Atlanticus (ATLC) Q4 2021 earnings summary

Executive summary

• 2021 growth reflected stronger consumer spending and partner originations; managed receivables rose 48% to $1.6B, revenue increased 33%, and diluted EPS reached $7.56, up 91% YoY.

• New account originations increased 53%; purchase volume reached $2.2B, up 58%, and customer satisfaction scores included 95% willingness to recommend and a Net Promoter Score of 50.

Financial highlights

• Total operating revenue was $743.9M vs. $560.0M in 2020; net income was $177.8M vs. $93.9M, while net income attributable to common shareholders was $155.5M vs. $77.1M.

• Diluted EPS was $7.56 vs. $3.95; basic EPS was $10.32 vs. $5.32.

• Net margin increased to $438.7M from $260.6M; this included a $218.7M fair-value loss on receivables and related structured financing liabilities, vs. $108.5M in 2020.

• Adjusted for one-time convertible-note repurchase and redemption losses of $29.4M, reported income before taxes was $219.6M; operating expenses rose to $189.7M from $146.2M with portfolio growth.

Outlook and guidance

• Management expected continued 2022 growth in private-label and general-purpose card receivables and related finance and fee income, subject to consumer demand, partner additions, funding and COVID-19 effects.

• Expected 2022 CaaS receivable acquisitions to grow; newer vintages and fading stimulus were expected to push delinquencies and charge-offs above 2021 levels.

• Quarterly interest expense was expected to exceed prior-period levels due to additional debt financing and anticipated Federal Reserve rate increases; operating costs were also expected to rise with receivables growth.

• Auto Finance managed receivables were expected to grow modestly in 2022, with managed yield ratios broadly in line with recent levels.