CACC - Earnings call transcript Q4 2019 | Credit Acceptance Corporation

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Operator

Good day, everyone and welcome to the Credit Acceptance Corporation Fourth Quarter 2019 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 Credit Acceptance’s Senior Vice President and Treasurer, Doug Busk.

Doug Busk

Thank you. to Acceptance welcome XXXX Fourth and Call. Earnings afternoon the Corporation Credit Quarter Good

our posted of as news Relations read statements recognize you As release forward contain Law. our this call, looking at that to both section the on website ir.creditacceptance.com Securities listen and meaning you within conference please Federal of Investor the

actual uncertainties materially our number many in of and uncertainties, such forward-looking and risks These control which risks risks and of statements in differ the are subject statement regarding light all include release. forward and in other results could news and uncertainties. These statements. included cause information cautionary of are from those spelled to those statements looking beyond to out forward the a Consider looking which

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

Operator

Instructions] first And from comes line Moshe [Operator Orenbuch Suisse. Credit question of from the our

open. is line now Your

Moshe Orenbuch

through nine of you down kind the know, quarter, kind it but the year, XX% years. out the And could -- it deceleration last hoping and months of also like, each talk fourth in fourth of the has pretty Thanks. October again The -- to volume over feels you know, last a Doug, cash of come the significant three have the feels Great. numbers that bit seems the of know, about you I the know up like, the you last because could, then market to just a was were quarter, you called terms kind your of for estimates you in continued. in flows little months. XX just quarter down but you I had then XX

So, a just talk what's going about I've would got up on follow Thanks. can that and you also. drive that

Doug Busk

flow With given quarter, pretty to cash it's the for million XX magnitude up the we're year million flows number. the of it's billion, cash a small respect XX.X that small to the forecast about forecast quarter, number. for a the though even We're down a still down is X pretty trying

but So -- a volume concerned grow and negative very one one to business. trying point, we're not it's data I'm With small a the respect to obviously about. too the

than it But break the a And number might The if probably at you that. given you'd XXX it the the be trend that you you the to from history, iteration was in new you line dealers during down you So perspective, than expect close pretty only I history. the what probably was might look expect just looked number, less volumes dealer to the there, somewhere if new quarter, guess quarter. didn't but the XXXX was our the maybe meet numbers again, different down what that think if in was only signups. range. to dealer the Again, history objective sequentially the year-over-year, at per

Moshe Orenbuch

the you might some Any ago taking liberalized mean, months I -- standards what kind did thoughts a dealers. of mean? about three new of that for

Doug Busk

with spend thought saw We that too sales standards have were existing would They harsh. I for feedback that causing a liberalized force fee. during field like the changed spend time quarter new standards thought us to their more the those They the more was to standards. they dealers. have to dealer gave enrolling dealers, it Yeah. enrollments. time know when discretion our if don't we is enrollment meet the we they What they

that whether saw a immediately enrollments know and So long we at We this term, relaxed those payoff we stage. in dealer change standards. or reduction don't new

Moshe Orenbuch

we is, the Gotcha. quarter would updates? really quarter up is way in first you I have the year, filing? to you we And the as of follow fourth that there or of to from be might had question gotten, doing under other XX-Q going what relevant this get either you're mean along any we CECL are have don't know, come disclosures the would My disclosures report with that CECL terms that earnings.

Brett Roberts

short estimated on financial our impact filed order. we'll which fairly provide be XX-K, will Again, in

make As the changes we in material to provided of to now we QX. any don't estimates expect that

Moshe Orenbuch

Thanks. Okay.

Operator

Jefferies. you, Thank from comes question of Hecht John our next line from the

Your now is open. line

John Hecht

guys. Thanks

the to bit Just more going a dealership activity. little

the You there's this quarter. a trendline which net little was loss, net, the cited that bit off

back a seen wondering I'm about? the channel, of color your has and Is of selling what there still on kind with of quarters if seasonal reduction. been you we potential a of and in lot fourth environment? and second is net should dealership grow certain to the we've process, thinking for opportunity are to Looking just quarters, And of share. anything your that you there respect would that be target market kind trends kind kind there so hit

Brett Roberts

loss, about? When are you you refer talking to what net

John Hecht

dealers. net Your

Brett Roberts

number the Or just dealers quarter? of quarter in versus the sequential the

John Hecht

Correct.

