Atlanticus Holdings Corp (ATLC) 2003 Q1 法說會逐字稿

Good day and welcome to the CompuCredit Corporation’s First Quarter 2003 Results Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to the Director of IR, Ms. Nancy King, please go ahead.

Good morning and thank you for joining us for CompuCredit Corporation’s conference call to discuss the 2003 first quarter earnings release. Before we get started, I would like to remind you that today we will be making some forward-looking statements. These forward-looking statements may include any statements of our plan, beliefs, or expectations of future results or developments including our future profitability, possible portfolio acquisitions and possible portfolio refinancing.

Our actual results may differ materially from the plans or expectations reflected in these statements. You should read the Risk Factor section of our report on Form 10-K for the year ended December 31, 2002 for summary of some of the more important factors that may cause actual results to differ from the results reflected in the forward-looking statements that we make today.

Thank you again for your interest in CompuCredit. Please feel free to contact me if you ever have any questions you would like to discuss. You may also access our website www.compucredit.com in order to obtain a hard copy of the press release or financial statement or to listen to an archived version of this conference call. I will now turn it over to David Hanna to give you an overview of CompuCredit’s performance for the first quarter of 2003.

Thank you, Nancy and thanks all of you for participating in this, our first quarter 2003 earning’s conference call. Today I will give you a brief overview of the financial performance during the quarter and I will outline some of the changes we will make in the future. We are pleased to report earnings for the first quarter of $33.2m or 67 cents per share.

We were pleased with our financial performance during the quarter. Our purchased portfolios performed a little better than we anticipated and our originated business performed in line with our expectations. The net interest margin was 15.5% in the first quarter of 2003 as compared to 17.1% for the fourth quarter of 2002.

The adjusted net charge-off rate was 10.2% in the first quarter of 2003 as compared to 9.2% for the fourth quarter of 2002. At March 31, 2003, the 60 plus-day managed delinquency rate was 13.3% as compared to 13.9% as of December 31, 2002.

Additionally, during the first quarter of 2003, we have reported an other credit card income ratio of 9.1%, which reflects an enhanced focus during the first quarter within our recovery operations, an income from our acquisition of Charge Off credit card paper during the first quarter.

Our reported other credit card income ratio for prior quarters, 6% for the fourth quarter of 2002 for example, also now includes cash received associated with our recoveries of Charge Off credit card paper as well.

I would like to briefly address our liquidity position as there have been some positive developments during the first quarter that warrant clarification relative to the disclosures that we made earlier during the quarter when we filed our 2002 10-K.

The information that I will provide today is the information that will also be filed with our 10-Q that we anticipate filing within the next several days. In March and as expected, when we priced the Fingerhut deal at the time of the acquisition, the Fingerhut Trust triggered an early amortization as a result of a minimum principle balance trigger based on the rapid decline in the portfolios receivables. This means that CompuCredit will experience significantly diminished cash flows from this trust until all investors are repaid.

We currently estimate that this repayment will occur during the latter half of 2004. We anticipate that the cash flows that are available from the trust to CompuCredit during the early amortization period of investor repayment and beyond will be sufficient to fund the servicing cost associated with this portfolio. We may look to refinance this portfolio. However, on terms that would be more favorable to CompuCredit.

Like the Fingerhut trust, we also anticipate that during the second quarter of this year, the CSG Trust will hit an expected early amortization trigger designed to facilitate early repayment to the investors based on the liquidation of the receivables in the portfolio.

When we hit this trigger, we will cease receiving cash other than our servicing fee and interest on the notes held by us from the CSG Trust beginning in the second quarter of this year. We believe that the servicing fee alone that we receive from this trust will be adequate to cover all of the servicing costs for this portfolio.

Our operations have generated positive cash flow thus far in 2003. With our current financing structures, we are not sure, however, if our operations would generate positive cash flow for the remainder of the year. If we are able to generate additional cash from financing activities, we may have positive cash flow for the year. If we do not, however, we are very comfortable that we have enough cash to support our business throughout the remainder of the year without any new financing structures.

It is the unique time to manage the public company with the increase in laws and regulations pertaining to disclosures of financial or other information about a company's business operations. Like others within the financial community, and particularly the credit card industry, we have been affected by some of the new SEC rules and regulations that became effective on March 28 of this year to prohibit and require significantly more burdensome filing obligations associated with any potential disclosure of non-GAAP financial information.

It always has been our policy at CompuCredit to try and ere on the side of safety in compliance with all laws and regulations. We have taken this approach with our credit card customer base as well as our relationships with the governing bodies of public companies. Therefore based on these changes, we no longer would discuss or refer to non-GAAP financial information through any vehicle other than our filings with the SEC and then owing to the instance specifically permitted in or required under our filings with the SEC.

We have traditionally provided information to the investors during conference calls about so called managed earnings. Based on the new SEC regulations, we will no longer provide this information. Consistent with this decision, we will not be entertaining any questions at the conclusion of my prepared remarks and we will no longer be providing any forward-looking information or confirming any managed basis earnings guidance.

We made a decision beginning with last year's 10-K to provide more information in our public filings than we have ever provided in the past. We intend to continue to provide substantial detail each quarter and we believe that our publicly filed documents will provide the relevant information for investors to make informed decisions.

We will monitor the approach that the SEC takes with other companies in the coming months and we may make a decision to change our conference call and guidance practices at some point in the future.

I can tell you that we are comfortable with the current business plan at CompuCredit. We have repeatedly spoken about the shift away from our traditional originated line of business towards a focus on portfolio purchases and towards marketing products to the sector of the subprime market with lower FICO scores than our traditional market. We do not have any portfolio purchases to report today, but we continue to believe that there are opportunities for portfolio purchases for CompuCredit during the remainder of 2003 and into 2004.

In summary, we are pleased with the quarter from a profitability standpoint and operational standpoint and an opportunity standpoint. As we pointed out in our shareholder letter this year, we are excited about opportunities in our market, but we do not know exactly where those opportunities will lead us.

We are confident that we have a strong management team that will enable us to attain attractive return rates for the capital that we invest, whether that investment is in new credit card loans, portfolio purchases or some other opportunity within the financial services around. Thank you very much for listening to the call this morning and thank you for your interest in CompuCredit.

This concludes today's conference call. Thank you for your participation. You may disconnect at this time.