Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q3 2023 Earnings Call Transcript
Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q3 2023 Earnings Call Transcript November 13, 2023
Operator: Good day, everyone. And welcome to the Consumer Portfolio Services 2023 Third Quarter Operating Results Conference Call. Today’s call is being recorded. Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuations of receivables because dependent on estimates of future events also are forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those projected. I refer you to the company’s annual report filed March 15th for further clarification.
The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information further events or otherwise. With us here today is Mr. Charles Bradley, Chief Executive Officer; Mr. Danny Bharwani, Chief Financial Officer; and Mr. Mike Lavin, President and Chief Operating Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.
Charles Bradley: Thank you. Welcome everyone to the CPS third quarter conference call. In terms of opening comments, I think, what we used to say a few quarters ago was, generally speaking, that our industry was returning to the pre-pandemic levels in terms of loss expectations and performance, and since then, obviously, in the last few quarters, we’ve had a lot of things happen to make that return more bumpy. Things like there’s become a huge focus on the portfolio performance from the 2021, 2022 vintages. Also, interest rates are obviously much higher. Therefore, cost of funds is much higher. So and then just the consumer position in terms of inflation. Lots of little things that all together make it a difficult time. The good news is, even having said that, we turned in another strong quarter and we’re a size now.
We’ve been through all these problems before, numerous different iterations and CPS is in a very good position to weather any potential storm. It really looks like, given our situation in the industry with other competitors, that we’re probably in a much better position today than lots of other people and that we would have been in other previous scenarios. The size of our portfolio, the size of the company, the experience we have and the credit controls we have in place have put us in a good position today and I would think going forward, we can prove that even better. I’ll touch on that a little more after we go through the financials and the operations update. And so, with that, I’ll turn it over to Danny.
Danny Bharwani: Thanks, Brad. Going over the financials, we’ll start with revenues. Revenue for the quarter $92.1 million is 8% higher than the $84.9 in our second quarter of this year and 2% higher than the $90.3 million in the third quarter of last year. For the nine-month period ending September 30th, revenues were $260 million, which is 5% higher than the $246.7 million in the third -- three quarters of 2022. Of note here, our fair value portfolio is now $2.7 billion, continuing to grow. If you’ve been listening to these calls in the past, you’ll know that the yield on the fair value portfolio is risk-adjusted and it’s after losses and that portfolio is yielding 11.3% in the current period. Also included in revenues for this quarter is a fair value mark.
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