Earnings call transcript Q3 2022

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2022 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 valuation of receivables because dependent on estimates of future events also are forward-looking statements.

are differ risks materially statements actual could forward-looking to results from such subject that to cause All those projected. to clarification. you XX refer the report annual I filed for further company's March publicly The no a of information, company new statements events otherwise. obligation update result or assumes further whether any to as forward-looking

Bradley, is Portfolio Chief Mr. Financial of Executive Consumer Mike Mr. Lavin, us here Chief and Bharwani, With Chief Danny Services. Mr. Charles Officer; Operating Officer; Officer

I Mr. turn Bradley. will the to now over call

Charles Bradley

quarter third conference Thank you, our and welcome call. to

to we what nice do. It's to had to few to another extremely we guys. of one -- of our over It's June. call it a our things we everything, to the Ares be say expected, highlights, But think timing I able that strong continue turn of and I'll in you the quarter. we our what give renewed certainly and is I'll we and things did, we last lot lines, mentioned facility a we in we'd one conference renewed did -- want

$XXX renewed and renewed million. thing to increased $XXX $XXX to the million did line we million. And July line we that from increased with $XXX Citibank. in that and it We from And million same

nice million warehousing, $XXX have right we now So be and to it's in looking warehousing in warehousing. or increase very for not now market the trying to

got and the So to that happy it done before we're accomplished we quite market started change.

do always growing a even has can this had our portfolio interesting so We been below operating enough dropped that. us. than think target thing been that is That's Another expenses core better year for we X%. that

And the size the well nice and size to those quite able the the below say our operating focus very target think to be now I strong a goals. portfolio them important. doing to is get expenses of achieving company, we're core at on it's X%, those given but increasing is of

during July did securitization, or Also July. would the we be highlight another securitization

the in up. market funds of cost the know, going have should everyone As been

So happy that at with about cost. deal X% pretty all-in we're

and It was to we thing up marketplace a for us bit from sell nonetheless, to and in everyone there to -- able demand, about worried some marketplace the is everyone's our bonds the before, economy, most important everybody done but the strong thinking a easily. was And deal and of we're be as knows, got potential today, deal in of the recession. sort that is

Fed over the had raising We rates hand fist.

doing raised trying also fees third the rates, quarter. to over we're in across that interesting we the the -- that all as points credit. to raising we basis we're also So cut about and We've thing. our part well, tightened paid we've too. combat By and think we've rates appropriate XXX The deals, dealers

is business isn't And the the interesting particularly down. part slowing

a one is So a person for our cars, has these car, financing have just the demand a number not remember customer a that shopping person car. for who's who to for lightly

and maintain well. would as expect business our performing There's the continue that maybe the to if Fed problem, credit our quickly raising it we a raise margins. we're so we is does, as try So credit rates, to rates good, and But going keeps walk but along just to can quite our continue. isn't always and

pre-pandemic still well competitors citing we're of they've and -- delinquencies are that gone terms levels. to our of still Many of losses, are back in and ahead levels those

well. financials, over then with to turn Danny of the it things that circumstance as where talk go will sort going sit go happy There're very we're over to over and about, to but I'm more we Mike to the So in operations.

Denesh Bharwani

you, Thank Brad.

financial third the the over results for Going quarter.

in million million last XX% increase it's of $XX quarter third which fair the increase in is is second the portfolio. revenue really driver up The for over quarter, from the quarter the driven servicing our third value now June up the in $XX.X in by the Our and That's were last XX% revenues $XX.X our million. portfolio, our we year. posted for main

If you'll and sheet, in we that that you've the value over when years XXXX, these fair five X% total of quarter-over-quarter talk ago grown to our -- fair That beginning has in component we that XX% been portfolio. remember now accounting calls switched the has and to value but past, we'll listening that XX% grown more year-over-year. cover is about balance

-- So that XX.X%. is yielding and

in you've is past value if fair the calls portfolio that You on on been might our of yield the recall, too, net these losses.

down assumptions. XX%. now to So loss The only legacy is our the portfolio expected That's of after X% is total. yielding XX.X% our

Included fair we year posted materializing. in are realizing last reserves losses a $X.X back these some COVID these of mark That or numbers for losses is the we value now where not -- X, the million. in that third are represents quarter

fair reversals So third our year $X.X didn't in we last have portfolio of value in the million these that have quarter. we

million in the quarter the quarter compared in million year. over third $XX to quarter sequential $XX $XX.X million expenses quarter and the June XX% third year-over-year. is in Going over XX% the up it's and last expenses, That

our of Those to not loss the In did in quarter current reversals a case, third materialize. million portfolio reversal results the quarter similar last this include it's $X.X provisions $X year. of compared of for legacy losses on million that in

up the $XX.X for million slightly from earnings quarter our $XX.X of $XX.X quarter, from quarter the third at and That's XXXX. June million Looking up significantly pretax in million. in

ending compared September, For to were million. earnings $XX.X pretax period $XX.X our million X-month the

