Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q3 2023 Earnings Call Transcript

We would like to start growing again, but we need to do two things. We need to let the 2022 vintage get through the pipeline, which it’s doing. We were initially worried about the 2021 vintage, but that’s all turned out fine. 2022, we would expect to track the same way. It’s going to be higher losses than we expected, but not nearly as bad as some, and again, certainly a lot better than a bunch of others, and so in terms of that, we’re good. The next thing we need is the 2023 vintage, which is still quite young, to show that the improvements and changes we made in late 2022 and early 2023 are, in fact, the proper moves and will hold. Now, against all that, inflation is hurting our customers’ performance. The higher interest rate is cutting our margins.

So there’s a bunch of things — recovery rates are returning to normal. There’s a bunch of little items that, again, are making life somewhat difficult. Given what we’ve done, I think, we’re in a very strong position to get through it, no problem. We’ve been doing this forever. This isn’t easily the worst thing in all we’ve ever seen or had to get through. So we’re confident where we go. And again, I think, just really getting through the next few months, the first half of 2024 will be very strong. It’s usually one of the strongest performance months. So that should hopefully take care of the problems in 2022 and put that behind us and then we can look to grow again in 2023. It would also appear, hopefully, that interest rates will at least stay flat, potentially come down.

Also, that inflation will continue to ease. So we’re very optimistic about the future in terms of what we’ve done. Again, us and everyone else has to sort of slug through the problems of 2022 and get through 2023. But 2024 should be a very positive position for both the industry and our company in particular. So we’ll see how that goes. Again, we’re big enough, we’ve done it before, we’re not particularly worried and we’re actually quite pleased with how well we’ve done compared to lots of other folks, which is one of the first times we can clearly identify that our program has worked very, very well. With that, we’ll just thank you all for being here and we’ll speak to you next quarter. Thanks for tuning in and see you then.

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Operator: Thank you. And this concludes today’s teleconference. A replay will be available beginning two hours from now for 12 months via the company’s website at www.consumerportfolio.com. Please disconnect your lines at this time and have a wonderful day.