Executive Summary & Financial Highlights Q2 2025 Key Financial Results Q2 2025 GAAP net income was $87.4 million ($7.42 diluted EPS), with adjusted net income at $100.8 million ($8.56 diluted EPS) Q2 2025 Key Financial Results | (In millions, except per share data) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------- | :------------ | | GAAP net income (loss) | $ 87.4 | $ 106.3 | $ (47.1) | | GAAP net income (loss) per diluted share | $ 7.42 | $ 8.66 | $ (3.83) | | Adjusted net income | $ 100.8 | $ 114.8 | $ 126.4 | | Adjusted net income per diluted share | $ 8.56 | $ 9.35 | $ 10.29 | Key Operational Achievements and Challenges Q2 2025 saw declining collection rates and loan assignment volumes, alongside portfolio growth and significant share repurchases - Forecasted collection rates declined, decreasing forecasted net cash flows from the loan portfolio by $55.8 million, or 0.5%, and indicating slower forecasted net cash flow timing2 - The average balance of the loan portfolio increased by 6.8% from Q2 2024 to a record $8.0 billion2 - Consumer Loan assignment unit and dollar volumes decreased by 14.6% and 18.8% respectively, compared to Q2 20242 - Approximately 530,000 shares, or 4.5% of shares outstanding at the beginning of the quarter, were repurchased2 - 1,560 new dealers were enrolled, contributing to 10,655 active dealers during the quarter2 - A $23.4 million contingent loss was recognized related to previously disclosed legal matters2 - The estimated long-term effective income tax rate increased from 23% to 25%2 - Named one of the 100 Best Companies to Work For by Great Place to Work and Fortune magazine for the eleventh time, ranking 342 Consumer Loan Performance Metrics Forecasted Collection Rates Forecasted collection rates improved for 2025 loans but declined for 2022-2024 loans as of June 30, 2025 Aggregated Forecast of Consumer Loan Collection Rates | Consumer Loan Assignment Year | Forecasted Collection Percentage as of June 30, 2025 | Forecasted Collection Percentage as of March 31, 2025 | Initial Forecast | | :---------------------------- | :------------------------------------------------- | :-------------------------------------------------- | :--------------- | | 2016 | 63.9 % | 63.9 % | 65.4 % | | 2017 | 64.8 % | 64.8 % | 64.0 % | | 2018 | 65.6 % | 65.5 % | 63.6 % | | 2019 | 67.3 % | 67.2 % | 64.0 % | | 2020 | 68.0 % | 67.9 % | 63.4 % | | 2021 | 63.8 % | 63.9 % | 66.3 % | | 2022 | 59.7 % | 60.0 % | 67.5 % | | 2023 | 64.1 % | 64.3 % | 67.5 % | | 2024 | 65.7 % | 66.3 % | 67.2 % | | 2025 | 66.9 % | 66.0 % | 66.9 % | - For Q2 2025, forecasted collection rates improved for Consumer Loans assigned in 2025, declined for those assigned in 2022 through 2024, and were generally consistent for other assignment years4 Changes in Forecasted Net Cash Flows Forecasted net cash flows decreased by $55.8 million (0.5%) in Q2 2025, partly due to a 2024 loan methodology adjustment Decrease in Forecasted Net Cash Flows from Loan Portfolio | Three Months Ended | Total Loans (Decrease in Forecasted Net Cash Flows) | % Change from Forecast at Beginning of Period | | :----------------- | :------------------------------------------------ | :-------------------------------------------- | | September 30, 2023 | $ (69.4) | -0.7 % | | December 31, 2023 | $ (57.0) | -0.6 % | | March 31, 2024 | $ (30.8) | -0.3 % | | June 30, 2024 | $ (189.3) | -1.7 % | | September 30, 2024 | $ (62.8) | -0.6 % | | December 31, 2024 | $ (31.1) | -0.3 % | | March 31, 2025 | $ (20.9) | -0.2 % | | June 30, 2025 | $ (55.8) | -0.5 % | - A methodology adjustment in Q2 2025 for 2024 Consumer Loans