Credit Acceptance Corporation (NASDAQ:CACC) Q4 2022 Earnings Call Transcript January 31, 2023
Operator: Good day, everyone, and welcome to the Credit Acceptance Corporation Fourth Quarter 2022 Earnings Call. Today’s call is being recorded. A webcast and transcript of today’s earnings call will be made available on Credit Acceptance’s website. At this time, I would like to turn the call over to Credit Acceptance, Chief Treasurer Officer, Doug Busk.
Doug Busk: Thank you. Good afternoon, and welcome to the Credit Acceptance Corporation fourth quarter 2022 earnings call. As you read our news release posted on the Investor Relations section of our website at ir.creditacceptance.com, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of federal securities law. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the cautionary statement regarding forward-looking information included in the news release.
Consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, I should mention that to comply with the SEC’s Regulation G, please refer to the financial results section of our news release, which provides tables showing how non-GAAP measures reconcile to GAAP measures. Our GAAP and adjusted results for the quarter include unit and dollar volumes grew 25.6% and 26.2%, respectively, as compared to the fourth quarter of 2021; a decrease in forecasted collection rates for loans originated in 2021 and 2022, which decreased forecasted net cash flows from our loan portfolio by $41 million or 0.5%. Adjusted net income decreased 26.6% from the fourth quarter of 2021 to $156 million. Adjusted earnings per share decreased 17.7% from the fourth quarter of 2021 to $11.74.
Photo by Dylan McLeod on Unsplash
Stock repurchases of approximately 8,000 shares, which represented 1.6% of the shares outstanding at the beginning of the quarter. At this time, Ken Booth, our Chief Executive Officer; Jay Martin, our Senior Vice President, Finance and Accounting, and I will take your questions.
Operator: Thank you. The first call, questions I have is coming from Moshe Orenbuch of Credit Suisse. Your line is open.
Moshe Orenbuch: Great. Thanks. I’m hoping you could give us a little bit of, kind of a help understanding you’ve had after several quarters of kind of write-ups of your cash flow expectations, the last three they’ve been down and mid-40s, 80s and now 41 again. How do we think about like where you’re sitting in this process? Like how is that and how should we think about how that affects the yield on the adjusted earnings basis?
Doug Busk: Well, we update our forecasts based on primarily loan performance and how loans with the same attributes have performed historically. So what we’ve seen I believe for the last three quarters is that loan performance was actually a little bit worse than expected. At the end of the preceding quarter, that’s caused our forecast of future net cash flows to decline a little bit. So where we’re at, I think, is impossible to say, that what happens to our forecasting collections and therefore the adjusted yield on our portfolio is really dependent how long performance is in the future.
See also 12 Cheap Bank Stocks To Buy and 11 Most Undervalued Natural Gas Stocks To Buy .
To continue reading the Q&A session, please click here.
— to news.google.com
