Credit Acceptance (CACC) Financials

Credit Acceptance Corp (NASDAQ: CACC) has displayed several notable trends over the last four years based on the quarterly financial data from 2022 through Q1 2025.

Positive Trends:

• The company’s total revenue has generally increased from approximately $373 million in Q4 2022 to $456 million in Q1 2025, demonstrating growth in top-line performance.
• Net income has shown resilience, with Q1 2025 net income at $106 million despite some fluctuations, indicating the company’s ability to generate solid profits over multiple quarters.
• Cash and cash equivalents rose significantly over time, reaching $528.8 million by Q1 2025, improving the company’s liquidity position.
• Total equity increased steadily, from about $1.59 billion in Q3 2022 to $1.71 billion in Q1 2025, highlighting strengthening shareholder value.
• Operating cash flow remains robust, with Q1 2025 showing $346 million of net cash from continuing operating activities, supporting business operations and growth investments.
• Issuance of debt has been consistent, providing capital for growth initiatives, with debt issuance of about $1.16 billion in Q1 2025 aiding liquidity needs.
• Common stock equity has increased, reflecting possible retained earnings and issuance activities benefiting the capital structure.
• Provision for credit losses appears to be well-controlled relative to total assets, with Q1 2025 at $161.9 million reflecting ongoing risk management efforts.
• Diluted earnings per share have generally improved, with $8.66 in Q1 2025 compared to previous quarters, indicating increasing profitability on a per-share basis.
• The company has maintained a conservative investment in property and equipment relative to assets, indicating focus on efficiency and asset utilization.

Neutral Trends:

• Interest expense related to long-term debt is substantial (around $114 million in Q1 2025) but is balanced by the business model and interest income characteristics.
• Marketing and employee expenses have grown but remain proportionate to company revenue changes, reflecting controlled operational scaling.
• Cash flows from investing activities are persistently negative due to ongoing purchases of investment securities, a core part of the company’s asset management strategy.
• Repurchase of common equity has occurred regularly, indicating active capital return strategies, though this reduces cash balances.
• The company's overall debt level has increased, with long-term debt rising to about $6.7 billion by Q1 2025, which enhances leverage but also increases financial risk.

Negative Trends:

• There was a significant net loss in Q2 2024 (-$47.1 million), which was an outlier in an otherwise profitable stream and could indicate heightened credit risk or operational challenges during that quarter.
• Provision for credit losses spiked in some quarters, notably $320.6 million in Q2 2024, pressuring profitability and highlighting exposure to credit risk.
• Other operating expenses showed a large and unusual increase in Q4 2024 (approx. $465 million) compared to other quarters, which may indicate one-time charges or inefficiencies.
• Fluctuations in non-cash adjustments and changes in operating assets and liabilities indicate some volatility in working capital and accruals, potentially impacting cash flow predictability.
• Cash paid for income taxes and interest has increased over time, which could reduce net cash available for reinvestment or return to shareholders.

Summary: Credit Acceptance has demonstrated strong revenue and net income growth over the last four years, with improving profitability metrics per share and enhanced liquidity. However, the company faces challenges from credit loss provisions volatility, occasional quarterly losses, and rising interest expenses due to increased leverage. Operational expense management appears mixed, with occasional spikes in other operating costs. Overall, the financials suggest a company with solid underlying growth and profitability but also elevated risk factors related to credit and cost management that investors should monitor closely.