Credit Acceptance posts Q3 net loss as provision for credit losses increased 170%
CACC•Credit Acceptance reported a Q3 net loss after its provision for credit losses rose 170%, while adjusted EPS of $13.01 beat the $12.34 consensus and revenue of $594.6 million slightly missed expectations. The company repurchased 2.6% of shares outstanding for $161.6 million.
1. Q3 results
Credit Acceptance said its Q3 net loss was driven by a 170% increase in its provision for credit losses, mainly reflecting a downward adjustment to its loan forecasting methodology and weaker Consumer Loan performance. Revenue was $594.60 million, slightly below the $595.85 million consensus, while adjusted EPS of $13.01 exceeded the $12.34 consensus.
2. Loan forecasts and volume
The company lowered forecasted net cash flows by 2.5% in Q3 after recent loan performance consistently underperformed forecasts, especially in lower scorecard bands. It expects lower collection rates for loans assigned from 2022 to 2026. Consumer Loan assignment unit volume rose 37.7% and dollar volume increased 51.0%, supported by increased dealer participation and higher average advances. Credit Acceptance repurchased 2.6% of shares outstanding for $161.6 million.
