Credit Acceptance(CACC) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2025, consolidated net income was $106.3 million, or$8.66 per diluted share, representing a 65.5% increase from $64.3 million, or$5.08 per diluted share, in the same period of 2024 [170]. - Total revenue for the three months ended March 31, 2025, was $571.1 million, an increase of$63.1 million or 12.4% compared to $508.0 million in 2024 [204]. - Net income for the same period was$106.3 million, representing a 65.3% increase from $64.3 million in 2024 [204]. - Interest expense rose to$114.7 million, a 24.0% increase from $92.5 million in 2024, primarily due to an increase in the average outstanding debt balance [212]. - Total provision for credit losses decreased by$24.1 million or 13.0%, from $186.0 million in 2024 to$161.9 million in 2025 [207]. - The effective income tax rate decreased to 25.0% from 25.6% in the prior year, mainly due to a reduction in the impact of state and local income taxes [213]. Loan Portfolio - The average balance of the Loan portfolio increased by 11.0% year-over-year to $7.9 billion, marking the largest balance ever recorded [170]. - The average net Loans receivable balance increased to$7,882.4 million, up by $781.1 million or 11.0$7,101.3 million in 2024 [205]. - The average yield on the Loan portfolio increased to 26.7% from 26.4% in 2024, reflecting a 0.3% improvement [205]. - The forecasted net cash flows from the Loan portfolio decreased by $20.9 million, or 0.2$2.2 billion in unrestricted cash and cash equivalents, along with unused revolving lines of credit [170]. - Cash and cash equivalents increased to $528.8 million as of March 31, 2025, compared to$343.7 million as of December 31, 2024 [217]. - The funded debt to equity ratio was 3.9 to 1 as of March 31, 2025, indicating the company's financial leverage [191]. - Scheduled principal debt maturities total $6,748.1 million as of March 31, 2025, with$1,090.4 million due in the remainder of 2025 [218]. Risks and Challenges - The company may face significant operational risks due to reliance on accurate forecasting of future collections, which could adversely affect results [223]. - Competition from traditional and non-traditional lenders poses a risk to the company's ability to compete successfully [223]. - Economic conditions and changes in the automobile or finance industries could negatively impact the company's financial position and liquidity [223]. - The company's substantial debt levels may hinder its ability to satisfy obligations and negatively impact financial condition [227]. - Interest rate fluctuations could adversely affect borrowing costs and overall profitability [227]. - A reduction in the company's credit rating could increase funding costs and restrict access to capital markets [227]. - The company relies on technology, and breaches in information security could lead to significant financial and reputational damage [227]. - Changes in tax laws and regulatory conditions could materially affect the company's results of operations [227]. - The concentration of dealers in several states may pose additional risks to the company's operations [223]. Shareholder Actions - The company repurchased approximately 329,000 shares, or 2.7% of the shares outstanding at the beginning of the quarter [170]. - The company was named a Top Workplaces USA award winner for the fifth consecutive year, ranking 2 among companies of its size [170].