CACC - Earnings call transcript Q3 2017 | Credit Acceptance Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Credit Acceptance Corporation Third Quarter 2017 Earnings Call. Today's call is being recorded. A webcast and transcript of today's earnings call will be made available on Credit Acceptance's website. At this time, I would like to turn the call over to the Credit Acceptance' Senior Vice President and Treasurer, Doug Busk.

Doug Busk

Thank you. to Acceptance welcome XXXX third and call. earnings afternoon the Corporation's Credit quarter Good

actual our posted our federal a include as and news control news forward-looking Relations differ and read and in of within results which in cause subject recognize you These uncertainties to As in release to forward-looking release. contain These our this from could and call many the statements are statements at risks forward-looking uncertainties, those forward-looking uncertainties. light that to are statements. such the both beyond all information, section meaning included on regarding risks materially website those creditacceptance.com law. listen number which of and other out of of you Consider cautionary the conference please risks securities of statement spelled Investor the statements and

comply Officer; the our G, mention At Regulation Booth, with Chief this GAAP that SEC's I measures. which Release, will time, measures News results your Additionally, financial how take reconcile provides tables to Financial Roberts, Officer; Chief to Ken should I Executive non-GAAP the our our showing to and section Brett questions. refer please of

Operator

question Rowan [Operator comes from Instructions] from Our first John Janney.

Your line open. is now

John Rowan

discernible to like a bit you'd weaker little any from the quarter the is which anything hurricanes out? the else there impact Was quarter on versus in number whether it volume be call or last

Brett Roberts

overall really, in areas not those to really No don't numbers. impact the do we business enough

John Rowan

about portfolio? Texas anything X% see what of in didn't You like that's your because

Brett Roberts

but the numbers. may affected it. the enough to areas, affect at And overall There It's big be impact, a small not looked again small. we

John Rowan

basis XX average is at first for the like is size forecasted rate I average quarter the true where size of comfortable eclipse looking the only you mark it assume for the collection year. in about loan collection points first loan. the of it any your is or surpassed time holds a duration now loan up the just the reservation given up guys at half ever. $XX,XXX looks third you little which the forecasted mean XX,XXX of would down metrics kind bad, some for ramp I And was there duration versus that is here, the Be and

Brett Roberts

is what I be asking accurate. is, think you're we going forecast do our think really to

billion which at if flows the I $X X.X recently million in or either net undiscounted best the about record quarter the zero disclosed sense is you look to attempting is cash long-term that the clearest our performance to size changed think way in we're X.X to that and historical change, more assess forecast want get positive loan release is to roughly and of which view our estimate the the is just to look for a basically the at flows cash number track is flow our cash by given in million. for

it, stable tells look longer-term track we're overall record, opposite, some but pretty a and track see you that forecasts of our bit at the there. the you'd are bits is you So, good sometimes little optimistic, currently record if our

Ken Booth

shorter just size in difference time. term is mix. loan The long the term, a primarily been We've term for a the in change loans writing and longer

specifically more function that mix. just is the in metrics of change we in really in quarter the the a third see So, 'XX are

John Rowan

unit you year-to-date, are is up contributing sales volume. - do just new your all XX% sales me if lastly, go. whether are then yet said are I'm force, still if continue hires last And or I any as correct to comp in force hiring units as these update you to obviously you you an not quarter losing us and negative where give wrong, far actually that now think the you continue and year-to-date you're Can

Ken Booth

we're in year's third QX last over about up - XX% up terms quarter of of we're Through QX sales the people. number

talked for to it force, necessarily this sales to the as play a any year. have us about time, don't we longer-term it's increase So, we impact expect last

go our then the got we force the the expansion. back our where back to three you before it productivity increased after about approximately was started force when size time the last If we and of roughly at double look sales years us took that years sales history, to two and

size expect will but play at its a looking five-year We're - process term. out you're not are and this start kind trying finish. we more of we longer that to it from time, So, significantly increasing double that to something

John Rowan

what you By of I'm where force just to trying But contributing. force would you sales quite to of you longer term idea that next productivity, sales start for and I that trying take do size long to is productivity sales we the how - the an to your doesn't three just see a got because start after year, to get from for to mean mentioned get someone bringing curve improved two mean, double to assume running years force and you in I'm the were. it that that perspective I you back up understand

Ken Booth

just were use have guide, two. kind year finish. just prior disclosed, we numbers a to year it all from a look can those at of where been would the five-year start saying process I'm one, was I you as expansion

wouldn't from you point, that a force have sales to this big expansion. expect impact at So,

Operator

next our Credit Suisse. Moshe And you. from Thank Orenbuch comes from question

Your now line open. is

Moshe Orenbuch

expectation, that of the 'XX rates talk 'XX about at I guess fact were loans and consistent your start the release the in period. as I'm in Q, with size looking collection for the the and the you the

a little then initially this in Although been them of been 'XX 'XX that written and bit and up down would has that that up 'XX to then I right, than fairly I kind them wrote written doing then and guess started quarter the 'XX originally decline was they outcome in you're down. mean writing where year, is you're consistently. current something guess even there different up down and I make wrote you has different 'XX in

