CPS(US:CPSS)2022-11-13 09:41Financial Data and Key Metrics Changes - Revenues for Q3 2022 were $90.3 million, up 10% from $82 million in Q2 2022 and up 32% from $68.6 million in Q3 2021 [13] - Pre-tax earnings for Q3 2022 were $34.3 million, slightly up from $34.2 million in Q2 2022 and significantly up from $19.5 million in Q3 2021 [19] - Net income for Q3 2022 was $25.4 million, compared to $25.3 million in Q2 2022 and up 85% from $13.7 million in Q3 2021 [20] - Earnings per share for Q3 2022 increased to $0.95, up 83% from $0.52 in Q3 2021 [21] Business Line Data and Key Metrics Changes - The fair value portfolio, which constitutes 96% of the total portfolio, grew 8% quarter-over-quarter and 41% year-over-year, yielding 11.4% [14][15] - The legacy portfolio now represents only 4% of the total, yielding 24% [15] - Core operating expenses were $38.5 million in Q3 2022, a 4% increase from $37 million in Q2 2022 and a 19% increase from $32 million in Q3 2021 [23] Market Data and Key Metrics Changes - The company originated $468 million in Q3 2022, a 14% drop from $548 million in Q2 2022, but applications increased to 653,000, a 6.2% sequential increase [28][29] - Year-to-date originations for 2022 reached $1.4 billion, a 71% growth rate compared to $818 million in the same period in 2021 [31] Company Strategy and Development Direction - The company is focusing on maintaining a rep force of 108 and increasing its dealer base, which has grown 15% this year [32] - The company is leveraging technology to improve efficiency, including partnerships for robotic process automation [37][38] - The company aims to cut costs and improve operational efficiency while navigating a challenging economic environment [50] Management's Comments on Operating Environment and Future Outlook - Management noted that despite rising interest rates, demand for financing remains strong, with expectations for continued business [10][11] - The company is tightening credit and raising rates to maintain margins, while credit performance remains strong compared to competitors [12][41] - Management expressed optimism about the future, anticipating a strong close to 2022 and readiness for the next year [50] Other Important Information - The company has increased its warehouse capacity to $400 million, which provides a strong liquidity position [6][22] - The company is not reliant on forward flow agreements, positioning it favorably compared to competitors [45][46] Q&A Session Summary Question: How is the company managing the impact of rising interest rates? - Management indicated that they are raising rates in line with the Fed and tightening credit to maintain margins while still seeing strong demand for their products [11][41] Question: What are the expectations for future growth? - Management expressed confidence in maintaining growth through increased originations and efficiency improvements, despite a slight slowdown in Q3 [31][50]