Credit Acceptance Corporation Reports 15% Revenue Growth, Net Income Decline in Latest Quarter

As of September 30, 2024, Credit Acceptance Corporation reported significant financial developments compared to the previous fiscal period. The company’s total revenue for the three months ended September 30, 2024, reached $550.3 million, marking a 15.0% increase from $478.6 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $1,596.5 million, up 13.2% from $1,410.3 million in the prior year. This growth was driven by a 14.9% increase in finance charges, which amounted to $507.6 million for the third quarter.

Despite the revenue growth, the company faced rising costs and expenses. Total costs and expenses for the three months ended September 30, 2024, were $443.8 million, a 16.1% increase from $382.1 million in the prior year. For the nine-month period, costs and expenses rose to $1,458.9 million, up 25.9% from $1,159.1 million. The increase in expenses was largely attributed to higher interest expenses, which surged by 57.7% due to increased average debt costs and outstanding balances.

Net income for the third quarter of 2024 was $78.8 million, an 11.3% increase from $70.8 million in the same quarter of 2023. However, net income for the nine months ended September 30, 2024, fell to $96.0 million, down 50.1% from $192.5 million in the same period of 2023. This decline was primarily due to increased interest expenses and provisions for credit losses, which rose significantly as a result of lower forecasted collection rates for Consumer Loans.

The company’s balance sheet showed substantial changes, with total assets increasing to $8,683.2 million from $7,610.2 million as of December 31, 2023. Total liabilities also rose to $7,036.7 million, up from $5,856.5 million. Cash and cash equivalents improved significantly, reaching $159.7 million compared to $13.2 million at the end of 2023.

Strategically, the company has been active in financing, completing several Term ABS financings throughout 2024, including a $600.0 million financing in September with an expected average annualized cost of 5.2%. Additionally, the company recognized a loss of $23.7 million from the sale of an office building in Q2 2024, which was part of efforts to reduce excess space and operating costs.

Overall, while Credit Acceptance Corporation experienced revenue growth and improved cash positions, it faced challenges with rising costs and a significant drop in net income for the nine-month period, reflecting the impact of increased provisions for credit losses and interest expenses.