Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q4 2023 Earnings Presentation
21 slides from Consumer Portfolio Services's earnings presentation, Mar 18, 2024
Slide 1: The Subprime Source Since 1991
The Subprime Source Since 1991 December 2023 Investor Presentation
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Forward-looking statements in this presentation include the Company's recorded figures representing allowances for remaining expected lifetime credit losses, it’s marks to the carrying value for the portion of its portfolio accounted for at fair value, its charge to the provisi
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 14 executives that are led by Brad, Mike and Danny. Each has significant industry experience and, on average, 23 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 Q3 Large Total Addressable 2023(1) Market (TAM) • ~14% of auto financings in Q3 2023 were sub- prime 8% High Barrier to Entry • Capital-intensive 6% 5% • Highly regulated industry 6% Small, Fragmented • Few dominant players Market •
Slide 7: Product Offering
PRODUCT OFFERING Avg. Amount Household Avg. Time on Program (1) Avg. Yield (2) Financed Income Job (years) Avg. FICO % of Purchases Meta 15.30% $23,300 $102,807 9.4 672 4% Preferred 17.13% $24,693 $93,127 7.1 594 14% Super Alpha 19.22% $24,121 $86,155 5.6 577 21% Alpha Plus 21.41% $22,087 $77,448 4.
Slide 8: Origination Characteristics
ORIGINATION CHARACTERISTICS Payment to Income FICO Loan to Value 590 11.5% 130.0% 585 11.0% 580 125.0% 10.5% 575 120.0% 570 10.0% 565 115.0% 560 9.5% 555 110.0% 9.0% 550 105.0% 8.5% 545 Amount Financed Original Term APR 69 $25,000 25.0% 69 $20,000 20.0% 68 $15,000 68 15.0% 67 10.0% $10,000 67 5.0% $
Slide 9: Demand for Our Lending Programs
DEMAND FOR OUR LENDING PROGRAMS 12,000 Applications vs. Funded Loans 46% Approved 3,500,000 Average Dealer Approval Network 3,000,000 Rate 2,500,000 Answers 2,000,000 Selective Within Funding Seconds to 1,500,000 Dealers 1,000,000 Strong Auto 500,000 Demand for Decisioning our Lending 0 Proprietary
Slide 10: Who Is Our Customer?
WHO IS OUR CUSTOMER? 42 Years Old on Average 35.0% 5 Years Average Average Job Debt to Time Income $73,000 Average CPS 7 Years Average Household Income Customer Length at Residence 10.6% 9 Years Average Credit Payment to History on Income Average 23% Homeowners Amounts for CPS programs for contracts
Slide 11: What Do Our Customers Drive?
WHAT DO OUR CUSTOMERS DRIVE? ORIGINATING DEALERSHIP VEHICLE TYPE Independent, 33% New, 6% Certified Pre- Owned, 13% Factory VEHICLE MAKE Franchised, 67% Domestic, Pre-Owned, 47% 81% Imports , 53% Charts show data for CPS programs for contracts purchased for the twelve months ended December 31, 2023.
Slide 12: Portfolio Performance
PORTFOLIO PERFORMANCE 22.00% 20.00% 18.00% 16.00% 14.00% CNL Percentage 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 Months Seasoned 16A 16B 16C 16D 17A 17B 17C 17D 18A 18B 18C 18D 19A 19B 19C 19-D 20-A 2
Slide 13: Recovery Rate
RECOVERY RATE Auction Values 55.0% 300.0 50.0% Recovery 250.0 Rates 45.0% Correlate 40.0% 200.0 with Manheim Manheim Index Recovery Rate 35.0% 150.0 Index 30.0% 25.0% 100.0 Vast 20.0% Auction 50.0 Network 15.0% Return to Historical 10.0% - Norms Post Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20
Slide 14: Economic Model
ECONOMIC MODEL Quarter Ended (1) Twelve Months Ended (1) December 31, December 30, December 31, December 31, 2023 2022 2023 2022 Interest Income 11.3% 11.5% 11.3% 12.0% Mark to Fin. Recs. at FV 0.8% 0.0% 0.4% 0.6% Servicing and Other Income 0.4% 0.5% 0.4% 0.4% Interest Expense (5.4%) (4.2%) (5.0%) (
Slide 15: Summary Balance Sheet
SUMMARY BALANCE SHEET Summary Balance Sheet ($ in millions) (1) December 31, December 31, December 31, 2023 2022 2021 Assets Cash $ 6.2 $ 13.5 $ 29.9 Restricted cash 119.3 149.3 146.6 Finance receivables, net of allowance 24.7 70.6 176.2 Finance receivables, measured at fair value 2,722.7 2,476.6 1,
Slide 16: Summary Statement of Operations
SUMMARY STATEMENT OF OPERATIONS Summary Statement of Operations ($ in millions) (1) Three Months Ended Years Ended December 31, December 31, December 31, December 31, 2023 2022 2023 2022 Revenues Interest income $ 83.3 $ 79.7 $ 329.2 $ 305.2 Mark to finance receivables at fair value 6.0 - 12.0 15.3
Slide 17: Selected Financial Data
SELECTED FINANCIAL DATA December 31, December 31, December 31, December 31, ($ in millions) 2023 2022 2023 2022 Auto contract purchases $ 301.8 $ 428.1 $ 1,357.8 $ 1,854.4 Total managed portfolio $ 3,187.6 $ 2,953.6 $ 3,187.6 $ 2,953.6 Risk-adjusted margin (1) $ 53.3 $ 58.9 $ 227.7 $ 270.3 Core oper
Slide 18: Portfolio Financing
PORTFOLIO FINANCING Portfolio Leverage $3,100,000,000 $400m $2,900,000,000 Across Two $2,700,000,000 Warehouse Line Credit $2,500,000,000 Facilities $2,300,000,000 $2,100,000,000 $18.9b of Bonds Sold in $1,900,000,000 100 ABS Deals $1,700,000,000 Decreasing Since Portfolio Inception $1,500,000,000 L
Slide 19: Shareholder Value
SHAREHOLDER VALUE $40,000 $14.00 Pre-tax Income $ in Thousands - Left Axis $35,000 $12.00 Book Value per Share in $ - Right Axis Continuous $30,000 $10.00 Improvements to Shareholder Value $25,000 $8.00 $20,000 $6.00 $15,000 $10,000 $4.00 NASDAQ Listed Stock- $5,000 $2.00 Ticker Symbol: CPSS $0 $0.0
Slide 20: 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 21: 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 EDGAR search page www.sec.gov/edgar
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