Credit Acceptance Announces Second Quarter 2025 Results

Financial Performance - Credit Acceptance Corporation reported consolidated net income of $87.4 million, or $7.42 per diluted share, for the three months ended June 30, 2025, compared to a net loss of $47.1 million in the same period of 2024, marking a significant recovery [1][27] - Adjusted net income for the same period was $100.8 million, or $8.56 per diluted share, down from $126.4 million, or $10.29 per diluted share, in 2024, reflecting a 20.3% decrease [1][29] - The company experienced a 46.2% decrease in provision for credit losses, amounting to $148.0 million, primarily due to a smaller decline in Consumer Loan performance compared to the previous year [27][32] Consumer Loan Metrics - The forecasted collection rates for Consumer Loans assigned in 2025 improved to 66.9% as of June 30, 2025, while rates for loans assigned in 2022 through 2024 declined [3][4] - The average balance of the loan portfolio increased by 6.8% to $8.0 billion, the highest ever recorded [6] - Consumer Loan assignment unit and dollar volumes decreased by 14.6% and 18.8%, respectively, compared to the second quarter of 2024 [6][22] Dealer Activity - The company enrolled 1,560 new dealers, bringing the total to 10,655 active dealers during the quarter [6] - The number of active dealers declined by 0.8%, and the average unit volume per active dealer decreased by 14.0% [22][23] - Consumer Loan unit volume from dealers active in both periods fell by 16.8% [23] Economic Profit and Capital - Economic profit decreased by 56.6% for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to a decrease in adjusted return on capital [29] - Adjusted average capital increased by 11.2% to $8.93 billion [29] - The company repurchased approximately 530,000 shares, or 4.5% of the shares outstanding at the beginning of the quarter [6] Tax and Legal Matters - The estimated long-term effective income tax rate increased from 23% to 25% [6] - A contingent loss of $23.4 million was recognized related to previously disclosed legal matters [6][32]