What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 130 added, 139 removed, 1416 unchanged (16% of the section changed)

3 unchanged sentences

(Dollars in millions, except per share data) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 159.7 $ 13.2

21 unchanged sentences

Preferred stock, $ .01 par value, 1,000,000 shares authorized, none issued

Common stock, $ .01 par value, 80,000,000 shares authorized, 12,111,128 and 12,522,397 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Common stock, $ .01 par value, 80,000,000 shares authorized, 12,111,600 and 12,522,397 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Paid-in capital 324.5 279.0

Retained earnings 1,321.0 1,475.6

Accumulated other comprehensive loss ( 1.2 ) ( 1.0 )

Accumulated other comprehensive income (loss) 0.9 ( 1.0 )

Total shareholders’ equity 1,646.5 1,753.7

2 unchanged sentences

CREDIT ACCEPTANCE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in millions, except per share data) For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

15 unchanged sentences

Total costs and expenses 443.8 382.1 1,458.9 1,159.1

Income (loss) before provision (benefit) for income taxes ( 55.3 ) 27.9 31.1 154.7

Provision (benefit) for income taxes ( 8.2 ) 5.7 13.9 33.0

Net income (loss) $ ( 47.1 ) $ 22.2 $ 17.2 $ 121.7

Net income (loss) per share:

Income before provision for income taxes 106.5 96.5 137.6 251.2

Provision for income taxes 27.7 25.7 41.6 58.7

Net income $ 78.8 $ 70.8 $ 96.0 $ 192.5

Net income per share:

Basic $ 6.42 $ 5.47 $ 7.78 $ 14.79

5 unchanged sentences

CREDIT ACCEPTANCE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions) For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Net income (loss) $ ( 47.1 ) $ 22.2 $ 17.2 $ 121.7

Net income $ 78.8 $ 70.8 $ 96.0 $ 192.5

Other comprehensive gain (loss), net of tax:

1 unchanged sentence

Other comprehensive gain (loss) 2.1 ( 0.2 ) 1.9 —

Comprehensive income (loss) $ ( 47.1 ) $ 21.6 $ 17.0 $ 121.9

Comprehensive income $ 80.9 $ 70.6 $ 97.9 $ 192.5

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in millions) For the Three Months Ended June 30, 2024

(Dollars in millions) For the Three Months Ended September 30, 2024

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

1 unchanged sentence

Balance, beginning of period 12,111,128 $ 0.1 $ 313.8 $ 1,242.2 $ ( 1.2 ) $ 1,554.9

Net loss — — — ( 47.1 ) — ( 47.1 )

Net income — — — 78.8 — 78.8

Other comprehensive income — — — — 2.1 2.1

Stock-based compensation — — 10.7 — — 10.7

3 unchanged sentences

Balance, end of period 12,111,600 $ 0.1 $ 324.5 $ 1,321.0 $ 0.9 $ 1,646.5

(Dollars in millions) For the Three Months Ended June 30, 2023

(Dollars in millions) For the Three Months Ended September 30, 2023

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

6 unchanged sentences

( 256,232 ) — — ( 126.3 ) — ( 126.3 )

Restricted stock units settled in common stock 1,000 — — — — —

Stock options exercised 770 — 0.3 — — 0.3

Balance, end of period 12,566,219 $ 0.1 $ 271.3 $ 1,432.4 $ ( 2.9 ) $ 1,700.9

(Dollars in millions) For the Six Months Ended June 30, 2024

(Dollars in millions) For the Nine Months Ended September 30, 2024

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

2 unchanged sentences

Net income — — — 96.0 — 96.0

Other comprehensive loss — — — — ( 0.2 ) ( 0.2 )

Other comprehensive income — — — — 1.9 1.9

Stock-based compensation — — 32.2 — — 32.2

3 unchanged sentences

Balance, end of period 12,111,600 $ 0.1 $ 324.5 $ 1,321.0 $ 0.9 $ 1,646.5

(Dollars in millions) For the Six Months Ended June 30, 2023

(Dollars in millions) For the Nine Months Ended September 30, 2023

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

2 unchanged sentences

Net income — — — 192.5 — 192.5

Other comprehensive income — — — — 0.2 0.2

Stock-based compensation — — 29.0 — — 29.0

6 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) For the Six Months Ended June 30,

(In millions) For the Nine Months Ended September 30,

Cash Flows From Operating Activities:

11 unchanged sentences

Increase in income taxes receivable ( 22.1 ) ( 5.5 )

Decrease in income taxes payable ( 80.8 ) ( 2.3 )

Increase (decrease) in income taxes payable ( 80.8 ) 7.0

Decrease in other assets 9.9 27.0

22 unchanged sentences

Net cash provided by financing activities 947.6 199.8

Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents 46.7 ( 5.7 )

Net increase in cash and cash equivalents and restricted cash and cash equivalents 245.4 20.5

Cash and cash equivalents and restricted cash and cash equivalents beginning of period 470.9 417.7

15 unchanged sentences

Actual results could differ from those estimates.

We have evaluated events and transactions occurring subsequent to the consolidated balance sheet date of June 30, 2024 for items that could potentially be recognized or disclosed in these financial statements.

We have evaluated events and transactions occurring subsequent to the consolidated balance sheet date of September 30, 2024 for items that could potentially be recognized or disclosed in these financial statements.

We did not identify any items that would require disclosure in or adjustment to the consolidated financial statements.

13 unchanged sentences

The following table shows the percentage of Consumer Loans assigned to us with either FICO ® scores below 650 or no FICO ® scores:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Consumer Loan Assignment Volume 2024 2023 2024 2023

6 unchanged sentences

Under the Purchase Program, we buy the Consumer Loans from the Dealers (referred to as a “Purchased Loan”) and keep all amounts collected from the consumer.

Dealer Loans and Purchased Loans are collectively referred to as “Loans.” The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last six quarters:

Unit Volume Dollar Volume (1)

6 unchanged sentences

June 30, 2024 78.5 % 21.5 % 77.3 % 22.7 %

September 30, 2024 79.5 % 20.5 % 78.4 % 21.6 %

(1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

46 unchanged sentences

Cash equivalents consist of readily marketable securities with original maturities at the date of acquisition of three months or less.

As of June 30, 2024 and December 31, 2023, we had $ 8.0 million and $ 12.8 million, respectively, in cash and cash equivalents that were not insured by the Federal Deposit Insurance Corporation (“FDIC”).

As of September 30, 2024 and December 31, 2023, we had $ 158.6 million and $ 12.8 million, respectively, in cash and cash equivalents that were not insured by the Federal Deposit Insurance Corporation (“FDIC”).

Restricted cash and cash equivalents consist of cash pledged as collateral for secured financings and cash held in a trust for future vehicle service contract claims.

As of June 30, 2024 and December 31, 2023, we had $ 504.5 million and $ 453.7 million, respectively, in restricted cash and cash equivalents that were not insured by the FDIC.

As of September 30, 2024 and December 31, 2023, we had $ 551.8 million and $ 453.7 million, respectively, in restricted cash and cash equivalents that were not insured by the FDIC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

1 unchanged sentence

(In millions) As of

June 30, 2024 December 31, 2023 June 30, 2023 December 31, 2022

September 30, 2024 December 31, 2023 September 30, 2023 December 31, 2022

Cash and cash equivalents $ 159.7 $ 13.2 $ 3.1 $ 7.7

94 unchanged sentences

For additional information, see Note 6.

For the three and six months ended June 30, 2024 and 2023, we did not make any other methodology changes for Loans that had a material impact on our financial statements.

For the three and nine months ended September 30, 2024 and 2023, we did not make any other methodology changes for Loans that had a material impact on our financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

96 unchanged sentences

A comparison of the carrying amount and estimated fair value of these financial instruments is as follows:

(In millions) As of June 30, 2024 As of December 31, 2023

(In millions) As of September 30, 2024 As of December 31, 2023

Amount Estimated Fair

19 unchanged sentences

The following table provides the level of measurement used to determine the fair value for each of our financial instruments measured or disclosed at fair value:

(In millions) As of June 30, 2024

(In millions) As of September 30, 2024

Level 1 Level 2 Level 3 Total Fair Value

21 unchanged sentences

Restricted securities available for sale consist of the following:

(In millions) As of June 30, 2024

(In millions) As of September 30, 2024

Amortized Cost Gross Unrealized

4 unchanged sentences

Asset-backed securities 21.2 0.2 — 21.4

Municipal securities 0.8 — — 0.8

Mortgage-backed securities 1.8 — — 1.8

11 unchanged sentences

The fair value and gross unrealized losses for restricted securities available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

(In millions) Securities Available for Sale with Gross Unrealized Losses as of June 30, 2024

