Credit Acceptance(CACC)2023-01-31 23:53Financial Data and Key Metrics Changes - Adjusted net income decreased by 26.6% from Q4 2021 to 11.74 [33] - Unit and dollar volumes grew by 25.6% and 26.2%, respectively, compared to Q4 2021 [42] Business Line Data and Key Metrics Changes - The provision expense for new loans was 41 million or 0.5% [42] Market Data and Key Metrics Changes - The competitive environment has improved, with a more constructive market tone observed in January [7][38] - Funding markets for subprime ABS have shown signs of recovery, with spreads lower than late last year [5][6] Company Strategy and Development Direction - The company intends to tap the ABS market at the appropriate time, leveraging its strong liquidity position with $1.6 billion in unused availability at committed revolving credit facilities [10] - The company emphasizes maintaining a significant margin of safety in loan pricing to address uncertainties in the market [63] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation and declining vehicle values have impacted loan performance, which has been worse than expected over the last few quarters [48] - The company is cautious about the future, acknowledging that used car prices remain elevated and the market is not yet stabilized [62] Other Important Information - The company disagrees with the allegations in the pending lawsuit and intends to vigorously defend itself [12][14] - The company has been proactive in adjusting pricing and risk assessments to maintain profitability amid economic uncertainties [65] Q&A Session Summary Question: What is the outlook for the competitive environment? - Management indicated that the competitive environment could become more intense if funding markets remain constructive [7] Question: Why not tap the ABS market given the origination growth? - Management stated they intend to tap the ABS market but currently have a strong liquidity position [10] Question: What are the implications of the lawsuit on accessing the securitization market? - Management confirmed that there is nothing in the lawsuit that would prohibit them from accessing the securitization market [22] Question: How does the company view the impact of inflation and vehicle values on loan performance? - Management believes inflation and declining vehicle values are primary factors affecting loan performance [48] Question: What adjustments are being made to pricing and risk assessments? - Management is adjusting pricing and maintaining margins to protect profitability amid economic changes [65]