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LPRO Open Lending

Participants
John Flynn Chairman, Chief Executive Officer
Ross Jessup President, Chief Operating Officer
Chuck Jehl Chief Financial Officer
Joseph Vafi Canaccord
Vincent Caintic Stephens
James Faucette Morgan Stanley
John Hecht Jefferies
Sameer Kalucha Deutsche Bank
Adib Choudhury William Blair
Call transcript
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Operator

Good afternoon. Welcome to Open Lending's Second Quarter 2021 Earnings Conference Call.

As a reminder, today's conference call is being recorded.

On the call today are John Flynn, Chairman and CEO; and Ross Jessup, President and COO; and Chuck Jehl, CFO. Earlier today the company posted its second quarter 2021 earnings release to the Investor Relations website. will comparable of on GAAP you to financial this release most the financial the find non-GAAP reconciliations measures call. In measures discussed

this Lending for and reflect circumstances. begin, may as represent statements of we I'd to XX, to future obligation views you Before Please XXXX. to August Open these like the company's or contain any refer forward-looking other that estimates today, statements disclaims that events remind and call update materially call our And concerning filings or to more today's opening SEC actual differ information pass over that the to implied earnings for John from remarks. cause could the release you now, I'll statements. factors with John. expressed to by results such those

John Flynn

third And and then QX for the and pleased progress and afternoon momentum we year-over-year on joining start XXXX to XXXX, an our of year QX loan to to provide finally, to certs. levels going Ross good objective. Second certified Quarter certified quarter. for and today the Open very XX,XXX XXXX record has outlook volume, for Thanks quarter it to Then the our and is XXXX. I’m over the another quarter QX of review full report updates loans OEM I'm continued we've second Conference our our Lending, is increased our at financials June Chuck Lending. generated highlights operator, XXX% to Call. into like going us record Earnings he on everyone. and by made Thank opportunity. I'd to growth turn Open you, our going reviewing

generated bank and XX% QX, year-over-year loan union in certified credit core growth business Our XXXX.

grown in have combined XXX% year-to-date OEMs two XXXX. Our

the of $XX.X We to million, an EBITDA XXX% quarter of revenue was also of of XXX% million, as which an and compared of second XXXX. adjusted which $XX.X increase increase reported was

and opportunity tremendous classified prime. for these accomplishment that well partner team, scores third penetrated It's we We've XXX, Traditionally, by strategic this and borrowers massive National, target. between driven as near annually FICO billion by strong by lender-customer about of further were our loans prime from In execution market American with base, worth the a us. a existing over agreement signed near new are prime of as and X% These underserved originated with only we the that are penetrating an loans, our of customers $XXX XXX cannot obtain market. insurance lenders. of consumers consumers, results addition, growth finding as

often As with focus amount not relationship and otherwise with credit a new these than customers, relationships approval What score. enable make rates existing subprime would to we and helping to lenders is do consumers, customers. is result, borrowers they credit loans get for deepening with from lenders higher appropriate come their what their make lower that interest forge

X the accounts Tier as the a in $X During executed with to was have and XX assets, classified months. with billion. one over lenders bank were loans past second that regional quarter, were lenders over the $X the signed XX over Up have in assets certified generated seven accounts billion platform currently asset new large XXX and we quarter in on XX contracts

they've into X six our growth. Tier underway. lenders believe the over the and has new activations with accelerating on greatest Momentum on new gone where customers will are focused are implementations July, In opportunity with continue platform. once We continued to these our accounts XX permissible, the live signed, contracts and we of live five names announce they cases also protection large certain

cert volume XXXX volume six of an and by increased them hit OEMs, excluding as Our compared top monthly their June. have lenders, XXXX have certification to all-time year-to-date XXX% record in ten

five channel credit that added sources and are we these to new as acting now refinance financial XX and funding quarter institutions behind refinance partners. unions banks have the the over program During

during was ‘XX volume nearly volume of refinanced the our XX% Our June. of second total certs record hitting in quarter

of existing a refinance channel allowing payments. them result our consumers our lower business accommodated flexible and to modify terms has by model, As their their

