Good day, everyone, and welcome to the Credit Acceptance Corporations Second Quarter 2014 Earnings Call. Today’s call is being recorded. A webcast and transcript of today’s earnings call will be made available on Credit Acceptance’s webcast. At this time, I would like to turn the call over to Credit Acceptance’s Senior Vice President and Treasurer, Doug Busk.

Thank you, Sam. Good afternoon and welcome to the Credit Acceptance Corporation second quarter 2014 earnings call. As you read our news release posted on the Investor Relations section of our website at 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 -- 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, I should mention that to comply with the SEC's Regulation G, please refer to the adjusted financial results section of our news release, which provides tables showing how non-GAAP measures reconcile to GAAP measures. At this time, Brett Roberts, our Chief Executive Officer, Ken Booth, our Chief Financial Officer, and I will take your questions

(Operator Instructions). Our first question will be coming from the line of Brian Gustavson from 1060 Capital. Your line is now open. Brian Gustavson – 1060 Capital: Hi, thanks for taking my question. I’m just curiously going to still address the slowdown in loan volume in the quarter, versus last few quarters you guys were in the mid lower mid teens now you’re in the mid single digits, just kind of curious and what – I know you talk about more capitals, and I’m just kind of like some more color on that. Thank you.

It continues to be a difficult competitive environment. The growth rate in the second quarter did break the trend that over the last three quarters, I don’t know if the comparison is a little bit tougher this quarter. So we had last years first quarter was pretty soft, so the first quarter this years growth number likely reflected that, the comparison is a little bit tougher but it continues to be a very tough market and that 4.5% growth that we had at that time was certainly a break in the trend line. Brian Gustavson – 1060 Capital: Do you see that competitive environment getting any better, how is July working that you are going to change to kind of what you’ve been seeing so far in the first half?

That will get better at some points, but it goes in cycles or it’s probably likely to get worst before it gets better, that’s been the history and it’s difficult to know the exact timing. But, we’re in a period now where there’s lots of capital and there’s of capitation and there is certainly loans that are being written that we wouldn’t want to write based on the economics of those loans and so we just have to be patient until the tides turn which they eventually will. Brian Gustavson – 1060 Capital: Got it. And then just on the -- no I should know here but -- when does the kind of the slower loan growth hit the kind of income statement to cause slower earnings or slower revenue growth and what’s the average kind of length of a loan?

I mean the average length of a Consumer Loan is about four years, but, again the asset that we put on our balance sheet and the asset that drives our revenue recognition is the amount that we paid to the dealer. Because of the relationship between what we pay to the dealer and the cash flows on the loan and the fact that we recover our investment before the dealer receives any residual interest, the life of our investment and the loan is much shorter, roughly in the neighborhood of a couple of years. So we’ve been drilling at -- in 2012 we drilled mid single digits 2013 we grew mid single digits, so I would say that a lot of the impact of the slower growth is already reflected in our current income statement. Brian Gustavson – 1060 Capital: Got you. Alright, I’ll let someone ask questions.

Our next question comes from Robert Dodd with Raymond James. Your line is now open.

Hi guys. This is on in the queue, obviously this is closer that you got an earning query from the – our investigated demand from the federal trade commission. Is there anything more you can tell us about either what’s in that letter in terms of what they are particularly looking at or you expected timeline for that issue to be resolved?

I mean relative to the content of the civil investigated demand, you had requested information on a number of topics, critical porting, consumer privacy and information security, customer payments, marketing, training and customer communications and consumer complaints. In terms of timing, really we don’t have any insight there. We provide information and the next step and the timing of the next step is unknown.

Hey got it. In fact, and except for a question and then I’ll hop back in the queue. On the --you talked about the tougher competitive environment which obviously is in terms of this particularly in here. If I look at the advanced rate that you would be giving to dealers they continue to tick up a little bit in the second quarter, the average to the first half is running a little bit above what it was for the first quarter obviously so it’s continuing to see upward movement and how much you are willing to fund to a dealer. Do you have any visibility on when if that’s going to stabilize or where kind of that the peak point is that you’d be willing to advance to a dealer and still generate the kind of returns on capital that you expect?

With respect to the portfolio program where we generate 90% of our business, we haven’t made a pricing change there since….

September of 2012.

