CRMT - Earnings call transcript Q3 2019 | America's Car-Mart, Inc.

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Operator

Good morning, everyone. Thank you for holding, and welcome to the America's Car-Mart Third Quarter 2019 Conference Call. The topic of this call will be the earnings and operating results for the Company's third quarter for fiscal 2019.

Before we begin, I would like to remind everyone that this call is being recorded, and will be available for replay for the next 30 days. The dial-in number and access information are included in last night's press release, which can be found on America's Car-Mart's Web site at www.car-mart.com.

materially some inherently comments that involve actual to know, forward-looking may could all view. results which present statements risks differ you of today management's include cause As management's from and uncertainties These statements Safe of XXXX. Private the of to Litigation Act Harbor Reform provisions Securities made are pursuant the any accuracy such update forward-looking guarantee The forecast estimate to Company the cannot nor obligation or any of does it undertake statements.

XX-K Officer; now, to annual for the information, call turn Forms morning please Williams. fiscal see X President report information Williams, over on are and X-K XX, more Company's Form furnished to, I'd April current regarding the Chief call Executive Jeff forward-looking ended Chief Executive the or Company's Vickie Officer. Financial For its like filed on Commission and the XX-Q. and Judy, Exchange on reports of year to Part and And with, the the XXXX, Jeff and Securities Officer, this the Company's Chief Participating and quarterly

Jeff Williams

you at better we highest our and lot the hard a through continue with a see our Thank non-negotiables line of levels. in thank and good get into quarter you collections improve, a had to much improvement pass-through us the for we work and hard very associates good, Sales are customers happy we're with results. and operational productivity results though interest to solid finished We we percentage. room Car-Mart. We're to business. the serve working our net XX-plus quarter volume key charge-offs America's down, Even improved, know our in to focus for areas bottom the on up, was our and your of and have joining lower translate Okay. solid was that

turn ahead about I'm as Car-Mart healthy to some improvement. Vicki? go over are obligation are to Vickie push believe have We over an we going when to is it we go We growth there. and to numbers. believe continuous communities restless for better

Vickie Judy

Good morning.

up was with increase in Stores million, sales For the age a the up Revenues were X%, over our revenues quarter, about This for in in overall up about age million. X%. interest from to focus five was five to less drive income. years at resulted inventory was to stores stores about helped we $XX to than continued $XX million. in category $XXX years of our believe has category same-store the up on this. XX.X% XX X.X%. and increased in dealership, XX-year We've traffic category and XX% increase see an Revenues from the revenues of X% quality

a to quarter. selling average $XX,XXX, the compared to X.X% price Our prior or $XXX increased year increase

increase vehicle because an the the quarter. tax vehicles results off-work in results elevated demand costs remain to in turn higher of to for the in sequentially. primarily high $XXX in purchase saw prices. also time from This expect purchase through We overall continue We car do and increase cost increase used of which selling market,

customer, our to stay older. were old, years the XX to However, quarter-end keeping or the At and to zero and XX the best were XX were of dealerships money. or from XX% XX%, for years remaining will years five or transaction continue to for on affordable vehicle our we the old, five from focused provide XX, XX old

Our third year the XX.X increase. compared overall per X.X% quarter, prior lot, to increased from to a units productivity XX.X

for lot, XX-year-plus -- sold year lots the to month quarter. XX-year prior per XX.X units compared XX.X Our produced lots per

productivity compared years third less age for year. XX-year of the and of quarter in five lots Our to had quarter, XX.X of last produced the XX.X prior lots than to compared category XX.X to year the for five the XX.X

percentage a to contract term the compared collections originating year compared sequentially. last basis as from payment receivables average XX.X up the points The flat to quarter, XX.X prior was was down percentage months, XX.X% compared finance Our months year. XX.X%, year and up however to of XX.X was average prior XX to quarter, for

average was third XX modification, Our for age contract prior for to was entire the portfolio portfolio, for quarter. compared compared basically term improvements. The collections collections quarter, to flat year to weighted visibility, the investments Interest including We the of $X.X weighted XX.X average the in believe in income contributed better consistency our at year interest was approximately these our the have our nine XX%, months. efforts staffing, increase, up and to and million million the $XX.X on end average the in all in almost of contracts 'XX. quarter XX.X% to January from prior due our at from approximately the 'XX. was of receivables the rage The XX.X% May which increase XX% due average of for also weighted at increase finance of up rate began finance to quarter receivables, XX.X%, the months interest