reduced forecasted net cash flows by $18.6 million (0.2%) and increased provision for credit losses by $16.5 million5 Consumer Loan Assignment Volume and Terms YTD 2025 Consumer Loan assignments totaled 185,764 units and $2,110.7 million, with average loan amounts of $25,376 Consumer Loan Assignments (Last 10 Years) | Consumer Loan Assignment Year | Average Consumer Loan | Average Advance | Initial Loan Term (in months) | Unit Volume | Dollar Volume (in millions) | | :---------------------------- | :-------------------- | :-------------- | :---------------------------- | :---------- | :-------------------------- | | 2016 | $ 18,218 | $ 7,976 | 53 | 330,710 | $ 2,635.5 | | 2017 | $ 20,230 | $ 8,746 | 55 | 328,507 | $ 2,873.1 | | 2018 | $ 22,158 | $ 9,635 | 57 | 373,329 | $ 3,595.8 | | 2019 | $ 23,139 | $ 10,174 | 57 | 369,805 | $ 3,772.2 | | 2020 | $ 24,262 | $ 10,656 | 59 | 341,967 | $ 3,641.2 | | 2021 | $ 25,632 | $ 11,790 | 59 | 268,730 | $ 3,167.8 | | 2022 | $ 27,242 | $ 12,924 | 60 | 280,467 | $ 3,625.3 | | 2023 | $ 27,025 | $ 12,475 | 61 | 332,499 | $ 4,147.8 | | 2024 | $ 26,497 | $ 11,961 | 61 | 386,126 | $ 4,618.4 | | 2025 (YTD) | $ 25,376 | $ 11,362 | 60 | 185,764 | $ 2,110.7 | 2025 Consumer Loan Assignment Period Averages | 2025 Consumer Loan Assignment Period | Consumer Loan | Advance | Initial Loan Term (in months) | | :----------------------------------- | :------------ | :------ | :---------------------------- | | January 1, 2025 through March 31, 2025 | $ 25,188 | $ 11,096 | 60 | | April 1, 2025 through June 30, 2025 | $ 25,596 | $ 11,674 | 60 | Loan Profitability and Spreads Loan profitability spreads were positive for 2019-2020 loans, negative for 2021-2024, with 2025 spreads higher than 2024 Aggregate Forecasted Consumer Loan Collection Rates, Advance Rates, and Spreads | Consumer Loan Assignment Year | Forecasted Collection % as of June 30, 2025 | Initial Forecast | Advance % | Spread % as of June 30, 2025 | Initial Forecast | % of Forecast Realized | | :---------------------------- | :------------------------------------------ | :--------------- | :-------- | :--------------------------- | :--------------- | :--------------------- | | 2016 | 63.9 % | 65.4 % | 43.8 % | 20.1 % | 21.6 % | 99.6 % | | 2017 | 64.8 % | 64.0 % | 43.2 % | 21.6 % | 20.8 % | 99.4 % | | 2018 | 65.6 % | 63.6 % | 43.5 % | 22.1 % | 20.1 % | 99.0 % | | 2019 | 67.3 % | 64.0 % | 44.0 % | 23.3 % | 20.0 % | 98.0 % | | 2020 | 68.0 % | 63.4 % | 43.9 % | 24.1 % | 19.5 % | 95.1 % | | 2021 | 63.8 % | 66.3 % | 46.0 % | 17.8 % | 20.3 % | 88.7 % | | 2022 | 59.7 % | 67.5 % | 47.4 % | 12.3 % | 20.1 % | 74.7 % | | 2023 | 64.1 % | 67.5 % | 46.2 % | 17.9 % | 21.3 % | 55.0 % | | 2024 | 65.7 % | 67.2 % | 45.1 % | 20.6 % | 22.1 % | 30.4 % | | 2025 | 66.9 % | 66.9 % | 44.9 % | 22.0 % | 22.0 % | 6.9 % | - Spreads for 2019 and 2020 Consumer Loans were positively impacted by performance exceeding initial estimates12 - Spreads for 2021 through 2024 Consumer Loans were negatively impacted by performance lower than initial estimates12 - The higher spread for 2025 Consumer Loans relative to 2024 was primarily due to the underperformance of 2024 Consumer Loans12 Dealer Loans vs. Purchased Loans Analysis Comparison of dealer and purchased loans shows distinct performance trends in collection rates, advance rates, and spreads Forecasted Collection Percentage: Dealer Loans vs. Purchased Loans | Consumer Loan Assignment Year | Dealer Loans (June 30, 2025) | Dealer Loans (Initial Forecast) | Dealer Loans (Variance) | Purchased Loans (June 30, 2025) | Purchased Loans (Initial Forecast) | Purchased Loans (Variance) | | :---------------------------- | :----------------------------- | :------------------------------ | :---------------------- | :------------------------------ | :--------------------------------- | :------------------------- | | 2016 | 63.1 % | 65.1 % | -2.0 % | 66.1 % | 66.5 % | -0.4 % | | 2017 | 64.1 % | 63.8 % | 0.3 % | 66.4 % | 64.6 % | 1.8 % | | 2018 | 65.0 % | 63.6 % | 1.4 % | 66.8 % | 63.5 % | 3.3 % | | 2019 | 66.9 % | 63.9 % | 3.0 % | 67.9 % | 64.2 % | 3.7 % | | 2020 | 67.8 % | 63.3 % | 4.5 % | 68.3 % | 63.6 % | 4.7 % | | 2021 | 63.6 % | 66.3 % | -2.7 % | 64.3 % | 66.3 % | -2.0 % | | 2022 | 58.9 % | 67.3 % | -8.4 % | 61.7 % | 68.0 % | -6.3 % | | 2023 | 62.9 % | 66.8 % | -3.9 % | 67.6 % | 69.4 % | -1.8 % | | 2024 | 64.5 % | 66.3 % | -1.8 % | 70.0 % | 70.7 % | -0.7 % | | 2025 | 65.4 % | 65.4 % | 0.0 % | 71.5 % | 71.5 % | 0.0 % | Forecasted Collection Rates, Advance Rates, and Spreads: Dealer Loans vs. Purchased Loans (as of June 30, 2025) | Consumer Loan Assignment Year | Dealer Loans (Collection %) | Dealer Loans (Advance %) | Dealer Loans (Spread %) | Purchased Loans (Collection %) | Purchased Loans (Advance %) | Purchased Loans (Spread %) | | :---------------------------- | :-------------------------- | :----------------------- | :---------------------- | :----------------------------- | :-------------------------- | :------------------------- | | 2016 | 63.1 % | 42.1 % | 21.0 % | 66.1 % | 48.6 % | 17.5 % | | 2017 | 64.1 % | 42.1 % | 22.0 % | 66.4 % | 45.8 % | 20.6 % | | 2018 | 65.0 % | 42.7 % | 22.3 % | 66.8 % | 45.2 % | 21.6 % | | 2019 | 66.9 % | 43.1 % | 23.8 % | 67.9 % | 45.6 % | 22.3 % | | 2020 | 67.8 % | 43.0 % | 24.8 % | 68.3 % | 45.5 % | 22.8 % | | 2021 | 63.6 % | 45.1 % | 18.5 % | 64.3 % | 47.7 % | 16.6 % | | 2022 | 58.9 % | 46.4 % | 12.5 % | 61.7 % | 50.1 % | 11.6 % | | 2023 | 62.9 % | 44.8 % | 18.1 % | 67.6 % | 49.8 % | 17.8 % | | 2024 | 64.5 % | 44.1 % | 20.4 % | 70.0 % | 48.9 % | 21.1 % | | 2025 | 65.4 % | 43.1 % | 22.3 % | 71.5 % | 50.3 % | 21.2 % | - The spread on 2025 dealer loans was 22.3%, up from 20.4% on 2024 dealer loans, primarily due to the lower performance of 2024 dealer loans18 - The spread on 2025 purchased loans was 21.2%, slightly up from 21.1% on 2024 purchased loans, reflecting improved performance of 2024 purchased loans partially offset by a lower initial spread on 2025 purchased loans19 Consumer Loan Volume and Dealer Dynamics Consumer Loan Volume Trends Q2 2025 Consumer Loan assignment volumes declined significantly year-over-year due to fewer active dealers and lower average unit volume Year over Year Percent Change in Consumer Loan Assignment Volume | Three Months Ended | Unit Volume | Dollar Volume | | :----------------- | :---------- | :------------ | | September 30, 2023 | 13.0 % | 10.5 % | | December 31, 2023 | 26.7 % | 21.3 % | | March 31, 2024 | 24.1 % | 20.2 % | | June 30, 2024 | 20.9 % | 16.3 % | | September 30, 2024 | 17.7 % | 12.2 % | | December 31, 2024 | 0.3 % | -4.9 % | | March 31, 2025 | -10.1 % | -15.5 % | | June 30, 2025 | -14.6 % | -18.8 % | - Unit and dollar volumes declined 14.6% and 18.8% respectively in Q2 2025, driven by a 0.8% decline in active dealers and a 14.0% decline in average unit volume per active dealer22 - Dollar volume declined more than unit volume due to a decrease in the average advance paid, primarily from a decrease in the average size of Consumer Loans assigned22 Active Dealers and Volume per Dealer Q2 2025 Consumer Loan unit volume decreased 14.6%, with active dealers down 0.8% and average volume per dealer declining 14.0% Changes in Consumer Loan Unit Volume and Active Dealers (Q2 2025 