Credit Acceptance Corporation Reports Second Quarter Earnings
21 July 2000
Credit Acceptance Corporation Reports Second Quarter Earnings of $6,153,000 or $.14 Per Diluted Share
SOUTHFIELD, Mich. - Credit Acceptance Corporation announced today that consolidated net income for the quarter ended June 30, 2000, was $6,153,000 or $.14 per diluted share compared to $5,148,000 or $.11 per diluted share for the same period in 1999 representing 19.5% and 27.3% increases in net income and earnings per share, respectively.The prior year results exclude a one-time after-tax gain of $8,960,000 from the sale of a subsidiary and a $337,000 after-tax asset write down. Including the one-time gain and asset write down, consolidated net income for the quarter ended June 30, 1999 was $13,771,000 or $.30 per diluted share.
Cash collections on installment contracts receivable, as a percent of average gross installment contracts receivable, were 29.9% for the six months ended June 30, 2000 compared with 29.3% for the same period in 1999. The Company's average annualized yield on its installment contract portfolio improved to 14.1% for the six months ended June 30, 2000 from 12.7% for the same period in 1999. The improvement in the average yield resulted from a decrease in the percentage of installment contracts which were in non-accrual status to 20.0% as of June 30, 2000 from 25.9% for the same period in 1999.
The Company's consolidated originations totaled $145,187,000 and $322,701,000 for the three and six months ended June 30, 2000 compared with $136,477,000 and $264,403,000 for the same periods in 1999, representing an increase of 6.4% and 22.1% for the three and six month periods, respectively.
The Company's North American operations originated $96,999,000 and $232,312,000 in new installment contracts for the three and six months ended June 30, 2000 compared with $105,805,000 and $220,116,000 for the same periods in 1999, representing a decrease of (8.3%) and an increase of 5.5% for the three and six month periods, respectively.
The Company's United Kingdom operations originated $37,526,000 and $67,681,000 in new installment contracts for the three and six month periods ended June 30, 2000 compared to $29,322,000 and $42,857,000 for the same periods in 1999, representing an increase of 28.0% and 57.9% for the three and six month periods, respectively.
Originations for the Company's automobile leasing operations were $10,662,000 and $22,708,000 for the three and six months ended June 30, 2000 compared with $1,350,000 and $1,430,000 for the same periods in 1999. The Company reported a net income on its automobile leasing operations of $52,000 for the quarter ended June 30, 2000 compared with a net loss of ($95,000) for the same period in 1999. The Company began originating operating leases of used vehicles during the first quarter of 1999.
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.
Summary Financial Data
----------------------
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
Income Statements June 30 June 30
----------------- ------------------- ------------------
2000 1999 2000 1999
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REVENUE
Finance charges $ 20,309 $ 19,797 $ 40,348 $ 39,202
Premiums earned 2,434 2,331 5,035 4,776
Lease revenue 3,457 79 5,047 79
Other income 5,008 7,301 10,245 15,812
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Total revenue 31,208 29,508 60,675 59,869
COSTS AND EXPENSES
Operating expenses 13,034 14,427 25,725 28,976
Provision for credit
losses 2,576 2,084 5,023 4,220
Provision for claims 716 894 1,492 1,725
Depreciation of
leased assets 1,206 34 1,846 34
Valuation adjustment
on retained interest
in securitization - 517 - 517
Interest 4,167 4,272 8,360 8,799
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Total costs and
expenses 21,699 22,228 42,446 44,271
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OPERATING INCOME 9,509 7,280 18,229 15,598
Gain on sale of
subsidiary - 14,720 - 14,720
Foreign exchange loss (66) (9) (80) (54)
Provision for
income taxes 3,290 8,220 6,270 11,114
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NET INCOME $ 6,153 $ 13,771 $ 11,879 $ 19,150
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Net income per common share:
Basic $0.14 $0.30 $0.26 $0.41
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Diluted $0.14 $0.30 $0.26 $0.41
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Weighted average shares outstanding:
Basic 44,532,373 46,303,516 44,967,741 46,301,210
Diluted 44,863,668 46,545,290 45,269,194 46,625,575
Summary Financial Data
----------------------
(Dollars in thousands, except per share data)
Balance Sheet As of June 30
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2000 1999
----------- -----------
1999
ASSETS
Cash and investments $ 20,327 $ 25,382
Installment contracts receivable 574,858 584,231
Allowance for credit losses (4,184) (5,114)
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Installment contracts receivable, net 570,674 579,117
Investment in operating leases, net 32,908 1,478
Other assets, net 49,014 67,399
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TOTAL ASSETS $ 672,923 $ 673,376
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LIABILITIES
Total debt $ 169,966 $ 168,527
