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CONSUMER PORTFOLIO SERVICES, INC. (CPSS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 14.5% year over year to $105.3 million and increased 5% sequentially, while diluted EPS was $0.21 versus $0.29 in Q4 2023, reflecting higher interest expense and credit cost dynamics .
  • Originations remained strong: $457.8 million in Q4 (52% above Q4 2023), driving a record portfolio balance of $3.491 billion; management signaled “cautious growth” with improving vintages and a set-up for more aggressive growth in 2025 .
  • Credit indicators were mixed: total delinquency plus repo ticked to 14.85% (from 14.55% YoY), net charge-offs rose to 8.02%, and recovery rates remained pressured (~27% vs historical 40–45%) due to macro/used-car dynamics and repo/auction constraints .
  • Technology initiatives (AI fraud scoring, AI voice bot) are expected to reduce fraud losses ($4.6 million saved in 2024) and improve collections efficiency in 2025; management stressed ABS market access and favorable unemployment outlook as key tailwinds .
  • No formal quantitative guidance was issued; management highlighted confidence in credit normalization, operating leverage as the portfolio grows, and strong capital markets access as catalysts into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record portfolio balance of $3.491 billion and continued origination momentum: Q4 purchases of $457.8 million; 2024 purchases of $1.682 billion (+24% YoY) .
  • Management emphasized credit model improvements and 2024 vintages performing better, setting up for growth in 2025: “We now have a better credit performance… set the stage for what could be a very good year in 2025” .
  • Operational efficiencies: net interest margin dollars grew sequentially; core operating expenses as % of managed portfolio improved vs prior year; dealer funding times reduced and large dealer group penetration increased .

What Went Wrong

  • Profitability compression: diluted EPS fell to $0.21 vs $0.29 in Q4 2023; pretax income declined to $7.35 million vs $9.84 million prior year quarter, with higher interest expense a key driver .
  • Credit costs: net charge-offs and total delinquency+repo increased vs prior year, while recovery rates (~27%) remained well below historical norms due to inflation, elevated car values/LTVs in 2022–23 vintages, and repo/auction frictions .
  • No explicit numerical guidance; reliance on qualitative outlook, leaving limited near-term visibility for estimates-driven investors .

Financial Results

Income Statement and Margin Metrics

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$95.880 $100.580 $105.303
Diluted EPS ($USD)$0.19 $0.20 $0.21
Pre-tax Income ($USD Millions)$6.672 $6.851 $7.351
Net Income ($USD Millions)$4.672 $4.796 $5.145
Net Interest Margin ($USD Millions)$49.17 $50.52 $52.78
Net Interest Margin (%)6.3% 6.2% 6.1%

YoY reference (prior-year quarter):

MetricQ4 2023
Revenue ($USD Millions)$91.978
Diluted EPS ($USD)$0.29
Pre-tax Income ($USD Millions)$9.844
Net Income ($USD Millions)$7.187
Net Interest Margin ($USD Millions)$51.70
Net Interest Margin (%)7.0%

Revenue Composition

Component ($USD Millions)Q2 2024Q3 2024Q4 2024
Interest Income$88.367 $93.158 $98.150
Mark to Finance Receivables (Fair Value)$5.500 $5.500 $5.000
Other Income$2.013 $1.922 $2.153

KPIs and Credit Performance

KPIQ2 2024Q3 2024Q4 2024
Contracts Purchased ($USD Millions)$431.88 $445.95 $457.81
Total Portfolio Balance ($USD Billions)$3.173 $3.330 $3.491
Average Portfolio Balance ($USD Billions)$3.122 $3.278 $3.446
31+ Days Delinquency (%)10.87% 11.25% 12.11%
Repossession Inventory (%)2.42% 2.79% 2.74%
Total Delinquency + Repo (%)13.29% 14.04% 14.85%
Annualized Net Charge-offs (% of Average Portfolio)7.26% 7.32% 8.02%
Recovery Rates (%)30.9% 29.1% 27.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025None providedNone providedMaintained: No guidance
OriginationsFY 2025None providedManagement expects stronger growth given improved credit and expanded sales forceQualitative improvement
Credit PerformanceFY 2025None providedExpect continued improvement as 2024 vintages replace 2022–23; NIM to improve, expenses decline as % of portfolioQualitative improvement
Collections/RecoveriesFY 2025None providedAI voice bot roll-out; layered fraud scoring expected to save $6–$7M incremental in 2025Qualitative enhancement
Capital Markets2025None providedStrong ABS/securitization access; lower cost of funds as weaker vintages roll offPositive outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesPiloted AI voice bot; AI in doc processing; fraud score saved ~$4M YTD; cloud migration for collections Implementing AI voice bot; $4.6M 2024 fraud savings; layering additional fraud score targeting $6–$7M savings in 2025 Improving/expanding
Credit performance & vintagesTightened credit (Gen 8 model); 2022/early-2023 improving; delinquency and net charge-offs stabilizing; originations growing without loosening credit 2024 vintages performing better; DQ modestly higher but improving intra-year; NCOs elevated but expected to improve as vintage mix shifts Improving mix, near-term elevated losses
ABS/securitization & capital marketsLargest securitization in company history; strong market access; rate backdrop improving Continued strong securitization access; expect NIM to improve as mix shifts and capital costs decline Positive
Dealer network & large groupsLarge dealer groups up to ~26–28% of mix; expanded territories; reduced funding times Further expansion; funding time <2 days; same-day funding rising; capture rate improved to ~6% Positive operational leverage
Macro/unemploymentWatching rates and election; unemployment healthy; positioning for lower rates Favorable unemployment (rating agency cited 4.4% trending to 4.6% through 2026); economy strong Supportive
Recoveries/auctionsRecovery rates pressured; hurricanes minimal impact; efforts to reduce roll rates Recovery ~30% vs 40–45% historical; repo agent scarcity and vehicle condition issues persist; expect gradual improvement Challenged but stabilizing
Operating efficiencyCore OpEx % trending down; NIM dollars steady; growth with discipline Core OpEx % down YoY; NIM dollars up sequentially; operating efficiencies highlighted Improving

