Core Insights - Credit Acceptance Corporation has been recognized as one of the Best Places to Work in IT by Computerworld for the 11th consecutive year, ranking 2 among midsize companies, an improvement of six positions from the previous year [1] - The company has received a total of twelve workplace awards this year, including 34 on Fortune's 2025 100 Best Companies to Work For list and 1 on the 2025 Top Workplaces for Remote Work list [3] Company Overview - Credit Acceptance provides innovative financing solutions that enable automobile dealers to sell vehicles to consumers regardless of their credit history, thus facilitating vehicle ownership [4] - The financing programs are offered through a nationwide network of automobile dealers, benefiting from sales to consumers who might otherwise be unable to obtain financing [4][5] Technological Advancements - The Engineering team has made significant progress in modernizing foundational technologies and integrating AI to enhance customer and team member support, leading to improved reliability, speed, and overall performance of technology [2] - Enhancements include increased system stability, AI capabilities that streamline support, and the launch of new digital platforms that simplify work and enhance service [2]

Core Insights - Giverny Capital Asset Management reported a third-quarter 2025 portfolio return of 6.78%, underperforming the S&P 500's 8.12% return, with a year-to-date return of 12.57% compared to the index's 14.83% [1] Group 1: Company Performance - Credit Acceptance Corporation (NASDAQ:CACC) had a one-month return of 3.66% but experienced a 6.95% decline over the last 52 weeks, closing at $461.29 per share on December 08, 2025, with a market capitalization of $5.184 billion [2] - Giverny Capital Asset Management fully exited its position in Credit Acceptance Corporation on October 1, citing concerns over the company's technological and underwriting capabilities compared to other subprime lenders [3] Group 2: Investment Sentiment - Credit Acceptance Corporation is not among the 30 most popular stocks among hedge funds, with 29 hedge fund portfolios holding the stock at the end of the third quarter, down from 39 in the previous quarter [3] - The company acknowledges the potential of Credit Acceptance Corporation but suggests that certain AI stocks present greater upside potential and lower downside risk [3]

Core Insights - Credit Acceptance Corporation has been recognized as a 2025 Top Workplace in Michigan, ranking 2 among large companies, maintaining the same position as last year, marking the 14th consecutive year of receiving this honor [1] Group 1: Company Recognition - The ranking was determined through an anonymous survey conducted by Energage, focusing on cultural factors such as alignment, execution, and connection, which are essential for organizational success [3] - In 2025, Credit Acceptance received a total of eleven workplace awards, including 34 on Fortune's 2025 100 Best Companies to Work For list and 1 on the 2025 Top Workplaces for Remote Work list [4] Group 2: Company Culture and Values - The Chief People Officer emphasized the importance of team members living the company's PRIDE values—Positive, Respectful, Insightful, Direct, and Earnest—in their daily activities [2] - The company has adapted to a flexible, remote-first environment for nearly 95% of its team members, ensuring strong connections despite physical distance [2] Group 3: Community Engagement - Credit Acceptance has partnered with Make-A-Wish® Michigan to grant 12 wishes for children with critical illnesses and has engaged in various community support activities, including packing over 103,400 meals for Gleaners Food Bank [8]

Core Points - Credit Acceptance Corporation completed a $500.0 million asset-backed non-recourse secured financing, conveying loans valued at approximately $625.2 million to a special purpose entity [1] - The financing involves three classes of notes with varying amounts, average life, prices, and interest rates, structured to ensure that 96.0% of cash flows will be used for principal and interest payments [1][2] - The company maintains approximately $2.0 billion in unused borrowing capacity and unrestricted cash following this financing, marking its 60th term securitization since 1998 [2] Financing Structure - The notes issued include Class A ($284.61 million, 2.58 years, 4.50% interest), Class B ($104.57 million, 3.33 years, 4.87% interest), and Class C ($110.82 million, 3.70 years, 5.38% interest) [1] - The company will receive 4.0% of cash flows from the underlying consumer loans to cover servicing expenses, while the remaining 96.0% will be allocated to pay principal and interest on the notes [1] Company Overview - Credit Acceptance Corporation provides innovative financing solutions that enable automobile dealers to sell vehicles to consumers with varying credit histories [3] - The financing programs help consumers improve their credit scores, allowing them to transition to more traditional financing sources [4] - The company is publicly traded on the Nasdaq under the symbol CACC [4]

