Here's my pick for tomorrow! WESTAR ticker west $2.00 per share
Monday March 1, 7:58 pm Eastern Time
Company Press Release
SOURCE: Westar Financial Services Incorporated
Westar Financial Achieves Profitability in Fiscal 3Q99
Net Income Equals $210,412 or $.09 Per Common Share
OLYMPIA, Wash., March 1 /PRNewswire/ -- Westar Financial Services Incorporated (OTC Bulletin Board: WEST - news), a prime-credit auto lessor, today reported a third quarter profit of $210,412, or $.09 per common share, its first reported profit since shifting its business model to the prime-credit auto leasing sector. Boosted by accelerating lease originations, operating revenues in the third quarter totaled $1.2 million and pretax income was $246,209.
''Consistent with our 5-Year Expansion Plan adopted in 1995, we have built a solid network of dealers and have steadily increased volumes, margins, market penetration and credit quality,'' said Robert W. Christensen, Jr., Chairman & CEO. ''Westar has signed almost 50% of the franchised new car dealers in the Pacific Northwest and has captured nearly a 5% market share of lease originations in this area, up from its 0.3% share in January 1998. In December 1998, we began operating in the Southwest region and have signed more than 15% of the dealers in Arizona and captured more than a 1% market share in our first 45 days of operations in this new market, which is already contributing to net margins.''
In its fiscal 1999 third quarter, ended December 31, 1998, Westar originated $16.2 million of prime credit auto leases, a ten-fold increase over originations of $1.7 million in the third quarter a year ago. Year-to-date, Westar has originated $35.4 million in prime-credit auto leases, a 361% increase over the $9.8 million in originations in the like period of fiscal 1998. ''The years of foundation building are beginning to pay off, and we believe we have reached critical volumes to sustain profitability going forward. Lease volumes have increased dramatically and we are closing securitizations on an accelerating basis,'' Christensen said.
In the third quarter, Westar completed its fifth and sixth sales of securitizations of automobile lease-backed securities. These transactions boosted total quarterly revenues to $26.2 million, bringing total revenues for fiscal 1999 first nine months to $55.7 million, compared to fiscal 1998 revenues of $518,000 for the third quarter and $1.4 million for the first nine months when no securitizations had been sold. ''New leases funded provide the basis of future profits and during the past six months, lease volumes have grown approximately 45% quarter to quarter,'' Christensen noted.
Westar reported net income of $246,209 and net income applicable to basic common shares of $210,412, or $.09 per share in the third quarter. These results compare to a net loss of $453,224 or a net loss applicable to common shares of $551,088 or $.31 per share in the third quarter a year ago. For the first nine months of fiscal 1999, Westar reported a net loss of $985,908 and net loss applicable to common shares of $1.1 million or $.50 per common share compared to a net loss of $1.4 million and net loss applicable to common shares of $1.7 million or $.93 per common share in the first nine months of fiscal 1998. The net income (loss) applicable to common shares reflects preferred stock dividend payments.
''As the volume of leases Westar services has increased, lease revenues, and administrative and service fee income also have increased,'' Christensen added. In early January, Westar reported it originated new leases totaling $16.2 million during the third quarter of fiscal 1999, compared to the $1.7 million of new leases funded in the like quarter a year ago. This represents a 44.6% increase over the $11.2 million in new leases funded during the preceding quarter, ended September 30, 1998.
''Operating margins have improved as a result of our new leasing products, improved dealer penetration and focus on prime-credit quality, in spite of the general instability and cost pressures in the capital markets during the last half of the year,'' Christensen added.
Reflecting the dramatic increase in revenue, direct costs also increased sharply for both the quarter and nine months. For the third quarter of fiscal 1999, direct costs related to sales and securitizations were $25.0 million compared to just $175,000 in the year ago quarter when no securitizations were sold. For the nine-month period, direct costs climbed to $52.4 million compared to $446,000 in the first nine months of fiscal 1998.
''The face value of leases Westar services rose to $68.0 million at December 31, 1998 from $35.3 million one year ago. This increase is the most accurate measure of Westar's growth,'' he added. ''Credit performance remains excellent, with fiscal 1998 annualized lifetime static pool losses on our securitizations ranging from 93 basis points (0.93%) to 39 basis points (0.39%) and total portfolio losses of 19 basis points (0.19%).'' Westar is among the first auto financing companies to publicly provide static pool data. Westar reports its static pool performance in order to report credit losses and repossession experience on a consistent and comparable basis.
''Over the past several months, we have been engaged in discussions with our outside accountants on our financial presentation and have now come to resolution. Despite some reservations, we have agreed to adopt the recommendation of our outside auditors regarding the recording of a valuation allowance for our deferred federal income tax asset,'' Christensen said. ''Because we had not demonstrated a history of profitability at March 31, 1998, the accountants took the conservative position that Westar should book the allowance. As a result, the balance sheet at March 31, 1998 reflects a valuation allowance of $2.9 million or 100% of the deferred federal income tax asset and a corresponding reduction in shareholder equity. This allowance will be available to shelter reported income from taxes for up to twelve years and was, in fact, utilized in the most recent quarter.''
Westar Financial Services Incorporated is a fast-growing, innovative, Washington-based automobile finance company. It has focused solely on the prime-credit segment of the $110-billion auto-lease finance market and has completed six securitizations of auto lease receivable certificates for the prime credit market. WEST is the only publicly-traded automobile lease finance company focused solely on this huge market. Westar's shares are traded over-the-counter by Hoefer & Arnett, San Francisco; Hill Thompson, Jersey City; and Monroe Securities, Rochester, NY.
Statement regarding ''Forward Looking Statements'': Statements concerning future performance, developments or events, including securitizations, new product developments, various statements concerning expectations for growth or profits, discussion of accounting treatments, market forecasts for the Company's products and for its industry, and any other guidance on future periods, constitute forward-looking statements which are subject to a number of risks and uncertainties including adequacy of working capital, which might cause actual results to differ materially from stated |
