Consumer Portfolio Services Inc (CPSS) 2024 Q3 法說會逐字稿

Good day, everyone and welcome to the Consumer Portfolio Services 2024 third-quarter, operating results conference call. Today's call is being recorded. Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements, statements regarding current or historical valuation of receivables because dependent on estimates of future events are also forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those projected.

大家好，歡迎參加消費者投資組合服務 2024 年第三季營運業績電話會議。今天的通話正在錄音。在我們開始之前，管理層要求我通知您，本次電話會議可能包含前瞻性陳述。本次電話會議期間所做的任何非歷史事實陳述的陳述都可能被視為前瞻性陳述，即有關應收帳款當前或歷史估值的陳述，因為依賴於對未來事件的估計也是前瞻性陳述。所有此類前瞻性陳述都存在可能導致實際結果與預測有重大差異的風險。

I refer you to the company's annual report filed March 15, for further clarification. The company assumes no obligation to update publicly any forward-looking statements whether as a result of new information, further events or otherwise. With us here is Mr. Charles Bradley, Chief Executive Officer; Mr. Danny Bharwani, Chief Financial Officer; and Mr. Mike Lavin, President and Chief Operating Officer of Consumer Portfolio Services.

請您參閱該公司 3 月 15 日提交的年度報告，以獲得進一步的說明。該公司不承擔因新資訊、進一步事件或其他原因而公開更新任何前瞻性陳述的義務。與我們在一起的是首席執行官查爾斯·布拉德利 (Charles Bradley) 先生； Danny Bharwani 先生，財務長；以及 Consumer Portfolio Services 總裁兼營運長 Mike Lavin 先生。

I will now turn the call over to Mr. Bradley.

我現在會把電話轉給布拉德利先生。

Thank you, and welcome everyone to our third-quarter earnings call again. We had another good quarter. It's slightly we're just basically trying to get comfortable with credit so we can start growing again, sent year over year from last year and it's continuing to be basically strong from the second quarter. Another highlight would be we think at this point, as I mentioned, we're comfortable with the credit going forward and somewhat, you know, importantly, the paper from 2022, in the first half of '23 which is what we'll loosely call a pro problematic paper for us and everyone else is down to less than 33% of the portfolio.

謝謝大家，歡迎大家再次參加我們的第三季財報電話會議。我們又度過了一個美好的季度。稍微有點，我們基本上只是試圖適應信貸，這樣我們就可以再次開始成長，從去年開始逐年成長，並且從第二季開始基本上繼續強勁。另一個亮點是我們認為在這一點上，正如我所提到的，我們對未來的信貸感到滿意，而且，你知道，重要的是，2022 年的論文，在23 年上半年，我們將鬆散地發布給我們打電話，給我們一份有問題的專業論文，其他人都下降到了投資組合的 33% 以下。

So as that runs off and the new paper comes in, everything's going to get a whole lot better. So we're looking forward to that. Basically, those are the highlights, probably the other one would be the securitization with a rate drop, we're now getting a better execution. That market still remains very strong. So it's very positive for us going forward.

因此，隨著新論文的出現，一切都會變得更好。所以我們對此充滿期待。基本上，這些是亮點，可能另一個是利率下降的證券化，我們現在得到了更好的執行。該市場仍然非常強勁。所以這對我們的前進非常積極。

I'll make some other comments, but for now, I'll turn it over to Danny to go through the financials.

我會發表一些其他評論，但現在，我會把它交給丹尼來檢查財務狀況。

Thank you, Brad. Going over the financial results. The revenues for the quarter $100.6 million is up 9% from the $92.1 million in the third quarter last year for the year-to-date period $288.2 million of revenues is 11% higher than the three months. The three quarters for 2023 of $260 million.

謝謝你，布拉德。回顧財務業績。該季度的營收為 1.006 億美元，比去年第三季的 9,210 萬美元成長了 9%，今年迄今的營收為 2.882 億美元，比三個月成長了 11%。2023 年三個季度為 2.6 億美元。

The top line revenue growth is driven by a very good origination volume for the quarter $446 million is 38% higher than the $322 million. We did in the third quarter last year for the year-to-date period. Originations are $1.224 billion compared to $1.056 billion which is 16% higher than last year.

