Value of Loans
Changes in fair value of loans, interest and fees receivable recorded at fair value increased to
We include asset performance degradation in our forecasts to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that current trends would suggest. Based on observed asset performance and improvement in
Total Operating Expenses
Total operating expenses increased 16.3% in the quarter when compared to the same period in 2023.
For the quarter, operating expenses increased, driven primarily by increases in variable servicing costs associated with growth in our receivables as well as growth in both the number of employees and inflationary compensation pressure. Certain other nonrecurring accounting and legal expenditures also contributed to increases for the quarter.
We expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations. These expenses will primarily relate to the variable costs of marketing efforts and card and loan servicing expenses associated with new receivable acquisitions.
In addition, as we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, we expect period over period marketing costs for 2024 to increase relative to those experienced in 2023, particularly towards the third and fourth quarters of 2024 , although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates.
Net Income Attributable to Common Shareholders
Net income attributable to common shareholders decreased 0.5% to
Share Repurchases
We repurchased and retired 18,033 shares of our common stock at an aggregate cost of
We will continue to evaluate the best use of our capital to increase shareholder value over time.
About
Empowering Better Financial Outcomes for Everyday Americans
Atlanticus™ technology enables 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 20 million customers and over
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, long-term growth plans and opportunities, operations, financial performance, revenue, amount and pace of growth of managed receivables, underwriting approach, total interest income and related fees and charges, the new
Contact:
Investor Relations
(770) 828-2000
investors@atlanticus.com
Consolidated Balance Sheets (Unaudited) | |||||||||
(Dollars in thousands) | |||||||||
2024 | 2023 | ||||||||
Assets | |||||||||
Unrestricted cash and cash equivalents (including | $ | 444,809 | $ | 339,338 | |||||
Restricted cash and cash equivalents (including | 37,494 | 44,315 | |||||||
Loans at fair value (including | 2,150,636 | 2,173,759 | |||||||
Loans at amortized cost | 100,144 | 98,425 | |||||||
Property at cost, net of depreciation | 10,855 | 11,445 | |||||||
Operating lease right-of-use assets | 11,313 | 11,310 | |||||||
Prepaid expenses and other assets | 31,964 | 27,853 | |||||||
Total assets | $ | 2,787,215 | $ | 2,706,445 | |||||
Liabilities | |||||||||
Accounts payable and accrued expenses | $ | 59,173 | $ | 61,634 | |||||
Operating lease liabilities | 20,034 | 20,180 | |||||||
Notes payable, net (including | 1,862,518 | 1,861,685 | |||||||
Senior notes, net | 199,028 | 144,453 | |||||||
Income tax liability | 92,870 | 85,826 | |||||||
Total liabilities | 2,233,623 | 2,173,778 | |||||||
Commitments and contingencies | |||||||||
Preferred stock, no par value, 10,000,000 shares authorized: | |||||||||
Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - | 40,000 | 40,000 | |||||||
Class B preferred units issued to noncontrolling interests | 100,325 | 100,250 | |||||||
Shareholders' Equity | |||||||||
Series B preferred stock, no par value, 3,300,704 shares issued and outstanding at | – | – | |||||||
Common stock, no par value, 150,000,000 shares authorized: 14,792,159 and 14,603,563 shares issued and outstanding at | – | – | |||||||
