Credit Acceptance Corporation Reports 2000 Earnings of $23,650,000 or $0.53 Per Diluted Share Fourth Quarter Earnings of $5,667,000 or $0.13 Per Diluted Share
SOUTHFIELD, Mich.--Jan. 24, 2001--Credit Acceptance Corporation announced today that consolidated net income for the quarter ended December 31, 2000 was $5,667,000 or $0.13 per diluted share compared to $3,805,000 or $0.08 per diluted share for the same period in 1999.For the year ended December 31, 2000, consolidated net income was $23,650,000 or $0.53 per diluted share compared to a loss of ($10,686,000) or ($0.23) per diluted share for the same period in 1999.
Earnings for the quarter ended December 31, 1999 include after tax charges totaling $800,000 resulting from the settlement of consumer litigation and $400,000 from the acceleration of amortization of certain deferred debt issuance costs in connection with the repurchase of senior notes. Results for fiscal 1999 include an after tax non-cash charge of $39.2 million in the third quarter relating to dealer advance losses and the write down of a portion of the retained interest in the July 1998 securitization which was partially offset by a $9.0 million after tax gain relating to the sale of a subsidiary. Excluding the impact of the non-recurring items discussed above, annual earnings per diluted share increased 20.5% from $0.44 in 1999 to $0.53 in 2000.
Cash collections on installment contracts receivable, as a percent of average gross installment contracts receivable, were 57.8% for the year ended December 31, 2000 compared with 57.3% for 1999. The Company's average annualized yield on its installment contract portfolio improved to 13.9% for the year ended December 31, 2000 from 12.7% for 1999. The improvement in the average yield resulted from a decrease in the percentage of installment contracts which were in non-accrual status to 21.6% as of December 31, 2000 from 23.0% as of December 31, 1999.
The Company's consolidated originations totaled $127,457,000 and $587,324,000 for the three months and year ended December 31, 2000 compared with $136,637,000 and $541,649,000 for the same periods in 1999, representing a decrease of 6.7% and an increase of 8.4% for the three months and year ended, respectively.
The Company's North American operations originated $85,518,000 and $403,078,000 in new installment contracts for the three months and year ended December 31, 2000 compared with $90,957,000 and $408,545,000 for the same periods in 1999, representing decreases of 6.0% and 1.3% for the three months and year ended, respectively.
The Company's United Kingdom operations originated $34,246,000 and $144,992,000 in new installment contracts for the three months and year ended December 31, 2000 compared to $40,816,000 and $124,566,000 for the same periods in 1999, representing a decrease of 16.1% for the three month period and an increase of 16.4% for the year ended.
Originations for the Company's automobile leasing operations were $7,693,000 and $39,254,000 for the three months and year ended December 31, 2000 compared with $4,864,000 and $8,538,000 for the same periods in 1999. The Company reported net losses on its automobile leasing operations of ($820,000) and ($1,489,000) for the three months and year ended December 31, 2000 compared with net losses of ($198,000) and ($488,000) for the same periods in 1999. The Company began originating leases of used vehicles during the first quarter of 1999.
The increase in the automobile leasing operations net loss for the quarter was primarily due to a $1.2 million increase in the provision for credit losses for the quarter ended December 31, 2000 compared to the same period in 1999.
The increase in the size of the Company's lease portfolio accounts for the largest portion of the increase in the provision for credit losses. However, additional amounts were provided during the year based upon the Company's evaluation of portfolio performance data, which caused the Company to increase its forecasted repossession rate for the portfolio of leases and increase the reserve against leased vehicle residual values.
The Company also released the following guidance for 2001:
Estimated earnings per share $0.60 Retail installment contract origination growth 13% Average net installment contract receivables growth 6% Finance charge yield % 14% Lease origination growth 31% Average debt balance $155-$160 million Average borrowing cost 10%
The Company expects that retail installment contract originations will grow by approximately 5% in the first quarter of 2001 over the prior year first quarter. The Company expects that both retail and lease origination growth will accelerate during the year. The growth in retail installment contract originations will depend in part on the acceptance of the Company's new internet based origination platform as well as continued stability in credit quality. The growth in leasing will depend primarily on the Company's evaluation of the profitability of leases originated to date as more data becomes available as existing leases mature.
