Credit Acceptance Corp. has increased net cash flows 220% year over year in the second quarter but profits remain “very small” compared with what the company is hoping to project moving forward, Chief Financial Officer Ken Booth said during the earnings call.
The subprime lender expects to collect $28.2 million from the loans it originated through the three months ended June 30, up from $8.8 million the year prior.
“We had a small positive change in our forecast during the quarter to disclose in terms of net cash flows,” Booth said. “Loan growth was very solid for the quarter I think deciding how much of that’s internal and how much that’s external is always difficult. Maybe we got a more favorable environment, maybe the expansion of our sales force probably has something to do with it. It’s hard to tell, but it was a strong quarter nonetheless.”
Rather than reporting straight origination numbers, Credit Acceptance reports loans as a forecast for what percentage of loans it expects to collect. Forecasted collections increased 100 basis points from the first quarter to 64.5% of outstandings.
Credit Acceptance added nearly 1,000 dealers to its network compared with the same period the year prior, which helped push consumer loan unit volume up 20% year over year. Consumer loan volume is up to 10.7 contracts per active dealer compared with 10.1 in the second quarter 2017.
“The best number to look at in the release is the change in volume per active dealer,” Booth said on the call. “It was up 5.9% for the quarter, so that’s certainly a positive mark.”
