Creditrust Corporation announced financial results for the first quarter ending March 31, 2000. First quarter earnings per fully diluted share were $0.25, and collections for the first quarter were $25.5 million.
For the quarter ended March 31, 2000, net earnings were $2.6 million, or $.25 per fully diluted share, compared to $2.4 million, or $.28 per fully diluted share for same quarter in 1999. Earnings from operations for the first quarter of 2000 increased to $7.0 million from $4.4 million in 1999.
Collections on managed receivables reached $25.5 million for the quarter ending March 31, 2000 over $13.4 million for the same quarter a year ago. Creditrust made no purchases of finance receivables in the first quarter of 2000. As of March 31, 2000, the Company had over 2.0 million accounts under management with a face value of $4.9 billion.
Revenues for the quarter ending March 31, 2000 increased 79% to $21.5 million, from $12.0 million for the first quarter of 1999. Operating expenses increased 91% from $7.6 million to $14.5 million in the first quarter of 2000 over 1999 reflecting the increase in operating costs associated with the growth in revenue. Income from operations increased 59% to $7.0 million for the first quarter of 2000 from $4.4 million for the same period in 1999.
For the quarter ending March 31, 2000, earnings before interest expense, income taxes, depreciation and amortization (EBITDA) rose to $8.1 million from $4.7 million for the same quarter last year.
Cash collections and operating expenses are more fully detailed in the Portfolio-Based Data Table included as supplemental information herein. While the Portfolio-Based Data Table does not purport to present the Company’s operating results in accordance with GAAP, the Company believes the presentation provides additional information useful in assessing the Company’s performance.
The Company’s policy is to assess estimates against actual collections. For the first quarter of 2000, the Company reevaluated some of its remaining future collection estimates and revised them to reduce income on finance receivables by $1.4 million after tax. The resulting effect was to amortize more collections to return of capital and less to income.
Financing and Liquidity
The Company has not experienced any losses, but obligations to retire debt on its revolving line of credit, coupled with the contractual servicing fees on its Series 1998-2, warehouse, and Series 1999-1 credit facilities which are lower than the Company’s total cost of operations, and the Company’s inability to raise additional financing or sell significant assets has resulted in the Company’s inability to meet all of its debt service obligations. As a result, the Company was unable to meet its debt service payments to Sunrock Capital and a default has been declared. The default would enable the lender to accelerate the loan. No acceleration has been declared. In addition, this caused a cross default under the Series 1999-2 facility and the Series 1998-1 facility, which could also be accelerated. The servicing on Series 1998-2, 1999-1 and the warehouse has been terminated which directly effects the Companies resources to pay operating costs and debt service.
The Company’s default of the revolving line of credit and other defaults and occurrences described above may raise doubt about the Company’s ability to continue as a going concern. The Company is currently working with all of its lenders and investors to obtain the necessary waivers under the terms of the agreements and is negotiating with them to stabilize its lender relationships by establishing certain operating plans. The Company also retained the services of an outside consulting firm to assist it in accomplishing management’s objectives.
The Company has also evaluated the disposal of certain assets, raising new capital for future operations, and reducing operating costs by certain staff and other cost reductions. However, there can be no assurance that the Company will be successful in achieving its objectives. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Founded in 1991, Creditrust Corporation acquires, manages and collects delinquent consumer receivables utilizing an information-driven strategy. The Company uses proprietary technology to acquire receivables primarily consisting of charged-off Visa(R), MasterCard(R), and private label credit card accounts issued by major banks and merchants.
For more details on Creditrust’s 1Q/00 results visit CardData ([www.carddata.com]).