Credit Acceptance Corporation Reports First Quarter Earnings
22 April 1999
Credit Acceptance Corporation Reports First Quarter Earnings of $5,379,000 or $.12 Per Diluted Share
SOUTHFIELD, Mich.--April 21, 1999--Credit Acceptance Corporation announced today that consolidated net income for the quarter ended March 31, 1999 was $5,379,000 or $.12 per diluted share compared to $6,887,000 or $.15 per diluted share for the same period in 1998.The Company's continued focus on the quality of installment contracts accepted has resulted in an improvement in the performance of the Company's portfolio of installment contracts. Cash collections on installment contracts receivable, as a percent of average gross installment contracts receivable, were 14.7% for the quarter ended March 31, 1999 compared with 11.6% for the same period in 1998. The Company's average annualized yield on its installment contract portfolio improved to 12.1% for the quarter ended March 31, 1999 from 11.2% for the same period in 1998. The improvement in the average yield resulted from a decrease in the percentage of installment contracts which were in non-accrual status to 29.1% as of March 31, 1999 from 33.2% for the same period in 1998. The improvement in the average yield also resulted from increased collection levels on non-accrual installment contracts. In addition, the improved collection levels resulted in lower provisions needed for loan and advance losses.
The Company originated $127,980,000 in new installment contracts for the quarter ended March 31, 1999 compared with $202,965,000 for the same period in 1998.
The improved collection levels and reduced origination volume allowed the Company to reduce its overall debt levels for the quarter ended March 31, 1999. Total balance sheet debt decreased from $315,055,000 to $186,638,000 as of March 31, 1998 and 1999, respectively. The ratio of the Company's total debt to shareholders' equity decreased from 1.37 to 0.66 as of March 31, 1998 and 1999, respectively.
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
March 31
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Income Statement 1999 1998
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REVENUE
Finance charges $ 19,405 $ 28,055
Premiums earned 2,445 2,923
Other income 8,511 8,332
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Total revenue 30,361 39,310
COSTS AND EXPENSES
Operating expenses 14,549 14,621
Provision for credit losses 2,136 5,796
Provision for claims 831 1,035
Interest 4,527 7,346
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Total costs and expenses 22,043 28,798
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OPERATING INCOME 8,318 10,512
Foreign exchange loss (45) (12)
Provision for income taxes 2,894 3,637
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NET INCOME $5,379 $6,887
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Net income per common share:
Basic $0.12 $0.15
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Diluted $0.12 $0.15
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Weighted average shares
outstanding:
Basic 46,298,904 46,113,115
Diluted 46,705,859 46,949,673
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands, except per share data)
As of March 31
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Balance Sheet 1999 1998
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ASSETS
Cash and investments $29,679 $22,255
Installment contracts receivable 612,506 957,979
Allowance for credit losses (5,849) (10,473)
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Installment contracts receivable, net 606,657 947,506
Other assets, net 65,312 48,278
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TOTAL ASSETS $701,648 $1,018,039
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LIABILITIES
Total debt $186,638 $351,055
Dealer holdbacks, net 194,254 363,749
Other liabilities 41,066 47,465
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TOTAL LIABILITIES 421,958 762,269
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TOTAL SHAREHOLDERS' EQUITY 279,690 255,770
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $701,648 $1,018,039
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Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Installment Contracts Receivable
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The following table summarizes the composition of installment
contracts receivable:
As of March 31
1999 1998
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Gross installment contracts receivable $ 724,946 $1,143,469
Unearned finance charges (104,403) (177,021)
Unearned insurance premiums,
insurance reserves and fees (8,037) (8,469)
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Installment contracts receivable $ 612,506 $ 957,979
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Non-accrual installment contracts as
a percent of total gross installment 29.1% 33.2%
contracts -------- -------
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A summary of changes in gross installment contracts is as
follows:
Three Months Ended
March 31
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1999 1998
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Balance, beginning of period $ 794,831 $1,254,858
Gross amount of installment
contracts accepted 127,980 202,965
Cash collections on installment
contracts receivable (111,503) (139,104)
Charge offs (82,543) (174,889)
Currency translation (3,819) (361)
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Balance, end of period $ 724,946 $1,143,469
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Dealer Holdbacks
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The following table summarizes the composition of dealer
holdbacks:
As of March 31
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1999 1998
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Dealer holdbacks $ 578,418 $912,981
Less: Advances (net reserve of $16,884
and $21,262 at March 31, 1999
and 1998, respectively) (384,164) (549,232)
Dealer holdbacks, net $ 194,254 $363,749
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Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Reserves
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A summary of changes in the allowance for credit losses and the
reserve on advances is as follows:
Three Months Ended
March 31
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1999 1998
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Allowance for Credit Losses
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Balance, beginning of period $7,075 $13,119
Provision for loan losses 192 1,030
Charge offs (1,383) (3,672)
Currency translation (35) (4)
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Balance, end of period $ 5,849 $10,473
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Three Months Ended
March 31
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1999 1998
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Reserve on Advances
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Balance, beginning of period $19,954 $16,369
Provision for advance losses 1,944 4,766
Advance reserve fees 4 152
Charge offs (4,882) -
Currency translation (136) (25)
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Balance, end of period $16,884 $21,262
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