Yes, September of 2012. So we’re holding line and pricing there. The – in the table you see a column for forecasting collections, a column for advancements in a spread. And if you look at the difference between 2013 and 2014 in terms of the spread, which is probably the best number to look at, there’s about a 100 basis point decrease in the spread. We had to keep in mind that 2013 and for most of the years of the table after we booked a loan there’s been an increase in the forecasted collection rate which has occurred overtime and that 2014 has the same positive variances still in ’13 those spreads will be pretty much the same. So the 100 basis point decrease in spread just reflects the fact that we had a positive variance on 2013 originations, whether we had one in 2014 and I don’t know but if we do it will be about the same. With respect to the purchase program, we have got a little bit more aggressive there and those numbers will be – those numbers will show up in the table. But obviously if we advance more, our return goes down so there is not a point where we can advance and keep the same return, it’s dollar per dollar if we advance the dealers more money our return goes down. So the way we try to optimize that equation is we -- we always do it the same way whether its competitive or it’s not competitive we’re always trying to maximize the total unit volume adds a profit for unit and that’s the way we price.

Nice color. I appreciate it, thanks guys.

(Operator Instructions) Our next question is from Jason Stewart with Compass Point. Your line is now open.

Hi, this is actually Amy [Levin] sitting in for Jason. Congrats on a good quarter and thanks for taking our question. Most of the questions have actually already been answered but in terms of the other income there was a slight decline in and below our estimates this quarter and I was just wondering what was driving that decline?

Other income was roughly consistent with the same quarter in 2013. You may be referring to the decline from the first quarter of 2014. If so the decline was due to a reduction in fees earned that we receive when dealer sell a GPS-SID device and that just due to seasonality and lower penetration rates. It was also due to a decrease in vehicle service contract profit sharing income.

Would you expect other income to be similar to the level seen in 2013 on a quarterly basis?

Most of the things that Doug about in Q2, with the lower penetration on the GPS-SID and the lower profitability and the -- those are both likely to continue for some time.

Okay. And then in terms of share count, share count went down pretty significantly this quarter. Is that a trend that we’ll see further remainder of the year?

Well, the reason that the share count went down this quarter is that we did a stock buyback at the end of the first quarter that due to the timing of it had very little impact in the number of shares outstanding in Q1, but had a more material impact on the shares outstanding in Q2. We’ll have a similar phenomena going on in the third quarter in this year, because we completed our buyback approximately 900,000 shares in mid June that modestly impacted the share count for the second quarter, but will reduce the share count by approximately 760,000 shares in the third quarter.

Last question in terms of dividends being adjusted, earnings per share and GAAP earnings per share, the differed losses related to the February 2014 debt extinguishment. Is that adjustment something that we will see that throughout 2014, 2015? It sounded in the release like that that adjustment will continue until…?

That’s correct.

Okay. So that is a charge that will continue until like for actually next five-year?

Yes. Through the term of the 2021 senior notes.

Okay. Great. Thank you so much.

Our next question comes from Kyle Joseph with Jefferies. Your line is now open.

Afternoon, guys. Thanks for taking my questions. Most of them have been answered. It just looks like collections on the 2014, I know it’s early already, but it looks like your collections improved a fair amount already? Can you explain a little bit about what’s going on there? Is it just general macroeconomic improvement or something specific in that vintage?

I think the trend tells ’14 is very similar to the trend in 2013 origination, so no real big change there.

All right. Thanks for answering my questions and congratulations on a good quarter.

Our next question comes from Ken Bruce with Bank of America. Your line is now open.

And Ken, your line is now open.

Sorry about that. Can you hear me?

Yes.

Okay. Good afternoon or good evening. What are you doing to address the new active dealers just as you kind of look over the last few quarters, it looks like at least based on the increase in the sales force you did back in 2012, it may have kind of run of course down pretty significantly just on a quarter-over-quarter basis, which maybe partly seasonal, but it looks like we’ve seen a little bit of inflation. How we to be looking at that?

Yes, I think you’re right. I think the – we had a nice trend for many quarters in a row of increase in the active dealer count that changed this quarter. We still feel that we got a big market out there. But it’s very, very competitive and that shows up not only in volume per dealer but it tougher to sign up new dealers as well.

Right. And do you think that at this point you’d expect to having to add more sales people, I think back up year or so ago you felt pretty comfortable that you could basically cover the footprint that you wanted to with the sales force that you had or is there any change in thought in terms of how you can address to re-grow the market?

No I think we have more work to do in getting the existing sales force more productive. I don’t think expanding it at this point is something we’re looking to do.

Okay. And anything else that you could do in terms of trying to improve the general volumes. I recognize just looking – considering what is going on in terms of competitive backdrop you probably want to be careful about changing anything from a pricing or structure standpoint, but is there – you feel like there’s anything you can do at this stage to maybe regain some of that momentum?

