CRMT - Earnings call transcript Q1 2021 | America's Car-Mart, Inc.

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Operator

Good morning, everyone. Thank you for holding and welcome to America's Car-Mart First Quarter Fiscal 2021 Conference Call. The topic of this call will be the earnings and operating results for the company's first quarter for fiscal 2021.

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 website 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 one 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 it's 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

and morning your us and Car-Mart. for thank joining for Americas in interest thank you you Good

in in mentioned solid how proud responded had and another trying our we and we're As press very release, quarter of these during we've our team our country. times we good

do will our a positive communities. build We force to our bridges continue in to part and be

of in eyes statement, our We America's have the a the unique associates best finance business, communities a while desire to improving be vision company, serve. sales that reflected by and with best we starts auto customers, and our

our business. and at creating, infrastructure them in the in levels. to and our and make investments of serve much a out, put Day all highest our the to as work build we to accounts continue dealership expand and allow support to to and grow made have the we hard in participate will opportunities customer customers in we're We required associates, significant day an larger

conduct We customers business them, on challenges how has a and but quality been by in of serve. with effect turn mind Our happen, on the improve to of sale. numbers. move quickly now our sense life a more of keeping the give go never offering as are Vicki, positive peace urgency our have and clear, life's we by we after the forward. very purpose them Again, direct I work, we when and the real get standing has communities of to to proud it road better we over Vicki? we over will the

Vickie Judy

with to resulted by up revenue Well, about stores The to Revenues a of good XX.X% X.X% and years less the due in by to Interest XX-years-of-age revenues about and category increased from increased to price, X.X% the sales $XX -- X.X% over were increase units sales. for in increase the decrease partially million. XX sold. stores was offset This quarter same-store were a retail stores in morning. increase strong XX% X.X%. than was up category in income category the were of We XX.X% five up $XXX X% up age in average five and up stores a revenues million. revenues had year from X%; the an in

years were of customer from reduced or inventory quarter our volumes at years price traffic, from first the to dealerships lower Our quarter At impacted were five due lower of the remaining as end, old. points, old pandemic. years both XX% were XX sales the and the levels, result to to XX XX XX% zero older. or old, especially and were or five XX XX a

XX month per year was per productivity for lot prior to overall compared the quarter. Our units XX.X

in produced the compared for Our per five per lot XX.X the compared XX.X than productivity quarter. XX.X XX years the category XX.X for for to age to the month first XX sold five quarter, Lots of for units year XX.X year of compared year plus XX.X had less prior lots produced year year. prior to lots the and quarter quarter, to of last

on payment for term the a collections extension average drivers the compared X.X% X.X% of prior XX% collection was quarter. the average first collections This receivables higher month The up year to months to to the term quarter. with for as contract improved lower XX.X year compared slightly modifications by XX.X the was average in down year originating offset prior Our $X,XXX increase to months the percentage. up primary average and for only from was XX.X% XX.X months, prior percentage The quarter, the selling were finance prior and delinquent of quarter were price was compared in percentage X.X contract term An and partially the sequentially. accounts. year a compared

Our monthly average is $XXX. payment approximately

The for entire portfolio, months the basically contract portfolio was of year. was average the approximately months. term compared weighted nine weighted flat age average for Our prior including at to XX.X the modifications, XX.X

of Our compared to average the The average year $XXX unit was compared million interest increase. gross in the finance from prior Gross flat improved The $X,XXX quarter. in was X% rate with over at Increasing price. the priced was of for average at sales prior plan top lower This unit, units, The gross by percentages the interest the retail as up lower the payment increased protection all million percentage the consistent margins by XX.X% and income quarter sold offset was retail approximately or improvements on XX.X%, lower higher compared quarter, increase margin the the mix prior the product. the XX.X% increasing of wholesale and due the at are per vehicles quarter, gross the a receivables, year also low XX.X% gross sequential to year but increased prior selling $XX.X end unit. weighted approximately of to year strong demand quarter to The our sold supply the percentages, the higher quarter. prior result primarily resulted in finance expenses reduced $X.X XX.X% XX.X%. at receivables partially SUV and margin to due year gross margin dollars XX.X% to prices profit quarter. for from margin the up per of from lower a selling profit profit fairly