XX.X% XX.X% from down sales third the at of profit quarter, gross remained Our for flat, sequentially. margin and

to and pressure selling continue We repair at margin our the average a price. price while a of battling selling gross on the gross focused inventory costs higher as percentages margin higher stay result lower managing as are

to SG&A million for prior sales, as we a XX.X% are the pleased investments improvements our the see were quarter. XX.X% percentage from the We that compared made $X.X dollars with of leveraging of SG&A. year some productivity of at some to up

to since this per over with our customers customers added associate work time we operations. full-time have last We we're year, stay and more efficient as X,XXX serving

infrastructure to will associates our invest improve the our continue We experience. and customer in to

ongoing experience. our of site improve to One online customer our Web overall is initiatives and our

compared to success. quarter. contributed Recovery compared year as XX% and XX%, charge-offs last to from deal the better, improve severity the in rates quarter frequency down basis recovery quarter. average For third collections losses X.X% XX% the the prior current and the the We've were Improved we to X.X%, the to of XX and rates in severity were to both year as decreased of prior net drive of improve structures prior continued finance was customer approximately a our percentage year receivables quarter, and higher to quarter, points losses. for XX% work

year XX.X% December year tax was the quarter Cuts third 'XX. from the of $X.X the prior fiscal Our tax of a million and enactment for to Act, Jobs due 'XX. the effective in of rate primarily benefit resulted Tax And recorded adjustment income

from We $XX base facility. any availability million, debt expect had our $XXX $XXX million, the total the 'XX exercises. basis did until be interest points current effective amend prior our rate under and million tax total of stock from December term by to to December We excess May our in committed option of our $XXX in applicable tax to reduced going revolving borrowings XX% we was credit extend revolving We additional forward and over million rate benefits 'XX. to to 'XX. credit increased facility At XX of quarter-end, the approximately

XX.X%. Our ratio current debt-to-equity our ratio is is debt-to-finance-receivables XX.X%, and

increased to compared rate. quarter increased XX% year's due to increase, due increase the Our to of this interest quarter the debt, last in expense the about interest $XXX,XXX and also

we of price million or During of at of $XX.XX X.X% our $XX.X share. $XX XXX,XXX XX% the we for of at Since repurchased company million for company, an approximately per an $XXX XXXX, have the shares, average quarter, repurchased share. per average cost

cash strong have continue We flows. to

million, common For funded million $XX.X the with receivables, repurchased a and of million million nine of increase in million $XX.X only $X million we've months, total stock, $XX.X in debt. by in increased expenditures, capital $XX.X added $X.X inventory

to invest grow now, opportunities be our shares and focus while turn I'll associates, Our to advantage continuing you it take purchase will continue back of Jeff. business, in the to market opportunistically. to

Jeff Williams

Vickie. thank you, Okay,

fifth Number a and two, facilities non-negotiables customer associates. to, four, customer number non-negotiable, practices, from and being four. inventory, other With number of the relate our one, management. part Our and three, collections but experience separate relations number expense

but our focus the to the non-negotiables where on lot-level We result business our understand And that improved this a been the making purpose are progress. to lot a the solid their duty through must we serve, of be good hardworking we of very we through be this an interactions. on still we Our to room have one experience disciplined great has be and in effect tackling good blocking has performance a to be to financial always. provide customer high-touch of with work company have four, clear. mostly point and four non-negotiables. lives, on such can customer we Again, to so customers first we is improve quality over-the-top believe our the we associates important have all service The have do the to great

However, company. priority a customer top as experience emerging our we is be as to strive great

in As four dealership process, and release, we new communities. started to openings we're excited in the these get mentioned in press have

healthy our line Our in and support the very is to rate, grow at to our at ability plan associates highest levels. a customers with

great so leveraged communities general our pleased large, invest have serve investments and our to we're future. We being we quickly. the our will especially to to serve in opportunity The more continue we a managers, is see and market people, in

like for we thank this always, to would to associates interest and work thank in your again effort, you As Car-Mart. for and dedication their our hard

will Operator? for open We now up some it questions.