營收成長得益於本季良好的創始量 4.46 億美元，比 3.22 億美元高出 38%。我們在去年第三季做了今年迄今的工作。發起金額為 12.24 億美元，去年為 10.56 億美元，成長 16%。

So the portfolio, the fair value portfolio which drives our top line revenue is now $3.1 billion and we're yielding 11.3% on that portfolio.

因此，推動我們營收的投資組合、公允價值投資組合現在為 31 億美元，該投資組合的收益率為 11.3%。

Remembering that the 11.3% yield is net of losses. The revenue for this quarter also includes a $5.5 million mark up to the fair value portfolio and that markup is a result of better than expected performance on that portfolio. The prior period, the prior year quarter also included a mark-up of $6 million for the fair value portfolio expenses during the quarter, $93.7 million is up from $77.9 million in the third quarter of last year for the year-to-date period, expenses were $268.1 million versus $208.8 million. And those expenses are primarily driven higher by increases in interest expense, which is a function of both higher interest rates, but also because we have a larger portfolio and have a larger securitization and the credit line debt balance, the pre-tax earnings for the quarter $6.9 million compared to $14.2 million in the third quarter of last year.

請記住，11.3% 的收益率是扣除損失後的收益率。本季的營收還包括公允價值投資組合 550 萬美元的加價，該加價是由於該投資組合的業績優於預期的結果。上一期間，即去年同期，本季公允價值投資組合費用還包括 600 萬美元的加價，今年迄今為 9,370 萬美元，高於去年第三季的 7,790 萬美元，支出分別為2.681 億美元和2.088 億美元。這些費用主要是由利息費用的增加所推動的，利息費用的增加既是利率上升的結果，也是因為我們擁有更大的投資組合、更大的證券化和信貸額度債務餘額，即稅前收益。營收為690 萬美元，去年第三季為1,420 萬美元。

Year-to-date period, pre-tax earnings $20.1 million compared to $51.3 million in the year-to-date period of 2023. Net income is $4.8 million for the quarter, $4.7 million was the June quarter. And that compares to $10.4 million in the third quarter of last year for the year-to-date period, $14.1 million of net income versus $38.2 million in the year-to-date period last year, the looted earnings per share is $0.20 per share compared to $0.19 last quarter and $0.41 per share last year for the year-to-date period, $0.58 compared to a $1.51 for the nine months of 2023.

年初至今，稅前利潤為 2,010 萬美元，而 2023 年年初至今，稅前利潤為 5,130 萬美元。該季度淨利潤為 480 萬美元，6 月季度淨利潤為 470 萬美元。相比之下，去年第三季年初至今的淨利潤為 1,040 萬美元，淨利潤為 1,410 萬美元，而去年年初至今的淨利潤為 3,820 萬美元，每股收益為 0.20 美元相比上一季的每股0.19 美元和去年年初至今的每股0.41 美元，相比2023 年9 個月的每股1.51 美元，每股收益為0.58 美元。

Moving over to the balance sheet, as I mentioned earlier, our fair value portfolio is now $3.1 billion is 17% higher than the $2.67 billion as of September, 30 of 2023.

轉向資產負債表，正如我之前提到的，我們的公允價值投資組合現在為 31 億美元，比截至 2023 年 9 月 30 日的 26.7 億美元高出 17%。

Our securitization balance debt balance is $2.875 billion is 28% higher than the $2.243 billion as of September, 30, of last year. So we've seen the we've seen the portfolio grow faster than the debt balance is growing.

截至去年 9 月 30 日，我們的證券化債務餘額為 28.75 億美元，比去年 22.43 億美元高出 28%。因此，我們看到投資組合的成長速度快於債務餘額的成長速度。

Shareholders equity is a $285.1 million for this quarter compared to $265.9 million a 7% increase year over year going over other metrics.

本季股東權益為 2.851 億美元，而其他指標為 2.659 億美元，較去年同期成長 7%。

The net interest margin is $50.5 million compared to $54.2 million in the third quarter of last year. That's a 7% decrease for the year-to-date period. Net interest margin is $149.5 million is a is 3% lower than $153.7 million for the nine months of 2023.

