Business
CREDIT ACCEPTANCE ANNOUNCES FIRST QUARTER 2020 RESULTS
Southfield, Michigan, May 27, 2020 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”,
About this update from Credit Acceptance Corporation
[{"type":"text","content":"Southfield, Michigan, May 27, 2020 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) today announced a consolidated net loss of $83.8 million, or $4.61 per diluted share, for the three months ended March 31, 2020 compared to consolidated net income of $164.4 million, or $8.65 per diluted share, for the same period in 2019.\n Adjusted net income, a non-GAAP financial measure, for the three months ended March 31, 2020 was $175.7 million, or $9.66 per diluted share, compared to $153.6 million, or $8.08 per diluted share, for the same period in 2019. COVID-19 Pandemic In March 2020, COVID-19 began to spread rapidly across the United States. In an effort to slow the spread of the virus, authorities implemented various measures, including travel bans, stay-at-home orders and shutdowns of non-essential businesses. These measures have caused a significant decline in economic activity and a dramatic increase in the number of individuals who are no longer employed. As detailed below, starting in mid-March, we experienced a substantial reduction in demand for our product and a significant decline in cash flows from our loan portfolio that lasted through mid-April, after which collections and new loan volumes improved significantly. As the virus is not yet contained, the ultimate impact of the pandemic on our business is not yet known. The impact will depend on future developments, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the disease or mitigate its impact, and the duration, timing and severity of the impact on consumer behavior and economic activity. GAAP Results GAAP results for the quarter ended March 31, 2020 include a provision for credit losses of $354.7 million reflecting the adoption of CECL on January 1, 2020 and the impact of a reduction in forecasted future cash flows from our loan portfolio. Under CECL, we are required to record a provision for credit losses for every new loan at the time that loan is originated equal to the difference between the amount we paid to acquire the loan and present value of forecasted net cash flows using an effective interest rate prescribed under CECL. The effective interest rate under CECL is calculated assuming 100% of the contractually sched...