CPS(US:CPSS)2023-11-13 19:18Financial Data and Key Metrics Changes - Revenue for the quarter was $92.1 million, an 8% increase from $84.9 million in the second quarter of 2023 and a 2% increase from $90.3 million in the third quarter of last year [5] - Year-to-date revenues were $260 million, a 5% increase from $246.7 million in the same period of 2022 [5] - Expenses for the current quarter were $77.9 million, a 17% increase from $66.3 million in the second quarter of 2023 and a 39% increase from $56 million in the third quarter of last year [4] - Net income was $10.4 million in the current quarter, down 59% from $25.4 million last year [29] - Diluted earnings per share were $0.41 this quarter, compared to $0.95 last year [30] Business Line Data and Key Metrics Changes - The fair value portfolio grew to $2.7 billion, yielding 11.3% in the current period [6] - The markup in revenues for the quarter was $6 million, down from $8.1 million in Q3 of 2022 [7] - Core operating expenses were $42 million in the current quarter, an increase of 8% from $38.5 million last year [32] Market Data and Key Metrics Changes - The average amount financed for the quarter was $20,100, down $900 quarter-over-quarter and down $3,000 from Q3 of 2022 [44] - The average APR in Q3 was 21%, slightly lower than the previous quarter but higher than 18% in Q3 of 2022 [40] - The approval rate for applications ticked down to 51%, significantly lower than 70% in Q3 of 2022 due to tightened credit standards [43] Company Strategy and Development Direction - The company is focusing on improving collection tactics and has hired 96 new collectors to enhance performance [53] - A new Gen 8 Originations Model was launched, utilizing machine learning and updated data to better score applicants [55] - The company plans to grow when the market conditions are favorable, particularly after assessing the performance of the 2022 and 2023 vintages [60][62] Management's Comments on Operating Environment and Future Outlook - Management noted that while inflation and rising interest rates are challenges, the unemployment rate remains low, which is a positive indicator for business [49] - The company is optimistic about the future, expecting a strong performance in the first half of 2024 [58][63] - Management believes the company is in a strong position compared to competitors, having maintained profitability through various economic cycles [15][62] Other Important Information - The company reported a 48% decrease in pre-tax earnings for the current quarter compared to last year [24] - Shareholders' equity reached an all-time high of $265.9 million, supported by 48 consecutive quarters of pre-tax profitability [31] Q&A Session Summary Question: How is the company addressing the challenges posed by inflation and interest rates? - Management acknowledged that inflation is affecting customer performance and higher interest rates are cutting margins, but they remain optimistic about future performance [65][66]