CPSS - Earnings call transcript Q2 2024 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2024 Second 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 fact may be deemed forward-looking statements. Statements regarding current or historical valuation of receivables, because dependent on estimates of future events, are also 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 us is of otherwise. With whether publicly result new or information, events, here Mr. as forward-looking any Officer; Chief Mr. Bradley, Charles Executive Financial Mr. Chief and Officer; Bharwani, Daniel now President Operating will Lavin, call over Consumer Portfolio Officer Mike the of to and Services. I Chief turn Mr. Bradley.

Charles Bradley

But still our the trying, the best quarter, need, sum up made quarter, that Thank that to was the we what growing probably call. Probably in but again. enough beginning has of point transition where you, portfolio start that the we're being We way the pools we'll waiting we're earnings X absolutely where we're the this and to make call second confident performance another quarter of grow quarter. credit months. have we can welcome certain on good turn, in it we gotten terms to X to a from to to our started to watchful

growth Our year-over-year XX%. is XX%, is quarter-over-quarter

of interest working on awaiting growing will our again. But credit with the anxiously in our to that we're XX-A the we on word to the an forward even the making where end XX-C, towards putting because we've the in again, performance XX-D of be mostly that concerned We're rates second the some be whether at overall And think of and year. XX-A sales. enough what we're start going footprint very performance will looking and there start securitizations, been the growing has really be still least And effort good. most expanding that is down the and we, terms to newest that of we're course, with able So still, looking corner at point, finally at, would quarter, being it's at sure turned we're confident fine.

the this for And of the the we're down. I'll through it but the about -- go really again. towards all I year to turn will think the We're go other financial moment, corner. interest hopefully, over about basically, stuff. timing highlights, that, more to I'll of when talk growing the turn So come rates some Danny we'll end for together but on focused

Denesh Bharwani

Thanks, Brad.

the over $XX.X the Revenues for over a year. which $XX.X increase and the results last quarter Going million a in quarter last financial over the increase were quarter. X% XX% $XX.X million, million June the is

months, which quarter, year. XX% numbers last shows to loan originations. receivables $XXX.X I last months, the and shows increase say, mark XXXX. Also the fair is $X.X quarter that said, quarter. last XX% the originated mark in For the X growth the million revenue mark portfolio second Brad a $XXX.X the compares in year. Included $XXX the to million, are months a million the our growth, the a a is a in a quarter outperformance in mark million value the X over finance would portfolio, increase first the during $XX.X the was our -- increase million, same in -- X interest driven million we mark that the $XXX.X as have numbers new year. We didn't that are included by over the for income, in That And on XX% in revenue the in over increase for

increase facts revenues. X are those So driving in the

last to the over to expenses, quarter, quarter, Moving $XX.X up is last in million million the the second over quarter $XX.X for compared year. million $XX.X X%

for over year. A had losses reversal $XXX the expenses. the the portfolio. items $XXX.X X in We For a the a is X last for months, months legacy for to expenses which million, of provision increase couple were note on million our XX%

the of had was $XX.X the last is million the prior longer the year. is portfolio $X.X legacy There's compares that X we to of gone quarter XXXX, reserved That And because than been $XX for reversal quarter, amortized. now, left. But our loans recall was in that better last required that million previously million credit second reverse a to $X.X only mostly for it's of period, year. expected. that months did about performance might no which we mostly of million $X quarter million 'XX losses, during the by originated the You reversal and about was

to this driven The other increase million the primarily which to as last in compared $XX.X year. increase in expense, quarter million by expense, increased $XX.X interest has

increase increase portfolio to is to growth, levels had in Now part again origination But expense. obviously, higher interest in something of rates the the by also year. driven due that the interest increase do with during that

Moving on the year. $X.X $XX.X income, to comparable is quarter, to million last pretax million, last million $X.X versus

months, million for pretax X net million last $XX from quarter, income was from quarter year. is income $X.X last the the second For the down $XX Similarly, year. second $XX.X down million, million

For million, from share, for the this per trends $X.XX year, last year. $X.XX months net X income $X.X earnings from year. The the million for $XX.X is same follow down last period, quarter down second

the months, per to For $X.XX X year. $X.XX last compared share, diluted

revenues and in overall, the balance. So by again, in the are by all increase portfolio the expense somewhat these trends driven from increase higher expenses interest offset

to the on sheet. Moving balance

first $X.XXX the is a Our increase and billion, last quarter X% increase billion value $X.X from the fair XX% finance at a year. receivables from is

-- the $XXX another of $XXX.X up the million balance billion year. XX% million, ] as shareholders' sheet, [ is total on billion Our from XX% the our June high up of $X.X last last $X.X last -- equity, company, from is year. record the And million lastly XXXX, $X.X (sic) for is June balance debt for

net interest $XX.X flat last margin, is other the in $XX.X metrics. at The quarter, year. Looking second million million from

year. $XX from down but the last is million On year. Core last million basis, For last from this is from $XX.X expenses up as June year-to-date XX% operating the million $XX.X in XX% a of to it's were compared $XX.X quarter the months, last the million, it's quarter $XX.X core year. X operating X% million quarter, up expenses

the of second to operating first of same As Mike. from quarter percentage assets, on last for second year. managed of return the in X.X% X.X% second for the for managed quarter, the to X.X% in a year-to-date The compared X.X% X.X% quarter, X% down the over months months from but X.X% the call portfolio, the in numbers to compared up is X lastly, the the in quarter XXXX. And it's the X expenses to XXXX. I'll turn period, core

Michael Lavin

in operations, the demand a couple XXX,XXX In We of business That sales. The remained in and than of subprime in XX% originations compares this to quarter quarter in Danny. for what Thanks, XXXX. do light received strong. follow-up second of That's projected to apps the we apps $XXX apps we're XXXX the fact in in XXXX. increase a year-over-year. second did of year. comments million less That's XXX,XXX that

the as large as inside second business base we as we as new reps told, in roughly increasing, in the XX Brad dealer group dealer XX XX XXX the XX with we grow reps quarter, XX business total. beyond is team dealer the a quarter, footprint we mentioned, large in sales That's it's X have to XXX umbrella. from the increase. we of of and in of dealer allowed sales the the -- outside That's dealer growing second hired rep our quarter that goal add with a to say, quarter. even increase from and that's and over taking sales, that XX% Danny That's with aspect our in years second of growing groups the of dig that's efficient. That's their increase that base. dealer us from We and terms continue group to business will end X groups our to What rooftops XXXX. All rooftops the taken to reps XX the end our grow dealerships XXXX. One to in the XX% our as quarter that groups In expand reps. at business, second XX XX% going quarter And a in around we and XXXX more was large XX% year, in under large be second our additions. our further of meaningful in XXXX of reached to of the super force than only last our done of continue the into second continue to

We meeting on way are our end XX% well the by to our goal year. that of being of the

we rental a We second were base, companies, car metrics deals quarter. and per able that part in major As other including originate loyalty That's dealer we volume from to large Hertz Enterprise, Avis. A continue dealer monthly basis. on grow organic growth. of our the many of do the few dealer how to group

get fastest to just know to to we goes our dealerships. able dealers quarter-over-quarter that year-over-year. And in able like were to quarter. We to to over fast. per company X percentage funding been And days. paid get average the able our the dealers to all it's rep That's our increase dealers were and were our we're that the grow lower to increase second the quarter, second history, We in service and So in to funding that. time increase able capture efforts our paid to we customer the

so APR terms XX.XX% growth we're we've a strong far -- In a that been of strong able hold risk XXXX. that's our profile, And in APR. current inflection our holding to during

than higher historical FICO emphasis Our XXX. upper-tier FICOs on which to is reflected of our our more of paper. increased XXX, That's getting

the So branch. the tranche upper subprime of we're earmarking

around from XXXX the Our from flat LTVs second in remained down down which and XXX XXXX. is quarter, in XXX in XXX, running

in to hammering income second income the payment quarter. of our second So our moving down over and debt to we from 'XX we've LTVs note, able our were progress some the 'XX. Of in made quarter quarter to exceptional first lower our into

we portfolio the quarter far quarter greater XX.XX% for was able in growth days to of a X profile in second XXXX, risk to That's the the month-over-month second cycle. Switching the XXXX. have That overall, weeks so strong than said, to for during performance. XXXX. been lower compared of our XX first XX.XX%. DQ we've So DQ