that We a or funding with to of is sheet we and want not sources risk. explore balance also have I long as our to loans to working third term this purchase continue effort, on parties third any take ownership party these any part just strategy. growth Lending will clarify Open

platform utilizing are While the the loans. underwrite by we the funding lenders and progress protection to decision initiative is these of our institutions, encouraged early, party at to-date, third

charges. tremendous As carriers, enough do initiative great with carriers. additional such thrilled affiliates relationships, to us, valued than of you flow product This be default The we of at that provide I been and unique the partners providers volume insurance to provide that announced completely three lines return operation and business, protection carrier. support other to a and continuing National key mentioned policy carrier third a businesses recently lender our high credit as is of for returns well we insurer agreement we’ve believe well a with we capital American of more additional is American believe partner as existing team We low the earlier, a deepen for insurance has have of We underwriting a the profitable for to generated two are insurance Open program. for consistent excess in lending profitability know and be insurance while with the signed to value them we're National. an our important Group, due our our to Lending, partners. there the working enabling strategic

loan business higher lending amounts, with appropriate prime proud from a But, and provide of to the extremely the the our growing underserved that we to and more quarter, can better partners. access pleased with near we're progress our range we So, insurance our a we're even consumer value rates interest payments. bring larger and down lenders credit

Ross to and to business over going Ross? with to it So OEM our progress review I'm our that front. on that, turn

Ross Jessup

John. Thanks

opportunity As we is have us. spoken major captive a for growth and OEM previously, the market substantial

OEM captives, As we to which and our take today, up serve advantage of to of expect ramp continue services. we two

We are with active OEMs. other large discussions also scale in

As their time of we the consumer. and billion $X the OEM lenders market. scale. But cycle typical discussed, associated the captive able take partners mentioned previously the portion partnerships we'll given with penetrate underserved ultimately, these substantial sales we be believe benefits insurance for provided to a addressable John

also benefits support increasing core We financing today. availability competitive by they can able the facilitate They by near are consumers are also used car values for to prime not sales OEM. where these new to expanding credit vehicles. to provide They

to new In new ability OEMs, shortage some protection of car chip much larger and up been The global keep unlock continued all opportunity market. mentioned around addition, their to efforts production lenders be affecting OEMs year functionality applicable as cars. will has for this the a

With spending the OEMs cars, lack of less new than incentives on are past. in the

turn benefits, is The experienced means this under Again, non-prime expect correlates growth. To and protection interest our eventually is XX% risk. shift, and normalize. car further levels this premium higher than CECL this with happens, and capture lower creating to insurance also the risk. higher credit higher losses. similar with and We levels in counter This to increases will Accordingly, in the loss insurance. with relief associated this change ease for like lenders quarters. expectations expand ratios the highly receive rates standards timing consumers. but offerings to values default risk captives a the pricing not expanded shortage offers rate certification leads experience, inventory OEM target normal simply has past return prime production and eventual payment offsetting to also vehicle shortage realize customers from a required return. and markets. the XX% yields, this, and normalize Based to mitigation this should from They also When levels in offers increased default income our other near more to lenders This to resulted of our higher inventory on expanded in timing on to create

by said, In we an of update second certification with sequential the me approximately X. certification buyers experienced compared the keep they ecosystem customer XXXX. of QX, by in and increasing growth increase partnering let XX% XXXX, us customer growth loyalty OEM QX XXXX to to on provide XXX% that captive With and quarter Additionally, compared repeat consumers base. of

expect terms this very We their loan to are only awaiting results we underway our the been to represents expansion to initial other from of have XX be regions months months, and X% favorable originations. but terms XX soon. XX on expanded months

is volume volumes a mentioned as As expansion. X, the will significant later this with discussed new new is chip vehicles. with impacting grow because well, car of I portion shortage their earlier; this OEM

For QX, was compared QX, OEM XXXX XX%, growth certification X, to loan up XXXX.

