Regional Management Corp.
) recently declared some of its preliminary financial results for
the fourth quarter of 2012.
The company has scheduled its fourth quarter and full year
2012 earnings release in late February 2013. Diluted earnings per
share for the fourth quarter of 2012 are expected to be in the
range of 50 to 55 cents, based on shares outstanding of 12.8
million. This would be lower than the Zacks Consensus Estimate of
64 cents. For full year 2012 the Zacks Consensus Estimate is
currently pegged at $2.29 representing a year-over-year
improvement of 3.62%.
Net income for the fourth quarter of 2012 is expected to be in
the range of $6.4 to $7 million compared to $7 million in the
third quarter of 2012. Net income and earnings per share of the
company for the fourth-quarter 2012 were adversely affected by
the combined effects of lower yield and increase in the provision
for loan losses and other growth-related costs like additional
marketing, overtime, and interest costs.
Regional Management expects its fourth-quarter 2012 revenue to
be in the range of $37.6 to $38 million which is higher than
$35.5 million, reported in the third quarter.
Finance receivables as of December 31, 2012 were approximately
$437 million. The finance receivables of Regional Management
showed an improvement owing to the company's overall growth. It
expects to earn revenue in the future periods riding on back of
the company's strong growth reported in the fourth quarter.
Regional Management estimates its fourth-quarter same-store
revenue to improve in a 16% to 17% range which is lower than the
third-quarter same-store revenue growth rate of 18.3%.
Total provision for loan losses for the fourth quarter of 2012
is expected to be in the range of $9 to $9.5 million, higher than
$7.4 million in the prior quarter.
The company expects to incur total General &
Administrative expense between $14.7 to $15 million in the fourth
quarter, higher than $14.3 million in third quarter of 2012.
Regional Management excelled in its loan portfolio through all
channels during the fourth quarter of 2012. It opened eight new
branches during the quarter to expand its operations rapidly and
could hence reap benefits from favorable market conditions. With
new branches added, the tally has reached 221 branch
The RMC Retail business unit has also shown consistent
improvement in its results in the fourth quarter of 2012 by
enhancing its product mix. The company successfully accomplished
an expanded holiday live check campaign.
The company hopes to engage in expanded testing of its
products. It also intends to increase its marketing network to a
greater number of customers with higher credit capacity. This is
in order to gain a wide customer mix thereby drawing a lump sum
check with a slightly lower APR. Regional Management looks
forward to this achievement by utilizing its success of the
holiday live check campaign.
As the company carried out a number of live check test
scenarios, it ended up with a relatively lower-than-expected
yield. However, on a positive note, Regional Management expects
the waning yields to compel similar future campaigns in an effort
to effect better numbers.
Though management expects the company to miss expectations in
the fourth quarter, the multi-channel growth and future growth
prospects of the company remained strong. It has led the company
going ahead with plans to set up 35 to 45 more branches in
Overall, we expect higher expenses to partially offset the
rise in revenue and hence weigh on margin expansion in the fourth
quarter of 2012. Regional Management currently carries a Zacks
Rank #3 (Hold).
World Acceptance Corporation
), a small-loan consumer finance company, which closely competes
with Regional Management carries the Zacks Rank # 2 (Buy).
REGIONAL MANAGE (RM): Free Stock Analysis
WORLD ACCEPTANC (WRLD): Free Stock Analysis
To read this article on Zacks.com click here.