$XX.X XX% our year. last That's $XX.X the net from That's June up current for the Similarly, year-over-year. quarter million million posted $XX.X income compared we to quarter. XXX% the million is up in

to million a million period, seeing income ago. year increase in a XXX% compared net For $XX.X to the we're $XX.X X-month

share up $X.XX, per trends, $X.XX for was third the That's is quarter, year-to-date following year. $X.XX up for year, Similarly, in last which to period, our is these current of quarter earnings the to increase. compared the last $X.XX XXX% XX%

note. things couple of of Looking balance the at sheet, a

June mentioned, large number cover over like a is originating we'll quarter territories. our loans, this at year-over-year. the I portfolio, value driven for record-breaking which and rate that fair later, fair We're up portfolio value XX% originations is up of but the by Our X% year,

capacity Brad discussed earlier our increase this we to the year. $XXX announced million, in which warehouse

So originations up loan sheet, you our our debt year the balance compared to with this portfolio look at rise year. the in that's but if levels are commensurate last

Looking at other metrics.

increase million sequential Our a the $XX.X million a net is X% and $XX.X interest year-over-year. ago. margin increase a in compared million $XX.X That's compared to June over to quarter XX% year

margin basis, compared $XXX.X On our a net That's last year-to-date year. $XXX to is increase. million a XX% million interest

to last and million. of basis, XX% current quarter-over-quarter the $XXX.X $XX.X That's in operating core compared million $XX to X% increase $XXX.X a year. year-over-year. a On core our expenses million Our a million quarter $XX increase and million are in operating June expenses compared year-to-date

That's core expenses In X%, June, a down it come a a it's X.X%. operating was the XX% Taking those of managed average as it's quarter, percentage so portfolio, the increase. for little X.X% bit. X% this first compared in quarter last third year. year nine the last for also months annualized to of of the basis, It was X.X% year. it's On an

X.X%. managed up and And on it's finally, June, of X.X% quarter year. return September from for in down from X.X% significantly That's last in assets the

to compared our period, this managed For assets last year return the X.X% year. on X.X% were X-month

I'll call Mike. turn to the over

Mike Lavin

Thanks, Danny.

employees COVID We've XXX are and XXX Forrester XXX between we're support the in facilities, of XXX by those in the employees sales currently are we are departments. XX%. reduced XXX and fluctuated in XXXX since in employees. at origination, and servicing, personnel in In our rest

by of we've I interesting XXX blown think XXXX in very to XXXX employees, far billion roughly and important originated it's and employees. $X.X that we amount note so with in that same with note to originations the in volume

think forward, testament We to we're our safe at scale. now that's it's more leading think And going investment in to efficiencies. new I right and personnel say, to a technologies,

our we've of been renewal leases have to office come of terms up leases, In fortunate post-COVID. quite five for our four

commercial sort real a of able relocate to will to renew we crash save million bottom $X offices. we've $X between estate or the million our the So line. four to leverage that year to been believe the And us of

the $XXX in $XXX which QX, In albeit strong a that million, million demand to a had setting sales, slowdown earlier, XX% I to That's QX. compares in of record that continues, QX, our noted But slight compares more In thing interesting is we the still year in news Brad our applications in XXX,XXX applications We XXXX. good as XXX,XXX product. QX. is originated drop. for with think, QX and

So it's a increase of sequential X.X%.

the still is strong. So demand

So did I $XXX despite a QX you'll that million year. dip, analysis, That's the that compares I to said, middle think In we record-setting of $XXX when you like the increase year-over-year look at XX% year-over-year. XXXX, million, in year-over-year. we're that a see

is in to we in a again XXX,XXX increase. you QX which XX% that can XXX,XXX And see did XXXX, compares which applications, year-over-year,

was Q-over-Q raising mentioned, due and of the also rates slight the fees. Brad the our as in aggressive drop originations sequential nature our to So

growth originations our had. the When at XXXX, you see you entire of can the for we've year look really

originated far, compares in so record billion, year-over-year, in us. for same that is So, growth we've over a is which to $XXX,XXX XXXX, XX% which XXXX, time a the period and rate $X.X

standard. the is of to think rep the industry concentrating forward of force is of maintain some around One going -- we're that initiatives our right XXX, on we which

of working ultimate currently get far so base concentrating X,XXX, year, XX,XXX. which to upwards, large is We're which year XX% sits number dealers also X,XXX, this dealer another to groups, on been which to year-over-year. point the which which currently we also dealer as looking our our still a XX% we've to for increase grown growth. We're upwards, goal with at of increase at a have for has We're lever sits this funding us emphasis increase

greater compares to XXXX. up delinquencies over moving X.XX% than QX QX in at and our servicing, Switching XXXX which XX.XX%, XX including inventory, for ended days, to repo

compares annualized the portfolio, of the XXXX. charge-offs, at X.XX% for to average ended X.XX% of up which quarter third we For

pre-pandemic at we're It's not beating we're we have Pre-pandemic, to that pandit, note as as QX, And DQ. levels. and we're the I that, XX.XX% at that said, there. the experts mentioned, at XX.X% which significantly pre-pandemic were are running all levels, our previously running shows Brad important competitors said just

actually of positioned pre-pandemic by extensions year-over-year are levels. that are driven extensions, we our Those well tick In below intelligence. are in artificial flat terms they and a