Brett Roberts

think I two components attrition and there new big Yeah, dealer are the signups.

the was of you -- the about. just a quarters, little that maybe you've in pretty the was dealer range at fourth number was than attrition enrollments, expect. line what off you might I I reported historically, was which of seen the talked think new The with history if we better in much attrition look what

John Hecht

is on that you've there thoughts the you, any the how much in -- what and how regard? big Do market penetrated is

Brett Roberts

- lot XX,XXX use. awful dealers you of database you what know, depending there, on a XX,XXX dealers There's out

are, GM, is that dealer in know, dealer to Generally there dealers turnover there's kids, our as you turnover base. sold, down in et like handed bought, base, Just cetera. new

say the total what So it's tough market addressable really to is.

we think of trend a encouraging. mean but room, the recent very line I lot obviously So there's isn't

John Hecht

obviously any spread Okay. know, over Thank the market and and it's the course cycle. competitive And can is maybe you duration I'm increase spread you. see deeper in market give do the an what But in in certainly tied anything. changing part And change? or wondering, us you been color -- a you eight is would change trends, spread? last at then, contraction of of the economic just would last why What the nine years, to the question and looking or to

Brett Roberts

that quarter. That a about market, prior in We've don't quarters. that. It's competitive no also in very the prior by case to question spread. referred in We've said quarters be price that we continued this

information you of originating. even the the there on or last pretty there's I at the economics think if some look that we're good in the XX-K XX-Q, loans

you that and spread many for see table, just our to refer So had in some the it. years, we've probably to I would like there lenders

information continued we're just to that to is think the write the the we've writing. really more K. From like a more in the the of I But we're So relevant Q We little it. perspective of pretty bit business happy and include it. economics with

John Hecht

very great. Okay, much. Thanks

Operator

Stephens, Thank is you, open. our next question Caintic comes from your the line Vincent line now from of

Vincent Caintic

Good afternoon. thank Hey, you.

a kind topic. of follow similar the up same, for Just

that's inflection Are just at looking XXXX, of to expect volume you volume it to this is month or as thing is late maybe seen So an you're cyclical the a downward, a event just something unit you've is --so of else maybe the a more do you. it? is stage and changes is maybe or the upside -- when and or cyclical trend there, there same? dollar that it secular it competition Thank this about thinking or thing the trajectory a

Brett Roberts

competitive that since been the XXXX-XXXX. time, long very-very environment has competitive recently. intense really, period in It late We’ve a appears for gotten more a

the what XXXX, to terms to environment In anyone going we better of than don't the forecast any competitive have be else. is ability

So we I your to answer can't on, an on really with provide what you see. question

Vincent Caintic

you've in used have cycles, maybe but know sales slowing, the past I to in compared prices car car takeaways it. declining. could Got maybe environment you competitive point any in where, are seen that are if if I what Okay. -- historical guess, an What to? you don't intense

Brett Roberts

some a take to you through, haven't Typically, the time a supply But out. know, the cycles, been capital. but cycles interruption of when there's market play the long few through we in been we've turns

So what market interrupted of supply case been to we that's tremendous the a capital the dynamics. don't number that's gets the points but data historically look and changes at have where

So, time. the that's if this see same thing we'll

Vincent Caintic

you. Got Okay.

applications, kind of you're mix is both? the else So is it's this is or, the that I that's case, but are that are it declining is of eroded? applications whoever of economics the a Or seeing economics guess, the guess applications I the or the the, if not in, being the winning deal, or coming just to applications compared a funnel

Brett Roberts

to grow the than I with out per the business we said just bit unit little like happy how figure been. ago, minute we're think we're of we profit the economics to have of a equation. We as part better the pretty

Vincent Caintic

so Thanks for much help. Okay, the it. got

Operator

Thank you.

question next line Fraser. comes the Our Jarislowsky from Arjun from of Tuteja

open. now is line Your

Arjun Tuteja

I on Hey, question have Brett, to top a pretty Credit so featured regularly. for Acceptance is work work hundred as companies high-level culture,

had So are about, get going there? financial dealing your a take of can likely you lot in back to a talk and steps curious history, with little the to you I'm bit stress. because consumers employees

positive a such in how So circumstances? you I'm do environment work curious, create

Brett Roberts

us took it many, a It on We question. years good a to many time. focus That's ago. long started

We tables put with can team the the answer as town know, for ask that leaders to well. I it and we member, a lot see. it in do lots writing We post surveys, of you every everyone a so think, do do do of online, we every meetings I'll time I communicating, we with do team sit business. a quarter hall of emphasis lot quarter. process. I they where question quarterly on spent Other me members meet every and -- communication I discuss that round

big a I think hiring it. is of part

bring You big values got the know, we've of with you core that and people those into are your to organization, our the things. some consistent articulated right

a have to period got thing, It's journey long it's not over You of but one a been people. time. the right

the to direction I in that you're Place and just embrace and talks would encourage that you, they that tell I things framework the think the do pride, all to to looking you're, a so uses framework trust, pretty Work is do. to if that one camaraderie that Great about if good move you Organization

