Credit Acceptance Corporation Reports 65.3% Increase in Net Income for Q1 2025

Credit Acceptance Corporation reported a significant increase in financial performance for the first quarter of 2025, with net income rising to $106.3 million, or $8.66 per diluted share, compared to $64.3 million, or $5.08 per diluted share, in the same period last year. This 65.3% increase in net income was primarily driven by a 12.4% rise in total revenue, which reached $571.1 million, up from $508.0 million in the prior year. The growth in revenue was largely attributed to a 12.3% increase in finance charges, which amounted to $526.7 million, reflecting a higher average balance of loans receivable.

In terms of operational metrics, the company experienced a decline in Consumer Loan assignment volumes, with unit and dollar volumes decreasing by 10.1% and 15.5%, respectively, compared to the first quarter of 2024. The average balance of loans receivable increased by 11.0% to $7.9 billion, marking the highest level recorded by the company. The number of active dealers remained relatively stable, with 10,789 active dealers reported, a slight decrease from 10,805 in the previous year. The company also enrolled 1,617 new dealers during the quarter.

Credit Acceptance's balance sheet showed total assets of $9.26 billion as of March 31, 2025, up from $8.85 billion at the end of 2024. The increase in assets was accompanied by a rise in total liabilities, which grew to $7.55 billion from $7.11 billion. The company maintained a strong liquidity position, with over $2.2 billion in unrestricted cash and available credit lines. The allowance for credit losses increased to $3.50 billion, reflecting the company's ongoing assessment of credit risk associated with its loan portfolio.

Strategically, the company issued $500 million in senior notes due 2030 at a 6.625% interest rate, using part of the proceeds to redeem $400 million of its senior notes due 2026. This refinancing effort is part of the company's strategy to manage its debt and optimize its capital structure. The company also reported a pre-tax loss of $1.2 million related to the extinguishment of debt during the quarter.

Looking ahead, Credit Acceptance remains focused on maintaining its market position and improving its operational efficiency. The company anticipates challenges in accurately forecasting Consumer Loan performance due to economic conditions and competition from traditional financing sources. However, it aims to leverage its strong liquidity and dealer network to navigate these challenges and continue providing innovative financing solutions to consumers with limited credit histories.