Credit Acceptance(CACC) - 2025 Q3 - Quarterly Results

Financial Performance - Consolidated net income for Q3 2025 was $108.2 million, or $9.43 per diluted share, compared to $87.4 million and $7.42 per diluted share in Q2 2025[2] - Adjusted net income for Q3 2025 was $117.9 million, or $10.28 per diluted share, slightly down from $118.3 million in Q2 2025[2] - GAAP net income for Q3 2025 was $108.2 million, a 37.3% increase from $78.8 million in Q3 2024[31] - GAAP net income per diluted share rose to $9.43, up 48.5% from $6.35 in the same period last year[31] - Adjusted net income for Q3 2025 was $117.9 million, compared to $114.8 million in Q3 2024, reflecting a growth of 2.7%[39] - Basic net income per share rose to $9.62 in Q3 2025 from $6.42 in Q3 2024, reflecting a 50.9% increase[70] - Total revenue for Q3 2025 was $582.4 million, an increase of 5.4% from $550.3 million in Q3 2024[70] Loan Portfolio and Consumer Loans - The average balance of the loan portfolio increased by 3.9% year-over-year to $8.0 billion[6] - Consumer Loan assignment unit and dollar volumes declined by 16.5% and 19.4%, respectively, compared to Q3 2024[6] - Consumer Loan unit volume decreased by 16.5% year-over-year for the three months ended September 30, 2025, with active dealers declining by 4.7%[26] - Year-over-year dollar volume for Consumer Loans dropped by 19.4% in Q3 2025, attributed to a decrease in the average size of loans assigned[26] - The percentage of Consumer Loans assigned as dealer loans was 73.1% for the three months ended September 30, 2025, while purchased loans accounted for 26.9%[29] - Consumer Loan assignment volume has been negatively impacted by a decrease in overall demand and available capital for new loans[25] - The company expanded dealer access to the purchase program for Consumer Loans to consumers with higher credit ratings, contributing to a higher percentage of purchased loans in 2025[30] Collection Rates and Performance - Forecasted collection rates for Consumer Loans assigned in 2025 improved to 67.4% as of September 30, 2025[10] - As of September 30, 2025, the forecasted collection rate for Consumer Loans is 67.2%, with an advance rate of 67.1%, resulting in a spread of 22.1%[17] - The forecasted collection rates for 2025 Consumer Loans show a variance from initial forecasts, with 2019 and 2020 loans performing better than expected, while 2021 to 2023 loans underperformed[18] Financial Metrics and Ratios - Adjusted return on capital decreased to 9.4%, down from 9.6% in the same quarter last year[33] - Adjusted revenue as a percentage of adjusted average capital for Q3 2025 was 18.6%, slightly up from 18.2% in Q3 2024[39] - Economic profit decreased by 8.7% to $43.0 million compared to $47.1 million in Q3 2024[34] - Economic profit for the three months ended September 30, 2025, was $43.0 million, compared to $35.3 million in the same period of 2024, representing a 21.1% increase[44] - Economic profit per diluted share for the three months ended September 30, 2025, was $3.75, an increase from $2.87 in the same period of 2024[44] Expenses and Liabilities - Operating expenses increased by 13.3% ($17.2 million), driven by higher salaries and legal expenses[31] - Salaries and wages expenses rose to $85.5 million in Q3 2025, compared to $77.3 million in Q3 2024, an increase of 10.4%[70] - General and administrative expenses increased to $36.3 million in Q3 2025 from $29.0 million in Q3 2024, a rise of 25.1%[70] - Total provision for credit losses decreased to $152.0 million in Q3 2025 from $184.7 million in Q3 2024, a reduction of 17.7%[70] - Total liabilities decreased slightly to $7,062.0 million from $7,105.0 million, a reduction of about 0.6%[72] Shareholder Equity and Capital - Shareholders' equity declined to $1,578.6 million from $1,749.6 million, representing a decrease of approximately 9.8%[72] - Paid-in capital increased to $392.1 million from $335.1 million, showing a growth of about 17.0%[72] - Retained earnings decreased to $1,185.3 million from $1,414.7 million, a decline of approximately 16.2%[72] - Adjusted average capital rose by 3.7% to $8,699.2 million from $8,387.6 million in the previous year[33] Tax and Legal Matters - The company expects a long-term effective income tax rate increase from 23% to 25% due to higher state and local income taxes[41] - A contingent loss of $15.0 million was excluded from adjusted results due to previously disclosed legal matters[6] - The company recognized a contingent loss of $11.2 million in Q3 2025 related to legal matters[40] Asset Management - Total assets decreased to $8,640.6 million as of September 30, 2025, from $8,854.6 million as of December 31, 2024, representing a decline of approximately 2.4%[72] - Loans receivable increased to $11,563.7 million, up from $11,289.1 million, reflecting a growth of about 2.4%[72] - Net loans receivable rose to $7,975.5 million, compared to $7,850.3 million, indicating an increase of approximately 1.6%[72]