CPSS - Earnings call transcript Q3 2021 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2021 Third Quarter Operating Results Conference Call. Today's call is being recorded.

Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call, that are not statements of historical facts may be deemed forward-looking statements, statements regarding current or historical valuations of receivables which are dependent on estimates of future events, also are forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those projected. the report to for March you clarification. further refer company's filed annual XX I no update further obligation statements, assumes company The to a of otherwise. whether publicly result new or information, events as forward-looking any us now Mr. With here is Bradley, Mr. Executive and Charles Chief Officer, of Financial Portfolio Services. Jeff Officer Fritz, Consumer Chief I now call Mr. over will to the turn Bradley.

Charles Bradley

we've to -- third one earnings we good collections, about and it's call. a you, everything well had guess simplest Thank functioning very easy our everything. of across and I the had. best really having all quarters of welcome originations it's the say quarter It's way to really marketing, company, quarter, points

it's the So doing get reward. start you that to nice when can things, right, you see

highlights. really real Year-over-year, numbers number do had growth. did. The to continue if that earnings starting was we so a good go going And we of I'm XXX% are through. just forever. But to we'll growth couple Don't come that know year-over-year. to through from a

just during somewhat interesting is period expenses cut the XX%. as of we And time, same

to be growth than better I like doesn't said, had to those things, do any So Originations, quarter-to-quarter, XX%, get we year-over-year. XX% originations that. both able

XXXX, Third our quarter highest was second the years. since in quarter highest second quarter company quarter XX the of history and

talk very So at of still strong. collection over Everybody's about servicing there. And of the -- stimulus. very, again, real and is there's Not point. strong. kind lot good pandemic, outdone, continues yet, a -- remains very numbers to be a lot Stimulus this of our the

charge-offs lot strong we were XX% So still year-over-year. less there's have DQ, yet, money, very a down stimulus a

-- as we're on to board it owe say well. We collections. across to doing an a scorecards added not of category right easy lot in we've the awful that it's lot So our

alternative So a And the a a purchased of how us still is out direct of successful bit performance the The to we of third million about also, best in securitization little the that's portfolio. I'll And more to lot talk very about get market quarter. lot market. securitization helping data we really out us AI, very have shares strong, later. that just that X another noted of the we

we're again, subjects our value. to walk I into through let more shareholder all go I'll we what on increase to can detail So after you. for the do trying those Jeff financials

Jeff Fritz

about we of of $XXX continues as you number's is million Thanks, pretty to to grow. simple Brad. yield right down quarter. net revenue, And year. $XX.X the That's quarter. It's predictable Welcome, continues But about X.X that's managed third $XXX.X this last everybody. only is The XX%. value million second legacy revenues, XXXX. is X% X% components X% our now, of our to the month know of XX% of losses. were along. total for down a move as portfolio yielding from months up XX.X% portfolio of XX% that our begin million rapidly pretty the in this year, which And quarter We'll $XXX.X with compared of quarter and of to a our compared nine decline The the nine fair about yielding billion, breakdown million portfolio

got losses baked as it's the it's, I in. so And said,

we've value marks don't for fair had offsetting the we losses with No in portfolio. provisions credit the So the that quarter. the have legacy in past third

on $XXX.X The a expense across provisions year. losses million million. months decrease a quarter. are as second all coming of year the Significantly and quarter a the had these million numbers revenue sort standpoint. $XX the Nine third That's are at from It's expense from breaking $XX.X straightforward to reductions expenses pretty credit significant expenses, of of of the quarter XX% a in compared categories. interest our decrease yields No the putting this X% off. than in for board, it's running month the decrease over ones this nine of So in XXXX. down XXXX. for lower XX% And the lower we've securitizations are

going a to minute in about we're talk which that this reversal to earnings a fact, the In provision contributed quarter. here,