(In millions) Securities Available for Sale with Gross Unrealized Losses as of September 30, 2024

Less than 12 Months 12 Months or More

26 unchanged sentences

(In millions) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Contractual Maturity Amortized Cost Estimated Fair

8 unchanged sentences

Loans receivable and allowance for credit losses consist of the following:

(In millions) As of June 30, 2024

(In millions) As of September 30, 2024

Dealer Loans Purchased Loans Total

9 unchanged sentences

A summary of changes in Loans receivable and allowance for credit losses is as follows:

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

(In millions)

28 unchanged sentences

$ 8,348.7 $ 2,848.9 $ 11,197.6 $ ( 2,775.3 ) $ ( 640.8 ) $ ( 3,416.1 ) $ 5,573.4 $ 2,208.1 $ 7,781.5

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

(In millions)

29 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

(In millions) Loans Receivable Allowance for Credit Losses Loans Receivable, Net

12 unchanged sentences

Balance, end of period $ 8,348.7 $ 2,848.9 $ 11,197.6 $ ( 2,775.3 ) $ ( 640.8 ) $ ( 3,416.1 ) $ 5,573.4 $ 2,208.1 $ 7,781.5

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

(In millions) Loans Receivable Allowance for Credit Losses Loans Receivable, Net

24 unchanged sentences

(In millions)

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Provision for Credit Losses

5 unchanged sentences

$ 123.5 $ 61.2 $ 184.7

(In millions) For the Three Months Ended June 30, 2023

(In millions) For the Three Months Ended September 30, 2023

Provision for Credit Losses Dealer Loans Purchased Loans Total

3 unchanged sentences

(In millions)

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Provision for Credit Losses

5 unchanged sentences

$ 457.5 $ 233.8 $ 691.3

(In millions) For the Six Months Ended June 30, 2023

(In millions) For the Nine Months Ended September 30, 2023

Provision for Credit Losses Dealer Loans Purchased Loans Total

8 unchanged sentences

(In millions)

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

New Consumer Loan Assignments

14 unchanged sentences

(In millions)

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

New Consumer Loan Assignments

12 unchanged sentences

$ 302.6 $ 117.9 $ 420.5

(In millions) For the Six Months Ended June 30, 2024

(In millions) For the Nine Months Ended September 30, 2024

New Consumer Loan Assignments Dealer Loans Purchased Loans Total

5 unchanged sentences

Expected net Loan income at the time of assignment (5) $ 1,205.9 $ 379.4 $ 1,585.3

(In millions) For the Six Months Ended June 30, 2023

(In millions) For the Nine Months Ended September 30, 2023

New Consumer Loan Assignments Dealer Loans Purchased Loans Total

17 unchanged sentences

(In millions)

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Expected Future Net Cash Flows

13 unchanged sentences

(In millions)

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Expected Future Net Cash Flows

12 unchanged sentences

$ 6,429.0 $ 3,510.2 $ 9,939.2

(In millions) For the Six Months Ended June 30, 2024

(In millions) For the Nine Months Ended September 30, 2024

Expected Future Net Cash Flows Dealer Loans Purchased Loans Total

5 unchanged sentences

Balance, end of period $ 8,077.1 $ 3,441.0 $ 11,518.1

(In millions) For the Six Months Ended June 30, 2023

(In millions) For the Nine Months Ended September 30, 2023

Expected Future Net Cash Flows Dealer Loans Purchased Loans Total

15 unchanged sentences

For additional information regarding credit quality, see Note 3.

The following table compares our aggregated forecast of Consumer Loan collection rates as of June 30, 2024 with the aggregated forecasts as of March 31, 2024, December 31, 2023, and at the time of assignment, segmented by year of assignment:

The following table compares our aggregated forecast of Consumer Loan collection rates as of September 30, 2024 with the aggregated forecasts as of June 30, 2024, December 31, 2023, and at the time of assignment, segmented by year of assignment:

