Credit Acceptance Corporation Announces Q3 Earnings
29 October 1998
Credit Acceptance Corporation Announces Third Quarter Earnings of $5,611,000 or $.12 per Diluted Share
SOUTHFIELD, Mich.--Oct. 28, 1998--Credit Acceptance Corporation announced today that consolidated net income for the quarter ended September 30, 1998, was $5,611,000 or $.12 per diluted share compared to a net loss of ($27,708,000) or ($.60) per diluted share for the same period in 1997. Total revenue for the quarter ended September 30, 1998 was $33,228,000 compared to $40,893,000 for the same period in 1997.The Company has continued to utilize more conservative advance programs and has continued to closely monitor business with marginally profitable dealers in order to improve the performance of its portfolio of installment contracts. These changes, while resulting in reduced levels of originations, have also resulted in increased levels of collections. The Company originated $121,487,000 and $477,967,000 in new installment contracts for the three and nine months ended September 30, 1998 compared with $241,890,000 and $775,531,000 for the same periods in 1997. Cash collections on installment contracts receivable, as a percentage of average gross installment contracts receivable, were 11.8% and 36.6% for the three and nine months ended September 30, 1998 compared with 8.9% and 28.5% for the same periods in 1997.
As previously announced, the Company completed its first securitization during the quarter ended September 30, 1998. As a result of this transaction, total revenue for the quarter includes a gain on sale of $685,000.
The Company also announced that an additional lender has joined the syndicate which provides the Company's line of credit facility thereby increasing the size of this facility from $115,000,000 to $125,000,000. The Company presently has approximately $88,000,000 outstanding under the facility leaving approximately $37,000,000 available. All other terms of the facility remain unchanged.
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
September 30
____________________________
1998 1997
____________________________
Income Statement
REVENUE
Finance charges $ 21,708 $ 28,956
Premiums earned 2,741 3,111
Dealer enrollment fees 693 1,750
Gain on sale of receivables 685 --
Other income 7,401 7,076
____________ ____________
Total revenue 33,228 40,893
COSTS AND EXPENSES
Salaries and wages 6,287 4,278
General and administrative 7,027 4,916
Provision for credit losses 3,438 64,071
Sales and marketing 1,392 2,100
Provision for claims 896 1,095
Interest 5,923 7,162
____________ ____________
Total costs and expenses 24,963 83,622
____________ ____________
OPERATING INCOME (LOSS) 8,265 (42,729)
Foreign exchange loss (77) (7)
Provision (credit) for
income taxes 2,577 (15,028)
____________ ____________
NET INCOME (LOSS) $ 5,611 $ (27,708)
____________ ____________
____________ ____________
Net income (loss) per
common share:
Basic $ 0.12 ($ 0.60)
Diluted $ 0.12 ($ 0.60)
Weighted average shares
outstanding:
Basic 46,243,115 46,113,115
Diluted 46,897,388 46,113,115
Nine Months Ended
September 30
____________________________
1998 1997
____________________________
REVENUE
Finance charges $ 77,657 $ 92,249
Premiums earned 8,294 8,119
Dealer enrollment fees 3,157 5,672
Gain on sale of receivables 685 --
Other income 20,581 21,475
____________ ____________
Total revenue 110,374 127,515
COSTS AND EXPENSES
Salaries and wages 16,884 12,349
General and administrative 21,169 14,410
Provision for credit losses 13,900 78,793
Sales and marketing 5,293 6,057
Provision for claims 2,868 2,776
Interest 20,098 19,639
____________ ____________
Total costs and expenses 80,212 134,024
____________ ____________
OPERATING INCOME (LOSS) 30,162 (6,509)
Foreign exchange loss (72) (22)
Provision (credit) for
income taxes 10,149 (2,911)
____________ ____________
NET INCOME (LOSS) $ 19,941 $ (3,620)
____________ ____________
____________ ____________
Net income (loss) per
common share:
Basic $ 0.43 ($ 0.08)
Diluted $ 0.42 ($ 0.08)
Weighted average shares
outstanding:
Basic 46,156,448 46,100,670
Diluted 47,085,750 46,100,670
Credit Acceptance Corporation
Summary Financial Data
______________________
(Dollars in thousands, except per share data)
As of September 30
__________________________
1998 1997
__________________________
Balance Sheet
ASSETS
Cash and investments $ 20,280 $ 9,438
Installment contracts
receivable 733,788 1,222,542
Allowance for credit
losses (7,661) (17,211)