Dealer holdbacks, net 208,987 171,765
Other liabilities 35,579 40,931
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TOTAL LIABILITIES $ 414,532 $ 381,223
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TOTAL SHAREHOLDERS' EQUITY 258,391 292,153
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 672,923 $ 673,376
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Summary Financial Data
----------------------
(Dollars in thousands)
Installment Contracts Receivable
--------------------------------
The following table summarizes the composition of installment
contracts receivable:
As of June 30
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2000 1999
----------------------
Gross installment contracts receivable $ 686,551 $ 694,071
Unearned finance charges (102,468) (100,232)
Unearned insurance premiums, insurance
reserves and fees (9,225) (9,608)
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Installment contracts receivable $ 574,858 $ 584,231
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Non-accrual installment contracts as a percent
of total gross installment contracts 20.0% 25.9%
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A summary of changes in gross installment contracts receivable is as
follows:
Three Months Ended Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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Balance, beginning of
period $ 693,703 $ 724,812 $ 679,201 $ 794,831
Gross amount of
installment contracts
accepted 134,525 135,127 299,993 262,973
Cash collections on
installment contracts
receivable (98,912) (104,481) (204,958) (215,984)
Charge offs (34,476) (56,738) (76,502) (139,281)
Currency translation (8,289) (4,649) (11,183) (8,468)
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Balance, end of period $ 686,551 $ 694,071 $ 686,551 $ 694,071
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Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of June 30
------------------------
2000 1999
----------- -----------
Gross leased vehicles $ 30,178 $ 1,430
Accumulated depreciation (2,196) (34)
Deferred costs 3,877 82
Lease payments receivable 1,668 10
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Investment in operating leases 33,527 1,488
Less: Allowance for lease vehicle
losses (619) (10)
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Investment in operating leases, net $ 32,908 $ 1,478
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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 Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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Balance, beginning of
period $ 20,060 $ 80 $ 8,442 $ -
Gross operating leases
originated 10,662 1,350 22,708 1,430
Operating lease
liquidations (544) - (972) -
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Balance, end of period $ 30,178 $ 1,430 $ 30,178 $ 1,430
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Reserves
--------
A summary of changes in the allowance for credit losses, the reserve
on advances, and the reserve on investment in operating leases is as
follows:
Three Months Ended Six Months Ended
June 30 June 30
--------------------- -------------------
2000 1999 2000 1999
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Allowance for Credit Losses
---------------------------
Balance, beginning of
period $ 4,435 $ 5,849 $ 4,742 $ 7,075
Provision for credit
losses 130 180 415 372
Charge offs (342) (893) (920) (2,276)
Currency translation (39) (22) (53) (57)
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Balance, end of period $ 4,184 $ 5,114 $ 4,184 $ 5,114
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Three Months Ended Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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Reserve on Advances
-------------------
Balance, beginning of
period $ 6,292 $ 16,884 $ 4,329 $ 19,954
Provision for advance
losses 1,927 1,894 3,918 3,838
Advance reserve fees - 4 - 8
Charge offs (578) (2,626) (578) (7,508)
Currency translation 54 (66) 26 (202)
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Balance, end of period $ 7,695 $ 16,090 $ 7,695 $ 16,090
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Summary Financial Data
----------------------
(Dollars in thousands)
Reserves - (continued)
---------------------
Three Months Ended Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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Reserve on Investment in Operating
Leases
----------------------------------
Balance, beginning of period $ 203 $ - $ 91 $ -
Provision for lease vehicle losses 519 10 690 10
Charge offs (103) - (162) -
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Balance, end of period $ 619 $ 10 $ 619 $ 10
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Dealer Holdbacks
----------------
The following table summarizes the composition of dealer holdbacks:
As of June 30
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2000 1999
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Dealer holdbacks $ 546,553 $ 554,183
Less: Advances (net of reserve of
$7,695 and $16,090 at
June 30, 2000 and 1999,
respectively (337,566) (382,418)
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Dealer holdbacks, net $ 208,987 $ 171,765
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