CPSS - Earnings call 3 2023 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2023 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 further you March refer the report annual I filed XX for clarification. company's on to The company as result Mr. otherwise. With new of publicly or forward-looking for events here statements a the update information us assumes whether any obligation no is Bradley, Executive Chief Officer; Charles Mr. Danny Bharwani, Chief Financial Officer; and Mr. call and Operating Services. I turn the Portfolio Officer will Consumer Mike over of Chief Mr. Lavin, President to now Bradley.

Charles Bradley

call. conference to the CPS you, Thank welcome, quarter and everyone, third

of bumpy. In I much ago to generally happen was return terms comments, much rates, expectations say huge since lot obviously, that a higher. levels speaking, the industry and performance a used become interest of cost what things we loss Things then, pre-pandemic in is has opening think on our 'XX terms the of few make more was, higher. the returning focus the portfolio obviously, of Therefore, 'XX, from performance. And to quarters, in last we've had Also like vintages. quarters a funds to that few

that it potential and things -- make And CPS and competitors iterations, now a have than other a all other today. And size just I size other can little been storm. financials So place, size in before in our problems the the said having in previous on have go a terms would looks we even position very I'll weather prove company, we and turned is, position going today and better. the the we've that our been we're is situation that position after in would and any at us another that, good probably we're with have the it we a position news these numerous through different credit like time. The a in even think, through in industry all touch good we given to than that put really and we difficult And update. good together the a controls of experience portfolio, have in lots lots of we a forward, of inflation, operations quarter, in the scenarios. The of in then of better people little much consumer strong more

And that, Danny. so it to with over turn I'll

Denesh Bharwani

Brad. Thanks,

million year quarter million of financials. We'll quarter the over with X% of the Revenue third is for million higher Going $XX.X quarter, year. in revenues. and the in last $XX.X the second this start higher than than $XX.X X% our the

XX, -- than For period million, X billion, to the fair September in value X-month ending which is the revenues the million grow. $XXX.X now XXXX. Of note third here, higher continuing our of were portfolio is quarters $XXX $X.X the X%

$X.X that these calls and listening know risk-adjusted It's million will been QX the losses, If for a million. the to That yield of of of you've a to past, markup current this after is compares it's portfolio is $X a in included revenues on quarter value XX.X% in in the fair the mark. value in yielding fair that you markup is in portfolio and QX XXXX. period. Also

that we we That's in in you're losses initial the benefits our outperformed and markup the portfolio, quarters included and performance portfolios, expectation. our the in XXXX markup vintages year-to-date better-than-expected million that received recognize fair of that's mainly The in have -- revenues that For older result $XX.X of a comparing. and seeing. collections for those the for we're million the is $X period, in the markup X our all X And from resulting periods is value XXXX. from

That 'XX. That's is expenses. compared compared $XX.X second is in expenses. to quarter to million year, XX% third last million quarter XX% current in which increase. the the $XX It's quarter a $XX.X on to in of the Moving increase million of in a

performance all comparing portfolio, are here for the period, our value. months X for include things For in and has expected, we accounted terms loss is of to took $XXX.X we're XXXX of we ending million which of expenses XX% the note quarter million to the reduce these million by expenses, million the loans. reverse year. that's legacy again, better time, than that that realized an to And reserve for we -- to this on compared last the X in a lifetime expenses and $X all come CECL, under were reversing provisions periods a helped for posted accounted increase. Two able year-to-date in last quarter compared provisions $X portfolio third over that's to loss we've adjustment the year, $XXX.X of in loss fair are These portfolio. The not the and using third

million For the in of the of quarters months, provision X that is compared loss X $XX.X million $XX.X to XXXX. reversal

that additional expenses interest that year expense quarter, is $XX.X the last million million the and of for the driver is $XX.X to year-to-date and XX -- the other in The year. of expense, compares quarter million period, $XX.X current in interest million $XXX last third

The most the greater. that in is attributable portfolio interest to size increase is For higher expense costs. part, interest also

we've But is rates that increased real obviously seen. partly driver costs. the that contributing the that's increase So in of to

In in it's increase further quantify and XX% expense, up interest quarter-over-quarter fact, year-over-year. the to XX%

million the pretax It's year. in current last $XX.X in $XX.X at quarter earnings. Looking million quarter, the

was per $XX.X last period, X-month We're million in net share. Net XX% a last million year. For million this the in year. $XX.X seeing a million year That's That's income current and decrease. same trends decrease. XX% quarter, versus $XX.X $XX.X the the income earnings

million X-month versus the $XX.X last period, For year. $XX.X million

XX rate September decline this ending year. manifest year, per per income last to down XX%, trends, is share those pretax again, earnings. and obviously, similar this the compared year $X.XX $X.XX to X And diluted of net same share So in $X.XX earnings the quarter will $X.XX versus reflect diluted for quarters last