XX.X% for XX.X% for to driving prior on sales was credit our customers losses This year a up losses, metric us Our the car but and keeping in prior the to important integrated back the losses. less at in efforts to for fleets, our recent large acquire a pre-pandemic able to our efforts of year XX.X% allowance reduce up for a advantage their to down inventory quarter. cost reduction companies focused vehicles part newer for percentage the continue year. year compared of total part procurement by and affordable of revenue, forward. sales and and quarter we volumes the our good is down compared SG&A as for the credit $XX,XXX are prior model, of as quarter, provision of are the XX.X% we've been This lower a as to percentage allowing finance quarter, was compared of levels, customers. mileage some be prior of move rental take to QX business, to excluding effort, to SG&A will sales for as prices

our with revamped forward preferred investments on, did moving COVID-XX, to we're now the rental other significantly we this are reaction companies hourly non-associate and through a the expenses, hours, associates purchases including and as As efforts related All payroll, and working procurement reconditioning reduce to back most efforts. normal with working well and of quarter. we were initiatives initiatives part-time expenses, that These vendors, as include from and car continued first pre-pandemic.

digital Our improved with the customer contracts, the the of continued our service and area in service along efforts associates. in recruiting training investments and

increasing the customers with goal number of service great customer this of of and dealership. each at served All the

to we be will continuing adapt associates changing term, for to the long on health to cost environment and customers amidst the We while the efficiencies the continues of continued a continue invest top safety to and and pandemic. our priority, as focus and control,

average first the X.X% current the a finance net was as down For year percentage in of from receivables quarter, quarter. prior charge-offs X.X%

customers we of to macroeconomic end for of Act our procedures for uncertainty and to to and in Our Income income enhanced quarter, to $XX,XXX include have first related move improvement, XX road. prior first million quarter credit the on pre-tax our uncertainties. XX.X% benefit related the $XXX,XXX forward. improvements of the be measures share-based compared contribute XX.X% X.X% seen continues did and days COVID due repossessions our past working see normal the efforts rate on keep year. an at the operating for there tax with quarter. to improvements increase quarter losses did this our to The fourth with year in respectively. and them car our tax 'XX to quarter, the although COVID-XX collections, as the XX.X% COVID-XX. to current our caused benefits economic we and in overall impact allowance returned its year by $XX.X in we potential portfolio environment, At customers, quarter, our during unemployment collection and at And much was effective related We quarter in current while by for the along first the to the income compensation was continuing the compared The safety did tax to fiscal did prior X.X% delinquent expense the accounts efforts accounts CARES prior the and

prior excess tax effective base forward, stock We to expect XX.X% our any exercises. be going benefits to approximately tax from rate option

flows have revolving our in continue additional was and balance end, approximately million in had solid and debt credit $XX We over we facilities. million under At million $XX.X sheet. $XXX a to and availability cash, our cash total quarter strong

XX.X% Our finance year. at time net XX% current compared last to cash ratio to is debt, receivables this of

with we back under in finance by debt, it Jeff. inventory net total During quarter, of $X.X increase And million million $X.X million added I'll increased of turn in a net a million and expenditures, $XX.X to for cash. now, $XX.X receivables $XX.X capital you. million only Thank the

Jeff Williams

thank well you, Okay, Vicki.

