CACC - Earnings call 4 2023 | Credit Acceptance Corporation

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Operator

Good day, everyone, and welcome to the Credit Acceptance Corporation Fourth Quarter 2023 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 Chief Financial Officer, Jay Martin.

Jay Martin

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

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

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

comply measures should which the measures. to refer of mention G, please results to non-GAAP the release, our news I how Regulation reconcile that to showing SEC's financial section GAAP tables with provides Additionally,

call Ken this over At turn Chief quarter to our Booth, Executive results. time, fourth our to discuss I will the Officer,

Kenneth Booth

Jay. Thanks,

GAAP quarter net million, per the $XXX of earnings of XX% XXXX. is include: is which XX% decrease of fourth adjusted a the quarter and $XX.XX, of a quarter income from which results decrease share adjusted Adjusted from the Our fourth for XXXX.

X.X%. collections, from forecasted or $XX in quarter net cash loan by decrease forecasted $XX portfolio during portfolio in of our forecasted X.X% net our from to XXXX loan by collection rates we a of decrease terms had a decreased the forecasted million In flows rates flows that million that cash decreased collection compared fourth or

forecasted a ascended due XXXX. lower that at our also of December since XX, quarter in had fourth than loans to in through XXXX XXXX forecasted collection the was We for profitability estimates XXXX, decline rates consumer

unit of slower From a to and result have standpoint, loan XXXX, average a our XXXX. fourth been. forecasted to below the it of historical levels. quarter as the now in compared is compared On of quarter timing during it decrease respectively, increased XX.X%, XX.X% ever grew asset by XX%, flow -- net portfolio largest loan fourth the and GAAP of to primarily growth basis, we respectively, a average balance cash The dollar consumer volumes X% Also, a and as payments XXXX. has

increase than XX.X% an Our of on older And compared to included interest consumer financing results debt, recently fourth rates. consumer signed the higher also primarily with assignments repayment an to average our or in spread initial in financings to completed the extended secured cost lower rates due in XX.X% which interest loan of loans secured quarter on XXXX. of increase was and

At our will Chief this I time, your Busk, and Officer; Jay questions. take Treasury Doug Martin

Operator

Cowen Orenbuch TD [Operator of from first the line comes Our Moshe of Instructions] question

Moshe Orenbuch

if just bit at stage Gentlemen, Great. environment the the competitive how you reflected and about little talk kind see of trends it this a you're could seeing. that in you

Kenneth Booth

XX dealer to high enrollments, for rate competitive for of feel that for dealers. environment. an growth year-end. increase was per are in and the productive despite the less just days the good is metric -- environment, the new overall our season the about good a intensity We very pretty the dealer increase is reflect subsequent dealers generally to quarter Volume But

Moshe Orenbuch

January Yes. in for January, numbers the the were I release see didn't the volumes?

Douglas Busk

XX.X% the for XX was Yes. first Yes. It days.

Moshe Orenbuch

to to that expense? to impact been have you of how talk a offset interest the time, interest up pick you rates up about that? did lot. there relate during QX little is could are same And way a amount to going bit financing the And to you At the a spread need that

Douglas Busk

of the interest in That a note issuance. QX. X.X% the obviously full million versus doesn't X.X% include rate in mean quarter I senior QX was $XXX

times would economic number is that for profit, expect to that's I forward. equal, the economic to our do maximize price including number wages. sales and higher long loans. be loans over of the we the things going of consider going profit occur were when of amount even G&A loan, interest, the all try life we and the marketing, And that, salaries What So anticipated expenses in and doing

So as as net lower expenses interest or need flows. the go or up, satisfied anticipated either we be return cash reduce to other with to relative

Moshe Orenbuch

the Got quarter. little note forward? about will was the another affect talk write-down a changes forecast kind that it. there did bit Can how yield we you And that of for go you adjusted as in

Douglas Busk

you in flows a would the cash that QX. QX. put some else in happens pressure a decline in all But from It's of changed, forecasted else adjusted else to bit adjusted the What mean will loan in in new equal, QX all originations yield and again, big assumptions be the yield expect performance net But QX. about XX.X% nothing equal. QX on yield if on in further I in QX. XX.X% declined old on dependent make

Moshe Orenbuch

And we Got then for one the me you. is, quarter, last XX-Q. get fourth just don't

shares. like math is back that correct? Like Is looks the XX,XXX it bought So you that right amount?