Operator

answer my that Murphy At prepared comments I would Merrill reiterate the to to up question Q&A. John comes America participants' from Lynch. Bank may and participants our now remarks during regular to apply come will statements first questions Instructions] callers. the this anything forward-looking with time, that like of regarding both [Operator And the from

Smith is This Smith is line open. Aileen Aileen Your John. Good morning. on for

significantly what have would better appropriately always we're little in lower provisioned least Williams would performance that of the otherwise points relative expected, for your envisioned? the coming delinquencies and it year-over-year. provision do I this data through even better quality other with than our already around guys subprime question bit the in something or dealerships for feel Is were, a with just say it How is than some your picking Jeff seeing where credit lending starts First car. is around we potentially you to estimates, you up consumers space? have a and losses down at of that marry credit that situated

pass-through doing has getting better a basically better credit job internally a much the think a efforts quicker good better customer. slightly then product for we're we've of top accounts with is with in And we and practices the I point also starting It's car improvements blocking that, contributed. So results. on collection made tackling better resolution and acquisition with made the and we've of

attribute our we better So, to work. our results

that's are the car putting Aileen, relatively and sale of after our lot I improvements on provisioned as well. in been. out these We is We where has way our product to collection's seeing that's provisioning to has Okay, better. success collection we Our it the deal we'll we're to and product a going keep work our of just like a I than of part feel future. is result reserved. we're this. losses that a collection continue delinquencies, our the and at very practices of The point pretty mean and that think with better reserve deal XX% We're on work I'm think flat. to our the that receivables, better good leave receivables side. our most of the area at keeps in Aileen also great, think is provisioning the feel at that us work accounts modifying the we us and XX% the that, to going certainly portfolio, practices We helpful. that Smith structure, doing the structure portfolio whole improving. We're I of better a Judy about helping Vickie that's quality remained I add And level think

representing weeks probably reports the been consumers correctly and of past in be for refunds of three specific into our up tax really around in and weeks our are appetite three buying might particularly good yet? at about refund even if some terms credits the vehicles any could offset refunds evidence consumers? Jeff year. a this to some there of that a indicate used tax paychecks, consumer refunds any have there's coming to These around Well, -- above you from to issues ourselves, their it context of going ours our lower sort think filing support that for market for not see withholding this question, than we've have. in you for the over what what chunk tax be the that are Is impact seen season is withholding more past and two, we potentially looked expected year oftentimes refundable for guys Second to least customer, and consumers differences payment Williams refunds two, down guys tax

funny The pretty that taking tax with maybe So like the a we refunds. we early taking getting through the as timing consumers was going loans than tax increase in those expect but to good loan are clear, are look a entire at starting net expected. our a been season It refund has little smaller amounts in be customers looks January. anticipation they're

a yet good do seen maybe portion here really haven't and onto a tax from at we bump be part to that last So the of and we refunds come March. and of expect February

all the there we So damper may out that money and the put shutdown and a has the there confident noise but government slight coming. demand, yet, it's on feel sales not be pretty is out

And you of inventory any result? Our shape, fourth frugal following we're really That a we webpage. what our to those it site. Aileen then are early working online around we're investment good as or dollars approach folks good to at about pretty adding on you helpful. is return to we've capitalized. quarter We're good were think other point we've that a got ready not where some not of of adding Jeff investments. last cars throughput might had at on us. I And with modernizing an investment We feel things. sort some very really days, this and in prepared period we the do six our the the very huge Smith features. move be on have you're investing been are and into our cost-conscious some in It's we being payback seven and a a the color what to a remarks improving made Great. and but it Web improving site dollar including stores offered better cars in terms could costs credit versus already up application in your a We webpage. is putting improved of Williams to for be be and of assessment upgrade or for process going pictures realize months and experience question digital Yes,

We is So to that that it's hasn't investment lot next a for presence do. all, and area something credit something not the to shopping just a and we be going to But have did good very as few we're the a have it's product cost-effective going within to far do when at digital customers months. having us investments it's good to at needed process and needed invest either. in applications investment, our we online ability online. look needed especially level us we This we the the that stopped an to at -- as

So, you. for got needed frugal our from and be goal thanks operations Okay. Jeff our just investing helpful. where and but very and grow is thoughtful very to Smith of especially direct we'll it Aileen in and lot me, Williams people, a to with improve investments. the That's keep questions. we Thank That's very opportunity

Operator

Thank you.

