Nicholas Financial : Reports 1st Quarter Fiscal Year 2024 Results

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) August 16, 2023

NICHOLAS FINANCIAL, INC.

(Exact name of registrant as specified in its Charter)

British Columbia, Canada	0-26680	59-2506879
(State or Other Jurisdiction of	(Commission	(I.R.S. Employer
Incorporation or Organization)	File Number)	Identification No.)
26133 US HWY 19 North Suite #300
Clearwater, Florida		33763
(Address of Principal Executive Offices)		(Zip Code)

[phone]

(Registrant's telephone number, Including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
  Securities registered pursuant to Section 12(b) of the Act:

		Trading
Title of each class		Symbol(s)		Name of each exchange on which registered
Common Stock		NICK		NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On August 16, 2023 Nicholas Financial, Inc. (the "Company") issued a press release announcing the Company's financial results for its quarter ended June 30, 2023. A copy of this press release is attached hereto as Exhibit 99.1.

The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) is furnished pursuant to this Item 2.02 and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.

Item 9.01 Financial Statements and Exhibits

Exhibit # Description

99.1Press release dated August 16, 2023

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

	NICHOLAS FINANCIAL, INC.
		(Registrant)
Date: August 16, 2023		/s/ Irina Nashtatik
		Irina Nashtatik
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 99.1

FOR IMMEDIATE RELEASE

NICHOLAS	Contact: Irina Nashtatik	NASDAQ: NICK
Nicholas Financial, Inc.	CFO	Web site: www.nicholasfinancial.com
Corporate Headquarters	Ph # (727)-726-0763
26133 US HWY 19 North
Suite 300
Clearwater, FL 33763	Nicholas Financial Reports
	1st Quarter Fiscal Year 2024 Results

• We substantially completed our restructuring plan and returned to profitability, recognizing $1.7 million in pre-tax income for the three months ended June 30, 2023
• Our pre-tax yield increased to 5.6% for the three months ended June 30,2023, and improvement of 9.2% year over year
• Our operating expenses decreased 55.3% for the first fiscal quarter, compared to the same period year over year

August 16, 2023 - Clearwater, Florida - Nicholas Financial, Inc. (NASDAQ: NICK) (the "Company") announced a net income for the three months ended June 30, 2023 of $1.6 million compared to net loss of $1.8 million for the three months ended June 30, 2022. Basic and diluted net earnings per share was $0.21 for the three months ended June 30, 2023 as compared to basic and diluted net loss per share of $0.24 for the three months ended June 30, 2022. Interest and fee income on finance receivables decreased 41.3% to $7.1 million for the three months ended June 30, 2023 as compared to $12.1 million for the three months ended June 30, 2022. The Company reported income before income taxes for the three months ended June 30, 2023 of $1.7 million compared to a loss before income taxes of $2.4 million for the three months ended June 30, 2022. The Company recorded income tax expense of approximately $0.1 million during the three months ended June 30, 2023 as compared to an income tax benefit of $0.6 million during the three months ended June 30, 2022.

We adopted ASU 2016-13 on April 1, 2023 and recognized a decrease to our opening retained earnings balance of approximately $0.2 million, which reflects an increase to the allowance for credit losses of approximately $0.2 million.

ASU 2016-13 introduces a new accounting model to measure credit losses for financial assets. In contrast to the previous incurred loss model, ASU 2016-13 requires credit losses for financial assets measured at amortized cost to be based on the total current expected credit losses over the life of those financial assets. Following the adoption of ASU 2016-13, the provision for credit losses decreased 82.3% to $0.6 million for the three months ended June 30, 2023 as compared to $3.6 million for the three months ended June 30, 2022. The net charge-off percentage increased to 9.6% for the three months ended on June 30, 2023, from 6.5% for the three months ended on June 30, 2022, primarily due to increased delinquencies and loan defaults.

For the quarter ended June 30, 2023, the Company originated $2.7 million in finance receivables, collected $15.6 million in principal payments, decreased debt by $13.9 million and increased cash by $0.2 million.