We lower and million. has all-around were better efficiencies, the to have which counts, lower losses negative Provisions for $X.X really expense profile. head contributed credit

that sure allowance. actually we've So the portion And losses. first this the as loan legacy this company, is is history, down, I've allowance for winding has of back a a portfolio pretty time CECL rolled portfolio said, significant in

is increase net a is pretax Net look over Act. these booked we in that of the year And First, months then its third And in January we last is for months we benefit XX% of established allowance XXXX. the XXX% during million why million that which reality year, this income back increase performing third first remaining to XX% XXXX. income million, a That's And $X the And increase allowance month at made the of because for we more numbers have the a when allowance I've the lifetime of $XX.X increase in additions well. XX% is we shaved a XXXX is, over suggests pandemic. a last a $XX.X tax result The $X.X million life that quarter for million, of the we a of income over before, quarter, that earnings said earnings is came XXX% numbers, over allowance than as quarter nine off increase were this the XXXX. almost CARES which second portfolio year. do net pretty as million is of Pretax over some $XX.X a portfolio year-to-date And quarter. last the quarter loss this of the quarter and XXXX. and $XX.X quarter the increase million. Nine XXX% nine adequate, just $XX.X over

and $X.XX a over the XX% share increase And a to is increase into year, XX% quarter numbers we over those year. third $X.XX Diluted XXXX. so second over our $X.XX that's increase kind this nine from of ended for the of year. first the in earnings the last XXX% a months last Year-to-date numbers, $X.XX baked quarter $X.XX, this nine the from months per year, of September of posted compared

attractive expense. which the million raise this And in a P&L also year $XX lower at in to performance you'll of in we warehouse strong as very financing, trusts Looking financing at second then rely less allowed quarter contribute to expected did balance interest credit the the getting than residual the out back sheet, on continues recall wind position. a That's June XXXX, releases down. helps the somewhat cash from the of We're liquidity us rate. to better significant of those a

the that So allowance shave the which strong. to of in XX%, portfolio, as able $X.X why is about about The balance I I that sheet and liquidity to off position million continues down. as said were is And mentioned this wind is very we quarter. remaining legacy

the was month come year. XX% Moving third some margin that But of debt compared That's what paying the compared securitization this $XX.X nine trust to significantly last performance the on second a quarter is blended our year, to. $XX net flat of million. to the of we booked interest months but metrics, down for of about rates compared of year. And we decrease of the net the to last to has were last on a increase higher you'll with other quarter quarter what interest interest margin year, million recall that the X% nine

improvements a $XX.X the quarter, Core quarter, X.X% is the million this last operating the compared year. to our this last is bit this million $XX.X compared little year, in $XX.X the is instance, XX% same month with in third operating where had X.X% quarter leverage. decrease of we've And For to of core was And however expenses operating this same ABS numbers year, QX period quarter expenses million a the for nine up XXXX. nine compared month cost just to is the period. year and and third in flat of significant

have that technology that metric. the of have really we've and been improved incorporated particular really Some efficiencies

second kept the return As one And our about XXX% quarter up return X.X% although That's That's the actually but those operating of to our a quarter. XXXX. contributed of the a we the metric up last particular quarter or portfolio, has X.X% costs portfolio posted a X.X%. the down third second come the on to portfolio and quarter this We numbers go originations with managed the this nine And flat the very quarter year, year-over-year, And the for is have a quarter. shrunk to even compared of increased. just is compared good had to just throughout bit X.X% month that little assets this had expenses relatively year-over-year expenses third last core of of quarter this over portfolio flat year, pretax, last compared we we've has even originations managed same. operating flat our thing for year Return on pretax, which that year. this outstanding the steadily last year. year. year-over-year, our makes have been though out point percent And X% pretax to though during originations in low increase were stayed for X.X% smaller on quarter

we funds. value improvement everything, on also last the protection incorporates none year. And marks portfolio. We that added had credit this of spreads the so -- the of the fair got, gains cost course, course, in you really and from And had year, portfolio, on of took lower and of this legacy increased

third credit X.XX% down compared in down of the nine September That's The XX.X% was X.XX% picture positive, quarter nine That's at seasonally nine down this The of up key Looking third really this in very X.XX% second X.XX% of the the up the just significantly the months numbers for at X.X% of quarter, X.XX%, XXXX, it XXXX. year, a X.XX%. so performance to far That's bit year. in for positive the this quarter. net for but was is quarter loss significantly, the delinquency from of significantly some also months, of the from month where second metrics, for little XXXX. end from quarter. but