Moving on sheet. to the balance

XX% over and healthy levels quarter X% by the origination portfolio Our year-over-year, June the throughout year. grew driven fair value by

Our X% year-over-year. up sequentially only debt securitization and is X%

liquidity where able our to on we're maintain shows area leverage balance portfolio. this our So our despite loan an of lower sheet, on strength

area quarters at by strength of X/XX posted The an pretax high company. is driven of consecutive all-time $XXX.X XX equity. this year, shareholders' our million profitability. is the Another for we

So we've shown profits our durability that quarterly to over XX the been last able period. we've the post entire years, throughout

metrics. other some at Looking

the Our net XX%. year. interest decrease in margin quarter quarter current last a versus million is of $XX.X in the million $XX.X That's third

in the are $XXX.X million basis, period for for For core year And this quarter, on months X.X% period increase months year X.X% year, the current the expenses X quarter X.X% quarter versus X%. of X-month of quarter million $XXX managed lastly, X.X% third also year, this last million versus versus a operating our year, this X.X% this in in of million that's last last in portfolio, operating return $XXX.X year. and the XXXX X.X% year. XXXX. on versus in assets, last this $XXX.X an year, the year-to-date expenses against the the annualized That's for managed XXXX. And X.X% year X $XX period, for X.X% this the last XX%. Core decrease of million million measured year-to-date an $XX.X

operational the over the call aspects. turn to of over will to go some I Mike

Michael Lavin

to in That in originations, compares million solid a back new in slight certainly operate strong due contracts box as third Thanks, our compares year-over-year with volume new and our quarter certain purchased $XXX eye macroeconomic and reflects $XXX space. contracts and third affordability quarter during discussed, credit to Brad tighter Danny. product of was to million The QX demand we uptick million kept the All In purposeful to we we the remains of as the right. keen quarter-over-quarter in that contracts. customers. XXXX. The new $XXX of on scaled reduction originations a headwinds that our in of for continue

hold subprime to That in the In ratios. payment terms payment income And upper firm a of used factor $XXX. debt-to-income affordability or we ever XXXs a of our on important, a for space, the and for payment a car upper that's near in Equally monthly our car for car. to compares remained to space at relatively irrespective our price customer. important the low compares our continue that new to prime a XXXs customer

space. for So our quite low payment our target remains

As quarter. strong remained demand third mentioned, in the I

the record of company roughly a getting which applications are receive XX-year day, billion. X,XXX we as in a roughly same is We $X.XX we originated when XXXX

significantly Our dug in Again, the that XX%. tightening. tightened ticked at significantly which we down is credit that's our not XX%, beginning and of concern at as of approval of for XXXX rate credit XXXX XXXX on box to end was really the down as purposeful QX cause that drop a from

Again, significantly a exceptions. indicator job losses. tightened in requirements, more lowered we made most especially percentage, importantly, program residency tightened less LTV, definitely LTVs, cap approval leading has We've Specifically, payments and but certain our is which stability and our lowered our we we segments. of it's and this

Our that average warranty in is the offer, the and This of a result amount about whopping quarter of for was $XX,XXX, pullback is we $X,XXX major back-end financed $XXX QX drop down and likely a down quarter-over-quarter XXXX. in which products GAAP. specifically

amount to relatively our So caps, lowered lowered to we've also the remaining allowed has this has contributed the which less peers. of LTV monthly be financed. compared to those back-end financed, products our And low which has payment

the point APR and APR of and late in APR average this 'XX lower despite in an QX important about XXXX to XX%. tightening our box strong than average a continue achieved is credit We of APR hold Again, was QX, XXXX. that higher recognize registering X.X to which early it's materially quarter-over-quarter in of significantly XX%,

credit then come realize don't of of when like to said, space see I demand terms basically with In their remains the pull out ways strong. the space unions continue to And and rates. lower competition, losses we the come meet of they in But they expectations. out

the there's or in the including makers business So us. than enough X space, more for market X

pull entrants In a players are not best terms as into Regional out no of learn month-over-month is the growth, this are tremendous market. continually there to market. their credit new target probably that there continuing unions opportunity and remains

of we our see a the tightening planning are We $XXX requires to time But and holding firm our at are grow it. performance. million the nonetheless, portfolio until credit when month we fruits

make we on our yet. vintages. that customers. particularly the fact for the that's there's affordability no to that the Moving going well recession talking XXXXs mid-Xs, below vintages, heads been the there's very macroeconomic of to it's more balanced on That's And headwinds success that economic of still the that if portfolio rates are and recession. interest our there soft our there's if early business. not one, for the consider not we rate is headwinds recent be one -- Most Certainly, And important, are more out which issue is to raising the which is in key target equally, must some weighing monitor the metrics short. that Inflation hovers going and of unemployment believe and that performance. a with be but XXXX in Xs,

good looking So we're there.

