Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2023 First Quarter Operating Results Conference Call. Today's call is being recorded.

Before we begin, management had 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 projected. materially statements actual could forward-looking to results from such subject that to cause All those I refer company's XX the you filed I March on annual for report clarification. further to

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

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

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

Charles Bradley

to first ago. but quarter everyone, We welcome, spoke a ago, call. and while definitely not you, Thank our conference little long too

So But very first strong the much the not a very quarter, We're that with happy has in terms start. to results. changed. it's off of

looking a I that strongly of the quarter of mean, might has Fed I of the lot XXXX, to as result the think last we rates the of in the raising we've mostly at is hoped. thing X made sort have gates as in on changes not out and the first a really quarters coming vintage as focus XXXX of

that, of of needed. tightening our though, our and raising spent really quarters and those result we a this good credit, a As rates and fees quarter realigning X everything part sort of we

Even than case we've One all. first quarter, on have attraction the very might industry. have in had the we We have our had thought had that would expected. strong effect the growth at quarter. both the the strong not would with and That's and a stronger price negative growth to in a tightening dealers increases,

a start. year our are terms getting things in off those of all first quarter So positive of the good to very

pre-pandemic DQ have many that. also of thing friendly below is we probably up little we competitors our significantly still and a good a think say saw of but bit, couldn't I levels, losses are gone sort our

to credit strong see collection beginning done of XXXX, are what of we're the we beginning we've both a made start real us or to model we as in in to year, sort to but model, kind that care changes strong an XXXX. inefficiencies any work didn't also of necessary start to but we as great still of work results see actually also give having well again, terms of So the things the having all help and to take a

a with that, financial to to industry stuff macro. over then to then on the the and going it Mike, on turn the So few I'm and and I'll get Danny comments back

Danny Bharwani

the posted We'll last slightly quarter, Brad. $XX higher December QX is XX% million you, it's quarter, $XX.X the up Thank million go in over $XX.X the Revenues for year. the of million, numbers. than which we over in the but

the So XX.X%, that's billion, of net that, yield what's about drilling yielding number The that is included $XX was portfolio, now here. that year which -- yielding last some $XXX the was million details is and portfolio year's And a down year. $X.X legacy versus losses. portfolio of Last larger portion or value year in legacy this larger million XX%. benefit last from fair on remembering

revenues in without QX in the That year comparison, 'XX. included that Also greater. a had of was would even increase We value million. of was of in for So no revenue $X.X markup been XXXX. markup have fair last QX

it's originally where year. we losses provision had last $XX didn't our estimated the $XX.X million, using to legacy include -- that from those portfolio the negative but CECL a losses from These portfolio which up on accounting, the expenses lifetime where legacy materialize. expenses. from XX% million is $XX.X quarter, same expenses QX, million number for QX of in from down Moving flat The the

the be $X December reducing the quarter, So amount year, provision. over In current quarter, that excess of was in quarter $X.X happened of time, gradually last $X.X amount And million. reserves. was in it the the it we've million to and been negative the first of million

I guess, -- million in increased can now $XX.X expense I'll I That a last cover component Pretax interest cover this expenses. earnings. $XX.X expense has big -- interest year from of component was right year. because to million the change that's

when about we'll our loan been net later Even So we -- the interest see originations on, on there margins. though compression in we've the margins is some for talk raising that the APRs the this yield fair the in rates works, the it on up little to of time value year, of accounting takes the change the to way just interest a bit catch debt. for

the there for current -- interest in quarter. is in net some margins the margins So compression

low million first Moving during performance the first pretax to quarter prices that the period. benefited period from quarter last stimulus of was benefiting $XX.X the occurring December that exceptional Also year. is flat even but interest had in million last some in that rates. very $XX.X year, current in comparable of from credit quarter the government in of million very car $XX.X high remembering earnings. down from the and to used We to about down

those year. So to of a comparison the are year first from quarter the first it's reasons the quarter tough last why of this