We the year. numbers That's very continue the And XX.X% of last last auction. up to year's XX.X% at recovered balances liquidating at do from auction. great. vehicles on loan were well are being our

that known are the values these vehicle market. at well shortage good. auctions. there's so to and very driving Look a ABS -- these numbers It's up Quick it's a And the of sort be at continue

resulted history. strong in Our stacks the a third of lowest in second securitize July X.XX%, demand, of layers was completed across the that we continued blended is in pretty our which much tranches securitization the 'XX, of quarter yield of

to the I'll continue Brad. to With turn continue that good we expect back in we and our that, here bonds, future. see over So it demand for near to

Charles Bradley

Jeff. you, Thank

of few of are them, things We've a but on focus highlighted to want the that a just the company. I little So maybe working for sort detail. more

increase In flat, things rate our originations, though application relatively one alternative which were on Gen did, Again, more we're to the of heavily data. using and still we we a of scorecard relies able terms originations. lot X of even AI our was

a so were though a -- XX% And growth, of we're getting we kind even [ph] apps flat. year-over-year, got

ability which sort out figure so should to And the it's and And into directly of to it's dig works very very buy. ones effective related well. and we become the customers

that's little play worked. a We've lot people APR in think get our cut a on And caused to issues. that going Another is inventory a to game that's thing And the competitive. I bit. it's more of

substantial year next there. growth competitive. will a subside issues will the will that inventory us APR increases, be just market probably when inventory be because less give little think Plus, the I

dealer the think send our in using of still XX,XXX. we Let's of scorecard we're be But effective better more We're continue that'll X,XXX, these to these we our want in We're do. pick that growth. X trying see, base. scorecard got. even about things Generation -- sort to help. and what will metrics outside out we're it terms the to around still get our the to else is trying best of get drive to And We're works. things to we All customers

and AI in that year. put collection the so effective. still data. We scorecard, But it's this much more again, alternative collections, at Looking it's last

collections. contact, Same better for customer get now of of And the call do customer. better have using who much use the the point also so sort better lower We greater and what's same model as on. going we how kind a gotten have we think should that, we should now result where is and scorecard, extension call it's text working call, and repossessions, I much messaging we really feel far extent. when of thing, a very And in terms a of should we we to effectively, an

terms we few end as now to we're and all think the more as results. can. the So seeing result. ago, -- in have I much focus And packages of to really to originations the of before, front got on focus trying great really the people on And was People we've stimulus able end. We're technology to beginning we're the because market. this saying, are in And a years a possibly been this, use collections. much back lot hear of you've

folks' Some to go beginning results other way. the are

it's nice see to not. So very ours are that

charge-offs. flat have better We delinquency, way

focused trend I So which on the down actually again, will think bucking or the we're able we market, in road. we efficiencies. the we Also, pay during as said, some off call, at level, the the bucking were to, pandemic, last think handsomely

But cut. We people being we'll and office with experimented road out we hybrid with office very costs, all the in of can continue that. occupancy come the You good play. by in down we've think do things the think, can those into see occupancy focus to terms expenses of I of on results, we've the amount and that as

different to do doing we help things things in the are lot of So going a really to we're future. continue that as

still As market mentioned, very remain funds no Jeff cost is the of getting low. problem deals done, securitization strong,