Forecasted Collection Percentage as of (1) Current Forecast Variance from

Consumer Loan

Assignment Year June 30, 2024 March 31, 2024 December 31, 2023 Initial

Forecast March 31, 2024 December 31, 2023 Initial

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

2015 65.3 % 65.3 % 65.2 % 67.7 % 0.0 % 0.1 % - 2.4 %

10 unchanged sentences

Consumer Loan

Assignment Year June 30, 2024 March 31, 2024 December 31, 2023 Initial

Forecast March 31, 2024 December 31, 2023 Initial

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

2015 64.6 % 64.6 % 64.6 % 67.5 % 0.0 % 0.0 % - 2.9 %

12 unchanged sentences

Consumer Loan

Assignment Year June 30, 2024 March 31, 2024 December 31, 2023 Initial

Forecast March 31, 2024 December 31, 2023 Initial

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

2015 69.0 % 69.0 % 68.9 % 68.5 % 0.0 % 0.1 % 0.5 %

13 unchanged sentences

We evaluate and adjust the expected collection rate for each Consumer Loan subsequent to assignment primarily through the monitoring of consumer payment behavior.

The following table summarizes the past-due status of Consumer Loan assignments as of June 30, 2024 and December 31, 2023, segmented by year of assignment:

The following table summarizes the past-due status of Consumer Loan assignments as of September 30, 2024 and December 31, 2023, segmented by year of assignment:

(In millions)

Total Loans as of June 30, 2024 (1) (2)

Total Loans as of September 30, 2024 (1) (2)

Pre-term Consumer Loans (3)

9 unchanged sentences

(In millions)

Dealer Loans as of June 30, 2024 (1)

Dealer Loans as of September 30, 2024 (1)

Pre-term Consumer Loans (3)

10 unchanged sentences

(In millions)

Purchased Loans as of June 30, 2024 (2)

Purchased Loans as of September 30, 2024 (2)

Pre-term Consumer Loans (3)

50 unchanged sentences

(5) We consider a Consumer Loan to be current for purposes of forecasting expected collection rates if contractual repayments are less than 11 days past due.

The following table summarizes the write-offs for Consumer Loan assignments for the three and six months ended June 30, 2024 and 2023, segmented by year of assignment:

(In millions) For the Three Months Ended June 30, 2024

The following table summarizes the write-offs for Consumer Loan assignments for the three and nine months ended September 30, 2024 and 2023, segmented by year of assignment:

(In millions) For the Three Months Ended September 30, 2024

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

6 unchanged sentences

$ 167.0 $ 159.8 $ 326.8

(In millions) For the Three Months Ended June 30, 2023

(In millions) For the Three Months Ended September 30, 2023

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

6 unchanged sentences

$ 153.7 $ 180.2 $ 333.9

(In millions) For the Six Months Ended June 30, 2024

(In millions) For the Nine Months Ended September 30, 2024

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(In millions) For the Six Months Ended June 30, 2023

(In millions) For the Nine Months Ended September 30, 2023

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

7 unchanged sentences

During the second quarter of 2024, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our Loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2022 through 2024.

Consumer Loans assigned in 2022 have continued to underperform our expectations for the past several quarters.

More recently, Consumer Loans assigned in 2023 have also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expect Consumer Loans assigned in 2022 through 2024 will likely underperform our historical collection rates on Consumer Loans with similar characteristics.

Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believe the ultimate collection rates will be based on these trends.

Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters.

More recently, Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics.

Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

8 unchanged sentences

(In millions) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land and land improvements $ 2.7 $ 2.9

11 unchanged sentences

(In millions) For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

(In millions) As of

Balance Sheet Location June 30, 2024 December 31, 2023

Balance Sheet Location September 30, 2024 December 31, 2023

Trust assets Restricted cash and cash equivalents $ 0.2 $ 1.4

4 unchanged sentences

Other income consists of the following:

(In millions) For the Three Months Ended June 30, For the Six Months Ended June 30,

(In millions) For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

14 unchanged sentences

The following table disaggregates our other income by major source of income and timing of the revenue recognition:

(In millions) For the Three Months Ended June 30, 2024

(In millions) For the Three Months Ended September 30, 2024

Ancillary Product Profit Sharing Interest Remarketing Fees Other Total Other Income

7 unchanged sentences

Total $ 8.0 $ 6.4 $ 2.9 $ 0.3 $ 17.6

(In millions) For the Six Months Ended June 30, 2024

(In millions) For the Nine Months Ended September 30, 2024

Ancillary Product Profit Sharing Interest Remarketing Fees Other Total Other Income

9 unchanged sentences

Debt consists of the following:

(In millions) As of June 30, 2024

(In millions) As of September 30, 2024

Principal Outstanding Unamortized Debt Issuance Costs Unamortized Discount Carrying

11 unchanged sentences

Total debt $ 5,106.6 $ ( 36.6 ) $ ( 2.5 ) $ 5,067.5

(1) Excludes deferred debt issuance costs of $ 5.2 million and $ 4.2 million as of June 30, 2024 and December 31, 2023, respectively, which are included in other assets.