in last first the for roughly the income the That's in $XX.X a in pretax share, quarter decrease. $X.XX trends of million quarter, is The line in quarter current the income, December per in year. and $X.XX of million million versus with earnings and same $XX.X Net in fourth XX% last first quarter quarter the trends $XX.X in the year. $X.XX

grew of the the portfolio quarter. from note. things of at receivable a balance sheet, finance Looking The December by X% couple

is of the XX% So -- and quarter. -- to in $X.XXX continue the the it's but have in continuing the $X,XXX first million. higher prior see last healthy $XXX origination year into we million now driven was million year than when compared $X.XXX to That in originated by to versus $X.X it's it quarter year first continue this where last we million the we from year levels quarter million first $XXX quarter, fourth

debt. securitization to down Moving

the to year. is Our million million $X,XXX fourth in last debt and securitization $X,XXX $X,XXX million compared quarter

up saw increase last sequential XX% the and in up despite and over value to position So year increase a quarter shows sequential XX% is Relating X% the liquidity X% debt portfolio. we're loan increase that to leverage lower a from sequential that year-over-year. our portfolio, on able maintain the the the fair securitization which

the due margin, in the the our net portfolio XX% has a quarter, part future. Fed yields on through year. the said, million interest increase on manifest rates while in in interest to accounting our million value That's increased, the yield at continuing higher $XX.X $XX.X loan the on will Like and the rates, funds raise to current in fair versus million I Looking debt December in last $XX cost of decrease.

the million Looking $XX.X quarter $XX.X year. quarter, X% at operating December to about $XX expenses, the but the it's core flat last million the in is million than of first higher in

from Looking current a X.X% as down quarter is that quarter is XX% expenses the in last the X.X% at first decrease of managed percentage of portfolio, number operating the from X.X% the core -- shows however, the the year. that in

due the net managed our from in interest first primarily decrease the from margin. assets lastly, year, QX, the compression of flat return X.X%, X.X% And is quarter quarter in current the last on down the of X.X% to but in

I will turn over Mike. call to the

Michael Lavin

our history, as XXXX to for record-setting standpoint, which best operations originations we was we our grow $X.XX XX% billion, year originating last our and us reported a an were year was From Danny. able in year-over-year. XX-year Thanks, our call, in

to but we XXXX. start in a $XXX first is is quarter-over-quarter, first down XXXX great far, So as in million off X% over originated quarter, the the originations that in X% up quarter

far tracking So XXXX. so nicely in we are

is for a is and our XX,XXX metric The key year-over-year. We financial demand XX% increase that XX% to quarter-over-quarter over had remain QX, strong. in a which increase products apps

Now greater refund influx seasonality. but in and March of we saw a for financial our expect February apps greater despite demand to we due tax season, products that

all the that aggressively with our we reported also Yet, on XXXX. last said, second credit half that tightened we call of

that do important. to that consider most the in QX continue in areas We we

As of a X, XXXX design result to tightening. a and second is quarter rate dropped result, credit from in drop of That down the as to half XX% and in in dropped first it XX% our of the XXXX by approval half XX%. our

So in so like the subprime continuing that originating the high was to market. to upper we're the order tranche the focus improving the we lend only to further that in feel continue and the market. best available subprime Demand narrow buy of we first in we quarter, to consumers on paper

hold That's This yield rise that slight able in XX.X%. helps to higher and much with -- with our We've to the up from cost strong at rate down XX.XX% funds the over average and maintain been uptick quarter-over-quarter perhaps a face year-over-year. losses. mentioned quarter of Brad aggressive quarter of the in average APR very XX.XX% QX

risk like metrics for affordability for and are right to our look looking XXXX is payments all thing our One debt numbers trends. payment at We maintain looking at our those profile, now to at we're with latest the income customers. car income, in line to

look average, at prime payment below car payment includes also the was the $XXX quarter first the And used of We the average and which car for that an average is of which and payment of $XXX, XXXX, $XXX payment is amount. industry prime near paper.