originations The to XX X OEM of of April XXXX expanded part shortage terms is represent October designed offline will early excited April. was major XXXX our April COVID-XX due levels. the As as returns are a months impacting their growth normal chips from supply seen XX to XX% and when pandemic. in since working to chip reminder, we have this our We but to terms about plan is a be OEM, month and ramp loan also the

$X opportunity million we additional for Each represents in and of million these As more OEM to than prospect with prospects. billion revenue. in $XX you know, discussions revenue captives collectively us are $XXX

However, are these to are cabinets sales of remind I large cycles various and resources. want projects everyone require juggling long lot and these resources a and

live We are scheduling discussing IT the other needed two sequencing and actively OEMs. to large go projects planning, at

QX over discuss it Chuck financials to more turn Now, and in to outlook detail.

Chuck Jehl

Thanks Ross.

second in a XX,XXX XXXX to XX,XXX loans QX, certified facilitated During quarter compared XXX% the XX of increase. loans we certified

in the second have to Total of with million $XX.X quarter XX to in second compared dates revenue contracts to for go million the as and the quarter live XXXX active implementations XX increased new mentioned the $XX.X As with XXXX. we XXX% earlier, in John customers quarter over XX of XX executed days.

For $XX.X million fees represented of profit were share, $XX.X claims million. administration program fees $X.X revenue, total and million and were revenue

year-to-date in like with revenue would XXXX $XX per XXXX new originations in share second quarter of for was for in certified the XXXX. or we certified $XXX million $XX.X Profit and in associated of XXXX $XXX $XX.X break quarter $XXX the QX down Now loan of and to loan $XXX profit or million Average loan, the was loan share respectively. certified further as certified XXXX. per second profit compared million share to

XXXX XXXX the Primarily of at corresponding share in the normal to of insurance part As that are standards, of increasing we April COVID-XX, of profit our value premiums returned and underwriting remove loan. established to pre-COVID back certified discount us per profit during vehicle economics. implemented levels share had previously pandemic the a our XX% of which effect changes approximately onset to second as in underwriting unit as disclosed, average the share to economics of comparable transitioning profit now by quarter pre-COVID result the unit

increased closure $XX.X million in market. loan However, originated improving certified positioning certified profit this in in revenues XX%, ‘XX in driving in included record rates was underwriting by in our over change QX the revenue volume, competitive from previous share loans our and change estimated Also periods.

a result claims the and defaults microeconomic performing continued we expected better portfolio As had overall than conditions. fewer and of improved to due

and a to carrier loan severity, profit by ASC is certified Lenders underwriting basis. forecasted upfront is the Under month the on us principle recognize insurance As profit based prepayments, the reminder, from with on defaults, share estimated loan-by-loan partners paid outstanding our XXX a Protection a we profit in share Risk. premium our associated monthly

to term in from earnings basis. slides posted have prospective previous loans new of periods assumptions asset, in due between addition, included to historical positive future would in to in related over share ASC In down these originated increasing share near during estimates periods. performance. drove profit profit asset, Basically, changes the of We performance on In on explain further we for XXX of and like economic share We lower XX% actual due change portfolio estimate estimates our months cash contract contract and changes than under estimation revenue contract over losses realized adjustments our our past claims in to strong unit realized periods prospective in to portfolio our positive flows. and six and slides assets the projected our a the last we trends. revenues today, to severity revenue XX supplemental in-turn that of profit point website changes, our was break out revenue quarters changes drive

the strategically quarter loan performance shifted profit term revenues strong channel from in our across in all positive conditions, channels. Continued unit We result our while perspective a mix to remains in risk strong assets, contract profit changes will flows. and market cash additional, maximize near share current economics share

the risk, to we insurance recall, adjusted constantly is best you'll premium lenders As dependent market evaluate risk and protection. opportunities pricing deploy the in on

certs refinance grown the characteristics and XXXX, channel profit corresponding high XX% to at nearly example, premium has in and exhibits For predictable share. a lower quality of QX and credit total insurance