Arjun Tuteja

that when they are what listened you are communication, more saying valued feel there? say Is you to? when to trying you're And employees about that's talk

Brett Roberts

maybe listening, a think get No this to amount team members addition is question. of channels. in I we from a variety tremendous And but of from obvious, feedback Yeah.

respond is, I think the to important that we feedback. thing

we need So, our out them, ask we then them information, know, we what state we or and we we what report you is, tell action take more done. we've position

like makes think feel listened they're I empowered. makes employees feel and they're like So employees to that

Arjun Tuteja

Okay.

sales I Okay. team. on have one more your

steady a three you state productivity sales ramped lot up quite the of some they what there? for have would over So people all a improvement you hired some last productivity call do to see or years, still you so

Brett Roberts

Yeah, in it's a work process.

I think pretty we at up this it quickly. ramped point, how

makes gotten where think we'd I the still to which bit my whether productivity see in track. get But to has it be. to more market we I’ve little work tougher this to it a you're to said some opinion like do on have difficult,

Arjun Tuteja

you. thank Okay,

Operator

you, from Weinger of next is line your Value, the Thank line question X Benjamin our now comes open. from Sigma

Benjamin Weinger

thanks. Hi,

no more value You there's to of assets. of but so be, loans, said grossing on up the business last CECL, there'll because the economics call be the you're the that of there's to going change your

level So you'll the same generating sheet balance bigger flows. cash have a of

return your Is decline. not that correct? will on assets So,

Doug Busk

No.

runs be unchanged for will will existing net until unchanged. off. Your the And be asset book, net portfolio asset that your

the change loans, the for you lower. new economics by be assets For actually point accounting the your don't it business of is larger The differently. will

Benjamin Weinger

What that is your I'm assets balance There’s on more now. is balance sheet your sheet… larger saying

Doug Busk

drive points. is, doesn't about. accounting wrong on A wrong both you’re second you're, which economics, thing you're that so

Benjamin Weinger

So CECL? you're a not because going sheet larger balance to have of

Doug Busk

Correct.

Benjamin Weinger

Okay. decrease adoption. be value in that just book CECL And confirm upon there'll also your no

Doug Busk

Correct.

Benjamin Weinger

Okay. Thank you.

Operator

comes from BTIG, line Giuliano the now Bologna from open. [Operator of question is Instructions] line Our next your

Giuliano Bologna

the of business, enrollment pace Good afternoon. of the have real since the little seen dealer of signups high fee dealer then? signups jumping taken a kind change since you into in I level a you've out guess or any from but more question,

Brett Roberts

sort the for of think answer question. that the I quarter numbers

quarter New dealer second before, mentioned were active We signups were, in lower dealers thousand new than as XXX a a the over the this quarter. line. had XXX I trend quarter,

the So and thought that in there you line, went fall what at I that off I a were. if trend was through for QX reasons look

Giuliano Bologna

to it's vintage And Then like the loan like Is dealer or that, the a vintage the the it recoveries since XX anything that about purchase those specific time 'XX question, of of came flows, looks 'XX of is say. is anything it a bips. slightly seems negative revisions on bips revision, is cash first the quarter were portfolio down there first XX at the looks and there it driving call different collections, driving couple then I came it like forecast down a numbers? with loan an specific should repossessions 'XX

Doug Busk

as again mentioned the Brett X context flows billion earlier, wasn't change. the the for and are to factor majority trying the we're forecast revisions, one of in very of The accounted small net in there that cash any

Giuliano Bologna

rate? base Is your to continue base. to in The other sounds the there anything to is base expect taper a as at the at obviously only would thing That should the drive the increasing off expense expense down? higher originations expense have same of at that the you come Or we you up terms sales look had expenses, look ramp good. your force side a when on

Doug Busk

just I of dependent to mean, it's from that immediate business and of aren't level we on investments growth that of dependent is on I business the just we need directly the make it part in think, with growth. the correlated think the part

earlier, the continue have business to So, the historically like be been growth expect tough tough I to, predict that I and future. investments in rate to would the the they'd and in lumpy said

Giuliano Bologna

for Got it. taking questions. and thanks Thank you my

Operator

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

Doug Busk

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

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

Operator

participation. Once again your conference. We conclude today's you for thank does

Credit Acceptance (CACC) 30 Jan 202019 Q4 Earnings call transcript