Atlanticus (ATLC) - 2024 Q3 - Quarterly Report

Financial Performance - Total operating revenue for the three months ended September 30, 2024, was $350,954,000, an increase of$56,041,000 from $294,913,000 in 2023, representing a growth of approximately 19$29,543,000 for the three months ended September 30, 2024, compared to $25,240,000 in 2023, reflecting an increase of$4,303,000 or approximately 17%[153] - Total operating revenue for 2024 reached $956.8 million, a 13$846.6 million in 2023[154] - Net income attributable to controlling interests was $858,000 for 2024, compared to$860,000 in 2023, reflecting a slight decrease[155] - Operating expenses totaled $63,074,000 for the three months ended September 30, 2024, an increase of$6,591,000 from $56,483,000 in 2023[153] Credit and Receivables - The company has serviced over$41 billion in consumer loans over more than 25 years, indicating a strong operational history in the financial technology sector[141] - Private label credit and general purpose credit card receivables increased to $2,653.8 million as of September 30, 2024, up from$2,314.6 million in 2023, indicating growth in customer acquisition[157] - Total outstanding receivables grew to $2,653.8 million as of September 30, 2024, up from$2,314.6 million a year earlier, indicating growth in both private label and general purpose credit card receivables[171] - Managed receivables as of September 30, 2024, totaled $2,654.1 million, reflecting an increase from$2,415.1 million in the prior year[185] - The company continues to focus on managing delinquency and receivables losses through account management strategies[190] Credit Losses and Provisions - The company reported a provision for credit losses of $4,633,000 for the three months ended September 30, 2024, an increase of$4,095,000 from $538,000 in 2023[153] - Provision for credit losses increased to$9.3 million in 2024 from $1.6 million in 2023, primarily due to higher loss estimates in the Auto Finance segment[162] - The Expected net principal credit loss rate has decreased due to a higher number of receivables from private label credit accounts, with continued improvements in delinquency rates expected[168] - The combined principal net charge-off ratio for the three months ended September was 22.2$38.8 million for the nine months ended September 30, 2024, due to increased borrowings and higher costs of capital[160] - The effective interest rates on debt have increased, leading to anticipated higher quarterly interest expenses in future periods[161] - The interest expense ratio, annualized, was reported at 6.6%, up from 6.3% in June[191] - The net interest margin ratio, annualized, increased to 11.7% from 6.7% in the previous quarter[191] - The company expects continued increases in operating expenses due to growth in receivables and inflationary pressures, particularly in salaries and benefits[171] Market Presence and Growth - As of September 30, 2024, the CAR subsidiary served over 670 dealers across 34 states and two U.S. territories, indicating significant market presence in the auto finance sector[152] - The company continues to pursue growth in the CaaS segment, leveraging technology solutions to support lenders in offering more inclusive financial services[141] - The company expects continued growth in managed receivables in 2024, despite initial restrictions due to tightened underwriting standards and regulatory changes[200] - The company plans to continue expanding its financial technology reach and grow private label credit and general purpose credit card receivables[231] - The company anticipates continued growth in the acquisition of general purpose credit card receivables during 2024 and into 2025[213] Regulatory and Risk Factors - The company is monitoring the impact of recent CFPB rules that limit late fees charged to consumers, which could affect its revenue[259] - The company faces substantial risks and uncertainties that could materially affect future financial conditions, including economic conditions, credit losses, and regulatory changes[258] - The company has expressed concerns regarding the adequacy of its allowances for credit losses and estimates of loan losses[259] - The company acknowledges the potential impact of security breaches on its operations and the unauthorized disclosure of confidential information[258] - The company is subject to competition from various sources providing similar financial products, which could impact its market position[259] Capital and Financing Activities - Cash flows from operations for the nine months ended September 30, 2024, were $346.8 million, an increase from$326.7 million in the same period of 2023[245] - Cash used in investing activities increased to $571.0 million for the nine months ended September 30, 2024, compared to$461.0 million in 2023, primarily due to increased investments in credit card receivables[245] - The company generated $225.3 million in financing activities during the nine months ended September 30, 2024, up from$101.2 million in 2023, largely due to the issuance of $130.8 million of 2029 Senior Notes[245] - The company expects to continue raising additional capital to fund acquisitions of credit card receivables portfolios and further stock repurchases[246] - The company entered into a Loan and Security Agreement with Dove for a senior secured term loan facility of up to$40.0 million, which was fully satisfied by issuing 400,000 shares of Series A preferred stock[255]