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's 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 Hagday.

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 long-standing 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 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 approach 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 cost-based 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 discipline execution, we made two strategic senior leadership additions in areas that are critical to strengthening our operating model and long-term performance. We appointed Stephan 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 Borea 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 disciplined 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 position for the future. With that, I'll turn it over to Jay to walk through the

financial results in more detail. Thank you. We reported year-over-year growth in earnings for the first quarter with gap net income of $135.8 million, or $12.40 per diluted share, and adjusted net income of $117.3 million or $10.71 per diluted share. From a loan performance standpoint, forecasted net cash flows from our loan portfolio declined $9.1 million or 0.1% during the quarter versus a decline of $34.2 million or 0.3% last quarter, reflecting reduced volatility and forecast changes. As Vinayak mentioned, this was the lowest quarterly decline we've seen in the past three years. Loan volume declines continue to moderate this quarter, with unit volume declining 4.3% this quarter versus a decline of 9.1% last quarter. Likewise, loan dollar volume declined 4% this quarter versus a decline of 11.3% in Q4. We financed nearly 96,000 contracts for our dealers and consumers, collected nearly $1.5 billion overall, and paid $47 million in dealer holdback and accelerated dealer holdback. Additionally, we enrolled over 1,500 new dealers and had a record 10,977 active dealers during the quarter, reflecting continued engagement across our dealer network. Our market share in our core segment of used vehicles financed by subprime consumers for the first two months of the quarter, the period for which data is currently available, was 4.5%, down from 5.2% for the same period in 2025. The average unit volume per active dealer declined 6.5% year-over-year, while our average loan portfolio remained steady at $8.9 billion on an adjusted basis year-over-year. From a capital standpoint, we closed our first ABS transaction of the year earlier today, raising $450 million of capital. The all-in cost was 5.2% compared to 5.1% on our most recent securitization in Q4, with the modest increase driven by higher Treasury rates. Despite a volatile macroeconomic backdrop, the transaction was supported by a broad and diversified investor base and achieved our lowest credit spread since late 2021. At this time, Vinayak and I will take your questions along with Jay Brinkley, our Senior Vice President and Treasurer, and Jeff Sutar, our Vice President and Assistant Treasurer. Thank you. At this time, we will conduct the

question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your hand to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Moshe Orenbach of TD Cowan. Your line

is open. Great, thanks. The data that you show for collections shows some, you you know, improvement in performance in prior vintages, but some, you know, some deterioration in 2026, and in the footnote, it attributes it to canceled loans. I mean, I know you've, could you just maybe explain what that, you know, what that is, and whether that's something that

either will continue or was one time in nature? Yeah, so it's something we see just about every quarter when we originate loans. We don't have enough loan performance experience yet for the loan performance impact the collection rate. But our numerator, when a loan cancels, our collection rate drops to zero on that loan, but our denominator still has the original contract amount in that. So in the quarter, something's originated. Generally, the change you see there is driven by these cancellations. So if you'd go back to first quarter last year, you'd see the 25 loans were down 20 basis points in Q1, and that's driven by these cancellations and it's nothing that's one time it's something that impacts uh all our origination years it's just more uh you see it more in q1 because those are the loans you originated you don't have um multiple quarters of originations in a year where loan performance is setting that

cancellation great thanks um and i i did notice that you know an increase in the you know the percentage of originations on the purchase loans. And sort of when you look at the spread on the portfolio loans versus the purchase loans, the spread was roughly flat on the portfolio loans, but down on the purchase loans. Is that like what it is taking? That's what it takes to get that volume? Maybe could you just describe what's going on from your perspective in terms of those two pieces of the portfolio.

Sure.

I'll start. I think in 2005, we expanded the dealer access to the purchase program to include all contracts from consumers with higher credit ratings. So the dealers have the option to use both portfolio and purchase. We kind of still price them with the same focus on minimizing economic profit. For perspective, the loan mix is, you know, purchase is 28% and it is well within the historical range of 20 to 40% over the last six years on the spread, Jake can comment

