Credit Acceptance Corp. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Credit Acceptance Corp. filed its Q1 2024 10-Q report on April 30, 2024.</b>

AI Summary

CREDIT ACCEPTANCE CORP (CACC) filed a Quarterly Report (10-Q) with the SEC on April 30, 2024. Credit Acceptance Corp. filed its 10-Q report for the period ending March 31, 2024. The filing covers the first quarter of 2024. The company's fiscal year ends on December 31st. The filing was made on April 30, 2024. The company is incorporated in Michigan (MI).

Why It Matters

For investors and stakeholders tracking CREDIT ACCEPTANCE CORP, this filing contains several important signals. This 10-Q filing provides the latest financial and operational details for Credit Acceptance Corp. for the first quarter of 2024, crucial for investors to assess performance and trends. Understanding the company's financial health and strategic direction as presented in this report is key for making informed investment decisions regarding CACC.

Risk Assessment

Risk Level: medium — CREDIT ACCEPTANCE CORP shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q) for a publicly traded company, indicating ongoing disclosure requirements rather than an immediate, significant event. However, the nature of the business (personal credit institutions) carries inherent risks.

Analyst Insight

Review the detailed financial statements and management discussion within the 10-Q to understand Credit Acceptance Corp.'s performance in Q1 2024 and identify any emerging trends or risks.

Key Numbers

• 2024-03-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-04-30 — Filing Date (FILED AS OF DATE)
• 12/31 — Fiscal Year End (FISCAL YEAR END)
• 6141 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)

Key Players & Entities

• CREDIT ACCEPTANCE CORP (company) — FILER
• 0000885550-24-000069 (filing_id) — ACCESSION NUMBER
• 20240331 (date) — CONFORMED PERIOD OF REPORT
• 20240430 (date) — FILED AS OF DATE
• MI (location) — STATE OF INCORPORATION
• 2483532700 (phone) — BUSINESS PHONE
• CACC (ticker) — tk

FAQ

Industry Context

Credit Acceptance Corp. operates within the personal credit institutions sector, providing financing for vehicle purchases, often to individuals with less-than-perfect credit.

Regulatory Implications

As a financial institution, Credit Acceptance Corp. is subject to various federal and state regulations governing lending practices, consumer protection, and financial reporting.

What Investors Should Do

1. Analyze the balance sheet and income statement for Q1 2024.
2. Review any disclosures regarding loan portfolio performance and delinquency rates.
3. Assess management's commentary on future outlook and any changes in business strategy.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-04-30: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This is the 10-Q filing for the first quarter of 2024. Previous filings would include the 10-K annual report and prior 10-Q reports for the preceding quarters and year.

Filing Documents

• cacc-20240331.htm (10-Q) — 2646KB
• cacc-20240331xex31a.htm (EX-31.1) — 11KB
• cacc-20240331xex31b.htm (EX-31.2) — 11KB
• cacc-20240331xex32a.htm (EX-32.1) — 7KB
• cacc-20240331xex32b.htm (EX-32.2) — 7KB
• 0000885550-24-000069.txt (&nbsp;) — 14368KB
• cacc-20240331.xsd (EX-101.SCH) — 82KB
• cacc-20240331_cal.xml (EX-101.CAL) — 65KB
• cacc-20240331_def.xml (EX-101.DEF) — 327KB
• cacc-20240331_lab.xml (EX-101.LAB) — 750KB
• cacc-20240331_pre.xml (EX-101.PRE) — 571KB
• cacc-20240331_htm.xml (XML) — 3650KB

— FINANCIAL INFORMATION

PART I. — FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets - As of March 31, 2024 and December 31, 2023 1 Consolidated Statements of Income - Three months ended March 31, 2024 and 2023 2 Consolidated Statements of Comprehensive Income - Three months ended March 31, 2024 and 2023 3 Consolidated Statements of Shareholders' Equity - Three months ended March 31, 2024 and 2023 4 Consolidated Statements of Cash Flows - Three months ended March 31, 2024 and 2023 5