Our channel opportunities to mix seek capitalize can change we on from market. in as quarter-to-quarter the growth

million profit. million second XXXX Selling, $XX.X quarter positive of the of XXXX, XX% primarily compared adjustment Gross of increase general Now, the XXXX second let and XXX. in quarter gross ‘XX $XX.X increase second year profit in to compared administrative me in XXX% as were an turn was the to second of XXXX quarter XXX%, QX the XXXX, ASC margin in in compared and expenses in to related million $XX.X quarter quarter. to loans XX% XXXX. of by of previous certified in was $XX quarter Gross driven QX to second million

second reminder, cost with million XXXX one-time the SG&A associated included expenses a QX and quarter $XX.X ‘XX. combination As in transaction business

loss exited $X.X with employee the $XXX.X XXXX. back April $XX.X quarter a after becoming of income million $X.X non-GAAP tax deferred was with in $XX.X million and per a compensation these recorded financial compared of in $XXX.X our our at of was ‘XX. second of Operating professionally to public XXXX a equity There's of measures of Excluding quarter and share, XXXX. the and compliance for to $XX.X we EBITDA repurchased which down net for of quarter as company, and expenses, net cost. million The to risks restocking of facility financial We approximately million pay assets. quarter total reconciliation $XX in million price an the assets, of consulting technology liabilities a quarter Adjusted second XXXX release. functions, for second revolving company. second information, follow was controls, million in SG&A unrestricted for on $XXX.X as that million and million XXXX. compared on can in million compared a second offering the press quarter shares debt completed of outstanding the one-time and million credit to was offering approximately and which our million We stock in XXXX. be $XX an XXXX of $XX.X a $XX and the QX was found assets, in in GAAP $XX.X to total in cost a the benefits $XX which services XX.X in we second was to cash shares second increase of quarter represents additions treasury related was to in In stock $XX.X had Net public of quarter contract common information XXX,XXX million our $XXX.X common internal additional million enhance income primarily headcount associated such reporting increased million,

earnings XXXX of posted XX, the shares price from term We of slide settled under merger the out a agreement June our we addition, had million updated a long liability $XX.X we TRA on million Investor share Relations an in approximately at the quarter of or a second a includes one-time on from and lays our outstanding recognized supplemental dollar the a on settlement. receivable and which gain XXXX, $XX.X quarter the current of tax extinguishment website, $XX.X million discounted $X.XX In count. XXX.X that million to

Government remains Institution Based announced of unchanged. combat COVID-XX, of the quarter certified as Total Mandated XXXX. results and $XXX,XXX, Despite moving ranges $XXX,XXX quarter XXXX, third on are which potential between into another to and trends measures previously be guidance guidance loans Now, million Total for range adjusted for range. to our $XXX at the revenue to of XX% reaffirming second the and to of we and like wave the guidance million, midpoint our follows: over we'd to over to million $XX be and the $XXX growth Adjusted flows between million. $XXX of million is EBITDA XXXX. again between and the be midpoint cash at the over operating million XX% point $XXX out between $XXX to be growth our

the group. the Now over happy turn back to the with and questions Thank we’d you. to to that, we’re call like from operator take

Operator

Thank you. [Operator Instructions].

Your first with Joseph Canaccord. ahead. question comes from Vafi Please go

Joseph Vafi

Hey Great gaining really to really, in and afternoon. guys! like it's looks the the the Good market. really LTP just see continued impressive results traction

number are three I those coming two a attention then and four, mean, at four I there – I guys and of after know numbers maybe lot should have point of some And I out pretty from quick little of that. and on OEMs think Ross a this and other I by must OEMs similar OEMs, some you just bit color So just the there. other maybe cert guys clearly on gave follow-up be out and us more three mean cars color the there a paying seeing little a now? be

Ross Jessup

senior Yeah X obviously all standpoint are the reference had where we've level mean of out our scope and is X are we're in especially discussions the They the Joe, forward. working going you're and our that, I We that for they at are to very success – a buy-in resonating others and endeavor. and OEM from with that IT to them definitely right. both have move well. at

where We in are is that the figure just out trying prioritized organization. to

well progress But great been need pleased quarter. for reviewing company our also and and done and has lot of all share going to the and maneuver the really of that that, to for and well of policy from the benefit to fact on I'm I around used a I'm it's delay the and some sure anxious to with and for of appropriate face-to-face the to the more red and just mitigate making time. OEMs there are refinance, our they of change a have some is does with And and at agreements for lining we've help new think with that meetings that certainly the able our way seeing attention really our just We the progress that.