vs. Q2 2024) | | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | % Change | | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------- | | Consumer Loan unit volume | 85,486 | 100,057 | -14.6 % | | Active dealers | 10,655 | 10,736 | -0.8 % | | Average volume per active dealer | 8.0 | 9.3 | -14.0 % | | Consumer Loan unit volume from new active dealers | 3,216 | 3,820 | -15.8 % | | New active dealers | 1,094 | 1,080 | 1.3 % | | Average volume per new active dealer | 2.9 | 3.5 | -17.1 % | Loan Type Distribution (Dealer vs. Purchased) Q2 2025 saw a notable shift towards purchased loans, increasing to 28.4% of unit volume and 31.7% of dollar volume Percentage of Consumer Loans Assigned as Dealer Loans and Purchased Loans | Three Months Ended | Unit Volume (Dealer Loans) | Unit Volume (Purchased Loans) | Dollar Volume (Dealer Loans) | Dollar Volume (Purchased Loans) | | :----------------- | :------------------------- | :---------------------------- | :--------------------------- | :------------------------------ | | September 30, 2023 | 74.8 % | 25.2 % | 71.7 % | 28.3 % | | December 31, 2023 | 77.2 % | 22.8 % | 75.0 % | 25.0 % | | March 31, 2024 | 78.2 % | 21.8 % | 76.6 % | 23.4 % | | June 30, 2024 | 78.5 % | 21.5 % | 77.3 % | 22.7 % | | September 30, 2024 | 79.5 % | 20.5 % | 78.4 % | 21.6 % | | December 31, 2024 | 78.7 % | 21.3 % | 77.7 % | 22.3 % | | March 31, 2025 | 77.0 % | 23.0 % | 75.1 % | 24.9 % | | June 30, 2025 | 71.6 % | 28.4 % | 68.3 % | 31.7 % | - The increase in the percentage of purchased loans in 2025 Consumer Loan assignment volume was primarily related to expanded dealer access to the purchase program for consumers with higher credit ratings26 GAAP Financial Results Consolidated Statements of Income Q2 2025 total revenue increased to $583.8 million, yielding $87.4 million net income, a significant improvement from Q2 2024 Consolidated Statements of Income (Unaudited) | (Dollars in millions, except per share data) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue: | | | | Finance charges | $ 540.7 | $ 497.7 | | Premiums earned | 24.1 | 24.3 | | Other income | 19.0 | 16.2 | | Total revenue | 583.8 | 538.2 | | Costs and expenses: | | | | Salaries and wages | 83.7 | 75.8 | | General and administrative | 45.2 | 23.2 | | Sales and marketing | 26.6 | 25.4 | | Total operating expenses | 155.5 | 124.4 | | Provision for credit losses on forecast changes | 101.3 | 237.8 | | Provision for credit losses on new Consumer Loan assignments | 71.3 | 82.8 | | Total provision for credit losses | 172.6 | 320.6 | | Interest | 118.1 | 104.5 | | Provision for claims | 19.8 | 20.3 | | Loss on sale of building | — | 23.7 | | Total costs and expenses | 466.0 | 593.5 | | Income (loss) before provision for income taxes | 117.8 | (55.3) | | Provision (benefit) for income taxes | 30.4 | (8.2) | | Net income (loss) | $ 87.4 | $ (47.1) | | Net income (loss) per share: | | | | Basic | $ 7.55 | $ (3.83) | | Diluted | $ 7.42 | $ (3.83) | Consolidated Balance Sheets As of June 30, 2025, total assets were $8,724.6 million, with net loans receivable at $8,001.9 million Consolidated Balance Sheets (Unaudited) | (Dollars in millions, except per share data) | As of June 30, 2025 | As of December 31, 2024 | | :----------------------------------------- | :------------------ | :---------------------- | | ASSETS: | | | | Cash and cash equivalents | $ 70.0 | $ 343.7 | | Restricted cash and cash equivalents | 493.8 | 501.3 | | Restricted securities available for sale | 107.1 | 106.4 | | Loans receivable | 11,563.0 | 11,289.1 | | Allowance for credit losses | (3,561.1) | (3,438.8) | | Loans