focus of on with we in and believe said, To have we the more to recruiting, investing all the we we customers on training will emphasis an over company position. manager time. significantly special have efforts our of obligation serve our associates, our general do retention to this, As position

continue customer will in reducing aimed before, service points to the experience. to many give making and along friction seamless, after are and great We touch the of efficiencies, during There many customer and at opportunities digital way. sale our improving the invest the efforts, vehicle, overall

the on terms, very are with important offerings, that other continue to improve our oil message will features customers, to keep changes, our to roadside customers in with longer contract enhance and our to road. line We service assistance, and and look

the for will in we procurement, opportunities as vehicles leverage our we and quality to consistency the continue size Additionally, we to the invest look of area sell. of the improve inventory and

continue to locations that look we locations significant in forward. customers for opened believe We existing during over large dealerships, and we more and Chattanooga, Tennessee process. us, growth opportunities percentage growth X,XXX from our Arkansas have for or and push Cabot, quarter, can as will Edmond This represents and We Oklahoma our support time. the a Norman,

Additionally, we to in opportunities believe available looking we're acquisition more also. open will direction and that us, to that be

We our business this excited environment. continuing look improve and forward about are dynamic to our to future in

to you to making each XXX% other, As giving communities better. for customers, to and always, thank our our to our associates

questions. will We it open Operator? now for up

Operator

of from comes America. question John Murphy first Our Bank with Instructions] [Operator

Your open. line is

Unidentified Analyst

morning, is Amsalem Good on [ph] guys. John. for This Yardin

Jeff Williams

morning. Good

Unidentified Analyst

we've of metrics were credit good unit actually in a a the quarter, sales across So but bit. little improvement number seen down

on hoping it seeing color some relates different government both the can us health And I'm demand you the as the your So stimulus consumer, maybe that you're of potentially, and programs? underlying credit to impact performance? from give

Jeff Williams

volume just The we related was, to believe, Yes. reduction mostly inventory.

short. on little inventory cars a for certainly demand, We points. will, were for There into at at especially quarter, consumers just somewhat and little We we price like just a cars. are lower coming been feel nice the low you There a was short related price point. has certainly stimulus, were if bit looking frenzy, the consumer so the that a to

lower but But certainly, we And metrics. during and the also with a know helped how credit certainly a little each, in The quarter. side a funds the lot were of so credit the maybe short inventory, exactly on did credit points things, at much on stimulus volume our It's improve of we resulted hard did quarter. performance internally, results. stimulus in things effect missed the an of price little to better to the have funds

Unidentified Analyst

the of of July, Can and a us from May sales cadence give maybe throughout give sense you even quarter to maybe the August?

Jeff Williams

the for and and ended then were so year mentioned up that June think in around nice close good prior ended being May, improvements call see to did I we August, of May, for fourth in pretty we pretty far. XX% running and where quarter July. and Yes, And in that we it's we

Unidentified Analyst

Okay, quarter, would your your excellent. margins GPUs I and how question love the And helped the I to for forecast guess what and used potentially my vehicle thoughts of year? the next about in you've it even seen pricing, much end hear

Jeff Williams

Well, been certainly, price to and of used lower do of supply up combination car the a especially stimulus and very the more points. has being low at funds than prices out used have lot a with that expected, there, cars,

push that time, six try next to the the same points. We the our car selling to sure I months, going so track were family think also the some relief there most our to market comes longer, customers supply price we to customers quality get for keep on up at we're on we side. may family the sell challenges share at relief time. the expand keep a to extended in the in an folks period of better not car-Mart are But of longer. that that trying as have in are customer, we're and at better we We're lower a some saying point car

be term, a relates macro lease at back, see some speed. factors in to the full car we and very in do down off terms the some selling up, auctions strong repossession maybe to market then short increase to subject being further expect and average of cars being continuing of pricing, in in in expect we do the road, little that prices price relief price So least, a coming that's overall some our activity and used but flowing going and to

expect And car term. prices but short to prices, used so over do we there's continue a with the lot going increase on to

Unidentified Analyst

Okay, thank you so much.

Jeff Williams

Thank you.

Operator

you. Thank

Our Caintic Stephens. with next question from comes Vincent

Your line is open.

