Atlanticus Reports Fourth Quarter and Full Year 2024 Financial Results

Fourth Quarter 2024 net margin growth of 28.0% over prior year, with 3.7 million accounts served (1) ATLANTA, March 13, 2025 (GLOBE NEWSWIRE) -- Atlanticus Holdings Corporation (NASDAQ: ATLC) (Atlanticus, the Company, we, our or us), a financial technology company that enables its bank, retail and healthcare partners to offer more inclusive financial services to millions of everyday Americans, today announced its financial results for the fourth quarter and full year ended December 31, 2024. An accompanying earnings presentation is available in the Investors section of the Company’s website at www.atlanticus.com or by clicking here. Financial and Operating Highlights Fourth Quarter 2024 Highlights (all comparisons to the Fourth Quarter 2023) Managed receivables2 increased 13.0% to $2.7 billionTotal operating revenue and other income increased 14.4% to $353.2 millionReturn on average equity of 22.3 %3Purchase volume of $660.2 millionOver 368,000 new accounts served during the quarter, 3.7 million total accounts served1Net income attributable to common shareholders of $26.3 million, or $1.42 per diluted common share 1) In our calculation of total accounts served, we include all accounts with account activity and accounts that have open lines of credit at the end of the referenced period.2) Managed receivables is a non-GAAP financial measure and excludes the results of our Auto Finance receivables. See Calculation of Non-GAAP Financial Measures for important additional information.3) Return on average equity is calculated using Net income attributable to common shareholders as the numerator and the average of Total equity as of December 31, 2024 and September 30, 2024 as the denominator, annualized. Management Commentary Jeff Howard, President and Chief Executive Officer at Atlanticus stated, “We are pleased to have once again achieved our return on capital targets while prudently growing our business. The past few years have had numerous disruptions – a pandemic, credit score inflation resulting from trillions of dollars of government stimulus, rapid increases in inflation, recessionary pressure on everyday Americans, an unforeseen potential regulatory change and an irrational competitive environment brought on by numerous new entrants into our lines of business. I am incredibly proud of the way the Atlanticus team has managed through this tumultuous period. Despite these challenges, over the last 5 years we have grown managed receivables on a compounded annual growth rate of 24%, revenue by 31%, and earnings by 29%, all while maintaining a return on common equity capital of over 20%.” “Although we continue to manage through lingering effects from these challenges, we are excited about what lies ahead. While our primary focus is on achieving at or above targeted returns on our capital, we see opportunity to continue achieving above market rates of growth across our business.” Financial ResultsFor the Three Months Ended December 31, For the Year Ended December 31, ($ in thousands, except per share data) 2024 2023 % Change 2024 2023 % ChangeTotal operating revenue and other income$353,186 $308,600 14.4% $1,309,955 $1,155,246 13.4%Other non-operating income 305 490 nm 1,489 630 nmTotal revenue and other income 353,491 309,090 14.4% 1,311,444 1,155,876 13.5%Interest expense (44,670) (32,619) 36.9% (160,173) (109,342) 46.5%Provision for credit losses (7,045) (601) nm (16,368) (2,152) nmChanges in fair value of loans (184,310) (184,072) nm (733,471) (689,577) 6.4%Net margin$117,466 $91,798 28.0% $401,432 $354,805 13.1%Total operating expenses$77,599 $61,093 27.0% $262,855 $226,247 16.2%Net income$30,971 $26,273 17.9% $110,106 $101,954 8.0%Net income attributable to controlling interests$31,303 $26,304 19.0% $111,296 $102,845 8.2%Preferred stock and preferred unit dividends and discount accretion$(5,012) $(6,341) nm $(23,928) $(25,198) nmNet income attributable to common shareholders$26,291 $19,963 31.7% $87,368 $77,647 12.5%Net income attributable to common shareholders per common share—basic$1.77 $1.37 29.9% $5.92 $5.35 10.7%Net income attributable to common shareholders per common share—diluted$1.42 $1.10 29.1% $4.77 $4.24 12.5% *nm = not meaningful Managed Receivables Managed receivables increased 13.0% to $2.7 billion with over $313.5 million in net receivables growth from December 31, 2023, driven by growth both in the private label credit and general purpose credit card products offered by our bank partners. Total accounts served increased 4.1% to 3.7 million. Ongoing purchases by customers of our existing retail partners and new private label credit retail partners helped grow our private label credit receivables by $292.4 million in the twelve months ended December 31, 2024. Our