receivable, net | 8,001.9 | 7,850.3 | | Property and equipment, net | 13.2 | 14.7 | | Income taxes receivable | 9.4 | 4.2 | | Other assets | 29.2 | 34.0 | | Total assets | $ 8,724.6 | $ 8,854.6 | | LIABILITIES AND SHAREHOLDERS' EQUITY: | | | | Liabilities: | | | | Accounts payable and accrued liabilities | $ 378.8 | $ 315.8 | | Revolving secured lines of credit | 1.5 | 0.1 | | Secured financing | 5,383.3 | 5,361.5 | | Senior notes | 1,086.4 | 991.3 | | Deferred income taxes, net | 306.1 | 319.1 | | Income taxes payable | 13.8 | 117.2 | | Total liabilities | 7,169.9 | 7,105.0 | | Shareholders' Equity: | | | | Common stock | 0.1 | 0.1 | | Paid-in capital | 369.3 | 335.1 | | Retained earnings | 1,184.3 | 1,414.7 | | Accumulated other comprehensive income (loss) | 1.0 | (0.3) | | Total shareholders' equity | 1,554.7 | 1,749.6 | | Total liabilities and shareholders' equity | $ 8,724.6 | $ 8,854.6 | Analysis of GAAP Net Income Changes Q2 2025 GAAP net income increased significantly, driven by lower credit loss provisions and higher finance charges - Decrease in provision for credit losses of 46.2% ($148.0 million), mainly due to a smaller downward forecast adjustment in Q2 2025 compared to Q2 2024, and a 14.6% decrease in Consumer Loan assignment unit volume29 - Increase in finance charges of 8.6% ($43.0 million), primarily due to an increase in the average balance of the loan portfolio29 - A loss on sale of a building of $23.7 million was recognized in Q2 2024, which did not recur in Q2 202529 - Increase in interest expense of 13.0% ($13.6 million), mainly due to an increase in average outstanding debt balance used to fund loan portfolio growth and stock repurchases29 - Increase in operating expenses of 25.0% ($31.1 million), driven by a 94.8% increase in general and administrative expense (including a $23.4 million contingent legal loss) and a 10.4% increase in salaries and wages29 - Increase in provision for income taxes of 470.7% ($38.6 million), primarily due to an increase in pre-tax income29 Non-GAAP Financial Measures and Reconciliations Adjusted Financial Performance Summary Q2 2025 adjusted net income was $100.8 million (down 20.3%), with economic profit decreasing 56.6% to $24.4 million Adjusted Financial Results (Q2 2025 vs. Q2 2024) | (Dollars in millions, except per share data) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | % Change | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------- | | Adjusted average capital | $ 8,932.7 | $ 8,033.3 | 11.2 % | | Adjusted net income | $ 100.8 | $ 126.4 | -20.3 % | | Adjusted interest expense (after-tax) | $ 88.6 | $ 80.5 | 10.1 % | | Adjusted net income plus adjusted interest expense (after-tax) | $ 189.4 | $ 206.9 | -8.5 % | | Adjusted return on capital | 8.5 % | 10.3 % | -17.5 % | | Cost of capital | 7.4 % | 7.5 % | -1.3 % | | Economic profit | $ 24.4 | $ 56.2 | -56.6 % | | Adjusted net income per diluted share | $ 8.56 | $ 10.29 | -16.8 % | | Economic profit per diluted share | $ 2.07 | $ 4.58 | -54.8 % | - Economic profit decreased 56.6% year-over-year, primarily due to a 180 basis point decrease in adjusted return on capital31 - The decrease in adjusted return on capital was mainly due to a 100 basis point decrease from a lower yield on the loan portfolio (due to declining collection rates and slower cash flow timing), a 60 basis point decrease from increased operating expenses (including a $23.4 million legal contingent loss), and a 20 basis point decrease from an increased estimated long-term effective income tax rate (from 23% to 25%)31 Adjusted Financial Performance Ratios Adjusted return on capital