The foregoing information regarding the Company's estimates of results for the first quarter and full year of 2001 represent our outlook only as of the date of this release, and we undertake no obligation to update or revise these estimates, whether as a result of new developments or otherwise.
Certain statements in this release that are not historical facts, including those regarding the Company's 2001 guidance, future plans, objectives and expected performance, are "forward looking statements" within the meaning of the federal securities laws. Forward looking statements are subject to various risks and uncertainties, including, among others, competition from traditional financing sources and from non-traditional lenders, unavailability of funding at competitive rates of interest, adverse changes in applicable laws and regulations, adverse changes in economic conditions, adverse changes in the automobile or finance industries or in the non-prime consumer finance market, the Company's ability to maintain or increase the volume of installment contracts or leases accepted, the Company's potential inability to accurately forecast and estimate future collections and historical collection rates, the Company's potential inability to accurately estimate the residual values of the lease vehicles, an adverse outcome in the ongoing Internal Revenue Service examination of the Company, an increase in the amount or severity of litigation against the Company, the loss of key management personnel, and the Company's ability to complete various financing alternatives and the various other factors discussed in the Company's annual and quarterly reports filed with the Securities and Exchange Commission.
Credit Acceptance Corporation is a specialized financial services company which provides funding, receivables management, collection, sales training and related products and services to automobile dealers selling vehicles to consumers with limited access to traditional sources of consumer credit.
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31 December 31
----------- -----------
Income Statements 2000 1999 2000 1999
----------------- ---- ---- ---- ----
REVENUE
Finance charges $ 19,154 $ 18,454 $ 79,659 $ 76,355
Premiums earned 2,481 2,579 9,467 10,389
Lease revenue 4,391 651 13,019 1,034
Other income 5,903 6,579 21,633 28,277
-------- -------- -------- --------
Total revenue 31,929 28,263 123,778 116,055
COSTS AND EXPENSES
Operating expenses 12,901 14,736 50,108 56,104
Provision for credit
losses 3,154 2,352 11,251 56,172
Provision for claims 888 889 2,984 3,498
Depreciation of leased
assets 2,490 350 7,004 569
Valuation adjustment
on retained interest
in securitization - - - 13,517
Interest 3,952 4,104 16,431 16,576
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Total costs and
expenses 23,385 22,431 87,778 146,436
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OPERATING INCOME (LOSS) 8,544 5,832 36,000 (30,381)
Gain on sale of
subsidiary - - - 14,720
Foreign exchange gain
(loss) 74 (74) (11) (66)
Provision (credit) for
income taxes 2,951 1,953 12,339 (5,041)
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NET INCOME (LOSS) $ 5,667 $ 3,805 $ 23,650 $(10,686)
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Net income (loss) per
common share:
Basic $ 0.13 $ 0.08 $ 0.54 $ (0.23)
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-------- -------- -------- --------
Diluted $ 0.13 $ 0.08 $ 0.53 $ (0.23)
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-------- -------- -------- --------
Weighted average shares
outstanding:
Basic 42,587,792 46,074,009 43,879,577 46,222,730
Diluted 42,950,463 46,252,798 44,219,876 46,222,730
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
As of December 31
-----------------
2000 1999
---- ----
Balance Sheets
--------------
ASSETS
Cash and investments $ 21,477 $ 22,691
Installment contracts receivable 568,900 570,529
Allowance for credit losses (4,640) (4,742)
-------- --------
Installment contracts
receivable, net 564,260 565,787
Investment in operating leases, net 42,921 9,097
Other assets, net 42,376 60,010
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TOTAL ASSETS $671,034 $657,585
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-------- --------
LIABILITIES
Total debt $156,120 $158,985
Dealer holdbacks, net 214,468 202,143
Other liabilities 38,220 33,482
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TOTAL LIABILITIES $408,808 $394,610
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TOTAL SHAREHOLDERS' EQUITY 262,226 262,975