I kind fronts. John open. of address John Our next Vickie question improvements Rowan Williams two Janney.Your morning. Rowan line Jeff So Good comes with on is morning. the morning. to want Good Judy Rowan from John Good just

your a fundamental lot markers are improving of So year-over-year. obviously,

number personal the number also were visits per the collection's things way deficiencies, the right, guys we representatives side we visibility some needed their collection support or what examples on of that make us Vickie making, additional And made whether follow-up showing the dealership. a of of collection improve, with the corporate we that Can looked of where corporate the working then of doing of our into within our accounts. at two and collection training year-over-year? your Judy we staffing, more it's some better that you speed forces, calls got pay being comps level. you're lot look areas they followed the some with those number at who calls, and we saw there One or give you're whatever are modifying of And were the at you were through mentioned positive to different business So know, some areas team. kind Cal specific were you we internal the specifically it from then

region. And so have each for team a we

and and will focus we in think attention improve be just area direction those to and the of business. I that our and the next our details quality So calls how

through started working getting quality of But didn't resolutions and like to quality So with quicker, relation because it's but the team lot that's good those basically operations Williams is really what doing looking we've higher side, visibility, And through to some private when the have do be what we've you on environment? we're that then too. It's we is to one a operations any things we've have ABS competitive you're structures obviously, we business, smaller our about And weakness of and that that and I guys there on it's John to done down, you? external and of work what deal side. we on know, then that was feel productivity it collections. numbers; to bad, Okay. plenty so we've then on Honor out really to chasing quickly improvement wondering the issues specifically go can subprime success, do, thank the out not working have visibility. we of deals. still the we take dedicated you might kind Honor productivity our for put just it and having money advantage on the got our mean, before, get ignore I competitive Rowan improving then more level players, to players, talented sometimes. if to on team funding, self work of top the at the a we to customers a touch have some the take a had serve much go the external Jeff that on deep doing factors had, but You there visibility a to the any today dedicated just out Finance to about higher those those an current of I'm made where market slightly the in at fact hard these on of really there's issue. of is the need customers what is resolution and Williams But statistics what your certainly factors, are you your the issuance the attributing reverberations competitors? your better of others I'm wondering deals it you're can't post and us little mean, on several than of through market, the deal, impacted ABS year Jeff a -- in chasing hearing market still Finance whether see improvements we're It's seen restrictive and ago a you've internal may maximize

there's customer we our and some blocking of convinced tackling going Maybe non-negotiables Okay. what that So you Jeff of much. us and the the improvements little Thank better us But it's a Williams what knowledge do. our and competitive our getting Thank and the of most think are that really are these every folks you. better there was, from we're telling John very Rowan after at field, about no leveling than based situation. folks of I but on business shortage day. be off it may the the

Operator

you. Thank

Our from Vincent Stephens. next question comes with Caintic

morning, thanks, Hey, good Your open. Vincent line is guys. Caintic

the on question, this follow-up refund quick a a season is tax Just question.

had Or say an pay like payment of sounds down see of of a say see it it bigger Judy So typically happen a of because Yes. should you in tax do be a or yet. seasonally, activity of I to season. outs or lot Vickie April? March in when guess impact lot refund much the hasn't expect impact really

and So there dollar smaller will hasn't It's had February. been change seen biggest a in driving it. February typically have been here Williams so change. thank Vincent you. February. from big really some loans, that's so small, March and typically of And affect hasn't Vincent a within it got this to Not well, purchasing decision. It then part point. on Jeff as in far? refund been run an you in anticipation not Makes starts There and much over year it sense, but Caintic the amounts really Caintic had us some customer Okay, the of

describe have improving and On am sales losses. to increasing increasing think the sales that a view traffic and -- pretty what then mentioned going? nice micro that running. impressive. has credit driving for -- could in have when we traffic much consumer taken? credit easier credit in if Jeff the car I at increasing same credit a So, of had be your recoveries lot better car of the I it's so your you that I consumer Judy lower volumes to going time so the the mentioned; seeing to been your your prices And much that's And the about sides frequency wondering back relates how do car prices getting keep the better a that of actions the just Vickie you you been are versus on of been think side, better that getting on where that's has car if XXXX, customer you that

practices they our to a working done sooner think point and I then get they those there. the And through is that loss. collection job and a better the we it can't getting recover have So resolution before

So I think that's helped on side. the frequency

down, we a about our were for are has On flat, that our then but also fair the severity. side, value severity helped has and increased market day improved, in collections equity XX that talked on

our retail from and market up Caintic sit So, quickly those as the a will is sales improve prices continue of market on wondering to Okay, one off you increasing, action the lot are see your much doing the driven Vincent how processes competitive versus on of I we think to so helpful. the competition recoveries. on will being moved for fair traffic them that getting there, values that's our with that I fair our I industry and talked on again kind And around business those better last letting what not keep year. being just your increased still you seeing and me are And of improving? very stay with out bit over values may you far elevated better as better a think know year the but about here vehicle the while. quickly, just