Brett Roberts

is best again the billion quarter we're flows. change think And million. that cash our answer to forecast was total the during in $X.X I estimate $X in our trying to

So think way release - our a collection the the stable from that takeaway forecast reasonable - I quarter. very is the for were

Moshe Orenbuch

CECL I - guess you've one of which and how I've how done investors impact that I how a can't guidance answer of your recording questions mention you've one it Could the of guess two is give interpret a on would gotten that or unfortunately to have the from that mean, us work? you? some to impact. I'm got I standard would not impact you material really you sure guys that as would reserves. any I have had

Ken Booth

making talked Having effective with we've on we're we've said calls our that it's until about is our progress, on extensive As and we're assessment The that. prior complicated working XXXX. begun auditors and not in good guidance it's it.

we we'll but our new impact will when this talk quantifying we point it, about finished haven't do the the financial So, more, on at statements. know guidance have

Moshe Orenbuch

cash that understand I differ you how now you terms which it of would it standard? be, know, sense any it work forecasting like under you're in flows. how doing the I of would believe what would How But

Ken Booth

until the flows all flows not account really what loans. to the comment out. terms got cash sorted mean we've prefer how I the cash I'd are in are that for of we

Operator

question our And comes you. of Kyle Thank from Joseph next Jefferies.

is Your now line open.

Kyle Joseph

market We've recognizing have of we hearing loan your guys these see eventually pulling more back the a on digging more take of bit the just market. but little your thoughts see a from I'm wanted been market. kind Some auto how long impact get been big trends. guys volume competitive the maybe bit asked, down little about of does in to it before insulated, but environment, finance banks lot your big for into to a it pulling you in the back

Brett Roberts

think there immediately. a see pullback I If was we'd

is hasn't sense competitive changed that Our that much. the environment

You are that some back, some have players doing have opposite. who pulling the are you

active play at think there some last per evidence competitive there's I for in down year that. factors environment But don't lot dealer versus quarter that was least the volume a numbers easier. that any into got the and our were other Our

Kyle Joseph

bottom appeared sign of that I kind just that a of some that was if your I XXXX. was kind was tweaks Well that wondering at is actually of spreads or looking in out on to underwriting. your

Brett Roberts

going our Yeah, a things few like factor on, obviously I ago. mean the forecasting initial is other to one big I year made there said, is changes we a the

on business see year we variances you So our 'XX we for initial and address business. in forecast the that late last 'XX the to go-forward negative QX lowered

had year impact economics on So volume. they better the than balance of a bit a little the are think And ago. loans an loan were that's I on

a have you well. So that's know, in fairly change per as to, you dealer. volume a But significant positive that's going

I of say your But competitive think it that think difficult to it's easier. gets take you lot when consideration; it I got almost question all to see easier if we'd the immediately. a into answer environment

Kyle Joseph

can the that, capital So, here context in you buybacks? strategy of terms update versus new originations your in allocation us of from on share

Ken Booth

think about to same the way continue always have. it We continue to we

we the priority capital the the with it's that is for the buy that to think than and stock do we and is answer business. The - question we that back first to we're a value make to that that. that is then can is, price And do have we the we need intrinsic sure fund we happy less

historically, has bought pretty lot stock of we over been So, lumpy. repurchases back of time, pattern but a those the

Operator

question Thank comes from JMP you. of Scharf our Securities. And next David

David Scharf

recession, asked, the XX% bigger sales mind I goal out of in wondering, top for in of a Most but dealer coming for question, headcount this big guess been increase company. longer last had, Brett, expansion how have a you be to count a big you maybe the is was want you on there terms the footprint term that's have with I in of picture and

Brett Roberts

and a do. mean, correlation what we're expanding we're strong add so and trying as fast come We by able as to the many between by dealers, we're so we're goal. profit sales how can. - we Not people to trying grow many There's our on that's adding dealers economic trying a to that. in stated to typically just has expansion historically that have we capitalize do field how I

David Scharf

of, ones as because ramp view XX,XXX or term regionally a to for XX,XXX performance however, XX,XXX get of you the was an do mean, XX, Okay. whether sense you big sales a really sense in count, down get a top many or that in franchise ultimate more which XX,XXX, view target, a the and wise terms now or you terms of in to and a long of context for CACC look I an footprint when sort independents, we interest force what's dealerships XX,XXX in at have dealer either left a obviously have of just XXX dealer trying don't trying obviously. in it's I

Brett Roberts

stated of and understand we question. Yeah. trying reluctant we're mean a as force to getting big mean, capable I how big I adding sales give sort goal obviously we're us going to do as term of helps to long get. the the that. we're get we're think as to I you

David Scharf

And franchise kind in from loans business figure more of loans, continues? is I be terms shift with towards been you or out purchase purchase more - of the doing are to mix mix, as might and which you trying representation has among it trending dealers have equal independents or that origination do who all am the

