Credit Acceptance(US:CACC)2024-10-30 20:03Financial Performance - Consolidated net income for Q3 2024 was $78.8 million, or $6.35 per diluted share, compared to $70.8 million, or $5.43 per diluted share in Q3 2023, representing an increase of 14.2% in net income [1]. - Adjusted net income for Q3 2024 was $109.1 million, or $8.79 per diluted share, down from $139.5 million, or $10.70 per diluted share in Q3 2023, indicating a decrease of 21.8% [2]. - GAAP net income for the three months ended September 30, 2024, increased by 11.3% to $78.8 million compared to $70.8 million in the same period of 2023 [36]. - GAAP net income for the nine months ended September 30, 2024, decreased by 50.1% to $96.0 million compared to $192.5 million in the same period of 2023 [36]. - Total revenue for Q3 2024 was $550.3 million, an increase of 15% compared to $478.6 million in Q3 2023 [82]. - Adjusted net income for September 30, 2024, was $109.1 million, down from $126.4 million in June 2024, representing a decrease of 20.5% [50]. - Adjusted revenue for September 30, 2024, was $382.4 million, compared to $393.1 million in June 2024, indicating a decline of 1.8% [50]. Loan Portfolio and Collection Rates - Forecasted collection rates declined, resulting in a decrease in forecasted net cash flows from the loan portfolio by $62.8 million, or 0.6%, compared to a decrease of $69.4 million, or 0.7% in Q3 2023 [3]. - Consumer Loan assignment volume grew by 17.7% in units and 12.2% in dollar volume compared to Q3 2023, with the average balance of the loan portfolio increasing by 14.9% on a GAAP basis [3]. - The forecasted collection rates for Consumer Loans assigned in 2021 through 2024 were lower than previous estimates, primarily due to a decline in collection rates and slower cash flow timing [4]. - The forecasted collection rate for Consumer Loans as of September 30, 2024, is 66.6% for the first half of 2024 and 67.0% for the second half [21]. - The forecasted collection rates for more recent Consumer Loan assignments are less certain, as a significant portion of the forecast has not been realized [21]. Expenses and Interest - The average cost of debt rose from 5.8% to 7.3%, primarily due to higher interest rates on new financings and the repayment of older debt [3]. - Interest expense increased by 57.7% ($40.7 million) for the three months ended September 30, 2024, primarily due to higher average cost of debt and increased outstanding debt balance [36]. - An increase in operating expenses of 17.1% ($18.9 million) for the three months ended September 30, 2024, was primarily due to higher salaries and legal expenses [36]. - The company reported a significant increase in salaries and wages, which rose to $77.3 million in Q3 2024 from $66.7 million in Q3 2023, a rise of 8.9% [82]. Capital and Equity - Adjusted average capital increased by 19.4% to $8,387.6 million for the three months ended September 30, 2024, compared to $7,023.9 million in the same period of 2023 [44]. - Adjusted average equity for September 30, 2024, was $2,316.5 million, up from $2,215.1 million in June 2024, reflecting an increase of 4.6% [50]. - Adjusted average capital increased to $7,976.2 million from $6,801.6 million year-over-year [54]. Economic Profit and Returns - Economic profit decreased by 40.1% for the three months ended September 30, 2024, primarily due to a decrease in adjusted return on capital [44]. - Adjusted return on capital fell to 9.3% in Q3 2024, down from 11.1% in Q3 2023 [47]. - Economic profit for the quarter was $41.4 million, down from $56.2 million in the previous quarter [51]. - Economic profit per diluted share for the quarter was $3.33, compared to $4.58 in the prior quarter [52]. Asset and Liability Growth - Loans receivable increased to $11,197.6 million as of September 30, 2024, compared to $10,020.1 million as of December 31, 2023, reflecting a growth of 11.8% [84]. - Total assets reached $8,683.2 million as of September 30, 2024, compared to $7,610.2 million at the end of 2023, marking an increase of 14.1% [84]. - Total liabilities increased to $7,036.7 million as of September 30, 2024, from $5,856.5 million at the end of 2023, an increase of 20.1% [84]. Future Outlook and Risks - The company expects to continue facing industry, operational, and macroeconomic risks that could impact future performance [72]. - The company anticipates a long-term effective income tax rate of 23% for future periods, reflecting adjustments made in response to tax legislation changes [50].