general purpose credit card receivables grew by $21.7 million during the twelve months ended December 31, 2024. While some of our merchant partners continue to face year-over-year growth challenges, others are benefiting from continued consumer spending and a growing economy and have expanded their relationship with us. Our general purpose credit card portfolio continues to experience modest growth in total managed receivables. We expect continued growth in 2025 in our managed receivables when compared to prior periods in 2024. Total Operating Revenue and Other Income Total operating revenue and other income consists of: 1) interest income, finance charges and late fees on consumer loans, 2) other fees on credit products including annual and merchant fees and 3) interchange and servicing income on loan portfolios and other customer related fees. We are currently experiencing continued period-over-period growth in private label credit and general purpose credit card receivables — growth that we expect to result in net period-over-period growth in our total interest income and related fees for these operations throughout 2025. Future periods’ growth is dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and the level of marketing investment for the general purpose credit card operations. During the quarter ended December 31, 2024, total operating revenue and other income increased 14.4% to $353.2 million. General purpose credit card receivables tend to have higher total yields than private label credit receivables (and corresponding higher charge off rates). As a result, in periods where we have declines in rates of growth of these general purpose credit card receivables, as was noted in 2024 (relative to growth in private label credit card receivables), we expect to have slightly lower total managed yield ratios. We currently expect increases in the acquisition of receivables, and correspondingly higher period-over-period operating revenue for 2025. This growth includes an expected seasonal shift in our mix of acquired private label receivables to higher FICO receivables that have lower gross yields (and correspondingly lower charge-off expectations) in the third quarter each year, which may result in marginally lower managed yield ratios when compared to the corresponding periods in 2024. Interest Expense Interest expense was $44.7 million for the quarter ended December 31, 2024, compared to $32.6 million for the quarter ended December 31, 2023. The higher expenses were primarily driven by the increases in outstanding debt in proportion to growth in our receivables coupled with increases in the cost of borrowing. Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased to $2,157.8 million as of December 31, 2024 from $1,796.0 million as of December 31, 2023. The majority of this increase in outstanding debt relates to the addition of multiple credit facilities in 2023 and 2024. Recent increases in the effective interest rates on debt have increased our interest expense as we have raised additional capital (or replaced existing facilities) over the last two years. We anticipate additional debt financing over the next few quarters as we continue to grow coupled with higher effective interest rates on new debt compared to rates on maturing debt. As such, we expect our quarterly interest expense for these operations to increase compared to prior periods. Changes in Fair Value of Loans Changes in fair value of loans increased to $184.3 million for the quarter ended December 31, 2024 compared to $184.1 million for the quarter ended December 31, 2023. This increase was largely driven by growth in our acquisition and relative mix of receivables, offset by improvements in the fair value assessment for receivables due to improvements in the underlying performance in the form of improved delinquencies and improved net returns, as well as the indefinite extension in assumed implementation dates of recent CFPB rules limiting late fees charged to consumers. We include asset performance degradation in our forecasts to reflect both changes in assumed asset level economics and the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that current trends would suggest. Based on observed asset performance, implementation of mitigants to a potential change in late fee billings and general improvements in U.S. economic expectations due to the improved inflation environment, some expected degradation has been removed in recent periods. Tightened underwriting standards shifted new receivable acquisitions to consumers at the higher end of the FICO bands in which our bank partners participate, presumably resulting in improved overall credit performance of our acquired receivables. When coupled with those existing assets negatively impacted by inflation gradually