Core Insights - Credit Acceptance (CACC) reported quarterly earnings of $10.28 per share, exceeding the Zacks Consensus Estimate of $9.61 per share, and showing a significant increase from $6.35 per share a year ago, representing an earnings surprise of +6.97% [1] - The company posted revenues of $582.4 million for the quarter ended September 2025, which was slightly below the Zacks Consensus Estimate by 0.59%, but an increase from $550.3 million year-over-year [2] - The stock has underperformed the market, losing about 2.2% since the beginning of the year compared to the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $10.00 on revenues of $594.11 million, while for the current fiscal year, the estimate is $38.89 on revenues of $2.33 billion [7] - The estimate revisions trend for Credit Acceptance was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Financial - Consumer Loans industry, to which Credit Acceptance belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company reported a decline in loan performance and year-over-year originations volume, with overall forecasted net cash flows declining by 0.5%, or $59 million [4] - The loan portfolio reached a record high of $9.1 billion on an adjusted basis, up 2% from the same quarter last year [4] - Market share in the core segment of used vehicles financed by subprime consumers decreased to 5.1% from 6.5% in the same period of 2024 [4] Business Line Data and Key Metrics Changes - The company financed almost 80,000 contracts during the quarter, with a total collection of $1.4 billion [6][7] - The unit volume was impacted by a scorecard change in Q3 2024, resulting in lower advance rates and increased competition [5] Market Data and Key Metrics Changes - The competitive environment remains intense, with a noted decline in volume per dealer [21] - The subprime market has stabilized after a decline over the past four to five years, but affordability issues continue to pressure consumers [36] Company Strategy and Development Direction - The company aims to maximize intrinsic value and positively impact its key constituents, including dealers and consumers, by providing financing options for those with poor credit histories [5] - The engineering team is focused on modernizing technology architecture to enhance dealer experiences and accelerate innovation [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive market and the challenges posed by affordability issues for consumers, which could negatively impact business [29][36] - The company is positioned for the future, with a strong loan portfolio and ongoing investments in technology [10] Other Important Information - The company received four awards for workplace excellence, highlighting its commitment to employee satisfaction [9] - The CFO announced his retirement after 22 years with the company, indicating a transition in leadership [10] Q&A Session Summary Question: Are there any covenants in the asset-backed securities regarding forecast shortfalls? - Yes, the current ABS still has a covenant for early amortization if there is a 10% forecast shortfall, but there are no outstanding securitizations close to the 90% trigger [14] Question: What is the current G&A expense situation? - G&A expenses were higher than expected due to one-time charges related to contingent legal losses, but adjusted results show consistency over recent quarters [15] Question: Is there a share repurchase authorization? - The company has just over 2 million shares currently under board authorization for repurchase [16] Question: How is the competitive environment affecting the business? - The environment remains competitive, with some peers struggling, but overall competition has not significantly decreased despite poor credit results [20][23] Question: What impact do tariffs have on the business? - Any factor that impacts consumer affordability is generally negative for the company, although the specific impact of tariffs is difficult to quantify [29] Question: Will there be any changes to the scorecard in the future? - The company continuously evaluates its scorecard and pricing based on loan performance and market conditions, indicating potential adjustments in the future [31] Question: What is the current state of capital markets activity? - The environment for ABS issuers has been favorable, with tight spreads and strong demand for recent deals, despite some recent widening in spreads [50]

