CPSS - Earnings call 4 2022 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2022 Fourth 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. historical events receivables also or estimates dependent current future of are regarding valuation because of on Statements forward-looking statements. statements to the forward-looking cause such are risks to All that actual results from differ -- from materially those projected. subject could annual the further you March filed company's refer XX report I to for clarification.

update no or statements, otherwise. any whether information, as company assumes publicly new events The a further obligation to forward-looking result of

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

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

Charles Bradley

you, A our little to fourth getting welcome, this call. late never. conference to year year-end better Thank bit but and it quarter everyone, out, and than late

back, things there's of happened looking lot what and and to about XXXX. awful good in an -- think think I

bit The relative fourth down year. to the a probably looks of the quarter little rest

of quite idea. X of truly literally However, tale showed X and a everything is out clicking started Fed We but not economies, growth cities, course, the raising in perfectly, started XXXX a mode XXXX up inflation of full rates. with of tale the sort then, a and same

an using went doing of way. all-out which we very did mode, everything successfully just and from So in what did in storm lots right the we lots technology, were of growth leverage we right, perfect

a cost the for the of dramatically X months of out and all X was grew first we so And funds sudden, hand. grow, getting around months, of inflation somewhere

down aggressively could. effect our as by of we the terms business of rates pivots quickly intact one sort the course, had growth abrupt in could And had raising and you ever do to so that the sure margins imagine we the as are of slowing making literally down. as of of we And keeping slowing most

had you as We could get immediately credit wanted We able to of very on able we of a kind it's were did very entire quickly. they to way. to we Almost raise well dime, our the industry. is possibly ironic, other good year. we way. within were turning best the expertly The about that the really possible going tighten news rates to go thoroughly rest really, as the So in think dramatically,

And so quarter as overall. we're was little are facing, of fourth position we that much light the quarter a as more in, with given pleased the we're ended so headwinds bit even the and very fourth the how sort

company's ever in originations it's Without in being the the had It's company's year history ever obvious, history. year best the we've the best we've earnings had in history.

are the and long So good. all highlights very lengthy and

we interesting that how in and right I grow that in margins. think XXXX aggressively and goes, and we'll time down credit also, and slow showed now could our way in us we're sort to in it and if performance both the but correctly still our our an very XXXX, do volume of importantly, necessary, more able and and it again see was maintain

even out. is to things the least that able do, and Now could at do it to But in was something it, good able our mind, those at impressive. sort our of we to took least way minute very make world be a were in very

ahead, future. a going what's I'll Danny that, it in talk the to little I'm about more we the where on go and to over going and to Go we'll get back think turn we're the industry in and Danny. with So over going financials,

Denesh Bharwani

Thank All you, right. Brad.

comparisons. I'll circle increase But that a to do million earlier. were back the fourth That's the the $XX compared Going the the the And in over driver alluded statements, in originations over $XX.X we'll to our of I'll year-over-year in in Brad financial comparisons. revenues size quarter-over-quarter quarter start fair that quarter value numbers by the last year. the going driven increase million and growth portfolio fourth increase. by is XX% the main then of The

portfolio, yield fair discussed before, currently. And value we've about as of might yielding you net remembering that, is is XX% recall, The losses. that

mark of terms value and a this a which of in mark, is fourth we last in third revenues, $X.X In also fair in fair the compares did million mark QX of any fair quarter of and with markup part not take quarter value the year. year, of value no the that

expenses, increase. last the terms of in quarter in million the a to compares In million fourth $XX.X of XX% year, year quarter $XX fourth of this

main Here, portfolio the our That have estimate continues our couple that reversal losses and expected that down to we CECL portfolio losses we actual the been reserves the coming -- of for the on that has the portfolio. on wind legacy of one lower. -- drivers is here the booked in

as an expense addition to reduction So reversals year. and and income provisions, we've to loss been for able to works of take it a those the

year quarter, quarter year. earnings year. in the to reversals down last sort we $XX.X to million we reported pretax where take $XX.X million last earnings compared that of quarter fourth $X.X to fourth of of in All fourth the such provision For $XX pretax of the in quarter million the compared loss million did trickles of cuts of this

earnings CECL we the for is Net the a reduction the pretax is fourth the million for year-over-year XX% to the -- for reversal in and quarter difference or Again, $XX.X income million $XX decrease lost income year. last the portfolio. posted quarter main over in the of number division net quarter for the the