becoming a smaller percentage of the outstanding portfolio, we expect to see overall improvements in the measured fair value of our portfolios of acquired receivables. Total Operating Expenses Total operating expenses increased 27.0% in the quarter when compared to the same period in 2023, driven primarily by increases in variable servicing costs associated with growth in our receivables and costs associated with the implementation of product, policy and pricing changes. In addition, we experienced growth in both the number of employees and inflationary compensation pressure. Certain other nonrecurring accounting and legal expenditures also contributed to increases for the quarter. We expect some continued increase in salaries and benefits in 2025 compared to corresponding periods in 2024 as we continue to invest in technology, risk underwriting and compliance and as a result we expect to increase our number of employees. We expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations. These expenses will primarily relate to the variable costs of marketing efforts and card and loan servicing expenses associated with new receivable acquisitions. Offsetting a portion of this increase are significant reductions in our servicing costs per account, resulting from the realization of greater economies of scale and increased use of automation as our receivables have grown. In addition, as we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, and allow for overall increases in the cost to successfully market to consumers, we expect period over period marketing costs for 2025 to increase relative to those experienced in 2024, although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates. Net Income Attributable to Common Shareholders Net income attributable to common shareholders increased 31.7% to $26.3 million, or $1.42 per diluted share for the quarter ended December 31, 2024. Share Repurchases We repurchased and retired 925 shares of our common stock at an aggregate cost of $0.03 million, in the quarter ended December 31, 2024. We will continue to evaluate the best use of our capital to increase shareholder value over time. About Atlanticus Holdings Corporation Empowering Better Financial Outcomes for Everyday Americans Atlanticus™ technology enables bank, retail, and healthcare partners to offer more inclusive financial services to everyday Americans through the use of proprietary technology and analytics. We apply the experience gained and infrastructure built from servicing over 20 million customers and over $40 billion in consumer loans over more than 25 years of operating history to support lenders that originate a range of consumer loan products. These products include retail and healthcare private label credit and general purpose credit cards marketed through our omnichannel platform, including retail point-of-sale, healthcare point-of-care, direct mail solicitation, internet-based marketing, and partnerships with third parties. Additionally, through our Auto Finance subsidiary, Atlanticus serves the individual needs of automotive dealers and automotive non-prime financial organizations with multiple financing and service programs. Forward-Looking Statements This press release contains forward-looking statements that reflect the Company's current views with respect to, among other things, its business, long-term growth plans and opportunities, operations, financial performance, revenue, amount and pace of growth of managed receivables, mix of receivables, underwriting approach, total interest income and related fees and charges, the new CFPB late fee rules and our response thereto, debt financing, liquidity, interest rates, interest expense, operating expense, marketing efforts, fair value of receivables, consumer spending, and the economy. You generally can identify these statements by the use of words such as outlook, potential, continue, may, seek, approximately, predict, believe, expect, plan, intend, estimate or anticipate and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as will, should, would, likely and could. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include those risks described in the Company's filings with the Securities and Exchange Commission and include, but are not limited to, bank partners, merchant partners, consumers, loan demand, the capital markets, labor availability, supply chains and the economy in general; the Company's ability to retain existing, and attract new, merchant partners and funding sources; changes in market interest rates; increases in loan delinquencies; its ability to operate successfully in a highly regulated industry; the outcome of litigation and regulatory matters; the effect of management changes; cyberattacks and security vulnerabilities in its products and services; and the Company's ability to compete successfully in highly competitive markets. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, the Company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements. Contact:Investor Relations(770) 828-2000investors@atlanticus.com Atlanticus Holdings Corporation and SubsidiariesConsolidated Balance Sheets (Dollars in thousands) December 31, December 31, 2024 2023 Assets Unrestricted cash and cash equivalents (including $140.2 million and $158.0 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) $375,416 $339,338 Restricted cash and cash equivalents (including $98.8 million and $20.5 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) 124,220 44,315 Loans at fair value (including $2,542.9 million and $2,128.6 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) 2,630,274 2,173,759 Loans at amortized cost, net (including $4.9 million and $1.8 million of allowance for credit losses at December 31, 2024 and December 31, 2023, respectively; and $19.8 million and $17.9 million of deferred revenue at December 31, 2024 and December 31, 2023, respectively) 84,332 98,425 Property at cost, net of depreciation 10,519 11,445 Operating lease right-of-use assets 13,878 11,310 Prepaid expenses and other assets 32,068 27,853 Total assets $3,270,707 $2,706,445 Liabilities Accounts payable and accrued expenses $72,088 $61,634 Operating lease liabilities 24,188 20,180 Notes payable, net (including $2,128.0 million and $1,795.9 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) 2,199,448 1,861,685 Senior notes, net 281,552 144,453 Income tax liability 114,068 85,826 Total liabilities 2,691,344 2,173,778 Commitments and contingencies Preferred stock, no par value, 10,000,000 shares authorized: Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $40.0 million) at December 31, 2024 and December 31, 2(1) 40,000 40,000 Class B preferred units issued to noncontrolling interests 50,000 100,250 Shareholders' Equity Series B preferred stock, no par value, 3,301,179 shares issued and outstanding at December 31, 2024 (liquidation preference - $82.5 million); 3,256,561 shares issued and outstanding at December 31, 2023 (liquidation preference - $81.4 million) (1) – – Common stock, no par value, 150,000,000 shares authorized: 14,904,192 and 14,603,563 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively – – Paid-in capital 98,278 87,415 Retained earnings 394,628 307,260 Total shareholders’ equity attributable to Atlanticus Holdings Corporation 492,906 394,675 Noncontrolling interests (3,543) (2,258) Total equity 489,363 392,417 Total liabilities, shareholders' equity and temporary equity $3,270,707 $2,706,445 (1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized. Atlanticus Holdings Corporation and SubsidiariesConsolidated Statements of Income(Dollars in thousands, except per share data) For the Three Months Ended December 31, For the Year Ended December 31, 2024 2023 2024 2023 Revenue and other income: Consumer loans, including past due fees $251,702 $224,698 $979,814 $879,123 Fees and related income on earning assets 83,788 71,691 269,771 238,775 Other revenue 17,696 12,211 60,370 37,348 Total operating revenue and other income 353,186 308,600 1,309,955 1,155,246 Other non-operating income 305 490 1,489 630 Total revenue and other income 353,491 309,090 1,311,444 1,155,876 Interest expense (44,670) (32,619) (160,173) (109,342) Provision for credit losses (7,045) (601) (16,368) (2,152) Changes in fair value of loans (184,310) (184,072) (733,471) (689,577) Net margin 117,466 91,798 401,432 354,805 Operating expenses: Salaries and benefits (12,559) (11,313) (50,143) (43,906) Card and loan servicing (35,811) (26,607) (118,400) (100,620) Marketing and solicitation (17,338) (14,930) (56,186) (52,421) Depreciation (752) (652) (2,715) (2,560) Other (11,139) (7,591) (35,411) (26,740) Total operating expenses (77,599) (61,093) (262,855) (226,247) Income before income taxes 39,867 30,705 138,577 128,558 Income tax expense (8,896) (4,432) (28,471) (26,604) Net income 30,971 26,273 110,106 101,954 Net loss attributable to noncontrolling interests 332 31 1,190 891 Net income attributable to controlling interests 31,303 26,304 111,296 102,845 Preferred stock and preferred unit dividends and discount accretion (5,012) (6,341) (23,928) (25,198) Net income attributable to common shareholders $26,291 $19,963 $87,368 $77,647 Net income attributable to common shareholders per common share—basic $1.77 $1.37 $5.92 $5.35 Net income attributable to common shareholders per common share—diluted $1.42 $1.10 $4.77 $4.24 Additional Information Additional trends and data with respect to our private label credit and general purpose credit card receivables can be found in our latest Form 10-K filing with the Securities and Exchange Commission under Management's