Paid-in capital | 88,883 | 87,415 | |||||||
Retained earnings | 327,138 | 307,260 | |||||||
Total shareholders’ equity | 416,021 | 394,675 | |||||||
Noncontrolling interests | (2,754 | ) | (2,258 | ) | |||||
Total equity | 413,267 | 392,417 | |||||||
Total liabilities, shareholders' equity and temporary equity | $ | 2,787,215 | $ | 2,706,445 | |||||
(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. | |||||||||
Consolidated Statements of Income (Unaudited) | |||||||||
(Dollars in thousands, except per share data) | |||||||||
For the Three Months Ended | |||||||||
2024 | 2023 | ||||||||
Revenue: | |||||||||
Consumer loans, including past due fees | $ | 230,374 | $ | 209,701 | |||||
Fees and related income on earning assets | 47,905 | 44,357 | |||||||
Other revenue | 11,895 | 6,924 | |||||||
Total operating revenue | 290,174 | 260,982 | |||||||
Other non-operating revenue | 532 | 59 | |||||||
Total revenue | 290,706 | 261,041 | |||||||
Interest expense | (35,063 | ) | (24,234 | ) | |||||
Provision for credit losses | (2,944 | ) | (704 | ) | |||||
Changes in fair value of loans | (159,171 | ) | (149,822 | ) | |||||
Net margin | 93,528 | 86,281 | |||||||
Operating expenses: | |||||||||
Salaries and benefits | (13,312 | ) | (10,604 | ) | |||||
Card and loan servicing | (26,822 | ) | (24,335 | ) | |||||
Marketing and solicitation | (10,428 | ) | (10,406 | ) | |||||
Depreciation | (654 | ) | (618 | ) | |||||
Other | (9,491 | ) | (6,236 | ) | |||||
Total operating expenses | (60,707 | ) | (52,199 | ) | |||||
Income before income taxes | 32,821 | 34,082 | |||||||
Income tax expense | (7,002 | ) | (8,188 | ) | |||||
Net income | 25,819 | 25,894 | |||||||
Net loss attributable to noncontrolling interests | 351 | 318 | |||||||
Net income attributable to controlling interests | 26,170 | 26,212 | |||||||
Preferred stock and preferred unit dividends and discount accretion | (6,292 | ) | (6,227 | ) | |||||
Net income attributable to common shareholders | $ | 19,878 | $ | 19,985 | |||||
Net income attributable to common shareholders per common share—basic | $ | 1.35 | $ | 1.38 | |||||
Net income attributable to common shareholders per common share—diluted | $ | 1.09 | $ | 1.08 | |||||
Consolidated Statements of Shareholders’ Equity and Temporary Equity (Unaudited) For the Three Months Ended (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
Series B Preferred Stock | Common Stock | Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||
Shares Issued | Amount | Shares Issued | Amount | Retained Earnings | Noncontrolling Interests | Total Equity | Series A Preferred Stock | Class B Preferred Units | |||||||||||||||||||||||||||||||||||||
Balance at | 3,256,561 | $ | — | 14,603,563 | $ | — | $ | 87,415 | $ | 307,260 | $ | (2,258 | ) | $ | 392,417 | $ | 40,000 | $ | 100,250 | ||||||||||||||||||||||||||
Accretion of discount associated with issuance of subsidiary equity | — | — | — | — | — | (75 | ) | — | (75 | ) | — | 75 | |||||||||||||||||||||||||||||||||
Preferred stock and preferred unit dividends | — | — | — | — | — | (6,217 | ) | — | (6,217 | ) | — | — | |||||||||||||||||||||||||||||||||
Compensatory stock issuances, net of forfeitures | — | — | 206,629 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Issuance of series B preferred stock, net | 44,143 | — | — | — | 1,071 | — | — | 1,071 | — | — | |||||||||||||||||||||||||||||||||||
Distributions to owners of noncontrolling interests | — | — | — | — | — | — | (148 | ) | (148 | ) | — | — | |||||||||||||||||||||||||||||||||
Contributions by owners of noncontrolling interests | — | — | — | — | — | — | 3 | 3 | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation costs | — | — | — | — | 940 | — | — | 940 | — | — | |||||||||||||||||||||||||||||||||||