Joseph Vafi

non-chip I were tougher maybe think color. kind a how was lot, that's much QX, if this mean were be its perhaps Sure, I guys. to handicap non-chip in mean, clearly great you where in mean have much results of shortage environment how chip but current we could Thanks business I there momentum? a shortage you world would but a quarter. a answer, shortage, might the environment And a question helped great this think just help given do you volumes, boost not would no

Ross Jessup

you this standpoint lot we're of still in to you're to are and struggling. think have grow to producing you the how were that And the and had they allocate chips very, trying just vehicles forward they to to they that all But we the they vehicles our there platform if move are actually normalization, have SUVs, then and incentives that urgency excited a know little a I that able well, it meeting best guess the environment. and faster. move definitely to they have we're sitting so, the back built are those vehicles out, scale from full fact going the having figure higher the to where dollar a use are are metal. all and having everybody and at that They that – to felt take works very I marketing in would

OEM one from each several Our we over out definitely years. and and the can there, few to TAM significantly huge next other more OEMs within is the grow expanded perspective,

Joseph Vafi

Thanks much, great. That's Ross. so

Operator

Caintic question is Stephens. with Your next Vincent

Vincent Caintic

for Hey, afternoon. questions taking my thanks! and Thanks great Good results.

so And OEMs, go outline bank sure Credit kind wondering patience questions first, the out, just further get the you're I'm – going the a side. So can going if and so ask XX of to might in that I'm and to lot there’s forth. you implementing the was so of non-OEM you Union pipeline about I

larger in If maybe I maybe big up about us about was how that. know you’ve help and growth is credit when you refi are you about volumes, a you've union purchase you with add could you help but bank, bank when the like us, you or I were the on that opportunity, can if union think OEMs size wondering side. versus talk the opportunities also if refi. experienced the talking could you the And growth credit experience

John Flynn

Flynn, John Vincent. Sure. This is

think and and $XX banks all interest I is in alluded go X an are target these recently and we thousand of names the them a are and interest you we of a see, a union are $X of are I the to that these rate, consider banks call of us billion alluded banks If bought there's we that lending, from deals position access what of division the the less consumers operation that got be to cars we $XX we're think more flow getting get going that banks recently up, unions, again in have that it announce starting and don't their than of Tier starting high credit bit just to the to that the do sign billion assets little of telling be to they their what to are indirect interested some a in to very refinance. a size, that and too of a goals create signed do accounts. earnings think and to, out will no some to you're have lot to billion the turnkey lot we've that and shortly. a some We're to credit the I just we’re But month.

that of size. on some are these bigger So

heard climb the union a a cert certs months, very large that XXX XXXX to until have X,XXX five their grown month. that the and past, doing just four certs wanting over think one to past credit last you've talk from month month, to us I months got and volume in in XXX we've

this of we've push traction, we've us lot tailwinds a got behind lot to a So forward. got

alluded also CECL. We to

from shops XX they are webinar I to to they that all we think lot getting months are in going a that larger probably all and getting to for to related XX calls did on based months the we're ’XX of that. that ready fact of comply inbound have KPMG the to the with the CECL need together, have

So it. larger I lot got going think and see think we've now a we're of things with on starting of shops right the the big benefits really I to

Vincent Caintic

thanks, appreciate Okay, that. I

Second into out, portfolio. profit profit question share additional share, including on I you recognizing it the it, the really appreciate the you're put on how the detail you broke current

to On even levels, assumptions, the describe wondering because more still could if were in guess and I'm changes back you XXXX. I we much than better prospective we're if in you're going maybe detail, that pre-COVID

the talk going Thank and be cash we the recognizing actual above expecting something past. should profit something you what that if maybe could that this Is assumptions forward? the share about you. already is you're booked So where you've in