In a repos. our sequentially, on terms but bit of running pre-pandemic up levels also our ticked they repos, still XX% below we're

in terms Value by a XX.X%. market, quite but recently dropped seen QX In Manheim about of levels. the general, historical Vehicle Index still the we've above recovery drop, In we're

the net It year, November the recovery For normalizing back and into our to XX%. XX% of end in seems climbed be of at it XXXX QX. height January to us, the currently in of mid-XXs last was

couple of miscellaneous A things.

originations intelligence by automation do to and we've that servicing We us the our will concentrated to entering learning instead in us. to time, machine into experience to in extract further three to things last information allow on like allow think looking to few robotic use over certain more will artificial will on partnerships is a dealer platforms process years, cut and us from to that do us build processing to with that a the the which and the continue that. down quarter specifically use allow four the concentrating processors bots they're for, utilizing that packages the dealers, frictionless what fund packages quicker of We the

and hour decisioning and We're more add calls things the significantly down collection per improve that also and the the contribute overall our wrap that expecting more think are to think Those of type cut will we our us into performance basis. notes, dollars monthly a which scorecards credit platforms, bolstering to are calls use further on we use, collect collection on bots to collectors will collection which our allow to time behavior efficiencies. into and our the our algorithms, listen and make populate overall

to I'll back with kick Brad. that, So it

Charles Bradley

Mike. Thanks,

doing doing doing might of obviously, lot should So We've taken we we're we this a things a and time, We've time. expect so are. be well. well, been a long things lot of one

the government keep Looking job everyone good industry, guess, with -- pretty can and industry of the federal are think interest And going the with same. to in the certainly things we the the are, raising along. a done doing is up the doing we've I course, madly at the of rates, I they -- moving on what

think how very done credit I we're given in well, that a our pretty position. has performance good

doing going evolve. year or great, just are All what know next is months pools of six months nine you don't nonetheless, the or to a but our

interesting rates, So it's raise all much pretty and continuing things and amount to credit of and tighten what's to those efficiently volume. And doing we're safer a fair very back, we're scale quickly. is get

So all that's if you kind rates, get real those of good.

on can't nonetheless, sometime up maybe With just can coming very forth. so this anything so But CPI hope of today the soon, peak market level in what to do that. front one of and the we that, rates picking can to might kind on We being stay get predict we we of about is on the curve. start and positive, and that and that, off and to

A about, though, lot industry flow their couple for agreements folks of things other to forward loans folks to used where just a our who think were of they yield. in more sold looking

yield when -- was flow take a couple a X%. of of these percent, would the basic So points back folks -- couple pay forward

Those games are over all now.

we're some amounts probably trying on we We looking relying companies flow and of forward -- not of who raise any haven't relied around to done on So to a flow substantial that. commitments now their program they're forward never capital, decades, capital. for in --

investor some Also, we've us the seasoned buying supporting investors bond issuers compared new for than long-term the So in what heard people of also that's with towards many very ourselves they're good that probably concentrating in of plus a in market. are track market, players new like rather the pretty to records terms good others. looking or

I I us, think where mean weeded industry are to things the lots and problems we there's all doing lot of out again, including supports these may there, folks they may of should that players, the things the there's cost and out. extent And a tighten good raising that. of of good all weaker get course, right and or capital things. capital like up, have think players, then And They some are,

any trying yet, money that But but our to where we just always, of needing keep open way. that in will opportunities or money seen we any to that nice than market. we for haven't as really again, certainly, might So raise this eyes evolve sit be particular rather it's

Fed of it One continues as think And in was stops, off to to a the the fact, when good very I rates and does, CPI with that good. should way, the In I the a raising. hope little we'll rate in economy, up keep spot. said, continue we that, today might Either be Fed lay terms maybe raise eventually bit.

but election anybody as about we'll So that down calms overall, nothing that. can see show results, we again, the well,

to quarter the in our efficient. than in set past. we've grow we a ways ways of have company the the and it it super exactly overall, for next sort ways then put doing We're up want. difficult looking close do, year. can cut looking for year we again XXXX. for What more together to to running fourth just strong three we be now and become We're looking quarters way been find But has is out we're strong We're do and can slightly more We're as to is we environment to the looking costs. in for all forward as what

Thank the about forward all we we that's February year-end our So today. in we to you call. probably you when look all do call, you. and Thank to have for attending speaking

Operator

A Thank via company's for lines time, available at will two your www.consumerportfolio.com. the beginning now replay wonderful XX this you. Please have a day. This be disconnect months concludes hours today's from and website at conference.

Consumer Portfolio Services (CPSS) 10 Nov 222022 Q3 Earnings call transcript