淨利差為 5,050 萬美元，而去年第三季為 5,420 萬美元。今年迄今下降了 7%。淨利差為 1.495 億美元，比 2023 年 9 個月的 1.537 億美元低 3%。

Core operating expenses for the quarter, 44.6% higher than the $42 million last year for the year-to-date period. Core operating expenses is $134 million is 9% higher than $123.1 million for 2023.

本季核心營運支出比去年同期的 4,200 萬美元高出 44.6%。核心營運支出為 1.34 億美元，比 2023 年的 1.231 億美元成長 9%。

And the core operating expenses as a percentage of the managed portfolio is now down to 5.4% in the current quarter compared to 5.7% last year. That's a 5% decrease on an annualized basis. Core operating expenses were flat at 5.7%.

本季核心營運費用佔管理投資組合的百分比已降至 5.4%，而去年為 5.7%。按年計算，下降了 5%。核心營運支出持平於 5.7%。

I will turn it over to Mike.

我會把它交給麥克。

Thanks, Danny. In originations and sales like Danny mentioned in Q3, we originated $446 million in new contracts which is a slight increase month over month over the $431 million we did in in Q2.

謝謝，丹尼。在丹尼在第三季度提到的起始和銷售中，我們簽訂了 4.46 億美元的新合同，比第二季度的 4.31 億美元略有增長。

Just want to note in the month of October, we just had our best origination month of the year and actually the second best month in the 33 year history of our company given our '24 growth to date, we have been able to build our portfolio of receivables to $3.3 billion at quarter end which is an increase of 12% over the portfolio size of $2.9 billion at the end of Q3 '23.

只是想指出，在10 月份，我們剛剛度過了一年中最好的起始月份，實際上是我們公司33 年曆史上第二好的月份，考慮到我們24 年迄今為止的增長，我們已經能夠建立我們的投資組合截至季末，應收帳款規模達到 33 億美元，比 2023 年第三季末的 29 億美元投資組合規模成長 12%。

If we continue at our current origination pace for the remainder of the year, we will have achieved a year over year growth rate of between 18% and 20%. So a good year overall, it's important to note, very important to note actually that we have achieved this growth without loosening our credit to be more of a specific. We've done this without raising our LTVs or changing our payment to income or debt to income ratios. That's very, very hard to do in our space to take a step further. We've achieved that growth while maintaining a strong average APR that is running just north of 20%.

如果我們在今年剩餘時間內繼續保持目前的開發速度，我們將實現 18% 至 20% 的年成長率。因此，總體而言，這是一個美好的一年，值得注意的是，實際上我們在沒有放鬆信貸的情況下實現了這種增長，這一點非常重要。我們在沒有提高生命週期價值或改變我們的付款與收入或債務與收入比率的情況下做到了這一點。在我們的領域，要更進一步，這是非常非常困難的。我們實現了這一成長，同時維持了 20% 以上的強勁平均年利率。

In fact, we've only been, we've only had to minimally lower our price on the margins in various states and only to our best A&B grade dealers. So we're running a strong APR growing and not loosening our credit at the same time, the growth has come organically through improving metrics such as funding dealers, dealer loyalty and capture with our current roster of 103 sales reps.

事實上，我們只需要在各州的利潤率上最低限度地降低價格，並且只向我們最好的 A 級和 B 級經銷商降低價格。因此，我們的年利率正在強勁增長，同時並沒有放鬆我們的信用，這種增長是透過改善指標有機實現的，例如為經銷商提供資金、經銷商忠誠度以及我們當前 103 名銷售代表的名冊。

We've been marching up our sales force. We added roughly 17 sales reps and added our fortified 12 new geographic territories in Q3. We've actually added 23 sales reps so far in '24 that's the best growth rate we've had in our sales force in a couple of years.

我們一直在加強我們的銷售團隊。我們在第三季增加了大約 17 名銷售代表，並增加了 12 個新的地理區域。事實上，2024 年到目前為止，我們已經增加了 23 位銷售代表，這是我們銷售團隊幾年來的最佳成長率。

We're also starting to see results of our multiyear initiative to add more large dealer group business to our portfolio. We did $119 million in large dealer group originations in Q3 which is a 21% increase over Q2 and a whopping 40% increase over Q1.