Discussion and Analysis of Financial Condition and Results of Operations. Calculation of Non-GAAP Financial Measures This press release presents information about managed receivables, which is a non-GAAP financial measure provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition to financial measures presented in accordance with GAAP, we present managed receivables, total managed yield, combined principal net charge-offs, and fair value to total managed receivables ratio, all of which are non-GAAP financial measures. These non-GAAP financial measures aid in the evaluation of the performance of our credit portfolios, including our risk management, servicing and collection activities and our valuation of purchased receivables. The credit performance of our managed receivables provides information concerning the quality of loan originations and the related credit risks inherent with the portfolios. Management relies heavily upon financial data and results prepared on the managed basis in order to manage our business, make planning decisions, evaluate our performance and allocate resources. These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures or the calculation of the non-GAAP financial measures are provided below for each of the fiscal periods indicated. These non-GAAP financial measures include only the performance of those receivables underlying consolidated subsidiaries (for receivables carried at amortized cost basis and fair value) and exclude the performance of receivables held by our former equity method investee. As the receivables underlying our former equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material. Additionally, we calculate average managed receivables based on the quarter-end balances. The comparison of non-GAAP managed receivables to our GAAP financial statements requires an understanding that managed receivables reflect the face value of loans, interest and fees receivable without any consideration for potential loan losses or other adjustments to reflect fair value. A reconciliation of Loans at fair value to Total managed receivables is as follows: At or for the Three Months Ended 2024 2023 (in Millions) Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Loans at fair value $2,630.3 $2,511.6 $2,277.4 $2,150.6 $2,173.8 $2,050.0 $1,916.1 $1,795.6 Fair value mark against receivable (1) 94.5 142.5 137.7 167.5 237.5 265.2 257.9 260.1 Total managed receivables (2) $2,724.8 $2,654.1 $2,415.1 $2,318.1 $2,411.3 $2,315.2 $2,174.0 $2,055.7 Fair value to Total managed receivables ratio (3) 96.5% 94.6% 94.3% 92.8% 90.2% 88.5% 88.1% 87.3% (1) The fair value mark against receivables reflects the difference between the face value of a receivable and the net present value of the expected cash flows associated with that receivable. (2) Total managed receivables are equal to the aggregate unpaid gross balance of loans carried at fair value. (3) The Fair value to Total managed receivables ratio is calculated using Loans at fair value as the numerator, and Total managed receivables as the denominator. A reconciliation of our operating revenues, net of finance and fee charge-offs, to comparable amounts used in our calculation of Total managed yield is as follows: At or for the Three Months Ended 20242023(in Millions) Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Consumer loans, including past due fees $242.1 $245.3 $232.1 $220.0 $214.6 $214.6 $210.3 $200.5 Fees and related income on earning assets 83.8 78.5 59.5 47.9 71.7 59.8 62.9 44.3 Other revenue 17.5 16.8 13.6 11.7 12.0 10.2 7.6 6.7 Total operating revenue and other income - CaaS Segment 343.4 340.6 305.2 279.6 298.3 284.6 280.8 251.5 Adjustments due to acceleration of merchant fee discount amortization under fair value accounting 0.7 (15.1) (12.6) 4.0 6.5 (6.8) (10.6) (0.5) Adjustments due to acceleration of annual fees recognition under fair value accounting (10.5) (8.0) 1.1 10.1 (12.6) (3.1) (9.8) 7.3 Removal of finance charge-offs (64.9) (60.6) (62.9) (63.7) (59.5) (47.1) (54.2) (61.7) Total managed yield $268.7 $256.9 $230.8 $230.0 $232.7 $227.6 $206.2 $196.6 The calculation of Combined principal net charge-offs is as follows: At or for the Three Months Ended 2024 2023 (in Millions) Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Charge-offs on loans at fair value $213.1 $201.5 $217.0 $231.7 $215.2 $173.5 $180.0 $191.9 Finance charge-offs (1) (64.9) (60.6) (62.9) (63.7) (59.5) (47.1) (54.2) (61.7) Combined principal net charge-offs $148.2 $140.9 $154.1 $168.0 $155.7 $126.4 $125.8 $130.2 (1) Finance charge-offs are included as a component of our Changes in fair value of loans in the condensed consolidated statements of income.

Atlanticus Reports Fourth Quarter and Full Year 2024 Financial Results

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