Vincent Caintic

Thanks, good everyone. morning

you of you're And kind quarter? Thank if could differences any the look far we then overview first the could if First there is sort what broad August give from but an first of that you in provide for provide saw and and seeing us for so on question from any trends of versus year, forward the question, you fiscal update us? you. the trends can rest what quarter

Jeff Williams

August I the as side. is would say that pretty expected, and on solid collections just demand sales on

are As far as pandemic looking forward, there's just a lot related. of things unknown that

up building And will in further increase we times, so so to there's happens now But we control we you a unemployment, that pick a just share as mentioned unknowns unknown the share. market the several we're up going general market now, going the control do lot be economic expect some XX bit expect, future, it's We're that tell to that, can what but we for five get share. just, with are is of But market to economy. market conditions. things and increases, stimulus about we've right and I and to from little we and years picking building share. would do company for our It's going

Just we know exactly look market the what over don't that term. short like might

Vincent Caintic

inventory are you think down helpful. on that had you. issues store Thank demand volumes just are able you Are call is inventory maybe inventory down, the you issues and very at do volumes -- per and today, there? longer question, follow-up sales what question previous solved, wasn't but wondering actually that's a unit you. about because about if fixed clear you the we next Okay, cited being if demand the Thank And issues? those being no that it, your point, pent-up customer to that can largely this when the

Jeff Williams

back I levels. to think to Vicki mentioned that are inventory volumes pre-pandemic close

are little a cost dealers A less We scale. lot the a independent product. on higher of used expensive buy

a that for a value a good months, for been we into in participate again, So translate as doesn't it lower frenzy frenzy not a for real as as company chose to there a has used car priced consumer. and that several fully

our is and So more has of overall little a market but friendly. overall the inventory cost up, drifted pricing

more drifted But a finding point for at points. inventory lower a we low the are cars little bit, price our expect time. the that an lower take are there We continue overall some at it to may prices up excess is until cars demand at price price We we more and to that those but and still points, more has happen as rational forward. expect do little and go point,

Vincent Caintic

on that's actually clarify that. just Okay, to And helpful. maybe

growth, quarter something something average that should quarters, be high this expect XX% -- still So with cleared maybe still being sales continue is price sales or should is your really future was bit, should year-over-year, to in the be that little we inventory -- average it strong is we prices? a we expecting

Jeff Williams

expecting some increases normal, know row. ends, lower overall forward. until look and several things supply price clarity cars to say, would the drifting quarter-on-quarter used more we return the I in market continuing move of the the in expect flow were we as quarters increases We've at shortage you been as for with up we But get on cars. do used of we a little cars more and issues on forward, the we quarter-on-quarter

Vincent Caintic

you. Okay, thanks very in back the much. get I'll queue. Thank

Operator

Thank you.

comes question Kyle from next Jefferies. Joseph with Our

open. is line Your

Kyle Joseph

any your now. about heard good guys quarter, out lot of evidence Hey, a good a given been wanted of well? on We've a competition Vicki. right the talk you seen Have lenders all there. Hope I side? to have that bit uncertainty you are lending anecdotally doing morning gentlemen, Congratulations guys on this tightening. little

Jeff Williams

of and payments deal that quality has don't high. quite consumer we're heard see although that, seeing our too. of much and the We we've structures fact the direct evidence that Well, been down

can huge haven't to ourselves a we do in competitive some that of is to over We a to the credit up extrapolate landscape, in are little positioning if environment markets. we kind constricts market in a that, change time significant more happen mean big and again lending But pick expect So our we believe that share, point. the seen tough. this at way

Kyle Joseph

as any on I are dealers Got other say pop mom with, compete How well, the kind of acquisitions they're side, you it. there? are inventory the difficulty some there then doing? similar and And more competitive dealers additional guys sourcing you seeing guess of would would opportunities for other

Jeff Williams

Yes, are to difficult few certainly that part part of the and little a us. would a having their like family, going They say Car-Mart be the acquisitions in are feel that we and feel number a good as so also like be point. that the liquidity to expensive having having with we did and dealers smaller do year, last cars, used acquisition or independent later finding would good our acquisitions, companies of we good -- a probably yes, there issues issues facilities time for which far that less out there's are lending as earlier and trouble their of inventory But with plan. I a is the thing growth finding a like

Kyle Joseph

me. it. question Last Got for

and terms you to I the know just appropriate level? perspective so your suspension stimulus kind up out is you some do believe of pandemic quarter. snap the near Can really activities, guys in reserve back and last impacts was there the saw I from now term, perform So a the really a and this took of credit reserve But much over collections definitely of well in you the temporary there we quarter, but think -- related that right on credit. is uncertainty

Vickie Judy

Yes.