我們也開始看到我們多年計劃的成果，即在我們的投資組合中添加更多大型經銷商集團業務。第三季度，我們向大型經銷商集團發起了 1.19 億美元的融資，比第二季度成長了 21%，比第一季成長了 40%。

We have taken our large dealer group from 21% of our originations at the beginning of the year to roughly 28% at the end of Q3.

我們已將大型經銷商群體從年初的 21% 增加到第三季末的約 28%。

We also, I also believe that there's significant room for improvement in this area of the business as we move forward.

我也相信，隨著我們的前進，這個業務領域還有很大的進步空間。

We also continue to bolster our efforts to provide our dealers with frictionless transactions. This goes to our brand and our stated purpose of having the best customer service in the industry. We've been able to lower our funding time to an all-time low of 1.79 funding days, which is a dramatic drop from our historical average of roughly 3.5 funding days.

我們也繼續努力為我們的經銷商提供無摩擦的交易。這符合我們的品牌和我們的既定目標，即提供業界最好的客戶服務。我們已經能夠將融資時間降低至 1.79 個融資日的歷史最低水平，這比我們大約 3.5 個融資日的歷史平均水平大幅下降。

The faster the dealer can get their money, the more chances we're going to get to more to get more business. In the same token, we've been able to raise our same day funding to 17.35% of deals funded, which is a significant improvement over our average same day funding of 6.5% in 2023. Again, the faster the dealer gets their money, the more apt we are to get more business from that dealer.

經銷商越快拿到錢，我們就越有機會獲得更多生意。同樣，我們已經能夠將當日融資比例提高到融資交易的 17.35%，這比 2023 年平均當日融資 6.5% 有了顯著改善。同樣，經銷商越快拿到錢，我們就越有可能從該經銷商那裡獲得更多業務。

We have been able to achieve some of these results using AI on the front end of our business which is speeding up processing. We're being able to check proof of income. Really quickly, we're able to get through verifications and prove stipulations all with AI and without human interaction and with precise accuracy.

我們已經能夠在業務前端使用人工智慧來實現其中一些成果，從而加快處理速度。我們能夠檢查收入證明。很快，我們就能夠透過人工智慧完成驗證並證明規定，無需人工交互，並且具有精確性。

The other thing that's helped is we've seen a higher penetration of e-contracting in our business so far this year and we expect that to get higher moving forward, switching over to portfolio performance. Our annualized net charge offs for Q3 were 7.53% of the portfolio as compared to 6.86% for Q3 of '23 delinquencies greater than 30 days, which includes repossession inventory were 14.04% of the total portfolio as of the end of the Q3. And that's compared to 12.31% as of the end of Q3 '23, diving a little deeper. We were able to knock down the DQ month over month for the first five months of this year and have seemed to get it under control going forward through Q3.

另一件有幫助的事情是，今年到目前為止，我們已經看到電子合約在我們的業務中的滲透率更高，我們預計未來會得到更高的滲透，轉向投資組合績效。我們第三季的年化淨沖銷佔投資組合的7.53%，而第三季23 個超過30 天的拖欠情況為6.86%，其中包括收回庫存，截至第三季末，佔投資組合總額的14.04% 。相比之下，截至 23 年第三季末，這一比例為 12.31%，進一步下降了一些。今年前五個月，我們能夠逐月降低 DQ，並且在第三季似乎已經得到控制。

Take a step further, looking at our CNLs on a vintage basis. Going all the way back to 2022. We have seen an increment, we have seen incremental improvements, vintage over vintage from 2022 through the first three quarters of this year.

更進一步，以年份為基礎查看我們的 CNL。時間一直追溯到2022年。從 2022 年到今年前三個季度，我們看到了漸進式、漸進式改進，逐年成長。

So we're trending downward on the CNLs as we move forward through 2024 and into 2025. This is a testament to our early tightening of our credit in late 2022 and continuing into the first quarter of 2024. It also correlates to the implementation of our genAI credit decisioning model that we put plate that we set forth in October of 2023. And of course, I would be remiss without mentioning that it is also related to good old fashioned hard work by, by our servicing department.