declined to 8.5% in Q2 2025, primarily due to faster growth in operating expenses Adjusted Financial Performance Ratios (Last Eight Quarters) | | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | | :---------------------------------------------------------------- | :------------ | :------------ | :------------ | :------------- | :------------ | :------------ | :------------ | :------------- | | Adjusted finance charges as a percentage of adjusted average loans receivable (1) | 17.0 % | 16.7 % | 16.5 % | 16.4 % | 17.8 % | 17.6 % | 17.9 % | 18.5 % | | Adjusted revenue as a percentage of adjusted average capital (1) | 18.3 % | 18.0 % | 18.4 % | 18.2 % | 19.6 % | 19.8 % | 20.2 % | 20.7 % | | Operating expenses as a percentage of adjusted average capital (1) | 7.0 % | 6.1 % | 5.6 % | 6.2 % | 6.2 % | 6.7 % | 6.3 % | 6.3 % | | Adjusted return on capital (1) | 8.5 % | 9.2 % | 9.8 % | 9.3 % | 10.3 % | 10.1 % | 10.6 % | 11.1 % | | Percentage change in adjusted average capital compared to the same period in the prior year | 11.2 % | 18.3 % | 19.3 % | 19.4 % | 17.6 % | 14.6 % | 11.5 % | 8.8 % | - The decrease in adjusted return on capital from Q1 2025 to Q2 2025 was primarily due to a 70 basis point impact from faster growth in operating expenses (up 14.8% while adjusted average capital grew 0.6%), partially offset by a 40 basis point increase from higher yields on recent Consumer Loan assignments33 Reconciliation of Non-GAAP to GAAP Measures Detailed reconciliations of non-GAAP measures to GAAP figures are provided, including floating yield, senior notes, and income tax adjustments Reconciliation of Adjusted Net Income, Adjusted Revenue, Adjusted Average Capital, and Adjusted Loan Yield | (Dollars in millions, except per share data) | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | | :----------------------------------------- | :------------ | :------------ | :------------ | :------------- | :------------ | :------------ | :------------ | :------------- | | Adjusted net income | | | | | | | | | | GAAP net income (loss) | $ 87.4 | $ 106.3 | $ 151.9 | $ 78.8 | $ (47.1) | $ 64.3 | $ 93.6 | $ 70.8 | | Floating yield adjustment (after-tax) | (117.1) | (118.9) | (116.8) | (115.1) | (96.1) | (92.4) | (83.9) | (76.4) | | GAAP provision for credit losses (after-tax) | 129.6 | 124.6 | 95.0 | 142.2 | 246.9 | 143.2 | 126.1 | 142.1 | | Loss on sale of building (after-tax) | — | — | — | — | 18.3 | — | — | — | | Senior notes adjustment (after-tax) | — | — | — | — | — | — | (2.6) | (0.5) | | Income tax adjustment | 0.9 | 2.8 | (4.1) | 3.2 | 4.4 | 2.3 | (4.1) | 3.5 | | Adjusted net income | $ 100.8 | $ 114.8 | $ 126.0 | $ 109.1 | $ 126.4 | $ 117.4 | $ 129.1 | $ 139.5 | | Adjusted revenue | | | | | | | | | | GAAP total revenue | $ 583.8 | $ 571.1 | $ 565.9 | $ 550.3 | $ 538.2 | $ 508.0 | $ 491.6 | $ 478.6 | | Floating yield adjustment | (156.0) | (154.5) | (151.8) | (149.4) | (124.8) | (120.0) | (108.9) | (99.3) | | GAAP provision for claims | (19.8) | (16.1) | (17.7) | (18.5) | (20.3) | (17.0) | (16.6) | (16.5) | | Adjusted revenue | $ 408.0 | $ 400.5 | $ 396.4 | $ 382.4 | $ 393.1 | $ 371.0 | $ 366.1 | $ 362.8 | | Adjusted average capital | | | | | | | | | | GAAP average debt | $ 6,583.8 | $ 6,398.3 | $ 6,202.5 | $ 6,071.1 | $ 5,818.2 | $ 5,306.8 | $ 4,986.3 | $ 4,831.4 | | Deferred debt issuance adjustment | — | — | — | — | — | — | 20.9 | 24.5 | | Senior notes debt adjustment | — | — | — | — | — | — | 2.8 | 3.4 | | Adjusted average debt | 6,583.8 | 6,398.3 | 6,202.5 | 6,071.1 | 5,818.2 | 5,306.8 | 5,010.0 | 4,859.3 | | GAAP average shareholders' equity | 1,635.9 | 1,782.0 | 1,712.3 | 1,594.2 | 1,623.5 | 1,678.5 | 1,734.3 | 1,731.3 | | Senior notes equity adjustment | — | — | — | — | — | — | 2.0 | 2.9 | | Income tax adjustment | (100.5) | (118.5) | (118.5) | (118.5) | (118.5) | (118.5) | (118.5) | (118.5) | | Floating yield adjustment | 813.5 | 820.8 | 837.0 | 840.8 | 710.1 | 641.0 | 606.5 | 548.9 | | Adjusted average equity | 2,348.9 | 2,484.3 | 2,430.8 | 2,316.5 | 2,215.1 | 2,201.0 | 2,224.3 | 2,164.6 | | Adjusted average capital | $ 8,932.7 | $ 8,882.6 | $ 8,633.3 | $ 8,387.6 | $ 8,033.3 | $ 7,507.8 | $ 7,234.3 | $ 7,023.9 | | Adjusted loan yield | | | | | | | | | | GAAP finance charges | $ 540.7 | $ 526.7 | $ 518.2 | $ 507.6 | $ 497.7 | $ 469.2 | $ 451.6 | $ 441.7 | | Floating yield adjustment | (156.0) | (154.5) | (151.8) | (149.4) | (124.8) | (120.0) | (108.9) | (99.3) | | Adjusted finance charges | $ 384.7 | $ 372.2 | $ 366.4 | $ 358.2 | $ 372.9 | $ 349.2 | $ 342.7 | $ 342.4 | | GAAP average loans receivable, net | $ 8,011.6 | $ 7,882.4 | $ 7,831.4 | $ 7,690.9 | $ 7,499.2 | $ 7,101.3 | $ 6,867.8 | $ 6,690.8 | | Average floating yield adjustment | 1,064.1 | 1,048.9 | 1,071.4 | 1,072.2 | 903.2 | 819.7 | 775.6 | 701.0 | | Adjusted average loans receivable | $ 9,075.7 | $ 8,931.3 | $ 8,902.8 | $ 8,763.1 | $ 8,402.4 | $ 7,921.0 | $ 7,643.4 | $ 7,391.8 | Reconciliation of Adjusted Interest Expense, Adjusted Return on Capital, and Economic Profit | (Dollars in millions) | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | | :-------------------- | :------------ | :------------ | :------------ | :------------- | :------------ | :------------ | :------------ | :------------- | | Adjusted interest expense (after-tax) | | | | | | | | | | GAAP interest expense | $ 118.1 | $ 114.7 | $ 111.3 | $ 111.2 | $ 104.5 | $ 92.5 | $ 78.8 | $ 70.5 | | Senior notes adjustment | — | — | — | — | — | — | 3.5 | 0.7 | | Adjusted interest expense (pre-tax) | 118.1 | 114.7 | 111.3 | 111.2 | 104.5 | 92.5 | 82.3 | 71.2 | | Adjustment to record tax effect | (29.5) | (26.4) | (25.6) | (25.6) | (24.0) | (21.3) | (18.9) | (16.4) | | Adjusted interest expense (after-tax) | $ 88.6 | $ 88.3 | $ 85.7 | $ 85.6 | $ 80.5 | $ 71.2 | $ 63.4 | $ 54.8 | | Economic profit | | | | | | | | | | Adjusted net income | $ 100.8 | $ 114.8 | $ 126.0 | $ 109.1 | $ 126.4 | $ 117.4 | $ 129.1 | $ 139.5 | | Adjusted interest expense (after tax) | 88.6 | 88.3 | 85.7 | 85.6 | 80.5 | 71.2 | 63.4 | 54.8 | | Adjusted net income plus adjusted interest expense (after-tax) | 189.4 | 203.1 | 211.7 | 194.7 | 206.9 | 188.6 | 192.5 | 194.3 | | Less: cost of capital | 165.0 | 167.8 | 160.4 | 153.3 | 150.7 | 137.2 | 136.6 | 125.2 | | Economic profit | $ 24.4 | $ 35.3 | $ 51.3 | $ 41.4 | $ 56.2 | $ 51.4 | $ 55.9 | $ 69.1 | - The estimated long-term effective income tax rate increased from 23% to 25% for Q2 2025 and future periods, due to higher state and local income taxes and lower excess tax benefits from stock-based compensation373940 Explanation of Floating Yield Adjustment The floating yield adjustment is a non-GAAP measure recognizing loan revenue on a level-yield basis, differing from GAAP's CECL model - The floating yield adjustment recognizes net loan income (finance charge revenue less provision for credit losses) on a level-yield basis over the life of the loan, based on expected future net cash flows44 - It differs from GAAP's CECL model, which recognizes a significant provision for credit losses at loan assignment and then higher finance charge revenue in subsequent periods4549 - The adjustment aims to provide a more transparent view of business economics, reflecting how the business is managed and offering