(1) Excludes deferred debt issuance costs of $ 4.8 million and $ 4.2 million as of September 30, 2024 and December 31, 2023, respectively, which are included in other assets.

(2) Warehouse facilities and Term ABS financings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

General information for each of our financing transactions in place as of June 30, 2024 is as follows:

General information for each of our financing transactions in place as of September 30, 2024 is as follows:

(Dollars in millions)

2 unchanged sentences

Amount Interest Rate Basis as of

June 30, 2024

September 30, 2024

Revolving Secured Line of Credit Facility n/a 06/22/2027 $ 390.0 At our option, either the Secured Overnight Financing Rate (SOFR) plus 197.5 basis points or the prime rate plus 87.5 basis points

3 unchanged sentences

Warehouse Facility V (2) CAC Warehouse Funding LLC V 12/29/2025 (5) 200.0 SOFR plus 245.0 basis points (4)

Warehouse Facility VI (2) CAC Warehouse Funding LLC VI 09/30/2026 (3) 75.0 The Bloomberg Short-Term Bank Yield Index rate (BSBY) plus 200 basis points

Warehouse Facility VI (2) CAC Warehouse Funding LLC VI 09/30/2026 (3) 75.0 SOFR plus 210 basis points

Warehouse Facility VIII (2) CAC Warehouse Funding LLC VIII 09/21/2026 (3) 200.0 SOFR plus 225.0 basis points (4)

14 unchanged sentences

Term ABS 2024-2 (2) Credit Acceptance Funding LLC 2024-2 06/15/2026 (3) 550.0 Fixed rate

Term ABS 2024-3 (2) Credit Acceptance Funding LLC 2024-3 09/15/2026 (3) 600.0 Fixed rate

2026 Senior Notes n/a 03/15/2026 400.0 Fixed rate

2028 Senior Notes n/a 12/15/2028 600.0 Fixed rate

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(1) Borrowings are subject to repayment on demand .

(2) Financing made available only to a specified subsidiary of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(3) Represents the revolving maturity date.

8 unchanged sentences

(In millions) For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

19 unchanged sentences

(Dollars in millions) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Revolving Secured Lines of Credit

44 unchanged sentences

(Dollars in millions) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Term ABS 2021-1

45 unchanged sentences

(Dollars in millions) As of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Term ABS 2023-3

28 unchanged sentences

Interest rate 6.21 % — %

Term ABS 2024-3

Principal balance outstanding $ 600.0 $ —

Loans pledged as collateral 847.2 —

Restricted cash and cash equivalents pledged as collateral 87.0 —

Interest rate 4.91 % — %

2026 Senior Notes

46 unchanged sentences

Except for the servicing fee and Dealer Holdback payments due to Dealers, if a Term ABS financing is amortizing, we do not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees, and other related costs have been paid in full.

If a Term ABS financing is in its revolving period, the applicable trust or Funding LLC is entitled to the portion of such collections available after application of any amounts necessary to acquire additional Loans from us and to pay accrued interest on the debt and any other transaction expenses, provided that any necessary principal payments are made to compensate for certain reductions in the balance of eligible loans or, in the case of Term ABS financings occurring after the Term ABS 2021-3 financing, certain reductions in forecasted collections.

If a Term ABS financing is in its revolving period, the applicable trust or Funding LLC is entitled to the portion of such collections available after application of any amounts necessary to acquire additional Loans from us and to pay accrued interest on the debt and any other transaction expenses, provided that any necessary principal payments are made to compensate for certain reductions in the balance of eligible loans or, in the case of the Term ABS 2019-2 financing and Term ABS financings occurring after the Term ABS 2021-3 financing, certain reductions in forecasted collections.

In addition, in our capacity as servicer of the Loans, we have a limited right to exercise a “clean-up call” option to purchase Loans from the Funding LLCs and/or the trusts under certain specified circumstances.

1 unchanged sentence

For all Funding LLCs, after the indebtedness is paid in full, any remaining collections will ultimately be available to be distributed to us as the sole member of the respective Funding LLC.