Chuck Jehl

Chuck. comment is to the to asset This on profit talk thanks and the the Vincent! the contract hi slide Yes, Yeah, on for Good you. share. understanding

it focus assumptions, you kind helpful estimate portfolio the first I'll around Your that the QX ’XX, change million changes in was with start under just maybe prospective was $XX.X and question of and a if the on performance. realized XXX,

we're conservatism certain in sure we and really that a is we of we pandemic to some looking of Variant one now, A is months have see Delta at make worldwide all were the about it the the on there. XX assumptions. was year and You XX with wanted months, over still good last XXX now, portfolio, clear things out understanding the unknowns our there

So a accounts credit performed what's that. it ‘XX. the it assets that into to clearly we to in from really to contract important thought change which out you an lower we’re educate That's was and receivable really defaults, the perspective, quickly. turns and really asset into we very increase looking the kind driving model also cash claims, portfolio revenue and estimate exceptional has But have of and some even stress lower and just know is built

XX realized realized $XX.X for million, So just that through QX, in XXXX. category, that that's that June $X.X million

So and with has move expected, that's then portfolio stops, actually a assumptions, continued yes, on, the near changes term than into the cash things that's will but delta very have you the really with still I turn out performance better the to if of just the the we are unknowns. quickly, portfolio and kind stress realized little outlook our perspective that perform future said better, to variant, built obviously like stimulus to

So obviously, you we the we’ll and bake confidence prudent that assumptions look that obviously run our sales, that also with obviously at of know all we're Manheim if closely car it's are process model, [ph]. consumer team macro the very in risk in; and if unemployment, it's

the the So all process. model of that's baked into in

really understand good felt we this it help color So change would was and like matters. folks that the estimate much very

Vincent Caintic

very much. helpful. that's Thanks perfect, and very Okay,

Chuck Jehl

you. thank bet, You

Operator

Stanley. from with Next comes Morgan James question Faucette

James Faucette

much. very Thanks

impacted about rolling here. It business stimulus us through wondering much off, effective I'm can the background has that itself how had how about you qualitatively think and impacting for your that you're and we you seems business should could business. providing particular building are for, segment the like obviously there's wondering if the how into noise Sorry walk your good but on the that it etc., insurance high know and now prices a car planning? demand you're

John Flynn

they mean how I'll stimulus that of – – doing? five much the as and are a and had the think put obviously you slide and to there that's this COVID the in government impact back when our was slide we did slide share If the supplemental. we all force hit, you originally, we have. really profit I market When and James of as on go in you know COVID-XX none a said into liquidity about you Yeah, right, the

that's So an a think I in had way. positive definitely impact

of averages, with are historical of frequency our can severity our well much defaults. our see our portfolio You it as lower than and losses as

So positive think items has stimulus to consumer that near the a those been in serve. been I and the we environment helpful times to very

our our we not to very positive also been but believe credit So, only consumers. in the portfolio, that's to

impact. huge a had it's think I So

Ross Jessup

Ross. have we've experienced those us lower been claims and hand mean on is we've in, to one you in little are car very severity and that, And comes part to I the I in realized we claims modeled happened have claims is the past. than where those compared severity so on positive. bit values what beneficial come this to our James, that the it all actually the what know higher – on have think Yes, past, claims has power to is and just a down of been have significantly what when that's experienced

John Flynn

And jump I'll this, our portfolio is claim lenders the In know trends of in other thinking due through this the James. you benefits. our and delinquency kind portfolio Yes. timeframe the have comments, of stimulus similar pandemic know seen showing just and that some one to through time you more and about

So the benefits. we're similar seeing

James Faucette

How interest end lot of of product Got terms a it, about know you sense. you Do credit and those like OEMs adapt. of how elements how the and you in like will stimulus anticipate? should and their reverse that in your does impact themselves needs do things we the of What then. makes you that about kind planning as or think think and

happens get to like do you So really going we're at, trying I kind think guess that's what of what forward?