Just in parse a that kind of But online way two if though there Jeff to itself that impacts your when even finished factor properly of Williams are efforts displayed out and the think a wondering increases Well, for lot out place be having it front, too cars while. cleaned will business? combine then and you your traffic. the better is in presence with effort, I to certainly one and our titled we not

reviews on level a our presence. at out coming just maximize a getting traffic our really and web And then from looking better Google sale and is think then of and really and we and lot blocking at displayed customer and good to and and we do lot got job a interaction digital we the ready cleaned doing front are titled have also new prospect. when page cars, trying We which tackling page properly the web so

is it's Caintic much helping certainly I those it improvements helpful. So nature more don't in And know from your accounts. that made do say is internally Vincent us just our but be, Okay, to might know us tell, of the would question traffic for improvements we with I although response. I competitive have hard traffic

interacting But where customer Williams from we this So of by, with just corporate people the associates the relationships site, or, Web level that the -- are forward, it's our who our with point a customers. the it being close corporate the interactions the customers site? go Jeff dealership and as is ones come the have been the effort into are interacts from the is driven online effort. a is the a to you Web customers presence so It level, at that or is dealership dealership something increasing on corporate there with

communicating for we day kind say try So, would but work of that to strongly or experience. I Judy very currently over. as all best we are Yeah, turned here. are that at to that making learning initial Vincent getting do manager through digitally, are the it. of Caintic the I and we process we Vickie this turned But way pretty Judy that end general over are into the at are least Okay, improve his to the staff as feel dealership. much. our And customers and Thanks they local we contact her get out do facing Jeff customer the of the with Williams corporate Vickie from got

Operator

Thank you.

Our question comes Jefferies. from Kyle Joseph with next

have open. taking quarter. Good Joseph morning good Your line questions my been is Good congrats Kyle another and Thanks for morning. Vickie questions on Kyle Judy answered. guys. my Thank you. Joseph Most of

matrix terms demand of We good is of quarters. about you for Joseph could how year And past and Kyle it. couple those credit Got last obviously, about credit, increase SUVs think any just fluctuations, not compared your to we price relatively to quarter very you to there? preferences strong. business, the then cars managing talk your transitioning Judy been the still it's And had there credit on the to Williams think talk a year. was seeing have we the gas you Vickie this mix there, see your we like the are and out still about seen for and trucks customer's The given flat SUVs? changes in talk trucks wanted demand Are Jeff Just mean about table results. deals positive feel think just improvement? for there. some did and but this you I Do and outlook with leaving do movement you if room big

progress in is better. We lot we have made. all feel there We we including are a areas the and do credit proud of that do can things like

to a at There going from and things but of that forward not that know to see low the is have feel in fifth like especially the all experience. offs talked non-negotiable fact years might or getting the be are made. XXs mathematically 'XX are feel results we improved we about changed the when we our customer hard we continue lot It's about a of from there back push that some and industry to other like improvements the are to back to charge the we we number So, We XXXX and direction. that talk where have to went we for have prevent in to room satisfied. credit low XXs this about some to bring do were us I we think that's

seen some good areas. customer experience in much with better a really for that points. fact We place touch shows key the we all results. the And we job at up first those results know credit improved And do have in can a

have very the So number, you. where satisfied range specific been a we Thank or a proud for of. are we not Great. are something to much we my have know even be with the trends though at we but Jeff Thanks don't Williams Kyle Joseph and improvements answering questions.

Operator

to would Instructions] this time. showing further Thank remarks. Williams to Jeff I at for And closing turn the you. call questions Mr. like over am I [Operator no back any

Jeff Williams

a for Car-Mart. Thanks thank great interest Okay. you this in day. America's your you. for And morning. joining Thank Well, again have once us

Operator

for participating you thank gentlemen, conclude This today's today's does in program. conference. and Ladies

a have disconnect. may all Everyone You day. great

Jeff Williams	President and CEO
Vickie Judy	CFO
Aileen Smith	Bank of America Merrill Lynch
John Rowan	Janney Montgomery Scott
Vincent Caintic	Stephens Inc.
Kyle Joseph	Jefferies

America's Car-Mart (CRMT) 20 Feb 192019 Q3 Earnings call transcript