因此，隨著 2024 年和 2025 年的到來，CNL 呈現下降趨勢。這證明了我們在 2022 年末提前收緊信貸並持續到 2024 年第一季。它也與我們在 2023 年 10 月提出的 genAI 信用決策模型的實施有關。當然，如果我不提及這也與我們的維修部門的老式辛勤工作有關，那我就失職了。

To that end, we have tightened our collection model. We've hired more collectors in the, in the back half of 2023 and then into 2024. This has allowed us to reallocate veteran collectors from the earlier easier accounts to the tougher advantages and we've been able to leverage our small nearshore team to lessen the DQ role by hammering down on the potential DQ accounts. That's 1 to 29 accounts, our extensions remain flat as a percentage of our portfolio. One note given the two hurricanes that rolled through in Q3, we've seen minimal impact in both hurricanes in Florida and specifically North Carolina.

為此，我們收緊了我們的收集模型。我們在 2023 年下半年和 2024 年聘請了更多收藏家。這使我們能夠將資深收藏家從早期較容易的帳戶重新分配到更困難的優勢，並且我們能夠利用我們的小型近岸團隊透過敲定潛在的 DQ 帳戶來減輕 DQ 的角色。從 1 到 29 個帳戶，我們的分機在我們投資組合中所佔的百分比保持不變。需要注意的是，考慮到第三季度發生的兩場颶風，我們發現佛羅裡達州，特別是北卡羅來納州的兩場颶風的影響微乎其微。

From a technology standpoint, we recently migrated our omni channel collection system to the cloud which provides us a more powerful auto dialler and will allow us to better communicate with our customers via text, which is by far the most important touch point and also email and chat.

從技術角度來看，我們最近將全通路收集系統遷移到雲端，這為我們提供了更強大的自動撥號器，並使我們能夠透過文字更好地與客戶溝通，這是迄今為止最重要的接觸點，也是電子郵件和聊天。

We should see some collection lift from this migration. Moving forward, the cloud migration will also allow us to launch our AI voice Bot. After a successful pilot, we expect the AI voice Bot to further allow us to reallocate those veteran collectors to tougher accounts and increase our call efficiency and promote self service payments.

我們應該會看到這次遷移帶來了一些收集提升。展望未來，雲端遷移也將使我們能夠推出人工智慧語音機器人。在試點成功後，我們預計人工智慧語音機器人將進一步幫助我們將這些資深收款員重新分配到更嚴格的帳戶，提高我們的通話效率並促進自助支付。

Finally looking at our portfolio performance as marked against our competitors. Market analysis by certain bankers reveals that we are consistently out performing our peers by up to 5% in the CNL starting from 2022 to present.

最後來看看我們的投資組合表現與競爭對手的比較。某些銀行家的市場分析顯示，從 2022 年至今，我們在 CNL 的表現始終比同業高出 5%。

One final note before I take it back to Brad. In our ongoing battle against fraud, we integrated a new AI fraud score earlier this year that we estimate has saved us nearly $4 million in losses to date. Those savings will compound as we move forward. And we're also currently piloting another AI fraud score that we will that we believe will further lower losses going forward.

在我把它帶回給布拉德之前，還有最後一點。在我們持續打擊詐欺的鬥爭中，我們在今年稍早整合了一個新的人工智慧詐欺評分，我們估計迄今為止已經為我們節省了近 400 萬美元的損失。隨著我們的前進，這些節省的費用將會增加。我們目前還在試辦另一個人工智慧詐欺評分，我們相信這將進一步降低未來的損失。

Now with that, I'll pass it back to Brad.

現在我會把它傳回給布拉德。

Thanks Mike. So looking at the industry, I think, probably what's kind of good about our industry is everybody's playing, everybody's kind of doing what they're supposed to be doing. There aren't any real problems most everyone is still working through the '22 early '23 originations trying to get the credit back in line. As I mentioned, our credit now is we're very, we feel very good about where we sit in the credit spectrum. One of the reasons we've been able to grow a lot is because we like where we sit and we're becoming a little more aggressive in the market.