John Flynn

and XXX the it assume that you about think forever we last we in from and will to profit slow go – go the year as and looking Well, stimulus modeling forward we're that the eventually away. a perspective already future our of kind out or won't think as business, in

We are forward into the as though defaults looking of as assumptions. it book share have of even under kind the in paid we know profit loss and well upfront. to we the future, as our of some you severity the as because monitor well as look XXX out monthly, claims So

prices as So that's values baked take we in well. those, with and we feel car relates to car it moderate We don't as those consideration, like that as have into eventually will well. used did

Chuck Jehl

billion and Yeah, and $XXX for Chuck, a you that that of to add the consumers [inaudible] have I’d thing [inaudible] TAM at one lot you look mark think you're of going that with through if higher car over defaults prices. default to was to

this people some all. see to going You're explore

is TAM the think grow. I to going

in ofcrisis, loans, haven't we union banks, kind to these all become geniuses are just underwriting around they continue and rebound the going near buy have overnight at look I to when don't they costs. So, prime data. Credit

huge think big going we're know to in. we and to that us of opportunity to continue I do ahead to a fine-tune have what to play you have always continue part So

I did billion worth billion think of X market. year loans addressable last of we a $XXX

So there's still huge a runway ahead.

James Faucette

great. you very That's Thank much.

John Flynn

Thank you, James. Yeah.

Operator

John Please Jefferies. question, go with next Hecht ahead. Your

John Hecht

of with Hey used the is model this, the that counterparties. more very insurance the inquiry back getting I'm guess change? what's assumptions prices? how the how rates of of more levels think afternoon, and thinking maybe about you and the Is some cadence the we – from what I This of process of is of Vincent car reflective underwriting it the normalization is on to the of that interested in year forth are normalized the or are normalization credit guys! insurance pricing loss the in current do sometime kind how Good call so you – much. assumptions like just thanks guys of of next

John Flynn

is the have to to shortage, production I going think, for that opinions we on the of is that. chip help level know you Yeah, know when normal I you and get a back car variety that think one to

do that, have modeled of stressed will that into it's as factored is we calculation. values next not our again happening a Chuck pretty said, that. majority thing. that back this all close like trending folks we’ll to balance and normal, the and It's overnight claims certainly of severity our It's even to XXX think and to what if thinks be the then gradual going I be next that time That's year, just believe a increase not decrease, year. we if

John Hecht

guess, But, conservative some asking like I'm sense. value? terms in in favorable the you're pricing It happens not for I a guidance slower But a if any economic could have of little of forecasting. rate, you in maybe then being sounds at normalization readjust your

John Flynn

history, our right. an mean, time all Yeah, in clearly we're I unusual of in

the to it demand as but supply pricing went you know, comes Obviously back ultimately normal lot back even, I supply of back pricing. great does and not think a about up – if financial quickly. if moderates and there crisis and comes so And you and think demand, pricing so the levels go and was and to yes,

with like to the moderate. follow, some and believe unemployment feel others it's with we we to that do these we of this the will for with know feel that, know in, and you prudent and way back trends get levels all in normal Moody's So we macro, example like that's you it and baked it at look time. unusual But

Chuck Jehl

we reversal, have XXX. we know that doing To assets you of do not expand so the are a this on Chuck,

John Flynn

John. that right. answers hope I question, Yeah, I your mean…

John Hecht

And No, can get getting I certain I’m through August and there? are July very about talk areas it me us that you volume noticeable of of variance forgive kind out talked wondering it, there seems Yes. Maybe you and trends, disrupted. but kind like it, it the if anything then much. appreciate

Chuck Jehl

jump lenders a you very Yes, by app protection. But record year-over-year our well. I'll know prepared and said, quarter, are quarter line. so in our That XX% a bank a on start as growth our strong credit record momentum June We volumes quarter. core very in Ross in as and momentum of our for can second into and was then in. union were encouraged continued comments, lot was QX July John John was and has It business quarter, really the

the the balance shortage we as and As well we're which execution. of the time the feel and really good as business where is the why good and heading difficult earnings really OEMs a feel but during of into about perspective the grow, from and reaffirmed as OEMs, the we worked our cert through, cash guidance a gets year about

John Hecht

you color guys. the Thank appreciate much. very I

Chuck Jehl

Thank you.