So a that's plus. again,

need I of be that happen lot the don't the people of industry, said, a we are very like fairly People -- We to just grow. to strongest the have indicator terms competitive. And well. grow, of inventory growing In probably is it's lack of to really

up, So think again, supply will that get things better. when sort loosens I line of

and very is good been fellow The purchases. the industry in on recently, other they've of competitors interesting values few A thing the acquisitions. been getting those our have purchased

we us off rub So point. at hope that some on will

bought becoming will time And day. and is the platform built little bought time these certainly realize million tell the actually are mentioned we more interesting beginning very half shares And benefit and long been million another I market. our people think the quarter. a of obviously, we've stock, well by X became platforms. also this it we've I successful but to that shares, more a

on do shareholder the out value. is So to dimensional think last I disappointing is think can. our after we going to certainly we the to very, improve do in frustrating focus these putting for It's today, thing stock We shareholder very of to down. us. is what price we're We're market. The purchaser shares trying numbers, great We're active everything continue an can value.

we'll to do that, we change. it until We questions. will that, continue see something for With up open

Operator

Instructions] [Operator you. you. Thank Thank

from Our Jefferies. first question comes Kyle Joseph at

Kyle Joseph

you what for guys. for good on your thaws know prices, that. normalized chain I But supply and XXXX uptick us quarter. car When kind another car obviously give good that Hey, had morning, touched about get you just a on recently. we for sense supply you're outlook Congratulations front? do think on and thinking used new of

Charles Bradley

improves the but my realized the little them a balling crystal manufacturers I rest first it the the of guess put of year. of wouldn't dramatically XXXX's think bit, quarter, is into shot. kind past slow I sort to most play we're going of Again, that as blockchain

they real So year. next have year good a

So that's or that my think three up months. next chain But the to bet of market. one one the on will in sort supply six way ease would another

are It's us. earlier, have certainly to think. a used mentioned, grow pretty We It in affect, mentioned out market everybody does a that's are plenty had but next that we another I Again, of this still what because time mean, car again hard year what the least front would I of sales prices huge tell, still don't give cars. as looking strong. on a I will to at that's buying we very auction there -- end business. them the probably at effect think the everybody's see, year compared and to prices So the as year. to Jeff good It's wants strong. tight

you'd as off used to more be are because the for market of remembering out financing So the are most lack cars much, the finance. that in total they're cars still of think expensive would dropping there our almost cars, of

think And it market of in, strong. cars And part that of new slows normalizes. so the come stays sort down some I as or then

pick guess you'll the then to point, start So that new at should quarter would first see next cars I used in back and car market up normalize year the it where to be.

Kyle Joseph

remind and portfolio at us on what remaining life then it, Got legacy Jeff, the just up one follow there, point. this is just the

Jeff Fritz

So that XX portfolio is okay. months seasoned already,

tail, out more loans period, expected a got much these tail it's And heading not of third, remaining of months. so more but it's a kind always some XX for probably extended rounding than clearly There's life for home. of

Kyle Joseph

guys. Appreciate helpful. color. very the Okay, Thanks,

Jeff Fritz

Welcome.

Charles Bradley

Thank you.

Operator

And Mr. the Thank closing any for I over remarks. or Bradley additional Charles to back you. will turn floor

Charles Bradley

Thank you.

we earlier, want we're having doing get what the were happen. just to with and to very started the said pleased doing I want things and notice stock As people quarter. We market We notice. hopefully to keep

I as you up Thank a be efficient We some can is the you market that's that's do benefit really and in probably talk is we're I day. for doing think seems guess for we benefit the industry, for all us. which plus. Thank So All what acquisition heating to results you. a think us keep February. joining becoming to produce more and will good every we

Operator

have and concludes a Thank identification and available days www.consumerportfolio.com. the XXX-XXX-XXXX teleconference. XX by this A will lines disconnect conference available of website at you also and after call wonderful live XXX-XXX-XXXX company's the from today's be Please two beginning via with time call for the conference XXXX at be your A day. until X, now dialing replay XXXXXXX. hours this number will does November or broadcast

Consumer Portfolio Services (CPSS) 29 Oct 212021 Q3 Earnings call transcript