On Tuesday, Credit Acceptance (NASDAQ:CACC) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://edge.media-server.com/mmc/p/mb5cepa3/
Summary
Credit Acceptance reported year-over-year growth in earnings for the first quarter, with GAAP net income at $135.8 million or $12.40 per diluted share, and adjusted net income at $117.3 million or $10.71 per diluted share.
The company is focused on improving pricing and decision-making models, leveraging data for deeper analysis to address areas where market share is being lost, and enhancing scorecard systems to align with current market conditions.
Loan volume declines have moderated, with unit volume declining 4.3% this quarter compared to 9.1% last quarter, indicating reduced volatility.
Credit Acceptance reported a record 10,977 active dealers during the quarter, enrolling over 1500 new dealers, but noted a decrease in market share for subprime used vehicle financing.
The company completed an ABS transaction raising $450 million of capital at a cost of 5.2%, with support from a diverse investor base.
Full Transcript
OPERATOR
Are designed to lower the marginal cost of high quality decision making across the business. We are still in early stages of this journey and we’ll continue to make disciplined investments focused on high impact use cases that drive efficiency and create long term value. We continue to focus intensely on improving our pricing and decision making models through deeper use of data and more granular analysis. Over the past quarter we took a critical look at where we are losing market share and work to diagnose the underlying drivers rather than simply reacting to outcomes. This included deeper analysis of performance vector segmentation by dealer segment, credit band geography and vehicle characteristics. It is critical to understand where our economics are strongest and where refinement is needed. We are actively fine tuning our advanced models and testing targeted opportunities to improve conversion while maintaining appropriate margins of safety. At the same time, we are evaluating scorecard enhancements to ensure our underwriting and pricing models remain aligned with current market conditions. This disciplined, data driven approach is designed to sharpen decision quality, improve consistency and support sustainable risk adjusted growth over the long term. To close, I want to reiterate the purpose that drives us. Our mission is to change lives by providing access to credit that enables people to obtain reliable transportation and create opportunities for financial progress. We believe all consumers deserve respect and that dignity should never depend on a credit score. This principle is the foundation upon which we are building Credit Acceptance with the goal of compounding intrinsic value over time. This will require discipline, transparency and a willingness to make difficult decisions when needed. It also requires continuous improvement in how we operate, how we serve our dealers and consumers, and how we allocate resources. Progress will not always be linear, but the operational changes we are making today across credit cost structure, operating discipline, customer experience and technology are designed to make Credit Acceptance more durable, more agile and better positioned for the future. With that, I’ll turn it over to Jay to walk through the financial results in more detail.
Jay
Thank you. We reported year over year growth in earnings for the first quarter with GAAP net income of 135.8 million or $12.40 per diluted share and adjusted net income of 117.3 million or $10.71 per diluted share. From a loan performance standpoint, forecasted net cash flows from our loan portfolio declined 9.1 million or 0.1% during the quarter versus a decline of 34.2 million or 0.3% last quarter, reflecting reduced volatility and forecast changes. As Vinayak mentioned, this was the lowest quarterly decline we’ve seen in the past three years. Loan volume declines continued to moderate this quarter, with unit volume declining 4.3% this quarter, versus a decline of 9.1% last quarter. Likewise, loan dollar volume declined 4% this quarter versus a decline of 11.3%. In Q4, we financed nearly 96,000 contracts for our dealers and consumers, collected nearly 1.5 billion overall, and paid 47 million in dealer holdback and accelerated dealer holdback. Additionally, we enrolled over 1500 new dealers and had a record 10,977 active dealers during the quarter, reflecting continued engagement across our dealer network. Our market share in our core segment of used vehicles financed by subprime consumers. For the first two months of the quarter, the period for which data is currently available was 4.5%, down from 5.2% for the same period in 2025. The average unit volume per active dealer declined 6.5% year over year, while our average loan portfolio remains steady at 8.9 billion on an adjusted basis year over year. From a …
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