Brett Roberts

largest accounts, of We our program. loans independents write XXX share of the closed largest of those which purchase what The call, national if franchise are groups portfolio country. kind pool a allow Yeah. dealers, we to on they've dealer are loans in

to from national working them it independents view and experience if access an write to have traditional allowed accounts. and So, we've beginning. is independent, the them limited are allow independents allowed quasi-franchised to franchise from some kind well, most write the a loans in the purchase that independents but Those the program number dealers, then with as we of them positive, as of that's other are once we to purchase there's larger we'll of loans that dealers distinguish

David Scharf

as a about that, the at peak still missed on months, Obviously, have noticeable percentage change versus things of any health. within early of just patterns couple lastly, payment in credit you look then we're consumer on indicators any ago. payments side, But in And observations any such curious you the quarter of at terms like employment. first arguably

Brett Roberts

know, we see and we can forecast. in or capture is Anything collection our

a of little see the sort moves consumer overall being as number we're the through Typically, that and the point just I'd payment loan our So, metric bit includes collection process. what - at and and we their patterns what the countercyclical origination as see that we there.

if little up. If numbers at to choppy, our tend economy collection a our look the historical go you numbers, gets bit

You'd say, side. competition our we usually it's - the because how and be. Well, eases, can well, originations get that on

we that mix. segment when So, a gives the other different competitive this lenders aren't that probably is environment willing we very easier, typically bit is very, which in and be the it's can of toughest we'll us little one population that face, then a to get things get do that

Operator

Instructions] James. Leslie from [Operator Vandegrift Raymond Our question next from comes

Leslie Vandegrift

my have of questions going. have answered, give Do before those months, on are yet guess you know losses. accounting method want we'll changes what when Most months, idea where of to an that's you you I been know for on guys kind have CECL to, it a the exactly timeline expected but going year a to changes are X X of guidance was ASC didn't the I

Doug Busk

sometime 'XX. Probably in

Leslie Vandegrift

obviously account, rather a going taken to accounting more just do for major standard that this doing some the change already believe into is losses into incurred, have of that And before. Okay. you been be moving your than you being expected is considered or

Doug Busk

impossible I the a are impact our it's - have said but precisely, what presented, material say. our to way on think in financials it's going that XX-Q that we our on means to

Operator

And question our Micenko from you. SIG. from comes Thank Jack next

Jack Micenko

better what the or is think. to Just I would a guess I prior loans one were bit have to. maybe the this and a well, The been that it in as like up. it little certainly quarter than you that the you purchase expected just driving on has look been back, think positive more know attributing story that as quick better on you curious conservative quarter performance follow I as the you're would, - and seem you two trending seems view what's development,

Ken Booth

been that just Yeah. very number. the able look small to thing flow haven't I have you to I cash is, guess a convey net at It's number.

there's the changes since any a the So, stable forecast I ago. than think other to collection the don't numbers made very view other has been year way we

whole this So, to to taking conversation of a bit. dealer is not at explain. this movement little The further decreased parse is are little to bit, to have. a The lot a flow, that $X I stable small loans number Purchase trying not productive even numbers but it on billion cash point. think and loans increased try a of

Operator

queue Thank Randy comes you. Goodnow And Heck our last from question in from Investment.

Randy Heck

to think, back pricing rates. that, was that go your to earlier I wanted reduced noted you you where Brett, just it of comment that changes the took advance I 'XX place, September

quarter So, this dollar flat, percent. volume loan reported, half staying a just your basically is

that year, profitable because written, how the that far more collection, you Can production, quarter, with versus the quantify quarter year the has the can prior the we so year. said September year-over-year, think said you so of the are that this adjustments of earnings XX% quarter. collection but you've to I 'XX and last isolate you just the of better much something if years this written You this obviously, you've that couple the also 'XX did Is business third Thanks. quarter mean is September something up performance business. versus quantifiable? do I

Brett Roberts

Yeah. All numbers are Q. in those the

it's of between down, the the Q. accretable say I all and know total So, per in what want written up the don't I we there's generated. expected the same shows it accretable year to the the that cash call QX last a number year X%. contract. advance, in real terms average have in as versus we good yield we Q disclosure it's that X yield I flows, were somewhere the but

and expected to numbers, future revenue Obviously, growth So, the we look going those have you want anytime cautious change any we exactly. again you will numbers at modest forecast in we are, to of assuming that be those initial terms forward. that those hit the had variances our extent of

Operator

back to With no I'd turn like closing the over you. Busk conference queue, Mr. Thank or for remarks. to any questions the in additional further

Doug Busk

call support thank us joining to for on for like everyone their today. our We'd and conference

Relations If ir@creditacceptance.com. to look talking follow-up at please again you next you. to you additional quarter. forward questions, Investor We have our Thank them mailbox direct any to

Operator

gentlemen, this conclude conference. and thank We participation. your you does Ladies your for

Credit Acceptance (CACC) 30 Oct 172017 Q3 Earnings call transcript