valuable supplemental information for investors45 Explanation of Senior Notes Adjustment The senior notes adjustment, a non-GAAP modification, treated certain note issuances as refinancings, deferring losses and interest expense - The senior notes adjustment modified GAAP financial results to treat the issuance of certain senior notes as a refinancing of previously issued senior notes46 - Under this non-GAAP approach, losses on extinguishment of debt and additional interest expense were deferred as debt issuance costs and recognized ratably over the term of the newly issued notes51 - The company ceased applying the senior notes adjustment for issuances in December 2023 and February 2025 because the adjustments would not be material52 Company Information and Risk Factors Company Description Credit Acceptance provides innovative financing solutions for automobile dealers, enabling vehicle sales to consumers across all credit histories - Credit Acceptance makes vehicle ownership possible by providing innovative financing solutions to automobile dealers, enabling them to sell vehicles to consumers regardless of credit history61 - The financing programs benefit dealers through sales to consumers who otherwise couldn't obtain financing, and from repeat/referral sales61 - An ancillary benefit for consumers is the opportunity to improve their credit score by reporting to national credit reporting agencies, helping them move to more traditional financing62 Webcast Details A webcast discussing Q2 results will be held on July 31, 2025, at 5:00 p.m. ET, accessible via the investor relations website - A webcast to discuss Q2 results will be held on July 31, 2025, at 5:00 p.m. Eastern Time59 - Access is available live through the 'Investor Relations' section of creditacceptance.com or by telephone with pre-registration5960 - Only telephone participants will be able to pose questions, and a replay/transcript will be archived online59 Cautionary Statement Regarding Forward-Looking Information Forward-looking statements are subject to risks and uncertainties, with actual results potentially differing materially from expectations - Statements in the release that are not historical facts are 'forward-looking statements' subject to risks and uncertainties53 - Actual results could differ materially from these statements due to various factors, including those detailed in the company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q53 - The company does not undertake any obligation to update or alter its forward-looking statements, except as required by applicable law58 Risk Factors The company faces diverse risks across industry, operational, macroeconomic, capital, technology, and legal/regulatory categories - Industry, Operational, and Macroeconomic Risks: Inability to accurately forecast collections, intense competition, adverse economic conditions, reliance on third parties and senior management, reputational risks, and impacts from public health emergencies or natural disasters5455 - Capital and Liquidity Risks: Inability to access or renew funding, debt limitations and obligations, interest rate fluctuations, credit rating reductions, and conditions of capital markets5563 - Technology and Cybersecurity Risks: Dependence on technology, risk of system breaches, impact of electronic contracts, failure to safeguard proprietary information, and challenges from artificial intelligence development and use5763 - Legal and Regulatory Risks: Litigation, changes in tax laws, and regulatory compliance leading to adverse effects on business5863
Credit Acceptance(CACC) - 2025 Q2 - Quarterly Results