Credit Acceptance Corporation

Good day, everyone, and welcome to the Credit Acceptance Corporation First Quarter 2026 Earnings Conference Call. A webcast recording and transcript of today's earnings call will be made available on Credit Acceptance website. At this time, I would like to turn the call over to the Credit Acceptance Chief Financial Officer, Jay Martin. Jay, please go ahead.

Thank you. Good afternoon and welcome to the Credit Acceptance Corporation quarterly earnings call. As you read our news release posted on the investor relations section of our website at ir.creditacceptance.com, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of federal securities law. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the cautionary statement regarding forward-looking information included in the news release. Consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, to comply with the SEC's Regulation G, please refer to the financial results section of our news release which provides tables showing how non-GAAP measures reconcile the GAAP measures. At this time, I'd like to introduce our Chief Executive Officer, Vinayak Hegde.

Good day, everyone, and thank you for joining us today. The first quarter of 2026 represented meaningful progress across the business. Before I get into the broader themes of the quarter, I want to start with the headline numbers. For the first quarter, we delivered gap net income of $12.40 per diluted share and adjusted net income of $10.71 per diluted share. From a loan performance perspective, forecasted net cash flows from our loan portfolio declined modestly by $9.1 million or 0.1%, which was the smallest quarterly change we have seen in the past three years. On the origination side, you've seen a moderation in decline of consumer loan assignment volume from 9.1% to 4.3% year over year. Within that context, we continue to operate in an environment that remains challenging for non-prime consumers as we remain very intentional about how we deploy capital and take risk. The data suggests that our pricing adjustments and segmentation work are helping bringing greater predictability back into the portfolio. While we remain vigilant about the macro environment, they're cautiously optimistic that our portfolio is becoming better aligned with current conditions. These trends do not change our posture as we remain disciplined. However, they do reinforce that the actions we have taken over the past several quarters are beginning to show up in the data. More importantly, they support our longstanding focus on managing the business to maximize long-term economic profit and intrinsic value. A critical part of our evolution is how we operate internally. Over the past quarter, we implemented a new company-wide operating system that defines how we plan, execute, and review the business. This system introduces consistent operating rhythms weekly and quarterly where leaders review performance, surface issues early, and make data-driven decisions. We call this reinforcing a founder's mentality, which is simple but demanding expectation. stay obsessively focused on the customer, operate with ownership, and never drift away from the front line. What's changing tangibly is not just cadence, but clarity. Teams are aligned around fewer, more explicit priorities. Accountability is clearer across functions. Decisions are made faster with better visibility into trade-offs. This operating rigor allows us to run credit acceptance as a more cohesive system rather than a collection of functional silos. Over time, we believe this discipline will improve execution quality and allow us to scale without adding unnecessary complexity with the ultimate goal being how we best serve our customers. Against that backdrop, we have taken a hard look at our cost structure. Our approach to cost discipline is broader than any single action. We are constantly evaluating capital allocation holistically across the organization. how resources, talent, and time are deployed against our highest priority objectives. In April, following a thorough review of how resources are allocated, we made a difficult decision to part ways with approximately 6% of our workforce. These decisions are never easy, and we approached them thoughtfully and with respect for the individuals impacted. Our responsibility as stewards of this business is to ensure our long-term viability and continue to change lives. And part of our responsibility is making sure our cost base reflects where we are today and where we need to be tomorrow. Headcount changes were one outcome of this review, but the broader goal is to build a more focused and efficient operating model that supports sustainable value creation over time. This means simplifying how work gets done, narrowing our focus to the highest impact initiatives, and directing investment towards areas that deliver the strongest long-term returns. we'll continue to look for opportunities to operate more efficiently and drive operating leverage over time while protecting investment in areas that strengthen risk management, scalability, and dealer and consumer experience. As a part of our continued focus on disciplined execution, we made two strategic senior leadership additions in areas that are critical to strengthening our operating model and long-term performance. We appointed Stefan Schumann, as Chief Business Officer to help integrate our pricing, performance, and analytics efforts around a more data-driven and coordinated operating