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

experienced That's we to XXs, control which our performance we we're stabilizing the from front, we're to the is is offset up our happy that way going our low the XXs, coming year. recoveries we -- in earlier don't low forward. help seeing that recovery that losses, which which something On are this helps report

we in to QX, from well, least in talk fact our that overall performance competitors accounts So the especially new picked are the strategic as in This employ We unique from improving on bankers per successful performance outperforming several collector to our our believe skip the our has are the over forward. XXX. from XX in last continued by that and what and collection the we more so up going offs, improve quarter, couple tactics. over this space. In the -- and market investors, at to is less performance, months we've we and such in-depth months collectors that we changes were lower collection hiring taking tactics allows heard portfolio of XX tracing also last

power out our built up EQ increase dialers. focus the roll near collection our and use to potential on or the We reduce rate accounts. program of shore also built

been refresh So on X these launched we XXXX in to In of it's early vintages. One servicing complete thing. months. last deck to Gen model, our model. This to model XX every and try all hands XXXX launched Gen the on a refresh X the XX XXXX. our originations quarter, models is collect We

AI, on utilizes fraud. also some implementing data recent best believe our updated reduce buy machine with hit to X performance believe better that model But this originations and going It's box model. score This alternative should most improve forward. fraud we learning to our infused that the Gen applicants. target So yet. importantly, scores new And we we our is

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

Charles Bradley

Thanks, Mike.

of been company doing. information lot what the has a that's So terms in of

guys where of both as terms it's money with people the much good lot grew been beginning out, industry, way better after most. than sit to the the pandemic anybody to the pointed In way we and than as because the flowing price industry performance we're than better turbulent the and been as our pay a quite the -- some and times. actually so all has as in out, got all not 'XX now for been pointed -- Everyone We're expected. Again, guys that during the has aggressive performance aggressive. as better an customers

So happy we're kind our with where in really there. kind of sit. control means It we is hung of

ready going sitting doing. were us the need again. But the not leave in do X position we're vintage we where would full let really bore as lot would to does fine. we're to We like a losses to a same but again, We about again, things. than a go not bad the in, growing to of through 'XX it's to vintage, -- as It's but that what start However, little And need get pipeline, which to we where nearly the certainly 'XX, worried than higher 'XX way. some. initially, we expected, all be that's the track a we net bunch expect better others.

that 'XX quite we're next improvements 'XX, hold. the we need still and proper And young thing the which are, is need fact, in and of is early show will made good. The moves and in terms so in we we that, 'XX changes the vintage, to late

Now against our margins. higher customers' is performance, all our cutting that, inflation hurting is rates interest

No I had in So normal. a seen doing very are we've that things little items strong thing to get isn't been This We've position there's a difficult. And making it. recovery what it, life done, the to get easily all this a think bunch given through or worst are of problem. to ever again bunch we're at forever. through. we've somewhat returning of There's rates

strong. where confident 'XX performance strongest getting really go. And the the usually the again, to we few one just we're months, I half think months. next So first of It's will be of very

hopefully will care So that look Also should then inflation interest ease. and at can also we problems the in appear stay grow put 'XX. It hopefully in least again will down. potentially 'XX and flat, that us take to that come continue rates would to behind of that

through everyone in the problems and be both our future a get position industry But 'XX. us And through very particular. so 'XX sort and the in done. Again, has should what positive very and we're the for optimistic to slug company of we've about of of else terms 'XX

well. Again, We've pleased first done that So we'll and how enough. we're lots other with compared identify the done that our worked very which and well clearly we're has We're actually can one it very, we've goes. not before. particularly see to how big program of we times, quite folks, is of worried,

quarter. thank you and we'll for just here, you we'll in, that, being you With speak Thanks all and to then. next for see tuning

Operator

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

Consumer Portfolio Services (CPSS) 13 Nov 232023 Q3 Earnings call transcript