Maybe I’m not. I think you should look at the comparison. I’m not sure the second quarter was much different than the first. I think it had more do with the comparison than anything else. If you compared 2014 volumes to 2012 volumes, you’d see second quarter look a lot like the first quarter. I mean, we’d always like to grow a little bit faster. But I think as a shareholder you should be more concerned if you’re going at 35% this quarter and then 4.5%, because it just a real tough market out there.

Agreed. I’m guess I’m really just trying to maybe anticipate what actions you may take and whether it would be trying to drive the growth or if you just do more buybacks just in order to drive the bottom line economics?

We continue work on improving virtually every aspect of our business. I don’t think there is any – we’re not really willing to make wholesale changes on pricing or policy at this point which are the easiest ways to improve volume, but obviously have a very negative impact on per loan profitability. I don’t think that there is any silver bullet out there that’s going to make it a dramatic improvement in volume in the near term. I think, as Brett said, it’s a tough competitive environment and at some point it will become more favorable, but until then we’re just going to focus on executing to the best of our ability.

Okay. And maybe just lastly, is there anything on just in terms of where this competitive, what -- where the competition is coming from? Is it new entrance or is it more traditional players that has been in the market and have just decided to essentially pay up for loans at this point?

It’s a little bit above, but it’s mostly the larger players that make a difference. You know 25 to 50 reasonable size players that are out there and some of them again pretty aggressive.

Okay. Well, thank you for comments. Appreciate it.

(Operator Instructions) Our next question comes from Brian Gustavson from 1060 Capital. Your line is now open. Brian Gustavson – 1060 Capital: Hi. Just on the FTC enquiry, I’m wondering if you had – have received one before and it will pass and how that affected the business?

We not received one before. Brian Gustavson – 1060 Capital: Okay. And just on the timing, I think you said you got it on June 6, you had a tender offer I think that expired on June 16, I don’t how material you viewing FTC enquiry, but I’m wondering about the whole decision making process especially in light of kind of the larger insider selling that took place with that tender? Thank you.

We discussed the matter internally. We did discuss it with council; the contents of Civil Investigative Demand are relatively straightforward and benign. And after discussing internally and with council, we didn’t think really there was anything to disclose. Brian Gustavson – 1060 Capital: Okay. Thank you.

And our final question comes from the line of Moshe Orenbuch from Credit Suisse. Your line is now open.

Great, thanks. Just a follow-up on the question about increased competition, I mean, you mentioned specifically that there were I guess loans that were being made that you would make -- would you kind of say those are being made by – I mean, are they typically the larger players or just kind of smaller players, could you kind of talk about that from if -- as to whether there’s anything there?

I’m not getting in the specific names of who is doing what. But, it’s a story we’ve seen before. We’ve been through the cycle several times. Our returns are – the returns that we try to make – our target returns are quite a bit higher than the target returns of lot of the companies we compete with. So if everything goes according to plan, the profit per deal that we [should] to achieve is typically quite a bit higher in terms of returns and you can look at the other public companies that are out there that are auto finance companies and compute their return and you can collaborate at what I’m saying. But then usually there’s a part on the cycle where things don’t go according to plan and because we have a nice margin or safety built into our business model we typically do okay during those periods and there is other companies that operating with razor thin margins that don’t do as well and we would expect it to play out the same way this time.

So, I mean, is that fair to say from that standpoint that you’re sort of almost rooting for weaker used car values? I mean, is -- how important is the level of used card values to both your ability to grow and your competitors feel like they’ll compete against you?

As much as we can we try to think long terms and we know that for the next 20 years there’s going to be periods that looks a lot like 2014, and there’ll be periods that are quite a bit easier, and what we expect over the next 20 years is a mix of the two. So we don’t try not to worry about the timing of when one cycle starts and the other one ends, because we know we have to compete and be successful in both environments. Obviously, we’ll make a lot of more progress faster in an easy environment and we expect we’ll have one of those in the next 20 years. But we try not to worry too much about what happened to this month or this quarter and when will this end. And we just keep focus and as Doug said and making every part of our business better and that will make us the most money in every part of the cycle.

Right. Okay. Can you just mention whether there has been any kind of discussions with the CFPB over the course over the last quarter?

We haven’t had any formal discussions with the CFPB. Our Chief Legal Officer is a Member of the Board of ASA. So – and that will he certainly had conversations with them and he’s obviously aware of what’s going on in the industry, so Charlie Pearce is very tuned into things.

With no further questions in the queue, I would like to turn the conference back over to Mr. Busk for any additional or closing remarks.

We’d like to thank everyone for their support 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@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.