___________ ___________
Installment contracts
receivable, net 726,127 1,205,331
Other assets, net 63,452 58,280
___________ ___________
TOTAL ASSETS $ 809,859 $ 1,273,049
___________ ___________
___________ ___________
LIABILITIES
Total debt $ 244,599 $ 379,269
Dealer holdbacks, net 253,495 618,443
Other liabilities 40,111 32,624
___________ ___________
TOTAL LIABILITIES $ 538,205 $ 1,030,336
___________ ___________
TOTAL SHAREHOLDERS EQUITY 271,654 242,713
___________ ___________
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $ 809,859 $ 1,273,049
___________ ___________
___________ ___________
Credit Acceptance Corporation
Summary Financial Data
______________________
(Dollars in thousands)
Installment Contracts Receivable
The following table summarizes the composition of installment
contracts receivable:
As of September 30
___________________________
1998 1997
____________________________
Gross installment
contracts receivable $ 871,704 $ 1,464,022
Unearned finance charges (129,412) (232,643)
Unearned insurance premiums,
insurance reserves and fees (8,504) (8,837)
___________ ___________
Installment contracts receivable $ 733,788 $ 1,222,542
___________ ___________
___________ ___________
Non-accrual installment contracts
as a percent of total gross
installment contracts 32.1% 42.2%
___________ ___________
___________ ___________
A summary of changes in gross installment contracts receivable is as
follows:
Three Months Ended
September 30
__________________________
1998 1997
__________________________
Balance, beginning of period $ 1,040,670 $ 1,420,620
Gross amount of installment
contracts accepted 121,487 241,890
Gross installment contracts
securitized (98,591) --
Cash collections on installment
contracts receivable (113,293) (128,130)
Charge offs(a) (80,959) (63,641)
Currency translation 2,390 (6,717)
___________ ___________
Balance, end of period $ 871,704 $ 1,464,022
___________ ___________
___________ ___________
Nine Months Ended
September 30
__________________________
1998 1997
__________________________
Balance, beginning of period $ 1,254,858 $ 1,251,139
Gross amount of installment
contracts accepted 477,967 775,531
Gross installment contracts
securitized (98,591) --
Cash collections on installment
contracts receivable (389,536) (386,936)
Charge offs(a) (377,637) (165,235)
Currency translation 4,643 (10,477)
___________ ___________
Balance, end of period $ 871,704 $ 1,464,022
___________ ___________
___________ ___________
(a) 1998 charge offs based on nine month recency method; 1997 based on
one year recency method.
Dealer Holdbacks
The following table summarizes the composition of dealer holdbacks:
As of September 30
__________________________________
1998 1997
__________________________________
Dealer holdbacks $ 695,689 $1,169,894
Less: Advances (net of reserve of
$19,655 and $77,308 at
September 30, 1998 and 1997,
respectively) (442,194) (551,451)
___________ ___________
Dealer holdbacks, net $ 253,495 $ 618,443
___________ ___________
___________ ___________
Credit Acceptance Corporation
Summary Financial Data
______________________
(Dollars in thousands)
Reserves
A summary of changes in the allowance for credit losses and the
reserve on advances is as follows:
Three Months Ended Nine Months Ended
September 30 September 30
____________________ ____________________
1998 1997 1998 1997
____________________ ____________________
Allowance for Credit Losses
___________________________
Balance, beginning of
period $ 9,174 $ 14,556 $ 13,119 $ 12,195
Provision for loan
losses 922 4,091 2,827 8,706
Allowance on securitized
installment contracts (1,107) -- (1,107) --
Charge offs (1,352) (1,361) (7,221) (3,599)
Currency translation 24 (75) 43 (91)
________ ________ _________ ________
Balance, end of period $ 7,661 $ 17,211 $ 7,661 $ 17,211
________ ________ _________ ________
________ ________ _________ ________
Three Months Ended Nine Months Ended
September 30 September 30
____________________ ____________________
1998 1997 1998 1997
____________________ ____________________
Reserve on Advances
___________________
Balance, beginning of
period $ 25,274 $ 19,816 $ 16,369 $ 8,754
Provision for advance
losses 2,516 59,980 11,073 70,087
Advance reserve fees 7 1,231 174 3,505
Charge offs (8,240) (3,513) (8,240) (4,834)
Currency translation 98 (206) 279 (204)
________ ________ ________ ________
Balance, end of period $ 19,655 $ 77,308 $ 19,655 $ 77,308
________ ________ ________ ________
________ ________ ________ ________