CPS(CPSS) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q2 2024 were $95.9 million, a 5$91.7 million in Q1 2024 and a 13% increase from $84.9 million in Q2 2023 [5][6] - Expenses for Q2 2024 were$89.2 million, up 5% from $85.2 million in Q1 2024 and up 35$66.3 million in Q2 2023 [6][9] - Net income for Q2 2024 was $4.7 million, down from$14 million in Q2 2023, with earnings per share at $0.19 compared to$0.55 last year [9][10] - Finance receivables at fair value increased to $2.960 billion, a 6$2.6 billion last year [10] Business Line Data and Key Metrics Changes - Loan originations in Q2 2024 were $431.9 million, a 25$318.4 million in Q2 2023 [6][12] - The company reversed $2 million in credit losses from its legacy portfolio, compared to a reversal of$9.7 million in Q2 2023 [7] - The average FICO score increased to 578, reflecting a focus on upper-tier subprime loans [15] Market Data and Key Metrics Changes - The demand for subprime business remains strong, with 310,000 applications received in Q2 2024, a 10% increase year-over-year [12] - The company expanded its large dealer group base to 99, up from 76 in Q2 2023, representing a 62% increase over two years [13] Company Strategy and Development Direction - The company is transitioning from a phase of cautious observation to growth, with a focus on expanding sales and improving credit quality [3][4] - Management aims to grow the business significantly as interest rates are expected to decline, positioning the company for increased profitability [21][22] - The company is leveraging AI technologies to enhance operations, including a conversational AI voice bot for collections [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the performance of their loan pools and noted that the industry is dealing with performance issues from 2022 and 2023 [20] - The company is focused on ensuring credit quality and preparing for growth as economic conditions improve [22][23] Other Important Information - The company achieved a record high in shareholders' equity at $280.3 million, up 10$255 million last year [10] - The company has reduced occupancy costs by renegotiating leases, contributing to overall cost management [19] Q&A Session Summary Question: What is the outlook for the company's growth? - Management indicated that they are building a strong foundation for growth and are optimistic about future performance as economic conditions improve [21][22]