Our $X.XX the back last metrics quarter And said, I of a That's to like in $X.XX year. diluted and compared I'll the XX% quarter share fourth the over circle decrease. year-over-year for same earnings comparison. the go is per for

portfolio $XXX.X $XXX.X value Again, for XXXX the XX% in markdown that So a reported revenues the portfolio value a the are XXXX year. over to of drivers XXXX. $X.X took markup in million the fair compared we the We in during million million for of took the fair revenues we the revenues for total marks starting again, increase with increase million is XXXX. main and $XX.X

$XXX.X were million, of XXXX. last X% $XXX year million over expenses we the posted The in increase an

So we're a revenues able expenses. significant increase in without increase to

to In XXXX same terms in XX% And million in net million a earnings, $XXX.X share, in provision million compared to loss of in was that million pretax increase XXXX. increase an XXXX. to increase it $XX.X increase XXXX. income, XXXX in to million diluted million $XX.X $X.XX $XX.X earnings $XX.X The to a from per from $X.XX XX% the large $XX from trends in and in in XXXX reversals, translates a XX%

to sheet. balance the over Going

is of Our end balance XXXX million the to at end year, $XX.X $XX.X this unrestricted at of of cash 'XX. the the compared end million

from up are $X.X in $X.X compared XXXX. billion in receivables billion value XXXX to fair Our XX%

of in In our to quarters. capacity terms liabilities, -- of did in a warehouse million. our that our increase total our debt, XXXX third in we and lines We second debt thought $XXX outstanding the

of while So is servicing we in the debt increase with commensurately have securitization plenty up our capacity, warehouse our portfolio.

of to some from operating $XXX million core margin And metrics to over $XXX.X $XXX expenses XXXX. up $XXX up year-over-year operating as in expenses XX% XXXX million from X% is Going interest compared million in a in net portfolio in are Core on from million to the holding XXXX. to managed expenses at the mainly XXXX, of time, the same those portfolio of increasing XXXX. our We rapidly keep line managed percentage while because in got trying and X.X% was the that the X.X% base. increasing of down

line again, now And to the same that the Our 'XX. managed return X.X% expenses in on increasing up. in on covers XXXX. keep and Mike. going turn It's it to managed the assets up financials. increased I'll portfolio from base from over to X.X% trends, And trying

Michael Lavin

Okay. Thanks, Danny.

We $X.XX to record-setting originating billion in XXXX year billion for As is XXXX, XXXX. $X.X compares originated alluded us. to, a in that

interesting, So set our originations. originations year-over-year, growth which we rate effectively, Of which efficiency in we haven't achieving operationally for while in the our an grew before note, is history. is record records that a origination XX% seen scale we us

employees, example, $X.X with billion XXX. billion XXXX in we was So we originated did for $X.X XXXX in XXX yet

growth. our XX% employee portfolio by we with our increasing grew that effect, only to So X.X% or service in base originate and origination our

$XXX QX considering $XXX that to we record-setting We XXXX. second well the million We the million set credit still Switching to our above compared QX, records did fourth we QX but $XXX in in the everything originated quarter originated quickly. year. in million did the so as tighten of we -- half

has new technologies efficiency growth allowed our bit intelligence among to and and artificial scale have machine quite more featuring The the our learning going in expense specifically, other our And operating benefits. forward. a helped investment us certainly, reduce

streamlined best-performing also manner. example, us was XXXX, subprime in to do but in Generation a so more which the paper, model X matured For AI-based fully we allowed believe our originate

It's raised at note and that same aggressively rates, increased our also the important time growth to record importantly, most achieved that fees we tightened credit. was

in of average February XXXX our ended XX.XX%, For example, was nearly the at year XXXX XX%. APR yet

addition, importantly our fees numerous sort LTV setting we might tighten by and halfway declines. of through back-end throughout made we we the more did year. we have year, more fairly that exceptions In the credit and And caps. so allowance, we eliminated dealer increased began our to some responsibly, low We on and reduced

believe end for we our selective At our demand As our product market. of more overall auto the strong the more but being best dropped percentage our for bought and such, day pullback. up continue XXXX, buy as on slice made the available originations, paper the the subprime we we're on than to credit

notes competition about couple A of and demand.