Douglas Busk

we think XXX,XXX. approximately little XXX,XXX bought back, shares a over I mean I

Operator

[Operator Our next Research. of Instructions] Robert comes of question Wildhack line the from Autonomous

Robert Wildhack

as on well. question the and and A forecast collections yield adjusted

ultimately or that then Is that the thoughts specific First, do insight collections? continued when drop you what's behind have highlight any there anything you'd bottom? could on And in there? forecasting

Douglas Busk

finance mean as the in were those a fact loans I Curt's at -- things, valuations. think I the those competitive relatively worse of loan the very including performance loan a than [ period combination originated performance that expected it's consumers initially peak vehicles for with being ] reason

to inflation difficult a business at when of point. the level book just to the after It's true It's when. it's If say has hold seen. to 'XX will pattern the performance leveled also rate, will precisely it level it slower say that out. some whether be but XXXX But still at I out. impossible consumer declined, out on look remains will I contributed. at the I loan business, mean inactive on this think absolutely point,

Robert Wildhack

Okay. shares growing to back pace? and you capacity level to the this then continue current to could And current buying continue keep your continue also both and speak leverage to -- at

Douglas Busk

Our leverage is an historical range. on the basis within adjusted

our have very to are the pretty different. GAAP anticipated originations. we're to norm. Obviously, So leverage. think towards consistently of is of apples sure today's we need XXXX with today. just our The leverage historical capital comparison within levels it's is make And we way is our about buybacks fund we loan leverage always But comfortable that where we basis, priority an on that to is the applied a first

else means less we back So means it any, what faster, equal, don't stock. doesn't that mean buy we That buy buy is less. we're we all growing but back

Operator

comes Our Vincent of next the question from Stephens. of line Caintic

Vincent Caintic

loan high balance terms as First you it's have the been increasing. loan so the in highlighted been one, average also as that

that wondering higher? Just other about them And are if adjustments you kind take there you're of with are about those if think when any comfortable you thinking you ranges, underwriting?

Douglas Busk

I mean a on term the month. a was consumer basis. up flat year-over-year balance pretty was loan Loan

I been years. a change over last don't think So dramatic the there's couple of

Vincent Caintic

then and I that influence Manheim cuts baked rate collections. And -- Fed I'm I for are know index on your wondering guess that. instance, used assumptions there's any anything or macro car has with if Okay. any the collections. there, sales the into like forecasted used prices for don't on car if forecasted or the that

that. talk about could if So you

Douglas Busk

We inflation do or like end that to that. or don't have macro collection rates. curve model rates include rates up or depreciation unemployed GDP we like using anything variables forecasted We

over going prices happen a XX-month that's in. what to used term. factored knows vehicle is So really to But no one loan

all the do are other uncertainty the that. by way we We and significant building uncertainties our margin associated they when pricing with prices of loan just is So that used car up safety pretty originated. into deal with

worse still loan likely a is our produce than even to -- effective are levels performance of expected. So that profitability. loans

Vincent Caintic

Okay. one last for And me.

underwriting as and or can getting desired you to if the over have about to you some consumer you of have lending -- But I if past you're change couple how get health collections doing, to better results. you So any consumer your is just quarters? forecast about trends you -- are variables views understand think the change that when that maybe

Douglas Busk

the loans are XXXX that It's pretty all business than that of book XXXX age at realized same season. far, to again, the say. early But the Thus better were. loans performing

made to our changes have and of the 'XX and we've recent forecast seen making underperformance the as loans. loan always We based trends adjustments 'XX -- on we're incorporated We've performance.

forecast a health. So to But we to I on adjustments consumer there. think have made early our conclusive too it's comment have

Operator

the queue, closing would I the turn Martin to Mr. back like additional questions or for over no any to call With remarks. further in

Jay Martin

on would joining for the to support their We thank conference like for and us call today. everyone

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

Operator

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

Credit Acceptance (CACC) 31 Jan 242023 Q4 Earnings call transcript