Credit Acceptance — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported a consolidated net loss of $56.6 million ($5.43 per diluted share) for the three months ended September 30, 2026, compared to net income of $108.2 million ($9.43 per diluted share) in the same period in 2025.
• Adjusted net income was $135.5 million ($13.01 per diluted share), representing a 14.9% increase from $117.9 million ($10.28 per diluted share) in the prior year period.
• Economic profit was $50.7 million ($4.87 per diluted share), up 17.9% from $43.0 million ($3.75 per diluted share) in the third quarter of 2025.
• Total revenue was $594.6 million, up from $582.4 million in the prior year period.
• Finance charges increased 2.1% to $550.9 million.
• Total operating expenses decreased 9.7% to $132.4 million, driven by a 24.8% decrease in general and administrative expenses and an 11.5% decrease in salaries and wages.
• Provision for credit losses increased 170.3% to $410.9 million, primarily due to a $193.8 million increase in provision for credit losses on forecast changes and a $65.1 million increase in provision on new assignments.
• Interest expense decreased 7.8% to $107.2 million.
• Average balance of the loan portfolio increased 1.1% to $8.1 billion.
• GAAP average debt was $6,446.9 million, up 0.7% from the prior year.
• GAAP average shareholders' equity was $1,552.2 million, down 1.3% from the prior year.

Guidance and Future Outlook:

• No specific forward guidance for future revenue, earnings, or volume was provided in the press release.
• Management indicated that the execution of their four-pronged strategy (customer obsession, segmentation, leveraging data and AI, and disciplined operating rhythms) strengthens forecasting, pricing, and operating processes.
• The company noted that forecasted net cash flows from the loan portfolio declined 2.5% ($291.2 million) compared to a 0.5% decline in the prior year, primarily reflecting an adjustment to the forecasting methodology.

Business Segments and Product Lines:

• Consumer Loan assignment volume reached 110,010 units ($1.4 billion), up 37.7% in units and 51.0% in dollars compared to the third quarter of 2025.
• Unit volume per active dealer increased 15.2% compared to the prior year period.
• The number of active dealers reached a record 12,093, an 18.8% increase from the prior year.
• 1,350 new dealers were enrolled in programs during the quarter.
• Dealer loans represented 67.2% of unit volume and 64.3% of dollar volume, while purchased loans represented 32.8% of unit volume and 35.7% of dollar volume.
• Product roadmap initiatives included a new scorecard update using refreshed data attributes, sales force reorganization by dealer type and geography, and integration improvements with aggregator platforms (Dealertrack, RouteOne, DealerCenter).

Market and Competitive Landscape:

• The company operates in the non-prime consumer auto financing market, enabling dealers to sell vehicles to consumers regardless of credit history.
• Management highlighted that momentum is driven by a four-pronged strategy rather than a single lever.
• The company achieved its lowest credit spreads since late 2021 following a $600.0 million asset-backed financing.
• Credit Acceptance was named one of PEOPLE magazine's 100 Companies That Care® for the fifth consecutive year, ranking #11.

Risks and Challenges:

• Forecasted collection rates for Consumer Loans assigned in 2022 through 2026 declined, with the most pronounced underperformance observed in lower scorecard bands.
• A downward adjustment to the forecasting methodology in the third quarter of 2026 reduced forecasted collection rates for loans assigned in 2022 through 2026.
• The company faces risks related to the inability to accurately forecast future collections, competition from traditional and non-traditional lenders, and adverse changes in economic conditions or the automobile industry.
• Risks include reliance on senior management, third-party vendors, and outsourced business functions, as well as potential impacts from climate change, natural disasters, and geopolitical conflicts.
• Technology and cybersecurity risks, including data breaches and the challenges associated with artificial intelligence, are noted.
• Legal and regulatory risks include ongoing litigation and potential changes in tax laws.

Management Commentary and Tone:

• Vinayak Hegde, Chief Executive Officer, stated that economic profit and adjusted net income experienced double-digit growth and that the number of active dealers reached an all-time high.
• Management expressed confidence that their strategy positions the Company to make more informed capital-allocation decisions.
• The tone regarding the forecast adjustment was explanatory, noting that the underperformance had been observed in small but consistent quarterly declines prior to the adjustment.

Other Key Points:

• Share repurchases totaled 269,150 shares (2.6% of shares outstanding at the beginning of the quarter) for an aggregate cost of $161.6 million.
• Total liquidity stood at $1.2 billion as of September 30, 2026.
• The company completed a $600.0 million asset-backed financing, matching the largest in its history.
• $37.3 million in dealer holdback was paid to dealers during the quarter.
• The company settled claims related to a longstanding multi-state investigation and the New York state attorney general lawsuit without admission of fault or additional charges beyond previously accrued amounts.
• The provision for income taxes decreased 141.5% to a benefit of $16.9 million, primarily due to the decrease in pre-tax income.