Financial Performance - Consolidated net income for Q3 2025 was $108.2 million, or $9.43 per diluted share, up from $78.8 million, or $6.35 per diluted share in Q3 2024, primarily due to a decrease in provision for credit losses and an increase in finance charges [200]. - For the first nine months of 2025, consolidated net income reached $301.9 million, or $25.50 per diluted share, compared to $96.0 million, or $7.68 per diluted share in the same period of 2024 [201]. - Total revenue increased by 5.8% to $582.4 million for the three months ended September 30, 2025, compared to $550.3 million in 2024 [235]. - Net income increased by 37.3% to $108.2 million for the three months ended September 30, 2025, compared to $78.8 million in 2024 [235]. - Total revenue for the nine months ended September 30, 2025, was $1,737.3 million, an increase of $140.8 million or 8.8% from $1,596.5 million in the same period of 2024 [244]. - Net income for the nine months ended September 30, 2025, was $301.9 million, a significant increase of $205.9 million or 214.5% from $96.0 million in 2024 [244]. Loan Portfolio and Collections - The average balance of the Loan portfolio increased by 3.9% year-over-year to $8.0 billion as of Q3 2025 [202]. - Forecasted net cash flows from the Loan portfolio decreased by $58.6 million, or 0.5%, due to declining collection rates [202]. - The company experienced a decline in forecasted collection rates, which impacted net cash flows from Consumer Loans assigned in 2022 through 2024 [206]. - The forecasted collection rate for 2025 Consumer Loans as of September 30, 2025, was 67.2%, with a variance of 0.1% from the initial forecast [206]. - The forecasted collection rate for 2025 Consumer Loans assigned from January 1 to June 30 is 67.1%, while for those assigned from July 1 to September 30, it is 67.4% [213]. - Total forecasted collections for the portfolio as of September 30, 2025, are estimated at $12.3 billion, providing over $4.5 billion of cushion to lenders after accounting for estimated expenses and outstanding debt [256]. Dealer and Consumer Loan Activity - A total of 1,342 new Dealers were enrolled, bringing the total to 10,180 active Dealers during the quarter [202]. - Consumer Loan assignment unit and dollar volumes declined by 16.5% and 19.4%, respectively, compared to Q3 2024 [202]. - Consumer Loan unit volume decreased by 16.5% to 79,916 for the three months ended September 30, 2025, compared to 95,670 in the same period of 2024 [226]. - Active Dealers decreased by 4.7% to 10,180 for the three months ended September 30, 2025, while the average volume per active Dealer decreased by 12.2% to 7.9 [226]. - Consumer Loan assignment volume decreased by 16.5% in unit volume and 19.4% in dollar volume during Q3 2025, attributed to a 4.7% decline in active Dealers and a 12.2% drop in average unit volume per active Dealer [225]. Financial Ratios and Expenses - The funded debt to equity ratio was 4.0 to 1 as of September 30, 2025, indicating the company's financial leverage strategy [222]. - General and administrative expenses increased by 25.2% to $36.3 million, primarily due to higher legal expenses [240]. - Interest expense increased by $5.1 million, or 4.6%, due to a rise in the average outstanding debt balance, reaching $116.3 million for Q3 2025 compared to $111.2 million in Q3 2024 [241]. - Average outstanding debt balance increased to $6,460.7 million for the nine months ended September 30, 2025, up by $728.6 million from $5,732.1 million in 2024 [252]. - General and administrative expenses rose by $27.7 million, or 36.5%, primarily due to increased legal expenses, including a $38.4 million contingent loss recognized in 2025 [249]. Funding and Debt Management - The company maintains multiple funding sources, including a revolving secured line of credit and term ABS financings, to support its capital access strategy [222]. - The company has $1,586.3 million in unused and available revolving lines of credit as of September 30, 2025 [264]. - Scheduled principal debt maturities total $6,404.2 million as of September 30, 2025, with $477.0 million due in the remainder of 2025 and $2,204.8 million due in 2026 [265]. - A $400.0 million Term ABS financing was completed on March 27, 2025, with an expected average annualized cost of 5.6% [259]. - The company extended the maturity of its revolving secured line of credit facility from June 22, 2027, to June 22, 2028 [260]. Awards and Recognition - The company received multiple awards, including a 4 ranking in Financial Services Top Workplaces and a 10 ranking in Fortune Best Workplaces in Financial Services and Insurance [202].

Group 1 - The article does not provide any specific information or data regarding companies or industries [1]