Operator

Bank. comes Sameer [Operator your question Instructions]. And next with Kalucha Deutsche from

Sameer Kalucha

taking my for question. Hi! Thanks

compared on the three? I the So there you one the How of do two color on to insurer first with provide three. things Then How the with number for two? any have? volumes can trending the compare economics was the wanted is, you insurer second they are check the that earlier

John Flynn

there's first one for to X. just That's one economics we insurance all sending adverse launched to third that same economics carrier for two. other, application have us on agreements of the us, the are the carrier identical Sure. the – The so we selection They to versus have put no and one the be to places. July in

volumes know business. they about tick up. just have happy, that to The them underwriting issues, So they're can we're they're them in you it will sure keep excited starting see them beauty but no the of as we've about is the now very make capacity getting get to excited the and mix to volumes much we got as

Sameer Kalucha

Great, economics on thanks. unit profit a the, the just talked And you quick per about the on share.

target So keep would and a bit there to – like in it mind you average to lower you have an that was number little probably long due at. or or is like a like term the mix the that

For this normalized you quarter have? example, is like and quarter XXX last Is target a that XXX. there

Chuck Jehl

Yes Sameer, this is Yes, that. Chuck. answer I'll

basically a you’ve vehicle We One the value basically of in And discount, of that COVID of value this the one started. increased discount COVID-XX of removed was first vehicle our the April in our that things picked basically took year. we prepared XX% part time, when standard pandemic. up underwriting was X% changes which in comments, off our during our premium it

we're XXX economics from will your pre-COVID that's know share we So a biggest but on adjusted. lenders do on really and quarter quarter-over-quarter. to share obviously it's that and normalized impact an profit to at the is mix the lending in open The analysis Everything in essence mix range. change you the and back profit vary, protection risk quarter and and

Sameer Kalucha

Thank it. you. Got

Chuck Jehl

of out And you also XX%. probably point improved one our prepared a about lift closure I'd comments in the heard thing that is, we rate,

record obviously part the is is very which volume which certs, So and of helpful.

Sameer Kalucha

Thank you. Got it.

Operator

Your Bob with Blair. next question William Napoli is from

Adib Choudhury

Choudhury on Adib is this Hey, for Bob Napoli.

our from question Just one end.

going has you talk and about like particular company in capital are the cash it around bit build flow you seems cash. and allocation to priorities continue little to M&A? guys you. Could philosophy your superstrong a So your Thank

Ross Jessup

term just bet. business keep as participated positive generate long to service closely the capital back bit forward, balance Obviously We of cash the going discount, doing about conservative are of million cash we we our everyone our bank and our up-to-date it to buying million human that a and very we'll cash of and well sheet obviously stock which piece well flow, a model think generated $XX about capital in is very of to allocation. cash you We we successful when balance uses a work Yeah, of the ample board and a But decisions. we obviously out the as and think allocation, by as $XX for little maintain down our believe make cash along that. the we a of paid decisions on shareholders resources we'll Obviously, year a a in debt to continue want back thoughtful debt. market bought very that. with and and and obligation financial of about strong quarter, very you our operating as capital policy and run invest and our for have has those flow uses little as and TRA, and and our we use as a significant

on all philosophy of value. is our in basically that shareholder focus So and maximizing opportunistic and

Adib Choudhury

Thanks Great! very much.

Ross Jessup

you. Thank bet. You

Operator

remarks. to turn over closing John would the to floor for I like Flynn

John Flynn

appreciate We We your support. everybody. us. Thank and effort really into you put the following you continued time love

the grow continue As with look well support. you put results we I quarter we're up of can forward your see about excited the the company to help. we company everybody's Thank second as the as appreciate future you. for the and to

Ross Jessup

Thank you.

Chuck Jehl

Thanks great everyone. a Have day!

John Flynn

Bye-bye.

Operator

the concludes This teleconference.

for lines your you thank disconnect may You participation. time your at and this