Credit Acceptance(CACC)2022-10-31 16:00Financial Performance - For the three months ended September 30, 2022, consolidated net income was 6.49 per diluted share, a decrease from 15.79 per diluted share, for the same period in 2021[226] - For the nine months ended September 30, 2022, consolidated net income was 29.74 per diluted share, down from 44.73 per diluted share, for the same period in 2021[227] - Net income for the three months ended September 30, 2022, was 250.0 million in the same period last year[259] - Net income for the nine months ended September 30, 2022, was 332.2 million or -44.8% from 460.3 million, a decrease of 2.1% from 1,373.4 million, a decrease of 1,392.8 million in 2021[270] Consumer Loan Performance - Consumer Loan assignment volume grew, with unit and dollar volumes increasing by 29.3% and 32.1%, respectively, compared to the third quarter of 2021[226] - The average Consumer Loan assignment for 2022 was 12,938 and an initial loan term of 59 months[235] - The company experienced a decline in Consumer Loan assignment unit volume of 0.4% for the nine months ended September 30, 2022, while dollar volume grew by 11.5%[227] - Forecasted profitability per Consumer Loan assignment significantly exceeded initial estimates for loans assigned in 2018 through 2020[226] - Consumer Loan unit volume for the three months ended September 30, 2022, was 71,937, a 29.3% increase from 55,620 in 2021[252] - Consumer Loan unit volume from new active Dealers rose to 2,522, a 70.9% increase compared to 1,476 in the prior year[253] Collection Rates and Forecasts - Forecasted collection rates for Consumer Loans assigned in 2022 were 66.5% as of September 30, 2022, down from an initial forecast of 67.4%[231] - The forecasted collection rate for Consumer Loans in 2022 is 66.5%, with an advance rate of 47.6% and a spread of 18.9%[238] - The spread between the forecasted collection rate and the advance rate has ranged from 18.9% to 25.8% over the last 10 years, with a decrease from 2021 to 2022 primarily due to lower performance of 2022 Consumer Loans[239] - The forecasted collection rates for Dealer Loans and Purchased Loans as of September 30, 2022, were 66.1% and 67.3%, respectively, with corresponding advance rates of 46.5% and 50.1%[243] - The risk of a material change in the forecasted collection rate declines as Consumer Loans age, with over 90% of expected collections realized for loans from 2018 and prior[238] Expenses and Provisions - Total costs and expenses for the three months ended September 30, 2022, were 137.9 million in 2021[259] - Provision for credit losses increased by 351.1 million, reflecting an increase of 283.5 million in 2022 from (15.4) million[276] - Operating expenses increased by 45.8 million increase in salaries and wages[274] Debt and Financing - The funded debt to equity ratio was 2.9 to 1 as of September 30, 2022, indicating the company's strategy to maintain modest financial leverage[247] - Total balance sheet indebtedness increased to 4,616.3 million as of December 31, 2021, primarily due to stock repurchases[289] - Scheduled principal debt maturities total 1,608.8 million due in 2023 and 350.0 million Term ABS financing on June 16, 2022, with an expected annualized cost of approximately 5.4%[285] - The maturity of the revolving secured line of credit facility was extended from June 22, 2024, to June 22, 2025, with a net decrease in the facility amount from 410.0 million[287] Operational Adjustments - The company is considering options to further reduce office space, which may include the sale of one or both of its buildings in Southfield, Michigan[281] - Management believes that cash flows from operations and various financing alternatives will provide sufficient financing for debt maturities and future operations[291] - The company had 149.5 million in forecasted net cash flows[294] - The implementation of enhanced forecasting methodology led to a total increase of $95.7 million in forecasted net cash flows[294]