So part of that, when you're looking at the spread table and the earnings release, you're looking at what the spread is now based on the current forecast. So if you look at the table above that, if you look at purchase loans, the 25 loans have outperformed our initial forecast by 20 basis points. The 26 loans have underperformed. So that that leads to a little bit of that difference in the spread, just the impact of the loan performance there, where the DOA loans in 25 have been generally consistent with their initial

expectation. Got it. Thanks. I'll get back in the queue. Thank you. Our next question comes from Rob Wildhack of Autonomous Research. Your line is

open. Hey, guys. I wanted to ask about the revision to forecasted collection and how that flows through to the provision in the income statement. You got the negative $9 million this quarter but a provision expense of $54 million for forecast changes. And I contrast that with last quarter. You revised collections down by a lot more, $34 million, but the provision for forecast changes was close it was fifty seven million so I guess the question is why doesn't the lower forecast change this quarter the nine million flow through to a lower provision expense in the in the income statement so I'll take that first I

point out the provision for forecast changes in December was actually 73 million yeah so you know so some of that difference is due to the change of forecasted net cash flows being down 9 million this year versus 34 million last quarter but when you look at when you think about our provision for credit losses on forecast changes it's driven by a change of the net present value of future cash flows so that considers both the decreases in undiscounted cash flows that we referenced there and then also the overall cash flow timing of the approximately 12 billion in future net cash flows that we're we're considering so uh so in most of in both of those periods a large contributor of the provision for credit losses was the overall slowing of forecasted cash flows and that's primarily related to prepayments we're seeing a lower level of prepayments than what our forecast would expect historically when the environment's competitive we've seen more consumers prepay their loans we're not seeing that in this current cycle difficult to say exactly what's driving that we think probably a couple things consumers are holding on their cars longer could be related to the prices of new cars could also be consumers having more negative equity making them hard to refinance so our forecasts assume that prepayments are going to normalize at some point in the future they haven't yet. We'll continue to evaluate our forecasts and make revisions as we find opportunities to do so.

Thanks. And, you know, all told that the negative $9 million is still quite a bit better. I'm curious if there's anything that you'd want to highlight as a main driver there. Do you think there's something specific to the consumer, tax refunds or lower tax withholdings this year? Or do you think it's more natural, like vintage remixing away from 22 and towards some better

vintages yeah thank you yeah it's both the fact the vintage remix of the 22 23 code shrinking and in the in the real performance of the newer vintages in the 24 and 25 vintages right the 24th vintage is performing at or about the level 25 is definitely tracking ahead and what happens is every every quarter goes by the relative mix of 22 23 becomes lesser as compared to the 24 25 and that confidence from that portfolio improving helps us kind of improve that on an ongoing period.

Thank you for your question. As a reminder, to ask a question during your session, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from Jordan Hamowitz of Philadelphia Financial. Your line is open.

Hey, everybody. This is Dan Furtado in for Jordan. I just tried to recall my question because Rob from Autonomous just asked it. Thank you very much.

Thank you. Our next question comes from Moshe Orenbach of TD Cowan. Your line is open.

Great. Thanks for taking the follow-up. Maybe just to understand how you're thinking about the market share and you know i know it's just the first two months of the quarter um but you know is there you know are there specific things that you're doing to regain that market share or things that you're you know that you think are you know factors in it and and and what would you know cause those to change you know to your benefit yeah um moshe thanks for the question

yeah i mean the latest data obviously shows february stable from q4 at you know at 4.5 uh i mean we are not trying to give share at any any cost right we are being very deliberate about the trade-offs uh we didn't price aggressively uh to get to the previous thresholds our focus is is is continuing to be having good economics and but what we are trying to do is to understand it by segment you know by price point by credit band by the geography and see if we can get sharper in pricing without compromising return on investment and it's really early but that's what we're starting to do so that we can actually understand whether it's over advance or pricing how do we understand this at a more segmented level what is the competition in those particular areas be independent of franchise, and selectively go off to pockets of opportunity. So that's what we're trying to do. We don't want to get share just for the sake of getting share.

Got it. And maybe just a housekeeping question. I noticed the claims expense was down pretty sharply, which is a good thing. Is that the new level, or is there something one-time in there?

This is related to the provision for claims.

Provision for claims, sorry.

Yes. Yeah. So, yeah, I would say, you know, the profitability on this contract there has been fairly consistent. You do see some volatility quarter to quarter. So I wouldn't read too much into just the impact this quarter. So nothing unusual there.

Okay. Thank you. With no further questions in the queue, I would now like to turn the conference back over to Mr. Martin for any additional or closing remarks. We would like to thank everyone

for their support and for joining us on our conference call today. If you have any additional follow-up questions, please direct them to our investor relations mailbox at ir at creditacceptance.com. We look forward to talking to you again next quarter. Thank you. Once again, this

does conclude today's conference. We thank you for your participation. You may now disconnect.