Redemption and retirement of common shares | — | — | (18,033 | ) | — | (543 | ) | — | — | (543 | ) | — | — | ||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 26,170 | (351 | ) | 25,819 | — | — | ||||||||||||||||||||||||||||||||||
Balance at | 3,300,704 | $ | — | 14,792,159 | $ | — | $ | 88,883 | $ | 327,138 | $ | (2,754 | ) | $ | 413,267 | $ | 40,000 | $ | 100,325 |
Series B Preferred Stock | Common Stock | Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||
Shares Issued | Amount | Shares Issued | Amount | Retained Earnings | Noncontrolling Interests | Total Equity | Series A Preferred Stock | Class B Preferred Units | |||||||||||||||||||||||||||||||||||||
Balance at | 3,204,640 | $ | — | 14,453,415 | $ | — | $ | 121,996 | $ | 204,415 | $ | (1,371 | ) | $ | 325,040 | $ | 40,000 | $ | 99,950 | ||||||||||||||||||||||||||
Accretion of discount associated with issuance of subsidiary equity | — | — | — | — | (75 | ) | — | — | (75 | ) | — | 75 | |||||||||||||||||||||||||||||||||
Discount associated with repurchase of preferred stock | — | — | — | — | 16 | — | — | 16 | — | — | |||||||||||||||||||||||||||||||||||
Preferred dividends | — | — | — | — | (6,168 | ) | — | — | (6,168 | ) | — | — | |||||||||||||||||||||||||||||||||
Stock option exercises and proceeds related thereto | — | — | 1,258 | — | 19 | — | — | 19 | — | — | |||||||||||||||||||||||||||||||||||
Compensatory stock issuances, net of forfeitures | — | — | 146,227 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Issuance of series B preferred stock, net | 51,327 | — | — | — | 1,069 | — | — | 1,069 | — | — | |||||||||||||||||||||||||||||||||||
Contributions by owners of noncontrolling interests | — | — | — | — | — | — | 4 | 4 | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation costs | — | — | — | — | 931 | — | — | 931 | — | — | |||||||||||||||||||||||||||||||||||
Redemption and retirement of preferred shares | (1,806 | ) | — | — | — | (45 | ) | — | — | (45 | ) | — | — | ||||||||||||||||||||||||||||||||
Redemption and retirement of shares | — | — | (72,354 | ) | — | (1,947 | ) | — | — | (1,947 | ) | — | — | ||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 26,212 | (318 | ) | 25,894 | — | — | ||||||||||||||||||||||||||||||||||
Balance at | 3,254,161 | $ | — | 14,528,546 | $ | — | $ | 115,796 | $ | 230,627 | $ | (1,685 | ) | $ | 344,738 | $ | 40,000 | $ | 100,025 | ||||||||||||||||||||||||||
Additional Information
Additional trends and data with respect to our private label credit and general purpose credit card receivables can be found in our latest Form 10-K filing with the
Calculation of Non-GAAP Financial Measures
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
These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures or the calculation of the non-GAAP financial measures are provided below for each of the fiscal periods indicated.
These non-GAAP financial measures include only the performance of those receivables underlying consolidated subsidiaries (for receivables carried at amortized cost basis and fair value) and exclude the performance of receivables held by our former equity method investee. As the receivables underlying our former equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material. Additionally, we calculate average managed receivables based on the quarter-end balances.
The comparison of non-GAAP managed receivables to our GAAP financial statements requires an understanding that managed receivables reflect the face value of loans, interest and fees receivable without any consideration for potential loan losses or other adjustments to reflect fair value.
