CPS(US:CPSS)2021-10-29 04:44Financial Data and Key Metrics Changes - The company reported a 232% year-over-year earnings growth, with a 24% reduction in expenses during the same period [5][11] - Revenues for the quarter were $68.6 million, a 3% increase from the previous quarter but a 3% decrease compared to the same quarter last year [9] - Net income for the quarter was $13.7 million, representing a 41% increase over the previous quarter and a 261% increase year-over-year [15] Business Line Data and Key Metrics Changes - Originations grew by 14% quarter-over-quarter and 87% year-over-year, marking the highest quarter since Q2 2016 [6] - The legacy portfolio is declining rapidly, now yielding about 20% but only representing 13% of the managed portfolio [9][10] - The fair value portfolio has grown to $1.9 billion, yielding a predictable 11.1% this quarter [10] Market Data and Key Metrics Changes - Delinquency rates were reported at 9.36%, up from 8.28% in the previous quarter but down from 10.3% in the same quarter last year [23] - The net loss rate for the quarter was 2.8%, slightly up from 2.79% in the previous quarter but significantly down from 6.39% year-over-year [24] Company Strategy and Development Direction - The company is focusing on increasing its dealer base from 8,000 to 10,000 and enhancing its scorecard technology to improve customer targeting [28] - The management is optimistic about future growth as inventory issues in the market are expected to ease, which will likely lead to increased originations [27][33] - The company is actively repurchasing shares to enhance shareholder value, having bought 2.5 million shares recently [8][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite external challenges, noting that their collections remain strong even as stimulus effects wane [7][31] - The outlook for used car prices is cautiously optimistic, with expectations for supply chain improvements in the coming months [37][39] - The competitive landscape is noted to be intense, with many players needing to grow, but the company is positioned well to continue its growth trajectory [33] Other Important Information - The company achieved a negative provision for credit losses of $1.6 million, marking a first in its history [13] - The balance sheet remains strong, with significant cash releases from trusts contributing to liquidity [17] Q&A Session Summary Question: Outlook for used car prices and supply chain normalization - Management anticipates that supply chain issues will ease in the next three to six months, leading to a better year for manufacturers in 2022 [37][38] Question: Remaining life on the legacy portfolio - The legacy portfolio is seasoned 58 months with an expected remaining life of about 12 months [40]