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $671,034 $657,585
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-------- --------
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Installment Contracts Receivable
--------------------------------
The following table summarizes the composition of installment
contracts receivable:
As of December 31
-----------------
2000 1999
---- ----
Gross installment contracts
receivable $674,402 $679,247
Unearned finance charges (98,214) (99,174)
Unearned insurance premiums,
insurance reserves and fees (7,288) (9,544)
-------- --------
Installment contracts receivable $568,900 $570,529
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-------- --------
Non-accrual installment contracts
as a percent of total gross
installment contracts 21.6% 23.0%
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-------- --------
A summary of changes in gross installment contracts is as follows:
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
Balance, beginning of
period $680,972 $683,024 $679,201 $794,831
Gross amount of
installment contracts
accepted 119,764 131,773 548,070 533,111
Cash collections on
installment contracts
receivable (92,855) (94,695) (395,061) (409,742)
Charge offs (35,756) (39,012) (144,828) (234,167)
Currency translation 2,277 (1,843) (12,980) (4,786)
-------- -------- -------- --------
Balance, end of period $674,402 $679,247 $674,402 $679,247
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Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of December 31
-----------------
2000 1999
---- ----
Gross leased vehicles $ 42,449 $ 8,443
Accumulated depreciation (5,283) (453)
Gross deferred costs 6,245 1,061
Accumulated amortization of deferred
costs (1,435) (108)
Lease payments receivable 2,968 245
-------- --------
Investment in operating leases 44,944 9,188
Less: Allowance for lease vehicle
losses (2,023) (91)
-------- --------
Investment in operating leases, net $ 42,921 $ 9,097
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-------- --------
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Investment in Operating Leases - (continued)
--------------------------------------------
A summary of changes in gross leased vehicles is as follows:
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
Balance, beginning of
period $ 36,952 $ 3,674 $ 8,443 $ -
Gross operating leases
originated 7,693 4,864 39,254 8,538
Operating lease
liquidations (2,206) (95) (5,258) (95)
Currency translation 10 - 10 -
-------- -------- -------- --------
Balance, end of period $ 42,449 $ 8,443 $ 42,449 $ 8,443
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Reserves
--------
A summary of changes in the allowance for credit losses, the reserve
on advances and the allowance for lease vehicle losses is as follows:
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
Allowance for Credit Losses
---------------------------
Balance, beginning of
period $ 4,374 $ 4,765 $ 4,742 $ 7,075
Provision for credit
losses 651 425 1,647 1,205
Charge offs (395) (427) (1,688) (3,489)
Currency translation 10 (21) (61) (49)
-------- -------- -------- --------
Balance, end of period $ 4,640 $ 4,742 $ 4,640 $ 4,742
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Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
Reserve on Advances
-------------------
Balance, beginning of
period $ 6,605 $ 3,832 $ 4,329 $ 19,954
Provision for advance
losses 1,221 1,863 6,591 54,868
Advance reserve fees - - - 8
Charge offs (1,063) (1,364) (4,104) (70,353)
Currency translation 25 (2) (28) (148)
-------- -------- -------- --------
Balance, end of period $ 6,788 $ 4,329 $ 6,788 $ 4,329
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Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Reserves - (continued)
----------------------
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
Allowance For Lease
Vehicle Losses
--------------------
Balance, beginning of
period $ 1,277 $ 35 $ 91 $ 0
Provision for loan
losses 1,282 64 3,013 99
Charge offs (536) (8) (1,081) (8)
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Balance, end of period $ 2,023 $ 91 $ 2,023 $ 91
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Dealer Holdbacks
----------------
The following table summarizes the composition of dealer holdbacks:
As of December 31
-----------------
2000 1999
---- ----
Dealer holdbacks $537,679 $540,799
Less: Advances (net reserve of
$6,788 and $4,329 at
December 31, 2000 and 1999,
respectively) (323,211) (338,656)
-------- --------
Dealer holdbacks, net $214,468 $202,143
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