-- portfolio quarter. there that better uncertainty, the the of and Kyle, quarter, a about decided our then level, to every looking taking feel clarity, little But our we know, leave with that factors are certainly impact, But more and it we every delinquencies CECL now adopting in-depth that a good right is readdress until and portfolio. you higher unemployment, is lot higher with we certainly and that review especially we As that into will better. macroeconomic out there all at

Kyle Joseph

congrats Thanks taking Well much again. very questions. it. my Got for

Jeff Williams

you. Thank

Operator

you. Thank

from next Our with question comes Janney. John Rowan

open. is line Your

John Rowan

Good guys. morning,

Jeff Williams

Good morning.

John Rowan

price know, A a level you monthly in so quite little just will, surprised or Is that move an just trying issue, payment? that to competitive see inventory sharply. is at you to lower of a duration a function a if investment the or jump higher

Jeff Williams

Yes.

kind a us we've ownership been at time, total realize the car customers of the our overall, term. all the sales we they this a on But keeping higher no us, beyond down car, deal the time, as that quite we of the with for on getting certainly to that when increase been our for pricing look car. but something at been do cost longer too, has in set, for and pricing and into had over they require the some are in talking working these lose we've price of newer longer Car-Mart models is about effect them a based price customers, we price We the used Some cost but street, retail term. family -- reason of while an the retail is and graduate a there let has

up, go as prices prices go used up So accordingly. sales our

was price $X,XXX in months, at on of X.X the relative up think sales the we're price a sales the I as decrease which only far car. and the prices, term, As based actually is

standpoint, share are confident big standpoint we would the a credit few real we're down, cars, months and a car forward. from adding a us be we keep term market doing for more as positive a to our standpoint working and So confidence consumer procurement very companies performance in and but as go and preferred that and best our to have recon, a with improve in vendors processes, a result, we our as term

John Rowan

the ability would the time? into that or lower vehicles these confidence over Does their go maintenance from comes

Jeff Williams

the better great sell and customers, it. accounts customer our have, The certainly is experience. your a cars mechanical with the and dealership more part to service time the credit give and of issues That personnel less you car, performance have

John Rowan

first of Okay. liquidity, I this went the the you quarter -- can where look not repurchasing the mean, in give I've for stock? whether and you. you just And then program up. to is the or status you buyback what me would order Can share lastly, continue count additional Thank is seen remind

Jeff Williams

what buyback out, We're now Yes, be is considered an many still we growing returns share the still program our we believe opportunities still place. to world business to in opportunistic the our on historically many There the so have, grow returns to the we're business, and be, just buyer. have base in are base -- and right our been unknowns higher on than repurchases.

service leader the the our the of repurchases. that share and side, consumer, going that's is environment a going right a going on and significant focus also invest investments until not be So let expansions, better in, clarity digital going try primary go feel relevant, experience conservative a places all sure now efforts bit on we we're we investments, but get on going little where to our in some years to the continue now. what's customer we're things business, we need on XX are to on with in making base macroeconomic focus, little in to five to contract our we for again where be from seamless, that investing a we're just making a need here, so with the a what's here, what's is more the better lot going little world, in to the customer now, growing of only group this care take and to There quality is our procurement of we're the our car, get and

John Rowan

you. Okay, thank

Jeff Williams

Thank you.

Operator

question follow-up have Vincent we And Instructions] with [Operator Stephens. from a Caintic

open. is line Your

Vincent Caintic

the for thanks Hey, follow-up.

