Nicholas Financial, Inc.
2015 Annual Report
From The President
This year marked our 30th year in business and our 28th year as a publicly traded company. We are extremely proud of the performance that our employees delivered during the past fiscal year and are optimistic about the future of our organization. During fiscal year 2015, we opened one branch location outside of Chicago and now operate sixty-seven branch locations in sixteen states. We have been developing new markets in the state of Texas and will open our first branch location in Houston during the second quarter which ends on September 30, 2015. We hope to be able to add more locations throughout Texas during the year, as we continue to develop additional markets. We are also continuing to evaluate markets in states where we are already conducting business to determine if there are additional opportunities to expand our established footprint. In March of 2015, we successfully completed a $70 million modified Dutch Auction which resulted in a share buy-back of approximately 4.7 million shares. Simultaneously, we increased our credit line from $150 million to $225 million and extended the maturity date to January 2018. We have now positioned our Balance Sheet to reflect a leverage ratio which allows for an increased return on equity and earnings per share without creating liquidity concerns or undue risk to accessing our credit line. The competitive forces in the marketplace remained elevated and as a result we continue to experience increased pressure on margins. As of the date of this report, we continue to see new and existing competition attempting to buy market share, with little to no regard of executing a business plan that is sustainable. We remain cautiously optimistic that some of this irrational lending will have to be eliminated and/or re-priced to adequately adjust for the risk associated with the acquisition of given installment contracts. The longer term risk associated with intense competition is such that some or many of these competitors may be willing to accept margins that will allow continued profitability, albeit at lower margins than typically customary in the auto financing segment. We continue to evaluate our alternatives, in the event this strategy is adopted by several of our competitors. We expect that additional regulation emanating from the Dodd- Frank Act will drive operating expenses higher as a result of implementing additional compliance programs. Such programs entail the need for additional personnel and the acquisition of software and systems. It is difficult at this time to measure the potential dollar affect as the company is still evaluating the recently issued rules by the Consumer Financial Protection Board. We remain committed to executing our business plan in order to achieve long-term sustainable value for our shareholders.
Ralph T. Finkenbrink |
