Credit Acceptance Corporation (NASDAQ:CACC) Q1 2023 Earnings Call Transcript

Moshe Orenbuch: Doug, just two quick things. The first is, you mentioned that, GAAP and adjusted kind of assets were growing in the 1% to mid-1%s. Given what you are seeing in terms of originations and the pace of originations, that deceleration you talked about that went into April? And cash flows, if you kind of put the two of them together, do you think that, that numbers kind of accelerating or decelerating into Q2 the growth in loans?

Doug Busk: I mean, I think, a lot of that, I think, we are — based on April numbers, we should still be growing the portfolio, but that could turn around May or June. So I think the growth in the portfolio primarily, I think, is just a function of what sort of growth we put out from this point forward.

Moshe Orenbuch: Got you. And then just a quick modeling one, salaries and wages, I think, were high, I didn’t get a chance to look in the Q. Was there anything in there that we should think of as onetime or is that the run rate?

Doug Busk: All right. Well, if you are comparing Q1 to Q4, there are certain expenses, like, payroll taxes and fringe benefits that tend to be higher in Q1 and most of the increase versus Q4 was due to seasonal impacts, increase in sales commissions would be another one. If you are comparing it to Q1 of last year, obviously, have comparable seasonal factors today, but the thing that accounts for the difference in operating expenses in Q1 this year versus Q1 last year is an increase in engineering expense that is likely to continue. So really…

Moshe Orenbuch: Excellent.

Doug Busk: … it depends on what your starting point is, Moshe.

Moshe Orenbuch: Okay. All right. Thanks very much.

Operator: Thank you. Our next question is a follow-up from Robert Wildhack with Autonomous Research. Your line is open.

Robert Wildhack: Hi, Doug. Thanks for the follow. I just wanted to ask about the repurchase. I think in the past you have talked about when you are growing originations, you won’t repurchase as much and vice versa. So just curious what the appetite for share repurchases is given the growth is a little bit slower now than it was towards the end of last year?

Doug Busk: I think we continue to think about it the same way we always have. The first priority is to make sure we have the capital we need to fund anticipated levels of loan originations and that obviously includes a number of subjective considerations, like, what the capital markets are, like, what sort of bank tightening is going on, regulatory matters, et cetera. But if we are comfortable with what we have all the capital we need to fund and anticipate the levels of originations then we go to the next step and if we can buy the stock for less than we think it’s worth, we do so. So we are thinking about it the same way we have for many, many years.

Operator: Thank you. With no further questions in the queue, I would like to turn the conference back over to Mr. Busk for any additional or closing remarks.