A reconciliation of Loans at fair value to Total managed receivables is as follows:
At or for the Three Months Ended | |||||||||||||||||||||||||
2024 | 2023 | 2022 | |||||||||||||||||||||||
(in Millions) | |||||||||||||||||||||||||
Loans at fair value | $ | 2,150.6 | $ | 2,173.8 | $ | 2,050.0 | $ | 1,916.1 | $ | 1,795.6 | $ | 1,818.0 | $ | 1,728.1 | $ | 1,616.9 | |||||||||
Fair value mark against receivable (1) | 167.5 | 237.5 | 265.2 | 257.9 | 260.1 | 302.1 | 322.3 | 293.0 | |||||||||||||||||
Total managed receivables (2) | $ | 2,318.1 | $ | 2,411.3 | $ | 2,315.2 | $ | 2,174.0 | $ | 2,055.7 | $ | 2,120.1 | $ | 2,050.4 | $ | 1,909.9 | |||||||||
Fair value to face value ratio (3) | 92.8 | % | 90.2 | % | 88.5 | % | 88.1 | % | 87.3 | % | 85.8 | % | 84.3 | % | 84.7 | % |
(1) 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. |
(2) Total managed receivables is equal to the aggregate unpaid gross balance of loans at fair value. |
(3) The Fair value to face value ratio is calculated using Loans at fair value as the numerator, and Total managed receivables, as the denominator. |
A reconciliation of our operating revenues, net of finance and fee charge-offs, to comparable amounts used in our calculation of Total managed yield is as follows:
At or for the Three Months Ended | ||||||||||||||||||||||||||
2024 | 2023 | 2022 | ||||||||||||||||||||||||
(in Millions) | ||||||||||||||||||||||||||
Consumer loans, including past due fees | $ | 220.0 | $ | 214.6 | $ | 214.6 | $ | 210.3 | $ | 200.5 | $ | 202.9 | $ | 208.9 | $ | 182.8 | ||||||||||
Fees and related income on earning assets | 47.9 | 71.7 | 59.8 | 62.9 | 44.3 | 48.0 | 48.5 | 65.8 | ||||||||||||||||||
Other revenue | 11.7 | 12.0 | 10.2 | 7.6 | 6.7 | 8.5 | 11.1 | 12.2 | ||||||||||||||||||
Total operating revenue - CaaS Segment | 279.6 | 298.3 | 284.6 | 280.8 | 251.5 | 259.4 | 268.5 | 260.8 | ||||||||||||||||||
Adjustments due to acceleration of merchant fee discount amortization under fair value accounting | 4.0 | 6.5 | (6.8 | ) | (10.6 | ) | (0.5 | ) | 3.4 | (7.9 | ) | (12.1 | ) | |||||||||||||
Adjustments due to acceleration of annual fees recognition under fair value accounting | 10.1 | (12.6 | ) | (3.1 | ) | (9.8 | ) | 7.3 | 7.9 | 10.0 | (6.6 | ) | ||||||||||||||
Removal of finance charge-offs | (63.7 | ) | (59.5 | ) | (47.1 | ) | (54.2 | ) | (61.7 | ) | (58.3 | ) | (45.3 | ) | (41.2 | ) | ||||||||||
Total managed yield | $ | 230.0 | $ | 232.7 | $ | 227.6 | $ | 206.2 | $ | 196.6 | $ | 212.4 | $ | 225.3 | $ | 200.9 | ||||||||||
The calculation of Combined principal net charge-offs is as follows:
At or for the Three Months Ended | |||||||||||||||||||||||||
2024 | 2023 | 2022 | |||||||||||||||||||||||
(in Millions) | |||||||||||||||||||||||||
Charge-offs on loans at fair value | $ | 231.7 | $ | 215.2 | $ | 173.5 | $ | 180.0 | $ | 191.9 | $ | 182.3 | $ | 134.4 | $ | 126.5 | |||||||||
Finance charge-offs (1) | (63.7 | ) | (59.5 | ) | (47.1 | ) | (54.2 | ) | (61.7 | ) | (58.3 | ) | (45.3 | ) | (41.2 | ) | |||||||||
Combined principal net charge-offs | $ | 168.0 | $ | 155.7 | $ | 126.4 | $ | 125.8 | $ | 130.2 | $ | 124.0 | $ | 89.1 | $ | 85.3 | |||||||||
(1) Finance charge-offs are included as a component of our Changes in fair value of loans in the consolidated statements of income. | |||||||||||||||||||||||||
Source:
2024 GlobeNewswire, Inc., source