The table below sets forth certain additional details regarding the outstanding Term ABS financings:

(Dollars in millions)

Term ABS Financings Closing Date Net Book Value of Loans

Conveyed at Closing Revolving Period

Term ABS 2019-2 August 28, 2019 $ 625.1 Through August 15, 2025

Term ABS 2021-1 January 29, 2021 125.1 Through February 17, 2026

Term ABS 2021-3 May 20, 2021 562.6 Through May 15, 2023

Term ABS 2021-4 October 28, 2021 312.6 Through October 16, 2023

Term ABS 2022-1 June 16, 2022 437.6 Through June 17, 2024

Term ABS 2022-2 December 15, 2022 250.1 Through June 15, 2027

Term ABS 2022-3 November 3, 2022 500.1 Through October 15, 2024

Term ABS 2023-1 March 16, 2023 500.2 Through March 17, 2025

Term ABS 2023-2 May 25, 2023 500.1 Through May 15, 2025

Term ABS 2023-3 August 24, 2023 500.1 Through August 15, 2025

Term ABS 2023-A November 30, 2023 252.0 Through December 15, 2025

Term ABS 2023-5 December 21, 2023 375.1 Through December 15, 2025

Term ABS 2024-A February 27, 2024 250.1 Through February 15, 2027

Term ABS 2024-1 March 28, 2024 625.2 Through March 16, 2026

Term ABS 2024-2 June 20, 2024 687.7 Through June 15, 2026

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

17 unchanged sentences

Debt Covenants

As of June 30, 2024, we were in compliance with our covenants under our revolving secured line of credit facility and our Warehouse facilities, including those that require the maintenance of certain financial ratios and other financial conditions.

As of September 30, 2024, we were in compliance with our covenants under our revolving secured line of credit facility and our Warehouse facilities, including those that require the maintenance of certain financial ratios and other financial conditions.

These covenants require a minimum ratio of (1) our net earnings, adjusted for specified items, before income taxes, depreciation, amortization, and fixed charges to (2) our fixed charges, as defined in the agreements.

3 unchanged sentences

Our Term ABS financings also contain covenants that measure the performance of the conveyed assets.

As of June 30, 2024, we were in compliance with all such covenants.

As of the end of the quarter, we were also in compliance with our covenants under the senior notes indentures and the RTP facility.

As of September 30, 2024, we were in compliance with our covenants under our Term ABS financings, the senior notes indentures, and the RTP facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

2 unchanged sentences

We utilize interest rate cap agreements to manage the interest rate risk on certain secured financings.

The following tables provide the terms of our interest rate cap agreements that were in effect as of June 30, 2024 and December 31, 2023:

The following tables provide the terms of our interest rate cap agreements that were in effect as of September 30, 2024 and December 31, 2023:

(Dollars in millions)

As of June 30, 2024

As of September 30, 2024

Facility Amount Facility Name Purpose Start End Notional Cap Interest Rate (1)

12 unchanged sentences

The interest rate caps have not been designated as hedging instruments.

As of June 30, 2024 and December 31, 2023, the interest rate caps had a fair value of $ 0.1 million, as the capped rates were above market rates.

As of September 30, 2024 and December 31, 2023, the fair value of the interest rate caps was negligible, as the capped rates were above market rates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

2 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

State and local income taxes

For the three months ended June 30, 2024 and 2023, state and local income taxes reduced our effective income tax rate primarily due to:

• Changes in state tax laws enacted during the second quarter of 2024 that were effective retroactively to the beginning of 2024 increased our state income taxes and reduced, rather than increased, our effective income tax rate, as we had a pre-tax loss this quarter compared to pre-tax income for the second quarter of 2023.

• The settlement of an uncertain tax position for state income taxes during the second quarter of 2023 decreased our effective income tax rate for that period.

For the six months ended June 30, 2024, the impact of state and local income taxes on our effective income tax rate increased from the same period in 2023 primarily due to:

• The increased impact of an adjustment to an uncertain tax position for state income taxes in the second quarter of 2024 primarily due to a decrease in pre-tax income.

• Changes in state tax laws enacted during the second quarter of 2024 that were effective retroactively to the beginning of 2024.

• The settlement of an uncertain tax position for state income taxes in the second quarter of 2023.

For the three months ended September 30, 2024, the impact of state and local income taxes on our effective income tax rate decreased from the same period in 2023, primarily due to the settlement of an uncertain tax position during the third quarter of 2024.