$XXX So average. industry our strong of against payment subprime the looks

performance. also weighing factor and historically good Inflation are numbers some stressing critical been that interest that balanced issues of rising factors, with the but on macroeconomic our portfolio portfolio out are There's certainly performance. that's vintages. Switching more affordability over recent to in rates unemployment some has

as repossession inventory ended up slightly for quarter. and of as X.XX% X.X% total Annualized the compared the in in charge-offs ended same up of over net including For portfolio the at quarter portfolio XXXX. the at the X.XX% DQ were to quarter quarter same quarter, in XXXX. the X.XX% repossessions Extensions of up to compared the

of front, look Interestingly, which On and in forward. the so be is month ended going over saw managing XX.XX% for the recoveries That's recoveries XX.XX% in always we increase below quarter at for QX, our for they news the month XXXX. record the stabilizing good up quarter losses. month level good over to same

initiatives basic the deeper strategic that actions to and into skip the do to terms quarter. the lessen we in strategies strategy most worked performance, the account more so can from collectors proprietary improve to earlier one of more hiring some they work accounts some in In of far took quarter, loads, the our so several dig have

to technology. Turning

dealers invest us, our quest specifically continue intelligence-driven technologies, our X-year and our efficient customers. in make more business to for for that new We aims our artificial to technology

progress one to quarter, efficient more we side to side on on the using intelligence. make streamline artificial such artificial intelligence origination the one technologies, underwriting, X using great the made on In servicing collections and

to We do continue provides with promote portal which the to way business us. dealer an easier our dealer

our a we offices X housing left across That On the with personnel front, hired as million month. collectors few country. We feel of total taken that us the I a million a scale. to do employees, we to XXX us remain at $XXX a It's gotten boatload performance. portfolio to $XXX we've $XXX mentioned, help with a scale but million month, years, month,

So with Brad. it that, toss I'll back,

Charles Bradley

Silicon sit in why? Mike. industry. course, the the out we industry, where good the payment. Mike questions growth seen of very think and coming some you, we'll in terms a rapid in a model. credit our spot problems one mentioned Thank think lot in of we've XXXX, the one is give of of And in But of industry of we of the I probably to across indicators 'XX the

folks and problems a things there our our up -- out A the and keep a in you all cause I managed folks, customers by of the worry we having lot performance. down. that's over the customers think payment numbers, the lot try time, And is more to other problems terms for the inflation customer the of do about, to can of lot. and went one to payment payments the tell -- of things With the going the other

So able really with among manage others, us to issue in us what we're that helped keep doing. has line being

year going but we to interesting for where our is industry, could So I I be think the advantageous today XXXX is most CPS think an sits one positions of in. be

about care So and of matter. owners and about famous care are the the the securitization we rate, nothing and the in about. with NFL phrase terms doesn't economy that. all, really rest good of This the unemployment deal mean market, else. ones I we Those we're we care

indications unemployment particularly remains That And the so to low. forecasting unemployments remain really other strong, that, of just end very the BB, those popular. are is go of sort another much. We day. BBB, very are the really did lower words, the Those No up grade In good bottom market stack. healthy. at market and very is bonds, very securitization other that one strong

can sure is still it. industry's So extent levels our are or in also very maintain work, making important. to about about DQ the models both else care sure making is anything, that and we we losses the performance. pre-pandemic we levels below that's fact Everything The

the a a was There used time bit. car down pricing came where little market

up, right We bounced then expected it and to hold it back up.

that area well. is So even very working

in looks good. So of industry, it the terms all

economy, In said, doesn't hope large would terms okay. One we large unemployment. doing be mid-bank, to I it affecting major the of with will problems. of really some the really the go about the in People bank are are as overall banks seem concerned banks. again, securitizations. that care only the But And things players small

have the really level it got us. banking point you'd a would it So to to at before problem have real bother a

things going lot And and the terms Mike, we the a looks We way healthy XX the the months So of to that so. moves last position the all our industry again, the in our industry. right very economy. of top-down in made like sort about of really where back We've or care within along

kind So We of our in think accomplishment. it well we're that proud of for progress XXXX. bodes

just so see And goes. to how it

Thank us you all for next and to today, talking you to look quarter. forward we joining

Operator

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

Consumer Portfolio Services (CPSS) 27 Apr 232023 Q1 Earnings call transcript