Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q3 2024 Earnings Presentation
20 slides from Consumer Portfolio Services's earnings presentation, Nov 1, 2024
Slide 1: The Subprime Source Since 1991
The Subprime Source Since 1991 September 2024 Investor Presentation
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Forward-looking statements in this presentation include the Company’s expectations of growth and the Company's recorded figures representing allowances for remaining expected lifetime credit losses, its estimates of fair value (most significantly for its receivables accounted f
Slide 3: Company Overview
COMPANY OVERVIEW Consumer Portfolio Services specializes in purchasing and servicing automobile contracts originated by licensed motor vehicle dealers in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealers for sub-pri
Slide 4: The CPS Advantage
THE CPS ADVANTAGE CPS is a leader in Machine Learning (ML) and Artificial Intelligence (AI). • Industry leading disciplined modeling framework: Linear/Logistic Regression, Neural Network, Decision Tree, Ensemble Model, Time Series, Machine Learning, Random Forest Proprietary • Continuous model train
Slide 5: Leadership
LEADERSHIP CPS’ senior management team consists of 13 executives that are led by Brad, Mike and Danny. Each has significant industry experience and, on average, 24 years with CPS. Combined, senior management has over 300 years of auto lending experience just at CPS. Charles “Brad” Bradley Mike Lavin
Slide 6: Market
MARKET Dynamics Footprint • $1.5 trillion auto loans outstanding at Q2 Large Total Addressable 2024(1) Market (TAM) • ~15% of auto financings in 2 2024 were sub- prime(1) 4% • Capital-intensive 10% High Barrier to Entry 5% • Highly regulated industry 6% Small, Fragmented • Few dominant players Marke
Slide 7: Product Offering
PRODUCT OFFERING Avg. Annual Avg. Amount Household Avg. Time on Program (1) Avg. Yield Financed Income Job (years) Avg. FICO % of Purchases Meta 14.60% $24,552 $104,800 8.9 667 3% Preferred 16.38% $26,284 $89,044 7.2 582 17% Super Alpha 18.76% $25,210 $83,676 5.8 570 21% Alpha Plus 21.14% $22,464 $8
Slide 8: Origination Characteristics
ORIGINATION CHARACTERISTICS Payment to Income FICO Loan to Value 590 12.0% 130.0% 585 11.5% 125.0% 580 11.0% 575 120.0% 10.5% 570 115.0% 565 10.0% 110.0% 560 9.5% 555 105.0% 9.0% 550 100.0% 8.5% 545 Amount Financed Original Term APR 70.5 $25,000 25.0% 70.0 $20,000 20.0% 69.5 $15,000 69.0 15.0% 68.5
Slide 9: Demand for Our Lending Programs
DEMAND FOR OUR LENDING PROGRAMS 12,000 Applications vs. Funded Loans 53% Approved 3,500,000 Average Dealer Approval 3,000,000 Network Rate 2,500,000 Answers 2,000,000 Selective Within Funding 1,500,000 Seconds to Dealers 1,000,000 500,000 Strong Auto Demand for Decisioning 0 our Lending 2014 2015 20
Slide 10: Who Is Our Customer?
WHO IS OUR CUSTOMER? 42 Years Old on Average 34.4% 5 Years Average Average Job Debt to Time Income $75,000 Average CPS 7 Years Average Household Length at Income Customer Residence 10.6% 9 Years Average Credit Payment to History on Income Average 24.3% Homeowners Amounts for CPS programs for contrac
Slide 11: What Do Our Customers Drive?
WHAT DO OUR CUSTOMERS DRIVE? ORIGINATING DEALERSHIP VEHICLE TYPE Independent, 29% New, 9% Certified Pre- Owned, 18% Factory VEHICLE MAKE Franchised, 71% Domestic, Pre-Owned, 48% 73% Imports , 52% Charts show data for CPS programs for contracts purchased for the nine months ended September 30, 2024.
Slide 12: Portfolio Performance
PORTFOLIO PERFORMANCE 22.00% 20.00% 18.00% 16.00% 14.00% CNL Percentage 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 Months Seasoned 2016- Q1 2016-Q2 2016-Q3 2016-Q4 2017- Q1 2017-
Slide 13: Recovery Rate
RECOVERY RATE Auction Values 70.0% 300.0 Recovery 60.0% 250.0 Rates Correlate 50.0% 200.0 with Manheim Manheim Index Recovery Rate 40.0% 150.0 Index 30.0% 100.0 Vast Auction 20.0% 50.0 Network Return to Historical 10.0% - Norms Post Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Jun-19 Jun-20 Jun-
Slide 14: Economic Model
ECONOMIC MODEL September 30, September 30, 2024 (1) 2023 (1) Interest Income 11.3% 11.3% Mark to Fin. Recs. at FV 0.7% 0.3% Servicing and Other Income 0.3% 0.4% Interest Expense (5.9%) (4.9%) Net Interest Margin 6.4% 7.1% Provision for Credit Losses 0.2% 1.0% Core Operating Expenses (5.7%) (5.7%) Pr
Slide 15: Summary Balance Sheet
SUMMARY BALANCE SHEET Summary Balance Sheet ($ in millions) (1) September 30, 2024 December 31, 2023 Assets Cash $ 8.1 $ 6.2 Restricted cash 271.0 119.3 Finance receivables, net of allowance 7.8 24.7 Finance receivables, measured at fair value 3,132.3 2,722.7 Deferred tax assets, net 1.5 3.7 Other a
Slide 16: Summary Statement of Operations
SUMMARY STATEMENT OF OPERATIONS Summary Statement of Operations ($ in millions) (1) Three Months Ended September 30, September 30, 2024 2023 Interest income $ 93.2 $ 83.3 Mark to finance receivables at fair value 5.5 6.0 Other income 1.9 2.8 Total Revenues 100.6 92.1 Employee costs 24.2 21.8 General
Slide 17: Selected Financial Data
SELECTED FINANCIAL DATA Three Months Ended September 30, September 30, ($ in millions) 2024 2023 Auto contract purchases $ 446.0 $ 322.4 Total portfolio $ 3,329.8 $ 2,943.3 Risk-adjusted margin (1) $ 51.5 $ 56.2 Core operating expenses (2) $ Amount $ 44.7 $ 42.0 % of avg. managed portfolio 5.4% 5.7%
Slide 18: Shareholder Value
SHAREHOLDER VALUE $40,000 Pre-tax Income $ in Thousands - Left Axis Book Value per Share in $ - Right Axis $14.00 $13.00 $35,000 $12.00 $11.00 $30,000 Continuous $10.00 Improvements $25,000 $9.00 to Shareholder $8.00 Value $20,000 $7.00 $6.00 $15,000 $5.00 $4.00 $10,000 NASDAQ $3.00 Listed Stock- $2
Slide 19: Investment Outlook
INVESTMENT OUTLOOK Continuous Strong macroeconomic AI-driven Originations Strong Fundamentals Growth factors Scorecard • 2.9 million applications • Raised Wtd. Avg APRs in • Improves efficiency and • Decreased leverage on in 2023 originations from 17.72% customer satisfaction the portfolio puts CPS
Slide 20: Reference to Public Reports
REFERENCE TO PUBLIC REPORTS Any person considering an investment in securities issued by CPS is urged to review the materials filed by CPS with the U.S. Securities and Exchange Commission ("Commission"). Such materials may be found by inquiring of the Commission‘s ED AR search page www.sec.gov/edgar
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