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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite strong revenue growth and loan originations, the company faces significant challenges. Declining pretax earnings and net income, coupled with increased expenses and debt, overshadow positive aspects. Credit performance risks, economic pressures, and operational challenges add further concerns. The lack of a share repurchase program and unclear management responses in the Q&A session contribute to a negative sentiment. Overall, these factors suggest a negative stock price movement in the short term.
Revenue for Q4 2024 $105.3 million, a 14% increase from $92 million in Q4 2023, driven by strong growth in loan originations.
Revenue for FY 2024 $393.5 million, a 12% increase from $352 million in 2023, driven by strong growth in loan originations.
Loan Originations for Q4 2024 $458 million, a 52% increase from $302 million in Q4 2023.
Loan Originations for FY 2024 $1.68 billion, a 24% increase from $1.36 billion in 2023.
Expenses for Q4 2024 $98 million, compared to $82.1 million in Q4 2023.
Expenses for FY 2024 $366.1 million, a 26% increase from $290.9 million in 2023, driven by higher interest expenses and adjustments to CECL portfolio.
Pretax Earnings for Q4 2024 $7.4 million, down 24% from $9.8 million in Q4 2023.
Pretax Earnings for FY 2024 $27.4 million, down from $61.1 million in 2023.
Net Income for Q4 2024 $5.1 million, down from $7.2 million in Q4 2023.
Net Income for FY 2024 $19.2 million, down from $45.3 million in 2023.
Diluted Earnings per Share for Q4 2024 $0.21, down from $0.29 in Q4 2023.
Diluted Earnings per Share for FY 2024 $0.79, down from $1.80 in 2023.
Cash Position at end of FY 2024 $137.4 million, up from $125.5 million in 2023.
Fair Value Portfolio at end of FY 2024 $3.5 billion, a 22% increase from $2.723 billion at the end of 2023.
Total Debt at end of FY 2024 $3.131 billion, a 22% increase from $2.566 billion at the end of 2023.
Shareholders' Equity at end of FY 2024 $293 million, a 7% increase from $275 million at the end of 2023.
Net Interest Margin for Q4 2024 $52.8 million, 2% higher than $51.7 million in Q4 2023.
Net Interest Margin for FY 2024 $202 million, down from $205.4 million in 2023.
Core Operating Expenses as a percentage for Q4 2024 5.4%, down from 5.9% in Q4 2023.
Core Operating Expenses as a percentage for FY 2024 5.6%, down from 5.7% in 2023.
Return on Managed Assets for Q4 2024 0.9%, down from 1.3% in Q4 2023.
Return on Managed Assets for FY 2024 0.9%, down from 2.1% in 2023.
Loan Originations Growth: For the quarter, we originated $458 million in new auto loans, which is a 52% increase over the $302 million in the fourth quarter of 2023. Loan originations for the year, $1.68 billion is a 24% increase from the $1.36 billion in 2023.
Sales Force Expansion: In 2024, we hired 42 new sales reps and opened new territories in anticipation of our growth goals for 2025.
Large Dealer Group Growth: We increased our large dealer group base from 20% to 28% of our originations.
Operational Efficiency in Funding: We lowered our funding time to less than 2 days, improved same-day funding to 13%, and second-day funding to 37%.
Cost Savings from AI: We saved $4.6 million in 2024 in fraud savings through AI-driven fraud scores.
Credit Performance Improvement: We expect the 2024 vintages to perform significantly better than 2023, reflecting our continued journey of responsible lending.
Technology Advancement: We piloted a new AI voice bot for collections, which will allow reallocating human collectors to harder accounts.
Credit Performance Risks: The company experienced challenges with credit performance in 2022 and early 2023, which impacted their growth strategy. Although improvements were noted in late 2023 and throughout 2024, the legacy vintages from 2022 still affect current performance.
Economic Factors: The company is facing macroeconomic challenges, including inflation and higher car values, which have negatively impacted auction recoveries, currently at 30%, down from the historical norm of 40-45%.
Regulatory Issues: The company mentioned the need to tighten credit models in response to economic conditions, indicating potential regulatory scrutiny on lending practices.
Supply Chain Challenges: The company is experiencing delays in repossession and auction processes due to a scarcity of repo agents, which is affecting the timely recovery of vehicles.
Competitive Pressures: The company is competing in a challenging subprime market, maintaining a strong APR despite increased demand, which may indicate pressure to adjust pricing strategies.
Operational Risks: The company noted an increase in extensions and challenges in managing collections, which could impact overall credit performance and operational efficiency.
Loan Originations Growth: For the quarter, we originated $458 million in new auto loans, a 52% increase over the $302 million in Q4 2023. For the year, $1.68 billion in loan originations, a 24% increase from $1.36 billion in 2023.
Sales Force Expansion: In 2024, we hired 42 new sales reps and opened new territories in anticipation of growth goals for 2025.
Technology Advancements: Utilized AI-driven fraud scores to eliminate applications with synthetic fraud, saving $4.6 million in 2024. A new AI voice bot was piloted to enhance collections.
Credit Performance Improvement: Expect improvements in credit performance as 2024 vintages flow through the portfolio, with a focus on tightening credit models.
Revenue Expectations: Revenues for 2024 were $393.5 million, a 12% increase over 2023, with expectations for continued growth in 2025.
Net Interest Margin (NIM): NIM is expected to improve as the portfolio grows and expenses decrease as a percentage of managed portfolio.
Economic Outlook: The unemployment rate is projected to remain low at 4.4%, with only a nominal increase to 4.6% through 2026, indicating a favorable economic environment.
Future Growth Strategy: Focus on expanding market share and improving credit performance, with expectations for a strong growth year in 2025.
Shareholders' Equity: $293 million, a 7% increase from $275 million at the end of 2023.
Share Repurchase Program: None
The earnings call presents a mixed picture. Financial performance shows modest growth, but key challenges like underperforming loan vintages and competitive pressures persist. Operational efficiency improvements are positive, yet growth challenges and macroeconomic headwinds remain concerning. The Q&A section didn't provide additional insights, leaving uncertainties unresolved. Overall, the stock is likely to remain neutral, with no strong catalysts for significant movement either way.
The earnings call presents mixed signals. Financial performance shows growth in revenue and loan originations, but net income and EPS are nearly flat. The company faces economic and competitive pressures, and no shareholder return plan was announced, which is typically negative. However, improvements in credit performance and operational efficiency provide some optimism. Without a market cap, the stock's reaction is uncertain, but the lack of strong positive catalysts and the presence of risks suggest a neutral sentiment, likely leading to a stock price movement between -2% and 2%.
Despite strong revenue growth and loan originations, the company faces significant challenges. Declining pretax earnings and net income, coupled with increased expenses and debt, overshadow positive aspects. Credit performance risks, economic pressures, and operational challenges add further concerns. The lack of a share repurchase program and unclear management responses in the Q&A session contribute to a negative sentiment. Overall, these factors suggest a negative stock price movement in the short term.
The earnings call reflects a mixed picture: strong revenue and origination growth, but significant declines in net income and EPS due to rising expenses and interest rates. The lack of a shareholder return plan and increasing portfolio risks add to the negative sentiment. Despite optimistic economic outlook and AI integration benefits, the financial health concerns and absence of guidance adjustments suggest a negative impact on stock price.
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