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 42

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 57

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 57

— OTHER INFORMATION

PART II. — OTHER INFORMATION

LEGAL PROCEEDINGS 58

ITEM 1. LEGAL PROCEEDINGS 58

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 59

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 59

OTHER INFORMATION 59

ITEM 5. OTHER INFORMATION 59

EXHIBITS 60

ITEM 6. EXHIBITS 60 SIGNATURES 62 Table of Contents

- FINANCIAL INFORMATION

PART I. - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CREDIT ACCEPTANCE CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in millions, except per share data) As of March 31, 2024 December 31, 2023 ASSETS: Cash and cash equivalents $ 8.4 $ 13.2 Restricted cash and cash equivalents 559.2 457.7 Restricted securities available for sale 99.9 93.2 Loans receivable 10,483.5 10,020.1 Allowance for credit losses ( 3,137.9 ) ( 3,064.8 ) Loans receivable, net 7,345.6 6,955.3 Property and equipment, net 44.6 46.5 Income taxes receivable 11.1 4.3 Other assets 28.2 40.0 Total assets $ 8,097.0 $ 7,610.2 LIABILITIES AND SHAREHOLDERS' EQUITY: Liabilities: Accounts payable and accrued liabilities $ 342.7 $ 318.8 Revolving secured lines of credit 169.5 79.2 Secured financing 4,444.1 3,990.9 Senior notes 989.6 989.0 Mortgage note 8.3 8.4 Deferred income taxes, net 421.1 389.2 Income taxes payable 69.5 81.0 Total liabilities 6,444.8 5,856.5 Commitments and Contingencies - See Note 16 Shareholders' Equity: Preferred stock, $ .01 par value, 1,000,000 shares authorized, none issued — — Common stock, $ .01 par value, 80,000,000 shares authorized, 12,220,580 and 12,522,397 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 0.1 0.1 Paid-in capital 303.5 279.0 Retained earnings 1,349.8 1,475.6 Accumulated other comprehensive loss ( 1.2 ) ( 1.0 ) Total shareholders' equity 1,652.2 1,753.7 Total liabilities and shareholders' equity $ 8,097.0 $ 7,610.2 See accompanying notes to consolidated financial statements. 1 Table of Contents CREDIT ACCEPTANCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in millions, except per share data) For the Three Months Ended March 31, 2024 2023 Revenue: Finance charges $ 469.2 $ 421.1 Premiums earned 21.9 17.4 Other income 16.9 15.3 Total revenue 508.0 453.8 Costs and expenses: Salaries and wages 78.5 77.2 General and administrative 23.7 18.0 Sales and marke

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles" or "GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of actual results achieved for full fiscal years. The consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023 for Credit Acceptance Corporation (the "Company", "Credit Acceptance", "we", "our" or "us"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. We have evaluated events and transactions occurring subsequent to the consolidated balance sheet date of March 31, 2024 for items that could potentially be recognized or disclosed in these financial statements. We did not identify any items that would require disclosure in or adjustment to the consolidated financial statements. Reclassification Certain amounts for prior periods have been reclassified to conform to the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) (UNAUDITED) In recent years, we have expanded our financing programs to consumers with higher credit ratings, which has contributed to the reduction in the percentage of total unit volume with either FICO scores below 650 or no FICO scores. We have two programs: the Portfolio Program and the Purchase Program. Under the Portfolio Program, we advance money to Dealers (referred to as a "Dealer Loan") in exchange for the right to service the underlying Consumer Loans. Under the Purchase Program, we buy the Consumer Loans from the Dealers (referred to as a "Purchased Loan") and keep all amounts collected from the consumer. Dealer Loans and Purchased Loans are collectively referred to as "Loans." The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last five quarters: Unit Volume Dollar Volume (1) Three Months Ended Dealer Loans Purchased Loans Dealer Loans Purchased Loans March 31, 2023 72.1 % 27.9 % 68.1 % 31.9 % June 30, 2023 72.4 % 27.6 % 68.6 % 31.4 % September 30, 2023 74.8 % 25.2 % 71.7 % 28.3 % December 31, 2023 77.2 % 22.8 % 75.0 % 25.0 % March 31, 2024 78.2 % 21.8 % 76.6 % 23.4 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program. Payments of Dealer Holdback (as defined below) and accelerated Dealer Holdback are not included. Portfolio Program As payment for the vehicle, the Dealer generally receives the following: a down payment from the consumer; a non-recourse cash payment ("advance") from us; and after the advance balance (cash advance and related Dealer Loan fees and costs) has been recovered by us, the cash from payments made on the Consumer Loan, net of certain collection costs and our servicing fee ("Dealer Holdback"). We record the amount advanced to the Deale

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) (UNAUDITED) Since typically the combination of the advance and the consumer's down payment provides the Dealer with a cash profit at the time of sale, the Dealer's risk in the Consumer Loan is limited. We cannot demand repayment of the advance from the Dealer except in the event the Dealer is in default of the Dealer servicing agreement. Advances are made only after the consumer and Dealer have signed a Consumer Loan contract, we have received the executed Consumer Loan contract and supporting documentation in either physical or electronic form, and we have approved all of the related stipulations for funding. For accounting purposes, the transactions described under the Portfolio Program are not considered to be loans to consumers. Instead, our accounting reflects that of a lender to the Dealer. The classification as a Dealer Loan for accounting purposes is primarily a result of (1) the Dealer's financial interest in the Consumer Loan and (2) certain elements of our legal relationship with the Dealer. Purchase Program The Purchase Program differs from our Portfolio Program in that the Dealer receives a one-time payment from us at the time of assignment to purchase the Consumer Loan instead of a cash advance at the time of assignment and future Dealer Holdback payments. For accounting purposes, the transactions described under the Purchase Program are considered to be originated by the Dealer and then purchased by us. Program Enrollment Dealers are granted access to our Portfolio Program upon enrollment. Access to the Purchase Program is typically only granted to Dealers that meet one of the following: assigned at least 50 Consumer Loans under the Portfolio Program; franchise dealership; or independent dealership that meets certain criteria upon enrollment. Seasonality Our business is seasonal with peak Consumer Loan assignments and collections occurring during the first quarter of the yea

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) (UNAUDITED) The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported in our consolidated balance sheets to the total shown in our consolidated statements of cash flows: (In millions) As of March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022 Cash and cash equivalents $ 8.4 $ 13.2 $ 8.1 $ 7.7 Restricted cash and cash equivalents 559.2 457.7 480.0 410.0 Total cash and cash equivalents and restricted cash and cash equivalents $ 567.6 $ 470.9 $ 488.1 $ 417.7 Restricted Securities Available for Sale Restricted securities available for sale consist of amounts held in a trust for future vehicle service contract claims. We determine the appropriate classification of our investments in debt securities at the time of purchase and reevaluate such determinations at each balance sheet date. Debt securities for which we do not have the intent or ability to hold to maturity are classified as available for sale, and stated at fair value with unrealized gains and losses, net of income taxes included in the determination of comprehensive income and reported as a component of shareholders' equity. Loans Receivable and Allowance for Credit Losses Consumer Loan Assignment. For legal purposes, a Consumer Loan is considered to have been assigned to us after the following has occurred: the consumer and Dealer have signed a Consumer Loan contract; and we have received the executed Consumer Loan contract and supporting documentation in either physical or electronic form. For accounting and financial reporting purposes, a Consumer Loan is considered to have been assigned to us after the following has occurred: the Consumer Loan has been legally assigned to us; and we have made a funding decision and generally have provided funding to the Dealer in the form of either an advance under the Portfolio Program or one-time purchase payment

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED) (UNAUDITED) Recognition and Measurement Policies. On January 1, 2020, we adopted Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which is known as the current expected credit loss model, or CECL. Loans outstanding prior to the adoption date qualified for transition relief and are accounted for as purchased financial assets with credit deterioration ("PCD Method"). Under the PCD Method, for each reporting period subsequent to the adoption of CECL, we: recognize finance charge revenue using the effective interest rate that was calculated on the adoption date based on expected future net cash flows; and adjust the allowance for credit losses so that the net carrying amount of each Loan equals the present value of expected future net cash flows discounted at the effective interest rate. The adjustment to the allowance for credit losses is recognized as either provision for credit losses expense or a reversal of provision for credit losses expense. Consumer Loans assigned to us on or subsequent to January 1, 2020 do not qualify for the PCD Method and are accounted for as originated financial assets ("Originated Method"). While the cash flows we expect to collect at the time of assignment are significantly lower than the contractual cash flows owed to us due to credit quality, our Loans do not qualify for the PCD Method because the assignment of the Consumer Loan to us occurs a moment after the Consumer Loan is originated by the Dealer, so "a more-than-insignificant deterioration in credit quality since origination" has not occurred at the time of assignment. In addition, Dealer Loans also do not qualify for the PCD Method because Consumer Loans assigned to us under the Portfolio Program are considered to be advances under Dealer Loans originated by us rather than Consumer Loans purchased by us. Under the Originated Method, at the time of assignment, we: calcul