so So XXXX. quarter X.X%. XXXX. Annualized lowering compared That's quarter net to we're seeing second was for the the charge-offs some in of positive second DQ X.XX% in trends the in far

the As months XXXX. charge-offs month-over-month with lower able our DQ, we have of been first to also in X moderately our

trends in in rate so as XXXX charge-off good well. So far the

competitors, our those with the we second Our extensions remain flat remained benchmarking And average. quarter. market at extensions in

get the a that through didn't get that did saw did charge-offs. June get extension an decrease accounts extensions of of in ran see extensions. the to uses versus December remarkable to did a provide study continue we compared our model to extension those of success extensions. And We recently the in those use and an in do 'XX, We have And that 'XX. we in granted that that and not 'XX found that extensions accounts algorithms accounts study extensions XX% of

So our working. extension methodology is

generally said, Brad quickly vintages. sort As of through or the fleshing 'XX challenging exiting speaking, we're

of The are it's second will the CNLs And half 'XX looking marked that norms. optimistic and early in cautiously improvement. great, 'XXs is the while to we're historical the return game, showing the

Turning to technology.

in back end We of layer in continue the front of AI-based the into the the to our end and technologies business operations, business.

of that Our we completed voice our latest few actually a by the project, of pilot a is bot, conversational competitors in used AI our industry.

pay, voice days. that The going RPC volume our time, on launch collecting X the real-time and of And in We AI establishing roll help it right XX that's we buckets. to efficiency incredible at to collections rate to payments on our making in use a that expect expect high of potential to converting this contact, revealed party pilot calls, fully least will our spot. reduce the promises probably to XX% the delinquencies, in August. We're testing and in and later bot

So we're excited that. about

launched had last AI the we we was did document originations. our processing the in first implemented thing phase year. in for other our We've The phase quarter of second bot the

X us income allows detects second renewing phase 'XX, leases. the the our actually process of we significantly and faster able deal fraud our things. renegotiating costs In pay the to -- upfront. A proof also second accurate dealer miscellaneous or on X faster. of more concentrates in The to checking it's months first upfront, and the reduce of And few by were X which occupancy and quarter

Our renewal for fifth now, working on speak. lease is we and are that up we as

And things. I'll it to Brad. with back good all So kick that,

Charles Bradley

Mike. Thanks,

and industry trying Looking performance in created we problems at everyone deal the the By to pretty and in 'XX. industry, XXXX place. in good our a is with sit large,

even not we better in As calls, better if previous done mentioned most, we've that. than than

industry. very are comfortable how other for think we're performing. We the with folks work We'll see how to it's through going So some those some affects to take it. pools that time

few a can -- and positively it affect think only pick if them the weaker players away, as up. of go big I the it players will

don't problem. have So that we

industry out entry years. in have or very last the in the things to one is extreme. almost in the has barriers X are we of No in our the past come One pointed XX now

And even bigger people up, leg people so I think an doing like gives a the gives us, here than better credit who leg that are most, up.

now lot production start roll so position we're real year and And We get on interest declining some a And in trick is experience want of the new we money then real growth. a hopefully growing and as into where we're have to again. the we we'll focused making lots rates.

the So really plan. that's

more think interested see to the We the our be what seems fine. economy, looks probably elections unemployment. what But terms do. in Unemployment I #X the do. the rates of will in We'll is healthy. even thing think we're economy

it sooner helps it the us. later they'll current to lower conditions, And that or appear really begin with that's rates. economic where So would

So One make in for that and we exactly declining we credit do of rates. probably growth X funding our position preparation two, a we're think that to lots in where where And is interest as is to loans into roll is things our to goal get lots it's sure going. time.

deal. the it's both the of when quarter, we'll exciting, like to position somewhat in not is first that, but advantage strong cash it time be that second the on possible take right, things financially. We're building and done building quarter, We're having blocks. So best economically all the so residual like

to beginning out. securitizations. We in have our is tied up money flow lots That of money

in a really position the very quarters. we're to advantage of next take good few So

let next quarter. attending. we'll for see go, So you Thank that, and with it we'll you all

Operator

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

Consumer Portfolio Services (CPSS) 31 Jul 242024 Q2 Earnings call transcript