For the nine months ended September 30, 2024, the impact of state and local income taxes on our effective income tax rate increased from the same period in 2023, primarily due to:

• An adjustment to an uncertain tax position estimate during the second quarter of 2024, which increased our effective income tax rate by 230 basis points for the nine months ended September 30, 2024.

• Changes in state tax laws that were enacted during the second quarter of 2024, which are expected to increase our long-term effective tax rate by approximately 10 basis points.

The enactment of these tax law changes increased our effective income tax rate by 70 basis points for the nine months ended September 30, 2024.

Non-deductible executive compensation expense

We recognize non-deductible executive compensation expense as an increase of provision for income taxes or a reduction of benefit for income taxes.

For the second quarter of 2024, the impact of non-deductible executive compensation expense reduced, rather than increased, our effective income tax rate, as we had a pre-tax loss in the period, compared to pre-tax income in the second quarter of 2023.

For the six months ended June 30, 2024, the impact of non-deductible executive compensation expense on our effective income tax rate increased from the same period in 2023 primarily due to a decrease in pre-tax income.

For the nine months ended September 30, 2024, the impact of non-deductible executive compensation expense on our effective income tax rate increased from the same period in 2023, primarily due to a decrease in pre-tax income.

Excess tax benefits from stock-based compensation

2 unchanged sentences

Excess tax benefits reduce our effective income tax rate, while tax deficiencies increase our effective income tax rate.

The decrease in the impact of excess tax benefits on our effective income tax rate for the six months ended June 30, 2024 was primarily due to a decrease in the number of restricted stock units that were settled in common stock during the first quarter of 2024 as compared to the first quarter of 2023 due to the timing of long-term stock award grants, partially offset by a decrease in pre-tax income.

The decrease in the impact of excess tax benefits on our effective income tax rate for the nine months ended September 30, 2024 was primarily due to a decrease in the number of restricted stock units that were settled in common stock during the first quarter of 2024 as compared to the first quarter of 2023 due to the timing of long-term stock award grants, partially offset by a decrease in pre-tax income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share has been computed by dividing net income (loss) by the basic number of weighted average shares outstanding.

Diluted net income (loss) per share has been computed by dividing net income (loss) by the diluted number of weighted average shares outstanding using the treasury stock method.

NET INCOME PER SHARE

Basic net income per share has been computed by dividing net income by the basic number of weighted average shares outstanding.

Diluted net income per share has been computed by dividing net income by the diluted number of weighted average shares outstanding using the treasury stock method.

The share effect is as follows:

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Dilutive number of weighted average shares outstanding 12,415,143 13,039,638 12,494,011 13,068,998

The potential effects of stock options and restricted stock units were excluded from the diluted earnings per share calculation for the three months ended June 30, 2024 because their inclusion in a net loss period would have reduced the net loss per share.

The following outstanding stock awards were excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive :

The following outstanding stock awards were excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive :

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

STOCK REPURCHASES

The following table summarizes our stock repurchases for the three and six months ended June 30, 2024 and 2023:

(Dollars in millions) For the Three Months Ended June 30,

The following table summarizes our stock repurchases for the three and nine months ended September 30, 2024 and 2023:

(Dollars in millions) For the Three Months Ended September 30,

Stock Repurchases Number of Shares Repurchased Cost (1) Number of Shares Repurchased Cost (1)

2 unchanged sentences

Total 86 $ — 256,232 $ 126.3

(Dollars in millions) For the Six Months Ended June 30,

(Dollars in millions) For the Nine Months Ended September 30,

Stock Repurchases Number of Shares Repurchased Cost (1) Number of Shares Repurchased Cost (1)

5 unchanged sentences

On August 21, 2023, the board of directors authorized the repurchase of up to two million shares of our common stock in addition to the board’s prior authorizations.

As of June 30, 2024, we had authorization to repurchase 1,346,570 shares of our common stock.

As of September 30, 2024, we had authorization to repurchase 1,346,570 shares of our common stock.

(3) Represents shares of common stock released to us by team members as payment of tax withholdings upon the vesting of restricted stock units and the conversion of restricted stock units to common stock.

3 unchanged sentences

(In millions) For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

46 unchanged sentences

On July 1, 2024, the court lifted the stay in view of the decision in CFSA and requested revised briefing on the Company’s motion to dismiss that would address the intervening legal developments and sharpen the issues for resolution.

As of October 29, 2024, the Company's motion to dismiss has been fully briefed.

We are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this litigation.

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements