Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q4 2018 Earnings Conference Call - Final Transcript

Feb 13, 2019 • 01:00 pm ET


Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q4 2018 Earnings Conference Call - Final Transcript


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Charles Bradley

delinquency and we keep working on that, it's not something we really concerned about the fourth quarter number.

On the other side, the losses are down. So, again, the losses hopefully will continue to trend down. But I think it goes part in part, when I get overly excited about the losses being down until they stay down for a long time, but again it's certainly good news that they are down in the fourth quarter which in some ways is a little more important than delinquencies.

In terms of the full year, we did -- we spent 2018 and I think I had mentioned in the past, we still think the competition is quite frisky out there, people are still very aggressive in trying to do things. And so, we really wanted to sort of spend the time managing our portfolio, making things better, so that when we have an opportunity to grow we're going to be well set up to do it. We put in this the new scorecard in sort of midyear, but it really probably took effect in August. The results from that new scorecard look very promising. That was a big project in 2018.

The second half of 2018 originations were probably some of the best originations we've had. So we think the results there could be promising. I think we've been talking for probably a couple of years, about getting things ready and sort of being ready to grow again. And I think 2018 was better than we expected. However, we're very good and happy that it's over. We are looking forward to 2019 and much better things, which I'll get into more after Jeff runs through the financials.

Jeffrey Fritz

Thanks, Brad. Welcome, everybody. We will begin with the revenues. Q4 revenues were $91.2 million, that's a 5% decrease from the third quarter this year of $95.6 million and a 15% decrease from the fourth quarter of 2017. The full-year revenues of $389.8 million is a 10% decrease from the full-year revenues of 2017. And of course, as we've discussed, this year the story on the revenues, there's really two things, primarily the adoption of the fair value methodology of accounting for the 2018 originations, as we've said the losses are baked into the revenue recognition methodology for fair value. And so, we've seen a significant decrease in revenues, as result of that. And then also as Brad alluded to, just the overall portfolio has been fairly flat for the year, which has had a significant contribution to impact on the revenue recognition.

Moving to the expenses, $86.4 million for the fourth quarter, that's a 5% decrease from the third quarter of this year and a 13% decrease from the fourth quarter of 2017. Full year basis, $371.1 million of expenses this year is an 8% decrease from $402.3 million last year. And really on the expenses, you've get some increases in core categories which are largely offset by -- entirely offset by decreases in