Atlanticus (ATLC) Q4 2019 earnings summary

Executive summary

• 2019 growth added ~865,000 general-purpose and private-label card accounts; managed point-of-sale and direct-to-consumer receivables doubled to $908.4M from $453.3M.

• Net income rose to $26.2M from $7.6M; growth was supported by receivables expansion and a $105.9M release of accruals included in other income.

• Funding and equity actions supported expansion, while the COVID-19 pandemic introduced material uncertainty for 2020 performance and liquidity.

Financial highlights

• Total interest income was $261.2M vs. $161.2M in 2018; net interest income before fees and loan-loss provision was $210.5M vs. $124.3M.

• Provision for losses on loans at net realizable value rose to $248.4M from $100.3M, primarily reflecting portfolio growth and maturation.

• Net income attributable to common shareholders was $25.3M vs. $7.9M; basic EPS was $1.74 vs. $0.56 and diluted EPS was $1.66 vs. $0.56.

• Other income included a $105.9M accrual reduction; 2018 included ~$36.2M income from litigation settlement after previously recorded amounts.

Outlook and guidance

• 2020 receivables growth was expected across point-of-sale, direct-to-consumer and auto finance, subject to COVID-19 effects on acquisitions and customer payments.

• Elevated credit-card charge-offs were expected as newer vintages matured; management expected APRs to remain consistent with recent quarters, with modest mix-related variation.

• Additional debt financing and higher quarterly interest expense were anticipated as receivables grew; marketing and servicing costs were also expected to rise.

• The pandemic's effect on 2020 results, financial condition and liquidity could not be estimated; management was monitoring conditions and assessing CARES Act assistance.