year marked our 27th year in business and our 25th year as a
publicly traded company. Virtually every aspect of our business
was working smoothly and we are extremely proud of the performance
that our employees delivered during the past fiscal year. Today,
Nicholas Financial has grown to 63 branch offices in 15 states. As of
March 31, 2012 we had $388,988,000
in gross receivables outstanding. In each successive quarter
Peter L. Vosotas
the year, we reported
CEO & President
increased revenues and increased
profits when compared to comparable quarters in the previous year. Year
over year our common stock share price rose slightly from $12.20
to $13.19. By virtually every measure we had an excellent year.
We reported this very same thing last year and we hope to repeat these same
results next year. We are disappointed that our stock price has
not matched the financial performance of our company.
achieved outstanding financial results by recording its 21st
consecutive year of record revenues. Net income for the fiscal
year ended March 31, 2012 increased 32% to $22,230,000 as compared
to $16,805,000 for the year ended March 31, 2011. Earnings per
share increased 31% to $1.85 as compared to $1.41. Revenue
increased 9% to $68,167,000. Shareholder’s equity grew 18% to
$135,939,000 from $115,213,000.
In August of 2011 our board
of directors approved the issuance of a cash dividend equal to
$.10 cents per share. The company issued a dividend each quarter
since then and expects to continue to do so, provided that the
Company meets or exceeds financial measurements imposed by its
consortium of lenders. Our board will review and determine how
much return they believe the company can pay-out to its
shareholders without impeding our growth objectives. We are
pleased to report that we returned over $3 million in the form
of cash dividends to our shareholders. Additionally we paid down
our credit line by $6 million dollars.
In the past year we added four new locations to our branch
office network. We will continue to evaluate additional markets
for future branch locations, and subject to market conditions, we
may open several new branch locations during the year.
Our plan is
to open branch locations in large metro areas in states that we
believe are favorable to our specialty vehicle and consumer finance
business. We remain convinced that providing auto and light truck
financing for Americans who for any numbers of reasons, find
themselves with poor credit, will be a strong business for years to
come as long as cars and trucks remain the main form of transportation.
During the past year we have noticed a huge increase in competition.
Like most companies that face new and very aggressive competition
our sales people have been challenged by this change in the
competitive landscape. Some of our most aggressive competitors are
divisions of the very same U.S. banks that the American taxpayer
had to bail out when they ran out of money back in late 2008. Now
these banks are undercutting our tried and true lending guidelines,
which in our business vernacular means bidding more aggressively in
their underwriting. In our point of view these banks are biting the
hand that has fed them.
Another issue that we and our used car dealers
experienced during the year was the lack of used car trades. The
dealers could not get product. Americans are holding onto their cars
and trucks longer causing a shortage in used car inventories. This
in turn created higher prices for the used cars that our dealer
clients sell. The resulting consequence was that used cars and
trucks were commanding a premium price that was out of balance with
the customer’s ability to pay. Conversely, our company benefited
from the higher resale prices at the auto auctions which reduced our
net losses from repossessions considerably.
For many years I have made
the same statement regarding our accomplishments: “Our consistent
financial performance hasn’t happened by accident. It is the result
of many people working very hard over a long period of time. The
automobiles of our employees are usually the first to arrive in the
parking lot each morning and invariably the last to drive away at
night.” To the credit of our employees, this statement rings as true
today as when it was first written. We, like all companies, have a
challenge to find good, hardworking, and qualified people. When we
do, we try our best to keep those who work hard and produce results.
We reward our employees with decent benefits, including performance-based
bonuses and excellent career opportunities. Our ability to mold and
retain a veteran team is one of the primary reasons for our success.
Several of our senior managers, accounting staff and data processing
staff have been with the Company since its inception in the late 1980’s.
We are however extremely concerned with the ever increasing cost of
health insurance that has risen by 10 to 20 percent a year for several
We look forward with optimism toward the coming year. Any
company that can say, “Our potential market is over $250 billion
dollars a year and growing”, should be excited about its business
prospects. Our intention is to continue our strategy of controlled
growth by increasing our existing branch loan portfolio and building
new branch offices. We intend to continue growing our company
organically. However, we will stay alert to possible acquisition
opportunities that may come to our attention.
On a sad note, I would
like to mention the passing of one of our most dedicated investors,
Marvin Mahan. Marvin passed away last year leaving his wife Ingrid
and a large family behind. Marvin loved our business, our company
and our staff. He visited with us often over the many years since
he made his original investment in our company in 1992. Initially
his cash infusion and support of our stock help us immensely. He
was my public company mentor and a key business advisor. His main
advice to me was, “Keep doing what you do and don’t try to impress
anyone. You know your business and if you stay the course you will
do fine.” Stephen Bragin, one of our board members, said when
describing Marvin, “He was an uncommon man.” We will really miss
this special friend of Nicholas Financial.
The independent members of
our Board of Directors have always diligently embraced their fiduciary
responsibilities. They take their responsibilities to heart. We are
fortunate to have been able to attract these talented individuals.
Charlie Neal, Scott Fink and Stephen Bragin are terrific board members.
They have taken the time to know our business and to give us excellent
We are very proud of all our employees whose
dedication, talent and loyalty have made Nicholas an important force
in automobile financing. We are grateful for the support of our customers,
bankers, vendors and shareholders. We remain determined to increase the
value of our publicly traded stock. We are convinced that our shareholders
will be rewarded if we continue to build the net worth of our Company each
year as we have done for the past 22 consecutive years.
To all of you who
have invested in Nicholas, we wish to thank you for having continued faith
in our Company. On behalf of our Board of Directors and our employees, we
thank you for the confidence that you have entrusted in us.
Peter L. Vosotas
Chairman, CEO & President