and At which the seen new car XXXX, being prices more more during new back players record which XXXX, of the were of same in XXXX, a car majority limiting at At that manufacturers are unions, used bigger the towards it comprises is in out of space. also are down Interestingly, credit our COVID, space the cut remained prices gone some full-spectrum -- we've unions on time, being XXXX, of or shortage car issues credit used appeared the most time, the highs inventory kicking lender. in car lose buyers XXXX largely end seen deals the to in concentrating the car inventory. originations. pulling same space leave the space some have Despite the our New into and over. chip as we as

only consistently other competitors begin competition, there X face are space our of that not our who in niche as most hundreds to the to product. us or think players of terms say competitive compared really compete X In for their who considering is industries with business with, I

tend We remained insulated, the consistent as have is the a in our there That slice. competitors solid while spectrum, landscape slice consistent, lower competition subprime top share into other target is close as the niche entry bar business. to a share and subprime of our market at XXXX of the high

remains business Our relationship based.

is required. network dealer loyal vast a So

have You dealing originations to based capital-intensive. data performance. The course, ensure that. highly it's to decades with servicing models does got of requires portfolio of proprietary business regulated, and remain on experience And which

performance. portfolio to Turning

as Our to delinquency, ended repossession compared at inventory year-end year-end including at XXXX XXXX. XX.XX% XX.XX%

Our the annual of as the X.XX% compared net for quarter fourth were XXXX. fourth to quarter X.XX% for charge-offs

just in usage. Good as outstanding tick up XXXX. portfolio, ended extension of news ever up a it percentage at the the which year on But second-best they to extensions. is They're a when comes X.XX%,

We buck based our an given out on learning scoring extension of get bang our the machine for extensions more which to do and extensions believe us more allowed model, us forward. we have AI going has

our it COVID-free pleased government we as average. more and faced in of heard course, we're have well XXXX, we in a results. money the like compared that bit considering economic headwinds and bolstered the the of end coming performance have the with vintages and In are XXXX gates, industry that been particular, with specificity our the looks industry of XXXX it's performing that out while ours to yet early, choppy Overall,

Our levels, our especially averages. to well compared are the still below curves industry pre-pandemic

to were in we that our kind first XX-year credit a believe the lender. conservative responsible which our XXXX, We of tighten operandi one follows being history, modus of

with we portfolio servicing and efficiency new performance technologies our learning and As originations, believe machine and have intelligence helped in it. our featuring artificial investment

our how that with model them. we with, or to have communicate collectors example, to phone when X and text or to e-mail communicate instruct with Whether a we use it's Generation collection on For them. to who AI-driven communicate

tweak to This, we with adjustments early we industry address algorithm and has little strategy dive to proprietary towards issues. half the the few end vintages, of the second bit averages. of towards XXXX better our deeper us For a XXXX, allowed combined made the the a XXXX outperform

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

Charles Bradley

you, Thank Mike.

we're sort that, half almost great out, of kind I a and are of first XXXX and of see seamlessly ups on so adjust And model the through pricing that's thing pointed both of and think ago, industry. where having that of given and somewhat time we and to today. criteria, going Danny second our both almost downs was a year seems to year. challenge the then to to half important the long move our But the in XXXX, the as Mike credit what most is kind react able in

We're sure happy else how everyone But not that. with quite nonetheless, quite it. did very we're did we

forward the sort to fact for so significantly go and of to successfully think But very and one I easily. we that we've move once time. And on different is that well going things that's are that shows some, always change. on will future, have rising bodes in to Certainly around. doing the count again, so long things able important been pull I we're one they you hand, can a market shows adjusting this And can as XXXX, through the lowering the with moving because levels. grow very that the the that and just ties think thing today, back

a sometimes they change time. And in

So I how pleased very again, we're it think, worked. with

think industry the I overall.

that off well performance very XXXX Certainly, the very behind excellent. sit performance. been our has we think I all

to we Most technology, able been technology and And think we the forward kind we've use of we more of on people what coming almost actually, to lots of and go. look sort could our to shrink need how every so we XXXX more that can day side, to grow. continue importantly,

spot can 'XX of we industry that's of the with. money XXXX and downs a ups sort things really does, us what to what And and and in so mostly free puts we're those doing, forward look where see of 'XX, combination the the over 'XX in or the

Now the what as of normal we're industry. might course getting back at in to our sort we look

we've the have issues like the XXXX, in looks year, we'll what such. to handle, new we're ride and new a can inflation banking overall, to looking based what forward numbers done again, the and I XXXX so think and of But And with kind do on we things it and challenge.

that, rather in With to you you April. we and joining for us, soon speak all thank will

Operator

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

Consumer Portfolio Services (CPSS) 15 Mar 232022 Q4 Earnings call transcript