Credit Acceptance(US:CACC)2025-10-30 20:06Financial 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].