Just some more.

flat the so were talking of now So being about your employed. strongly, SG&A they quarter, after employees up fully think -- not that, employed were year-over-year, are expenses remember X% really even I were though I up were you -- Vickie, one revenues year-over-year. most

really wondering this forward, level that your Is expect had quarter. we or growth? sort Just should of would what growing going expenses because kind sort alongside you of sustainable should be expenses we that now, expect of revenue strong expense

Vickie Judy

growth seeing Yes, I pandemic. you you like the expect SG&A, think to the were should the in prior

we've order feel got know we business. we that and we like support areas some to to got lot mentioned, Jeff we've invest a in, As opportunities in need of a larger here

if you of of kind the at look think So cadence SG&A pre-pandemic. the

a unique This a quarter here. was little, little bit

Jeff Williams

any a investments to making we're time. difficult leveraged quarter-to-quarter right, little and or expected we'll make, are to get investments that basis over be SG&A just provide over on always, right, the pandemic, place. making to good it's It's continue expected as we're exactly especially with in cost some in time. SG&A get cutting a But are But bad, a that always to exactly tough that to during some leveraging

Vincent Caintic

taking share that over And wondering kind last can helpful. about that's Yes, opportunities of from sort front, if you you highlighted a about But of question follow-up talk time. Kyle's question earlier. on the competitive

color on away from Wells car financing the pulling So also you saw hearing of we've financing. we're the and maybe the helpful mom some dealer, news the some kind used -- what Fargo so there struggles and pops and independent about of and sides, independent like on

wondering that of these kind family? also more the you disruptions of highlighted I'm you if so the to going maybe could just. interested advantage markets if take to that about about opportunity advantage or And may on, could talk folks be Car-Mart take some opportunities here? are I talk And you to in So broadly, think of joining share? might some take of be

Jeff Williams

is do what like, Yes, we we feel unique.

consumer, for credit going affordable sale. after the challenged a quality provide then that's to we we after affordable car mentioned, sale, payments, need we to price, As and good a an give some help the incredible service

for the for deal we total that cost with that at better transaction we through to look might a consumer. down choices we have finance, and really our special a of street when that So total realize get cost what compare the consumer ownership

you actually the So going if from them they people's big on we consumers point and and just and get this And increases, or are how below look day day. down we're dealing needs, and the than mission, got us out, cost point make we all about associates bottom that's us, forward. our is exit values about point heavy in our We're points team promote of communities. we take to and transportation us, to in share that put side, person the good you of market that And that price They together. believe boots and going at with the and significant us. in there continue and independent, someone peace up makes do need doing dealers, that punch consumers market feel ownership while. also Car-Mart the top here vision with We jump a when on that stress in Here Pay to of of Car-Mart. both work combine Might our we've all go that clock big do when the some price we Buy be we at take as too, the our that looking every journey. out lives. doing a sense street, the acquisition is a lifting. their trust the our we opportunities consumers strategy, can you the above to it live with every just just us. dare-to-compare, go and a total like, and to educate been And related for fact to and then to consumers, looking at more to the to of We our significant Here an think have on price a give are lot them local to share does, to associates We're we these count from it, opportunities, stress better, that we're doing that on mind for our really keep and into know translate What and comparisons stresses help lives, attractive on road what price boat a trying we

with to grow join the obligation seriously said, that active team time. there, expand over and serve are an customers count can these have and pushing players So good we're And so take that as and we open our to would we're on that that customer we obligation initiatives, out more and very love we we all there believe geography. our some and

Vincent Caintic

Great. very much. Thank you

Jeff Williams

you. Thank

Operator

currently Jeff for back to I'm questions. no closing turn call further like And you. remarks. I'd Thank over showing Williams the to

Jeff Williams

thank again, our there you thank the of joining in have a our and your you us dedication great and to great for all Thanks interest Thank guys our out mission. work and And you day. for you. effort Well, their company. Okay. for to hard all associates

Operator

you and today's concludes gentlemen, call. this participating. Ladies conference Thank for

may disconnect. You now

America's Car-Mart (CRMT) 18 Aug 202021 Q1 Earnings call transcript