"We are pleased to announce income of $1.6 million for the three months ended June 30, 2023. Over the past twelve months the Company has significantly changed its operating strategy. The focus has been to reduce operating expenses and free up capital permitting the Company to allocate excess capital to increase shareholder returns. The Company continued to originate $2.7 million of indirect finance receivables while building our relationship with our servicing agent, Westlake Portfolio Management, during the first quarter of fiscal year 2024," commented Mike Rost, CEO of Nicholas Financial.

"Turning the Company in the right direction is an ongoing process. I feel we have made progress in the first fiscal quarter. Our ultimate goals are still the same, free up capital and permit the Company to allocate that excess capital to increase shareholder equity, while continuing to reduce operating expenses throughout the Company," concluded Rost.

Key Performance Indicators on Contracts Purchased

(Purchases in thousands)

		Number of								Average
Fiscal Year		Contracts		Principal Amount		Amount		Average					Average		Average
/Quarter	Purchased			Purchased#		Financed*^		APR*					Discount%*		Term*
2024			219		$			2,720		$	12,420			22.0			%				6.0		%		50
1			219					2,720			12,420			22.0		%				6.0 %	50
2023			4,040	$			47,526		$	11,932			22.5		%				6.5 %	48
4			127					1,579			12,433			22.2		%				6.2 %	49
3			383					4,511			11,778			22.4		%				6.8 %	48
2			1,595					19,082			11,964			22.7		%				6.4 %	48
1			1,935					22,354			11,552			22.9		%				6.6 %	48
2022			7,793	$			85,804		$	11,002			23.1		%				6.9 %	47
4			2,404					27,139			11,289			22.9		%				6.9 %	47
3			1,735					19,480			11,228			23.1		%				6.8 %	47
2			1,707					18,880			11,061			23.0		%				6.7 %	47
1			1,947					20,305			10,429			23.2		%				7.0 %	46
2021			7,307	$			74,025		$	10,135			23.4		%				7.5 %	46
							Key Performance Indicators on Direct Loans Originated
									(Originations in thousands)
				Number of			Principal
Fiscal Year			Loans			Amount			Average Amount					Average							Average
/Quarter			Originated			Originated			Financed*^					APR*								Term*
2024		$	-		$			-		$	-								0.0		%				-
		1			-					-			-								0.0	%				-
2023			3,662	$	15,822	$	4,277								30.4	%				26
		4			-					-			-								0.0	%				-
		3			245			1,080			4,128								29.6	%				27
		2			1,427			6,527			4,574								30.3	%				25
		1			1,990			8,215			4,128								31.2	%				25
2022			6,770	$	28,740	$	4,307								30.5	%				26
		4			1,584			7,458			4,708								30	%				27
		3			2,282			8,505			3,727								31.8	%				24
		2			1,588			7,040			4,433								30	%				26
		1			1,316			5,737			4,359								30.1	%				25
2021			3,497	$	14,148	$	4,131								29.6	%				25
					*Each average included in the tables is calculated as a simple average.
						^Average amount financed is calculated as a single loan amount.
					#Bulk portfolio purchase excluded for period-over-period comparability

Nicholas Financial, Inc. (NASDAQ: NICK) is a specialized consumer finance company, operating branch locations in both Southeastern and Midwestern U.S. States. Nicholas Financial engages primarily in acquiring and servicing automobile finance installment contracts ("Contracts") for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial sells consumer-finance related products and originated direct consumer loans ("Direct Loans") prior to December 2022 . For an index of Nicholas Financial, Inc's new releases or to obtain a specific release, please visit our website at www.nicholasfinancial.com.

Cautionary Note regarding Forward-Looking Statements

This press release may contain various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company's current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as "anticipate," "estimate," intend," "plan," "expect," "project," "believe," "may," "will," "should," "would," "could," "probable" and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company's actual results and financial condition 28may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: the ongoing impact of the COVID-19 pandemic and the mitigation efforts by governments and related effects on our financial condition, business operations and liquidity, our customers, our employees, and the overall economy; recently enacted, proposed or future legislation and the manner in which it is implemented; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators, including, but not limited to, the Securities and Exchange Commission (SEC), Department of Justice, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans;