Consumer Loans and Financing Programs - 79.5% of Consumer Loans assigned in 2025 had FICO scores below 650 or no FICO scores, compared to 80.6% in 2024 and 80.9% in 2023[15] - In 2023, 74.0% of Consumer Loans were assigned under the Portfolio Program, while 26.0% were under the Purchase Program[18] - The Portfolio Program allows Dealers to receive advances against future collections, while the Purchase Program involves a one-time payment for Consumer Loans[26] - The Company’s financing programs enable consumers with impaired credit histories to purchase vehicles, improving their credit scores over time[12] - The company provides innovative financing solutions that enable automobile dealers to sell vehicles to consumers, regardless of their credit history, through a nationwide network of automobile dealers[149] Financial Performance - For the year ended December 31, 2025, consolidated net income was $423.9 million, or $36.38 per diluted share, compared to $247.9 million, or $19.88 per diluted share, for the same period in 2024, indicating a significant increase in profitability[150] - The increase in consolidated net income for 2025 was primarily due to a decrease in provision for credit losses and an increase in finance charges, partially offset by an increase in operating expenses[150] - Total revenue for the year ended December 31, 2025, was $2,317.2 million, an increase of $154.8 million or 7.2% compared to $2,162.4 million in 2024[188] - Finance charge revenue increased by $149.1 million, or 7.5%, driven by a rise in the average net Loans receivable balance to $7,956.3 million from $7,530.7 million[190] - Operating expenses rose by $98.4 million, or 19.6%, largely due to a $63.5 million increase in general and administrative expenses[192] Dealer Network and Operations - The number of Dealer enrollments in 2025 was 5,752, with 15,745 active Dealers, an increase from 15,463 active Dealers in 2024[29] - The Company provides financing solutions through a network of approximately 60,000 independent and franchised automobile dealers in the U.S.[29] - The company’s business model aligns the interests of Dealers, consumers, and the company by sharing the risk and reward of collecting on Consumer Loans, particularly through the Portfolio Program[42] - The number of active Dealers in 2025 was 15,745, with Texas having the highest number at 1,377 (8.7%) and Michigan at 854 (5.4%)[53] Regulatory and Legal Risks - The company is subject to various regulations, including the Truth in Lending Act and the Equal Credit Opportunity Act, which could materially affect its operations if not complied with[56] - The company received a subpoena from the New York State Attorney General on May 7, 2019, regarding its origination and collection policies, followed by additional subpoenas until April 30, 2021[59] - On January 4, 2023, a joint complaint was filed by the New York State Attorney General and the Bureau, alleging deceptive practices and seeking various forms of relief, including restitution and civil penalties[61] - The company intends to vigorously defend itself against the allegations and has filed a motion to dismiss the complaint, which is currently under review[61] Economic and Market Conditions - Economic downturns could lead to increased delinquencies and defaults on consumer loans, adversely impacting financial results and liquidity[75] - The company faces intense competition in the automobile finance market, which may affect its ability to maintain and expand dealer relationships[74] - Economic conditions, including public health emergencies, could lead to decreased collections and consumer loan assignments, adversely affecting financial results[81] Debt and Liquidity - The funded debt to equity ratio was 4.2 to 1 as of December 31, 2025, indicating the company's financial leverage[175] - A substantial amount of debt could negatively impact the company's financial condition and ability to meet obligations[96] - Interest rate fluctuations may adversely affect the company's borrowing costs, profitability, and liquidity, particularly during periods of higher interest rates[97] - A reduction in the company's credit rating could increase funding costs and restrict access to capital markets, adversely affecting liquidity and financial condition[98] Cybersecurity and Technology - The company has adopted NIST SP 800-37 Rev. 2 and the NIST Cybersecurity Framework to manage cybersecurity risks effectively[122] - The company conducts periodic cybersecurity assessments and preparedness analyses, supervised by the Chief Information Security Officer (CISO) with over twenty years of experience in information security[126] - The company has established a comprehensive information security incident management plan to respond quickly and effectively to cybersecurity threats[129] - Cybersecurity threats have not materially affected the company to date, but future incidents could have a significant adverse impact on business and financial condition[103] Collection and Forecasting - The company monitors Consumer Loan performance monthly, comparing current forecasted collection rates to initial expectations[208] - A statistical model is used to estimate expected collection rates based on various credit quality indicators[208] - Adjustments to the statistical pricing model are made periodically to reflect new trends identified through performance evaluations[208] - The company forecasts future collections on each Consumer Loan for a 120-month period after the origination date[207]

分组1 - Giverny Capital Asset Management reported a portfolio return of 0.01% in Q4 2025, underperforming the S&P 500 which returned 2.66% [1] - Year-to-date, the fund achieved a return of 12.58%, compared to 17.88% for the S&P 500 [1] - The firm faced challenges due to underweighting in large technology stocks and overweighting in smaller niche leaders, despite strong earnings growth from portfolio companies [1] 分组2 - Credit Acceptance Corporation (NASDAQ:CACC) closed at $498.24 per share on January 30, 2026, with a one-month return of 8.26% but a 12-month decline of 2.42% [2] - The market capitalization of Credit Acceptance Corporation is $5.496 billion [2] - Giverny Capital Asset Management exited its position in Credit Acceptance Corporation due to increased competition in the deep subprime lending space and concerns over its technological capabilities [3] 分组3 - Credit Acceptance Corporation was held by 29 hedge fund portfolios at the end of Q3, down from 39 in the previous quarter [4] - While Credit Acceptance Corporation is recognized for its investment potential, Giverny Capital Asset Management believes certain AI stocks present greater upside potential with less downside risk [4]

Core Insights - Credit Acceptance Corporation (CACC) shares rose 2.9% in after-market trading following better-than-expected Q4 2025 results, with adjusted earnings per share of $11.35 exceeding the Zacks Consensus Estimate of $10.30 and reflecting an 11.6% year-over-year increase [1][8] Financial Performance - CACC's total GAAP revenues for the quarter were $579.9 million, a 2.5% increase year-over-year, although it slightly missed the Zacks Consensus Estimate of $580 million [3][8] - The quarterly provision for credit losses was $129.6 million, up 5% year-over-year [3] - Total operating expenses rose significantly by 33.5% to $162.3 million compared to the prior-year quarter [3][8] Balance Sheet Highlights - As of December 31, 2025, net loans receivable stood at $7.91 billion, showing a marginal increase from December 2024 [4] - Total assets decreased by 2.5% to $8.63 billion as of the same date [4] - Total shareholders' equity was reported at $1.52 billion, down 12.9% from December 31, 2024 [4] Market Position and Outlook - The company is expected to face challenges due to rising expenses and weak asset quality, which may impact financial performance [5] - Despite these challenges, CACC is positioned for revenue growth due to increasing demand for consumer loans [5]

Core Insights - Credit Acceptance is focusing on enhancing dealer relationships and improving operational efficiency under new CEO Vinayak Hegde, emphasizing a digital-first and AI-enhanced servicing strategy [4][7][10] Group 1: Leadership and Strategy - CEO Vinayak Hegde has implemented disciplined operating rhythms, including weekly business reviews and a quarterly game plan to align functions with annual objectives [2][4] - The company aims to remove friction for dealers and consumers, make data-driven decisions, and invest in culture and talent [2][3] Group 2: Financial Performance - In Q4, Credit Acceptance financed nearly 72,000 contracts and collected $1.3 billion, while enrolling over 1,200 new dealers, resulting in approximately 9,800 active dealers [6][12][13] - Active dealers decreased by 2.8% year-over-year, and unit volume fell by 9.1% year-over-year, with core subprime used-vehicle market share declining from 5.4% to 4.5% [6][14] Group 3: Credit Performance - The company reported modest credit underperformance in the 2023-24 vintages, with declines of approximately 0.4% and 0.2%, attributed to pre-scorecard originations and inflation [5][15] - Loan performance showed a moderate decline, with the 2023 and 2024 vintages experiencing slight decreases, while other vintages remained stable [15][16] Group 4: Technology and Innovation - A new contract origination experience was launched in Q4, specifically designed for franchise and large independent dealers, integrating RouteOne e-contracting and deal structuring tools [8][9] - The technology aims to reduce friction in dealer workflows and improve the speed of deal optimization to less than two seconds [10][9] Group 5: Capital Allocation and Leverage - Management indicated that leverage is at the higher end of the target range, with a focus on maintaining capital for new originations while being active in share repurchases [17][18] - The company’s approach to capital allocation considers intrinsic value relative to market price when deciding on buybacks [18][19]

Core Viewpoint - Credit Acceptance (CACC) reported quarterly earnings of $11.35 per share, exceeding the Zacks Consensus Estimate of $10.3 per share, but down from $12.26 per share a year ago, indicating a +10.19% earnings surprise [1] Financial Performance - The company posted revenues of $579.9 million for the quarter ended December 2025, slightly missing the Zacks Consensus Estimate by 0.02%, compared to $565.9 million in the same quarter last year [2] - Over the last four quarters, Credit Acceptance has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Credit Acceptance shares have declined approximately 2.3% since the beginning of the year, while the S&P 500 has gained 1.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $11.26 on revenues of $599.13 million, and for the current fiscal year, it is $44.62 on revenues of $2.4 billion [7] - The estimate revisions trend for Credit Acceptance was mixed ahead of the earnings release, which may change following the recent report [6] Industry Context - The Financial - Consumer Loans industry, to which Credit Acceptance belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - The company reported growth in adjusted earnings per share despite declines in loan performance and loan volume [14] - Loan unit volume improved to a decline of 9.1% this quarter, compared to a decline of 16.5% last quarter, while loan dollar volume improved to a decline of 11.3% this quarter, versus a decline of 19.4% last quarter [15] - Changes to the forecast of future net cash flows improved, with the rate of decline narrowing from $58.6 million (0.5%) in Q3 2025 to $34.2 million (0.3%) in Q4 2025 [15] Business Line Data and Key Metrics Changes - The company financed nearly 72,000 contracts for dealers and consumers, collecting $1.3 billion overall [14] - The underperformance of the 2024 vintage was primarily related to loans originated prior to the scorecard change during Q3 2024 [14] - The number of active dealers declined by 2.8% year over year, and the average unit volume per active dealer declined by 6.4% year over year [16] Market Data and Key Metrics Changes - The company's market share in the core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of Q4, down from 5.4% for the same period in 2024 [16] - The loan portfolio increased by 1% year over year on an adjusted basis [16] Company Strategy and Development Direction - The company aims to generate dealer and consumer demand by deepening relationships within the dealer network and leveraging data-driven insights [9] - The strategic objectives include empowering dealers through preferred channels and delivering world-class servicing and processing [9] - The CEO emphasized a focus on removing friction for customers and enhancing servicing capabilities through artificial intelligence [8] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the impact of high inflation on subprime consumers and expressed a conservative approach to lending [19] - The CEO highlighted the importance of being customer-focused rather than competitive-focused, aiming to build solutions for large independent and franchise dealers [26] - The management believes the company is well-positioned to serve subprime customers across various economic cycles [37] Other Important Information - The company was named one of America's top 100 Most Loved Workplaces for the second consecutive year, ranking number 6 [12] - The CEO plans to layer technology and a data-informed approach on the company's strong foundation to enhance customer experience [13] Q&A Session Summary Question: How will the new CEO manage credit lending and underwriting? - The CEO plans to take a long-term and conservative approach to lending while continuously improving credit scoring models [19] Question: What is driving the increase in the provision for new originations? - The increase is attributed to the mix between the portfolio and purchase program, with the initial provision on the purchase program being significantly higher [21][22] Question: What is the competitive environment like, given the decline in market share? - The CEO noted that the competitive environment is evolving, with a focus on customer needs rather than competition [26] Question: How does the company view its leverage and capital distributions? - The company maintains its strategy regarding capital allocation and leverage, ensuring sufficient capital for new originations [33] Question: What is the perspective on affordability issues and used car prices? - The CEO believes the company is well-positioned to serve subprime customers regardless of economic cycles, focusing on a frictionless experience [37] Question: What is the outlook on prepayments in the portfolio? - There has been a decline in prepayments, which may indicate customers are staying in their vehicles longer [44]

Financial Data and Key Metrics Changes - The company reported growth in adjusted earnings per share despite declines in loan performance and loan volume [14] - Loan performance declined moderately, with 2023 and 2024 vintages decreasing by 0.4% and 0.2% respectively, while other vintages remained stable [14] - Changes in forecasted future net cash flows improved, with a decrease narrowing from $58.6 million (0.5%) in Q3 2025 to $34.2 million (0.3%) in Q4 2025 [15] - Loan unit volume decline improved to 9.1% in Q4 from 16.5% in Q3, and loan dollar volume decline improved to 11.3% from 19.4% [15] Business Line Data and Key Metrics Changes - The company financed nearly 72,000 contracts and collected $1.3 billion overall, while paying $48 million in dealer holdback [14] - The number of active dealers decreased by 2.8% year-over-year, and average unit volume per active dealer declined by 6.4% year-over-year [16] Market Data and Key Metrics Changes - Market share in the core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of Q4, down from 5.4% for the same period in 2024 [16] Company Strategy and Development Direction - The company aims to deepen relationships within its dealer network, support dealers in acquiring new consumers, and leverage data-driven insights [9] - Strategic objectives include generating demand, empowering dealers through preferred channels, and delivering world-class servicing and processing [9] - The company is investing in artificial intelligence to enhance customer service and improve efficiency [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the impact of high inflation on subprime consumers and emphasizes a conservative approach to lending [19] - The CEO expressed confidence in the company's ability to serve subprime customers across various economic cycles [37] - The company plans to maintain a focus on maximizing intrinsic value and disciplined capital allocation [13][38] Other Important Information - The company was named one of America's top 100 Most Loved Workplaces for the second consecutive year, ranking sixth [12] - The new contract origination experience was rolled out to better support franchise and large independent dealers [10] Q&A Session Summary Question: How will the new CEO manage credit lending and underwriting? - The CEO plans to take a long-term and conservative approach to lending while improving customer experience and credit scoring models [19] Question: What drove the increase in provision for new originations? - The increase is attributed to the mix between the portfolio and purchase program, with the initial provision on the purchase program being significantly higher [21][22] Question: What is the competitive environment like, given the decline in market share? - The CEO noted that the competitive environment is evolving, with a focus on being customer-centric rather than competitive-centric [26] Question: How does the company view its leverage and capital distributions? - The company maintains an acceptable leverage range and will continue to ensure capital is available for new originations while considering intrinsic stock value for buybacks [33][38] Question: What factors could affect affordability and used car prices? - The CEO believes the company is well-positioned to serve subprime customers regardless of economic cycles and emphasizes a conservative approach [37] Question: What is the outlook on prepayments in the portfolio? - There has been a decline in prepayments, which may indicate customers are staying in their vehicles longer, despite historical trends suggesting an uptick in competitive environments [43][44]

Financial Data and Key Metrics Changes - The company reported growth in adjusted earnings per share despite declines in loan performance and loan volume [14] - Loan unit volume improved to a decline of 9.1% this quarter, compared to a decline of 16.5% last quarter, while loan dollar volume improved to a decline of 11.3% this quarter, versus a decline of 19.4% last quarter [16] - Changes to the forecast of future net cash flows improved, with the rate of decline narrowing from $58.6 million (0.5%) in Q3 2025 to $34.2 million (0.3%) in Q4 2025 [16] Business Line Data and Key Metrics Changes - The company financed nearly 72,000 contracts for dealers and consumers, collecting $1.3 billion overall [14] - The underperformance of the 2024 vintage was primarily related to loans originated prior to the scorecard change during Q3 2024 [15] - The number of active dealers declined by 2.8% year over year, and the average unit volume per active dealer declined by 6.4% year over year [17] Market Data and Key Metrics Changes - The company's market share in the core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of Q4, down from 5.4% for the same period in 2024 [17] - The loan portfolio increased by 1% year over year on an adjusted basis [17] Company Strategy and Development Direction - The company aims to deepen relationships within its dealer network, support dealers in acquiring new consumers, and leverage data-driven insights [8] - The strategic objectives include generating dealer and consumer demand, empowering dealers through preferred channels, and delivering world-class servicing and processing [9] - The company is investing in artificial intelligence to enhance customer service and improve efficiency [9] Management's Comments on Operating Environment and Future Outlook - The CEO emphasized a long-term conservative approach to lending and credit scoring, focusing on improving customer experience [20] - The management believes the company is well-positioned to serve subprime customers and will continue to focus on making the experience frictionless [37] - The CEO expressed excitement about building a customer-obsessed company while maintaining a disciplined approach to capital allocation [13] Other Important Information - The company was named one of America's top 100 Most Loved Workplaces for the second consecutive year, ranking number 6 [12] - The new contract origination experience was rolled out to better meet the needs of franchise and large independent dealers [10] Q&A Session Summary Question: How will the new CEO manage credit lending and underwriting? - The CEO stated that the approach towards lending and credit scoring will be conservative and long-term focused, with ongoing improvements to credit scoring models [20] Question: What drove the increase in provision for new originations? - The CFO explained that the provision is influenced by the mix between the portfolio and purchase program, with the purchase program having a higher initial provision [22][23] Question: What is the competitive environment like, given the decline in market share? - The CEO noted that the competitive environment is evolving, and the company is focused on being customer-centric rather than competitive-centric [26] Question: How does the company view affordability issues and high used car prices? - The CEO mentioned that the company is well-positioned to serve subprime customers and will continue to take a conservative approach regardless of economic cycles [36] Question: Will there be any changes in capital returns or buyback strategies? - The CEO confirmed that the company will stay the course regarding capital allocation and buyback strategies [38]

Financial Performance - Consolidated net income for Q4 2025 was $122.0 million, or $10.99 per diluted share, showing a sequential growth from $108.2 million in Q3 2025[1] - Adjusted net income for Q4 2025 was $126.0 million, or $11.35 per diluted share, compared to $117.9 million in Q3 2025[1] - GAAP net income for Q4 2025 decreased by 19.7% to $122.0 million compared to $151.9 million in Q4 2024[28] - Adjusted net income for Q4 2025 remained flat at $126.0 million compared to Q4 2024[30] - Economic profit increased by 3.9% to $53.3 million for Q4 2025, driven by a decrease in the cost of capital[30] - Adjusted net income per diluted share rose by 11.6% to $11.35 in Q4 2025, compared to $10.17 in Q4 2024[30] - GAAP net income for the three months ended September 30, 2025, was $122.0 million, an increase from $108.2 million in the previous quarter[34] - Adjusted net income per diluted share increased to $11.35, compared to $10.28 in the previous quarter[34] - Economic profit for the quarter was $53.3 million, an increase from $43.0 million in the prior year, marking a growth of 24.3%[39] Revenue and Expenses - Total revenue for Q4 2025 was $579.9 million, an increase of 2.2% from $565.9 million in Q4 2024[59] - Adjusted revenue for the three months ended September 30, 2025, was $408.2 million, up from $405.1 million in the previous quarter[34] - Operating expenses increased by 33.5% ($40.7 million), primarily due to a 162.7% increase in general and administrative expenses, including a $35.8 million contingent loss related to legal matters[28] - Adjusted operating expenses for the quarter were $126.5 million, compared to $131.6 million in the same period last year, showing a decrease of 3.9%[39] Loan Portfolio and Collections - The average balance of the loan portfolio was $7.9 billion, with a consumer loan assignment unit volume of 71,731 and a dollar volume of $821.3 million[4] - Forecasted collection rates for Consumer Loans assigned in 2025 were 67.2%, with a slight decline from the initial forecast[7] - The forecasted net cash flows from the loan portfolio decreased by $34.2 million, or 0.3%, in Q4 2025[8] - Consumer Loan assignment volume decreased by 9.1% in unit volume and 11.3% in dollar volume during the fourth quarter of 2025 compared to the same period in 2024[23] - The forecasted collection percentage for dealer loans in 2025 is 65.7%, while for purchased loans it is 71.9%, reflecting variances of 0.2% and 0.4% respectively from initial forecasts[15] Dealer Activity - The company enrolled 1,207 new dealers, bringing the total to 9,863 active dealers during the quarter[4] - The number of active dealers decreased by 2.8% to 9,863 in the fourth quarter of 2025[24] - Consumer Loan unit volume from new active dealers increased by 8.1% to 2,954 in the fourth quarter of 2025[25] - The average volume per active dealer declined by 6.4% to 7.3 units in the fourth quarter of 2025[24] Legal and Contingent Losses - A contingent loss of $35.8 million was excluded from adjusted results due to previously disclosed legal matters[4] - The cumulative contingent losses recognized through Q4 2025 amounted to $82.6 million, with a potential cash payment of $75.5 million related to legal settlements[28] Capital and Debt - Average debt increased by 3.3% to $6,409.6 million in Q4 2025 from $6,202.5 million in Q4 2024[28] - Adjusted average capital for the three months ended September 30, 2025, was $535.0 million, compared to $539.4 million in the previous quarter[34] - Adjusted average capital for the quarter was $8,662.9 million, a slight decrease of 0.4% from $8,699.2 million in the previous quarter[39] Future Outlook - The company expects a long-term effective income tax rate increase to 25%, up from 23% previously used[36] - The company plans to host a webcast on January 29, 2026, to discuss its fourth quarter results[53] - The company emphasizes its role in providing financing solutions to consumers with poor credit histories, enabling vehicle ownership[55]

Core Insights - Credit Acceptance Corporation reported consolidated net income of $122.0 million, or $10.99 per diluted share, for Q4 2025, showing a sequential growth despite declines in loan volumes and performance [1][29] - Adjusted net income for the same period was $126.0 million, or $11.35 per diluted share, indicating stability in adjusted performance metrics [1][30] - The company emphasized its commitment to maximizing intrinsic value and enhancing customer lives, despite challenges in loan performance [1][2] Financial Performance - GAAP net income decreased by 19.7% compared to Q4 2024, primarily due to increased operating expenses and legal contingencies [29][32] - Adjusted net income remained stable year-over-year, reflecting effective management of operational costs and capital [30] - The average balance of the loan portfolio was reported at $7.9 billion, with a consumer loan assignment unit volume of 71,731 and a dollar volume of $821.3 million [5][24] Consumer Loan Metrics - The forecasted collection rates for Consumer Loans showed a moderate decline, impacting net cash flows from the loan portfolio by $34.2 million, or 0.3% [5][7] - The company utilized a statistical model to estimate expected collection rates, which improved for loans assigned in 2025 but declined for those assigned in 2023 and 2024 [4][6] - The forecasted collection rates for 2025 Consumer Loans were 67.2%, reflecting a positive variance from initial forecasts [11][19] Dealer Relationships and Product Initiatives - The company enrolled 1,207 new dealers, bringing the total to 9,863 active dealers, indicating growth in dealer relationships [5][24] - Recent product initiatives aimed at enhancing dealer and consumer experiences included digital credit applications and AI-powered call-center agents, which have shown promising adoption rates [2][5] - The average volume per active dealer decreased by 6.4%, highlighting challenges in maintaining dealer performance amidst market fluctuations [24][23] Legal and Operational Challenges - The company recognized a contingent loss of $35.8 million related to ongoing legal matters, which significantly impacted operating expenses [5][32] - An increase in general and administrative expenses was noted, primarily due to legal costs, which rose by 162.7% [32] - The provision for credit losses increased by 5.0%, reflecting slower forecasted net cash flow timing and a decline in Consumer Loan performance [32]