approach. Prior to joining Credit Acceptance, Stefan spent more than two decades at Deutsche Telekom and T-Mobile, most recently serving as a Senior Vice President at T-Mobile, where he focused on driving commercial growth, marketing, and increasing customer lifetime value. His experience operating at scale and translating data into commercial outcomes strengthens our ability to make more precise, disciplined decisions across the business. We also appointed Robert Bourie as Chief Sales Officer to lead our sales organization with a sharper focus on dealer segmentation, frontline execution, and reducing friction in how dealers engage with us. Robert brings more than two decades of experience in aviation, more recently holding senior leadership roles at Delta Airlines and Wheels Up. He has led sales organizations serving a wide range of customers from small and mid-sized businesses to large enterprises, which aligns well with our diversity and scale of our dealer network. Together, these leadership additions reinforce our commitment to investing in talent that strengthens execution, improves decision quality, and supports sustainable long-term value creation. On the dealer front, we are seeing encouraging signs. particularly with franchise and large independent dealers. They're making deliberate changes to how we support their business, including simplifying workflows, integrating more deeply into the systems they already use, and reducing time and friction in origination and funding. At the same time, we are becoming more targeted in how we deploy pricing and advanced strategies. We are actively testing scenarios, analyzing sensitivities, and applying more granular segmentation to ensure that we partner most deeply with dealers where the long-term economics are strongest. This is because our success is aligned with the success of our partners and their customers. We have the strongest returns when the consumers meet their obligations and our dealers build healthier businesses. And I believe it's important to note our goal is not to regain volume at any cost. Technology and artificial intelligence in particular continues to be one of the most important levers for improving how we operate. Our focus is on practical application of AI to make our operations more seamless and more efficient. We are embedding AI into daily workflows where it meaningfully improves speed, consistency, and decision quality by automating high-value analytical work to free our teams to focus on insight, nuance, and customer understanding. For example, during the first quarter, our AI-enabled call center agent handled approximately five times more inbound calls than the prior quarter. This allows us to scale servicing capacity without a proportional increase in cost, while still enabling consumers to access information and complete payments efficiently. We are also using AI to automate and analyze dealer interaction data, combining performance data with dealer interaction dialogue to build a more intelligent CRM system. This gives our sales and support teams real-time insight into dealer needs, emerging friction points, and opportunities to respond more proactively. Over time, these capabilities are designed to lower the marginal cost of high-quality decision-making across the business. We are still in early stages of this journey and will continue to make disciplined investments focused on high-impact use cases that drive efficiency and create long-term value. We continue to focus intensely on improving our pricing and decision-making models through deeper use of data and more granular analysis. Over the past quarter, we took a critical look at where we are losing market share and worked to diagnose the underlying drivers rather than simply reacting to outcomes. This included deeper analysis of performance vector segmentation by dealer segment, credit band, geography, and vehicle characteristics. it is critical to understand where our economics are strongest and where refinement is needed. We are actively fine-tuning our advanced models and testing targeted opportunities to improve conversion while maintaining appropriate margins of safety. At the same time, we are evaluating scorecard enhancements to ensure our underwriting and pricing models remain aligned with current market conditions. This discipline data-driven approach is designed to sharpen decision quality, improve consistency, and support sustainable risk-adjusted growth over the long term. To close, I want to reiterate the purpose that drives us. Our mission is to change lives by providing access to credit that enables people to obtain reliable transportation and create opportunities for financial progress. We believe all consumers deserve respect and that dignity should never depend on a credit score. This principle is the foundation upon which we are building credit acceptance with the goal of compounding intrinsic value over time. This will require discipline, transparency, and a willingness to make difficult decisions when needed. It also requires continuous improvement in how we operate, how we serve our dealers and consumers, and how we allocate resources. Progress will not always be linear, but the operational changes we are making today across credit, cost structure, operating discipline, customer experience, and technology are designed to make credit acceptance more durable, more agile, and better positioned for the future. With that, I'll turn it over to Jay to walk through the financial results in more detail.