Q3 2024 Credit Acceptance Corp Earnings Call
The End
Speaker Change: And as you listen to this conference call. Please recognize that both contain forward looking statements within the meaning of federal Securities law.
Speaker Change: These forward looking statements are subject to a number of risks and uncertainties.
Speaker Change: Many of which are beyond our control and which could cause actual results to differ materially from such statements.
Speaker Change: These risks and uncertainties include those spelled out in the cautionary statement regarding forward looking information included in the news release.
Speaker Change: Consider all forward looking statements in light of those and other risks and uncertainties.
Speaker Change: Additionally, I should mention that to comply with the Sec's regulation G. Please refer to the financial results section of our news release, which provides tables showing how non-GAAP measures reconcile to GAAP measures.
Speaker Change: At this time I will turn the call over to our Chief Executive Officer, Ken Booth to discuss the third quarter results.
Ken Booth: Thanks Jay.
Ken Booth: Overall, we had another mix quarter as it relates to collections and originations two key drivers of our business.
Ken Booth: 2022 benefits continued to underperform our expectations.
Ken Booth: In 2021, 2023, and 2024 also declined.
Ken Booth: <unk>.
Ken Booth: Modest decline of 0.6% or $62 $8 million and forecast that net cash flows.
Ken Booth: As we've previously communicated historically our miles are very good at predicting loan performance in aggregate.
Ken Booth: Our models work faster and less volatile times.
Ken Booth: The pandemic and its ripple effects created volatile conditions federal stimulus enhanced unemployment benefits.
Ken Booth: The supply chain disruptions led to vehicle shortages inflation et cetera.
All of which impacted competitive conditions, we've had larger than average forecast Mrs. Both high and low during this volatile period.
Ken Booth: Product innovation and support for our viewers faster and more effectively than ever before.
Ken Booth: This requires teamwork attention to detail.
Ken Booth: There are process attempts to make improvement every step of the way.
Ken Booth: This is a work in progress, but we are getting better.
Ken Booth: We also continued investing in our technology team with improved Europeans capabilities and are focused on modernizing both are key technology architecture.
And Howard can perform work with the goal of increasing the speed at which we enhanced our product for dealers and consumers.
Ken Booth: During the quarter received more awards from Fortune USA today, and people magazine, recognizing us as a great place to work, we continue to focus on making our amazing workplace, even better we support our team members and making a difference to what makes a difference to them.
Ken Booth: In connection with their efforts, we contributed to organizations such as 42 strong.
Ken Booth: American Foundation for suicide Prevention, Atlanta Area School District Children's Hospital of Michigan, and Pier House Foundation, now J, Martin and I will take your questions along with Dove Us our Chief Treasury Officer Jay.
Ken Booth: Very briefly our senior Vice President and Treasurer.
Ken Booth: And Jeff <unk>.
Ken Booth: Our vice President and assistant Treasurer.
Speaker Change: If you'd like to ask a question at this time. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Your question. Please press star one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: At the end of Q3 is at the high end of the historical range.
Speaker Change: And given <unk>.
Speaker Change: Certainties about collection performance and capital market conditions in light of the election.
Speaker Change: We took a bit more of a conservative approach.
Speaker Change: As you know we've repurchased.
Speaker Change: A significant number of shares over a long period of time over 30 million shares since the late nineties.
Speaker Change: But we don't do a consistently some periods, we buy back a lot some periods, we buy back very little.
Speaker Change: So I don't think that you can take a look at one quarter and assume that's the basis for a new trend line.
Speaker Change: Got it thanks very much.
Speaker Change: Our next question comes from the line of John Hecht with Jefferies.
John Hecht: Good morning, guys. Thanks.
John Hecht: So.
Speaker Change: John you may have muted your line.
Speaker Change: Our next question will come very good.
John Hecht: Thank you Tony.
Speaker Change: And we have a question from the line of John Rowan with Janney Montgomery Scott.
John Rowan: Hey, good morning.
John Rowan: I guess I, just wanted to drill down a little bit into what.
John Rowan: Lower consumer prepayments means I mean, we've asked on the call before is that related to lower.
John Rowan: Lower.
John Rowan: Repossession.
Speaker Change: If I could just sneak one more in and ask Ken about something you highlighted earlier, specifically the fifth 22 vintage would still generate economic profit I was wondering if you could give some more context, there like how much more economic profit does.
Speaker Change: A good vintage like say 2019 generate versus 2022.
Speaker Change: I did.
Speaker Change: We've got a wide variance.
Speaker Change: Rafa.
Obviously 2019 O.
Speaker Change: Buoyed by stimulus payments in it over collected.
Speaker Change: <unk>.
Speaker Change: I don't really want to get into the details of our.
Speaker Change: Kind of profitability by vintage but.
Speaker Change:
Speaker Change: I guess, what I would say as you know 2019 was a highly profitable vintage in 2022 is a lesser profitable one but they all produce economic profit, which means they are all profitable vintages.
Speaker Change: Okay. Thank you.
Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone phone.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Ryan Shelley with Bank of America.