Management Commentary

  • “2024 was a year… of cautious growth while we waited to prove out the changes in credit… we’ve set the stage for what could be a very good year in 2025” — Charles E. Bradley, CEO .
  • “Revenues for the quarter were $105.3 million… driven by strong growth in loan originations… fair value portfolio now sits at $3.5 billion yielding 11.3% (net of losses)” — Denesh (Danny) Bharwani, CFO .
  • “We increased our capture rate to 6%… lowered our funding time to less than 2 days… and strengthened origination flow from partnerships, particularly with our best partner, Ally” — Michael Lavin, President/COO .
  • “Our extensions are granted with the assistance of a proprietary AI model… auction recoveries remain tough (~30%), mostly caused by macro issues… we are seeing trends that should tick up the recoveries this year” — Michael Lavin .
  • “Capital markets remain very strong… as the portfolio grows, expenses should be even a less percentage… NIM is going to continue to improve” — Charles E. Bradley .

Q&A Highlights

  • The published transcript primarily contains prepared remarks; a distinct Q&A session was not captured in the materials reviewed. Key clarifications came via management commentary on credit vintage mix, ABS access, and AI-driven efficiencies .

Estimates Context

  • S&P Global Wall Street consensus for EPS and Revenue was unavailable at time of retrieval due to a system limit; therefore, comparison versus estimates cannot be provided today. We attempted to fetch Q4 2024 estimates but encountered S&P Global request limits. If needed, we can refresh and update when access is restored [GetEstimates error].

Key Takeaways for Investors

  • Revenue momentum with disciplined growth: Q4 revenue $105.3 million, sequential +5%; origination growth and record portfolio underpin medium-term revenue trajectory .
  • Profitability compressed by funding costs and credit costs: diluted EPS $0.21 vs $0.29 prior year; interest expense remains elevated given rates and portfolio growth; watch NIM trajectory as mix improves and rates cycle .
  • Credit normalization in progress: 2024 vintages performing better; NCOs 8.02% and DQ+repo 14.85% still elevated; management expects improvement as 2022–23 vintages run off and AI-enabled collections take hold .
  • Operational leverage: core OpEx as % of portfolio trending down; faster dealer funding and higher capture rates should sustain origination growth without loosening credit .
  • ABS access and macro supportive: strong securitization execution and favorable unemployment outlook reduce tail risks; potential rate declines could aid NIM and funding costs in 2025 .
  • Fraud/collections tech as catalysts: AI fraud scoring saved $4.6M in 2024; layering additional scores and voice bot expected to enhance collections efficiency and reduce losses in 2025 .
  • Near-term focus: monitor recovery rates and delinquency trends, funding costs, and any formal guidance; absent consensus comparisons today, traders should watch upcoming calls for estimate resets and narrative shifts [GetEstimates error].

Appendix: Additional Q4 Details

  • Q4 highlights from press release: revenue $105.3M; pretax income $7.35M; net income $5.15M; originations $457.8M; total receivables $3.491B; NCOs 8.02%; DQ+repo 14.85% .
  • Sequential framing (management): Q4 revenue +5% vs Q3; NIM dollars up; core OpEx % improved vs prior year .
  • 2024 full-year: revenue $393.5M; pretax income $27.4M; net income $19.2M; purchases $1.682B; shareholders’ equity $292.8M (record) .