謝謝邁克。因此，看看這個行業，我認為，我們行業的好處可能是每個人都在玩，每個人都在做他們應該做的事情。沒有任何真正的問題，大多數人仍在努力解決'22'23的早期起源，試圖讓信用恢復正常。正如我所提到的，我們現在的信譽是我們對自己在信用範圍內的位置感覺非常好。我們能夠大幅成長的原因之一是因為我們喜歡我們所處的位置，並且我們在市場上變得更加積極。

I think the other players are still doing about the same thing, some are aggressive, some are still trying to get through those problems, but either way the health of the industry is very good.

我認為其他參與者仍在做同樣的事情，有些人很激進，有些人仍在努力解決這些問題，但無論哪種方式，行業的健康狀況都非常好。

There have been no new interest in our industry in a long time, which again, I think just shows that the industry has matured and only strong players are still here and that's important because, you know, when someone blows up, it causes ripples within the whole industry, it also those kind of problems affect the ABS market since that's what we need every quarter. We want that market to stay strong. As I mentioned, it is.

很長一段時間以來，我們的行業沒有出現新的興趣，我認為這再次表明該行業已經成熟，只有強大的參與者仍然存在，這很重要，因為，你知道，當有人爆炸時，它會在內部引起漣漪整個產業，這些問題也會影響 ABS 市場，因為這是我們每季都需要的。我們希望該市場保持強勁。正如我所提到的，確實如此。

I think in looking at the economy, everybody's going to say it's all about the election and as much as it may be, I don't think whatever the result is, it will affect us in a tremendous way one way or another, as we've said, numerous, hundreds of times, what we care about is unemployment, unemployment is in a great position today. I don't think that'll change no matter who wins the election.

我認為在審視經濟時，每個人都會說這一切都與選舉有關，儘管可能如此，但我認為無論結果是什麼，它都會以某種方式對我們產生巨大的影響，因為我們已經說過無數次、數百次了，我們關心的是失業，今天失業狀況非常嚴重。我認為無論誰贏得選舉，這一點都不會改變。

I think the economy is in a very good position today. And so I think with a growing economy and very strong unemployment numbers, you know, the backdrop for us in terms of going next year and you throw in the fact that the fed has now lowered rates once and it's expected to lower rates a few more times.

我認為今天的經濟狀況非常好。因此，我認為，隨著經濟成長和失業率非常高，你知道，我們明年的背景，再加上聯準會現在已經降息一次，預計還會再降息幾次。

You know, we now are coming into a perfect kind of place in terms of, we're comfortable with our credit, we're comfortable with our growth strategies and we're executing them. We're doing many other things in the sort of the backside of the business to improve things.

你知道，我們現在正處於一個完美的境地，我們對我們的信用感到滿意，我們對我們的成長策略感到滿意，並且我們正在執行這些策略。我們正在業務後台做許多其他事情來改進事情。

So we're -- as I mentioned before, we were trying to get position for next year. And I think we've done a wonderful job of doing that almost across the board. You know, with the economy being strong, unemployment being good, the rates coming down and us being in a position to grow substantially in the new year, you know, we really, you know, the future looks quite bright for what we're doing.

所以我們——正如我之前提到的，我們正在努力爭取明年的位置。我認為我們幾乎在所有方面都做得非常出色。你知道，隨著經濟強勁，失業率良好，利率下降，我們有能力在新的一年大幅增長，你知道，我們真的，你知道，就我們現在的情況而言，未來看起來相當光明正在做。

With that. I think we'll see how the rest plays out. We have one more quarter this year and then we're going to hopefully go up to a big start for next year. We look forward to speaking with everyone again sometime in February. Thank you for attending.

就這樣。我想我們會看看剩下的事情會如何進行。今年我們還有一個季度，然後我們預計在明年取得一個好的開始。我們期待在二月的某個時候再次與大家交談。感謝您的出席。

Thank you. This concludes today's teleconference. A replay will be available beginning two hours from now for 12 months via the company's website at www.consumerportfolio.com. Please disconnect your lines at this time and have a wonderful day..

謝謝。今天的電話會議到此結束。從現在開始兩小時後，您可以透過公司網站 www.consumerportfolio.com 重播，為期 12 個月。請此時斷開您的線路，祝您有美好的一天。