Financial Performance - Consolidated net income for Q3 2025 was $108.2 million, or $9.43 per diluted share, compared to $87.4 million and $7.42 per diluted share in Q2 2025[2] - Adjusted net income for Q3 2025 was $117.9 million, or $10.28 per diluted share, slightly down from $118.3 million in Q2 2025[2] - GAAP net income for Q3 2025 was $108.2 million, a 37.3% increase from $78.8 million in Q3 2024[31] - GAAP net income per diluted share rose to $9.43, up 48.5% from $6.35 in the same period last year[31] - Adjusted net income for Q3 2025 was $117.9 million, compared to $114.8 million in Q3 2024, reflecting a growth of 2.7%[39] - Basic net income per share rose to $9.62 in Q3 2025 from $6.42 in Q3 2024, reflecting a 50.9% increase[70] - Total revenue for Q3 2025 was $582.4 million, an increase of 5.4% from $550.3 million in Q3 2024[70] Loan Portfolio and Consumer Loans - The average balance of the loan portfolio increased by 3.9% year-over-year to $8.0 billion[6] - Consumer Loan assignment unit and dollar volumes declined by 16.5% and 19.4%, respectively, compared to Q3 2024[6] - Consumer Loan unit volume decreased by 16.5% year-over-year for the three months ended September 30, 2025, with active dealers declining by 4.7%[26] - Year-over-year dollar volume for Consumer Loans dropped by 19.4% in Q3 2025, attributed to a decrease in the average size of loans assigned[26] - The percentage of Consumer Loans assigned as dealer loans was 73.1% for the three months ended September 30, 2025, while purchased loans accounted for 26.9%[29] - Consumer Loan assignment volume has been negatively impacted by a decrease in overall demand and available capital for new loans[25] - The company expanded dealer access to the purchase program for Consumer Loans to consumers with higher credit ratings, contributing to a higher percentage of purchased loans in 2025[30] Collection Rates and Performance - Forecasted collection rates for Consumer Loans assigned in 2025 improved to 67.4% as of September 30, 2025[10] - As of September 30, 2025, the forecasted collection rate for Consumer Loans is 67.2%, with an advance rate of 67.1%, resulting in a spread of 22.1%[17] - The forecasted collection rates for 2025 Consumer Loans show a variance from initial forecasts, with 2019 and 2020 loans performing better than expected, while 2021 to 2023 loans underperformed[18] Financial Metrics and Ratios - Adjusted return on capital decreased to 9.4%, down from 9.6% in the same quarter last year[33] - Adjusted revenue as a percentage of adjusted average capital for Q3 2025 was 18.6%, slightly up from 18.2% in Q3 2024[39] - Economic profit decreased by 8.7% to $43.0 million compared to $47.1 million in Q3 2024[34] - Economic profit for the three months ended September 30, 2025, was $43.0 million, compared to $35.3 million in the same period of 2024, representing a 21.1% increase[44] - Economic profit per diluted share for the three months ended September 30, 2025, was $3.75, an increase from $2.87 in the same period of 2024[44] Expenses and Liabilities - Operating expenses increased by 13.3% ($17.2 million), driven by higher salaries and legal expenses[31] - Salaries and wages expenses rose to $85.5 million in Q3 2025, compared to $77.3 million in Q3 2024, an increase of 10.4%[70] - General and administrative expenses increased to $36.3 million in Q3 2025 from $29.0 million in Q3 2024, a rise of 25.1%[70] - Total provision for credit losses decreased to $152.0 million in Q3 2025 from $184.7 million in Q3 2024, a reduction of 17.7%[70] - Total liabilities decreased slightly to $7,062.0 million from $7,105.0 million, a reduction of about 0.6%[72] Shareholder Equity and Capital - Shareholders' equity declined to $1,578.6 million from $1,749.6 million, representing a decrease of approximately 9.8%[72] - Paid-in capital increased to $392.1 million from $335.1 million, showing a growth of about 17.0%[72] - Retained earnings decreased to $1,185.3 million from $1,414.7 million, a decline of approximately 16.2%[72] - Adjusted average capital rose by 3.7% to $8,699.2 million from $8,387.6 million in the previous year[33] Tax and Legal Matters - The company expects a long-term effective income tax rate increase from 23% to 25% due to higher state and local income taxes[41] - A contingent loss of $15.0 million was excluded from adjusted results due to previously disclosed legal matters[6] - The company recognized a contingent loss of $11.2 million in Q3 2025 related to legal matters[40] Asset Management - Total assets decreased to $8,640.6 million as of September 30, 2025, from $8,854.6 million as of December 31, 2024, representing a decline of approximately 2.4%[72] - Loans receivable increased to $11,563.7 million, up from $11,289.1 million, reflecting a growth of about 2.4%[72] - Net loans receivable rose to $7,975.5 million, compared to $7,850.3 million, indicating an increase of approximately 1.6%[72]

Financial Performance - Credit Acceptance Corporation reported consolidated net income of $108.2 million, or $9.43 per diluted share, for the three months ended September 30, 2025, representing a 37.3% increase from $78.8 million in the same period of 2024 [1][29] - Adjusted net income for the same period was $117.9 million, or $10.28 per diluted share, a 2.7% increase from $114.8 million in 2024 [1][31] - The company experienced a 5.4% increase in GAAP average debt, rising to $6.4 billion from $6.1 billion year-over-year [29] Consumer Loan Metrics - The average balance of the loan portfolio increased by 3.9% to $8.0 billion from the third quarter of 2024 [6] - Consumer Loan assignment unit and dollar volumes declined by 16.5% and 19.4%, respectively, compared to the third quarter of 2024 [6][24] - The forecasted collection rates for Consumer Loans assigned in 2025 improved to 67.2% as of September 30, 2025, compared to 66.9% as of June 30, 2025 [7][14] Operational Highlights - The company modernized its loan origination system, resulting in a 70% increase in the speed of delivering enhancements to dealers compared to the previous year [6] - 1,342 new dealers were enrolled in the company's programs, bringing the total to 10,180 active dealers during the quarter [6][24] - The company repurchased approximately 230,000 shares, or 2.0% of the shares outstanding at the beginning of the quarter, totaling $107.4 million [6] Economic Profit and Capital Management - Economic profit decreased by 8.7% for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in the cost of capital and a decrease in adjusted return on capital [32] - Adjusted average capital increased by 3.7% to $8.7 billion from $8.4 billion year-over-year [31] - The company reported a decrease in provision for credit losses of 17.7%, amounting to $32.7 million, attributed to a decline in Consumer Loan assignment unit volume [33]