Credit Acceptance (NASDAQ:CACC) Corporation (NASDAQ: CACC) reported its Q3 2023 earnings, revealing a decrease in forecasted collection rates and a drop in adjusted net income. The company's Chief Treasury Officer, Doug Busk, led the call and addressed concerns about the company's financial performance amid a challenging economic environment.
Key takeaways from the call include:
- The company's GAAP and adjusted results for the quarter showed a decrease in forecasted collection rates, which decreased forecasted net cash flows by $69 million or 0.7%.
- The forecasted profitability for consumer loans assigned in 2020 through 2022 was lower than estimates at September 30, 2022, due to a decline in forecasted collection rates and slower forecast net cash flow timing during 2023.
- Unit and dollar volumes grew 13% and 10.5% respectively as compared to the third quarter of 2022.
- The average balance of the company's loan portfolio on a GAAP and adjusted basis increased 5.9% and 10.6% respectively as compared to the third quarter of 2022.
- Adjusted net income decreased 22% from the third quarter of 2022 to $140 million, and adjusted earnings per share decreased 20% from the third quarter of 2022 to $10.70.
During the call, Busk responded to questions about the company's financial performance, attributing the decrease in forecasted collection rates to a combination of factors including inflation and elevated used car prices. He also noted that the competitive environment has improved, with loan portfolio growth and originations in Q3 meeting the company's expectations.
On the topic of the ongoing CFPB and New York AG suit, Busk stated that he doesn't expect any significant developments until the Supreme Court rules on the constitutionality of the CFPB. He also clarified that the company hasn't made any significant changes to its approval policies or pricing in October.
The company thanked its supporters and invited further questions to be directed to its Investor Relations mailbox at ir@creditacceptance.com.
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