CRMT - Earnings call transcript Q3 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’s Third Quarter Fiscal 2021 Conference Call. The topic of this call will be the earnings and operating results of the company’s third 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 of 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 I 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

thank Well, this We in appreciate interest your good you Car-Mart. morning. us for and America's morning you joining and Okay.

We and with our we're progress with various pleased operational the our initiatives. are seeing results

and car do, stress areas will the We on the of the road. work a can of mind keeping the stressful we're of give eliminate by our we're more We which We of life. to of solidify them market. the investments to be lot that optimistic improvements our have unique in tried the making but ownership, place one customers peace

increase dealerships future. serve point and building time. serve customers or better to we're the number the to in per some currently XX,XXX XXX serve more customers that our we because We served or as a are dealership. We a customers customers’ over obligation to have lives close large our an we're X,XXX can more And at of about majority there. communities customers significantly platform We believe that

share cash on new serve, in well well. and flow to acquisition we openings acquisition, focus like Taylor deploy great historical position to our going and the through sheet continue as new a market very us is already has balance which the markets lot Our in grow areas put to and looking opportunities as capital

Our and getting strong business model is stronger.

difference competitive the continues of operate advantage. Our people are a amount market us required effectively distinct to in increased, makers capital our giving the in

We from of place. bricks-and-mortar and and pack to solidify are will our collection us the better more cars a as confidence of base infrastructure sales an digital move a put with Better that our aggressively. can along transitioning support company ahead more outstanding presence collect company structure forward us to give

online else, that need be and to approval list to that We whatever in is break digital and/or provide significant help the not delivery experience our to we car valuable customer overall to can with our experience. centrally, and efforts anyone's more businesses. most We and online we're procurement car as they will here and management XXX buying press logistics, the project in excited on significant Our consistently, that provided area vehicles. and above in be our investments experience home manner to good engagement in them our better, as and us corporate overall efforts progressing efforts preferred the which improve sound face-to-face affordable We're functions team maximize We to to and continue or the us field streamline sales their to resources is want customer certainly the things the be curbside about had seamlessly is customer our specifically to to make excellent in a high again, investing our road. management are physically points mentioned digitally more Microsoft associates enjoy opportunities customers place this in area options. to it's we our release. they and our customers they focus we must our have affordable enhanced help Once tremendous the improvements continue area quality, efficiently to and making support IP certain keep vendors, our inventory, and to field understand credit We're process and on inventory devoting growing leaving centralize we're demand procurement allow very effectively the mechanically our all business, including served. with in inventory progress our continue in that experience flow key touch replenishment team the reconditioning, on of customers Dynamics of and

our now training, I'll support extremely progress growth we recruiting, associates over efforts to some important and good enthusiastic Our as to we our over Vickie to continue growing retention with And they engagement company. turn with very Vickie? and are that, go and take advantage individual see opportunities it of numbers. and

Vickie Judy

morning, Good everyone.

end, million. units of improvement older. to increased category Stores or happy five XX Revenues move by into years old XX the up or our to as dealership. productivity lower in XX%. Interest XX years mentioned, a XX remaining were in and and continued to of stores invest to X.X% by five to continue years of and from up inventory the age we in average feel The sold X-year up category increased to years stores XX% $XX,XXX. see were quarter XX.X% years revenues points confident income from We per dealerships five XX% time. tax XX in At tight. we revenue the Jeff revenues increased were processes. from selling were improve up zero also old, age increase And the our the $XXX XX% our procurement in total to were the up old units Our XX% and with million. unit we or But retail XX-year XX.X%, supply to for were about were category to price be in price $XX than as of less and at same-store were over XX.X%. The retail

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

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

to percentage of payment for collections and was to down X.X% finance quarter. at receivables the the compared as percentage quarter, for a prior-year X.X% XX.X% compared Our prior-year average was XX.X%

term, for would quarter XX.X However, up The have year collection absent improved the the a XX.X The average compared prior-year was prior contract increase the and was term to with quarter. term the increase the from contract X.X-month months over to prior-year price the compared in months XX originating selling $X,XXX average percentages third average in sequentially. months up quarter.

is Our payment average monthly $XXX. approximately

prior was up and quarter was XX.X% that's from the over quarter. compared the at retail wholesale million demand to for for $X.X of low-priced again XX.X% basically increased months for portfolio quarter. improved Our age compared from weighted nine profit the weighted prior-year flat to the a was gross unit for average it resulted due XX.X% The all to strong average from increased was quarter, improvement contract entire the of the compared at in portfolio the The interest was year prior-year per XX.X%. flat prior-year the increase the and prior the XX.X increase. XX.X% down relatively sequential $X,XXX units at supply approximately and million average or $XXX Gross the XX.X due Interest quarter. rate profit and months The $XXX.X receivables to quarter, compared including prior-year repair months. XX.X% The receivables term finance at income lower modifications end percentage low margins, in XX.X%/, year of primarily just margin costs. finance weighted the to quarter the slightly the to third gross average to

that was lower by partially the margin offset retail units. However, the on

higher Finance XX.X% fairly decrease the compared as selling to of for quarter. compared provisions gross large total to of in in this prior-year percentage sales for for consistent The down our SG&A Sales Pickup and revenues and profit price. tight the higher XX.X% with quarter, to as XX.X% of SUV of due lower Integrated business their a for quarter. up prior cost a year credit quarter. SG&A customers focused you sales X% sold high was driving but losses a the the at type to is for credit $X.X prices the recall, good over selling to as increasing the margins, was prior compared XX.X% mix sales of down dollars profit part the the are our a increasing average of percentage prior-year percentages year less vehicle As result efforts losses. of metric as cars on and Again, of gross important keeping margin and sales trucks. price gross approximately lower quarter supply million was

payroll-focused, as net primarily and to team stock Our procurement, with result higher commissions combined we and customer of investment income continue as investments the our build increased be compensation. experience a increased

year payments along with in at charge-offs due net in with prior-year third our from customers average X.X% this X.X% the receivables compared enhanced of with on Act contributed and in accounts X.X% in past as accounts saw prior quarter, was X.X% our of quarter. benefits still cars third delinquent We CARES current at and The them For quarter. keep percentage to days some XX and to stimulus a efforts road. our to the improvements their the improvement unemployment down working the possibly finance

at have to We provision XX.X%. continued

customers, the to fiscal remains to as repossessions, Although benefit the impact compensation well potential and for quarter, by to caused $XXX,XXX much for the income current our was its continued current the there XXXX overall and respectively. on quarter. we environment income effective uncertainty move XX% expense share-based for economic tax Income compared related our the quarter prior-year still portfolio perform rate of and tax the an XX.X% included prior-year collections, tax quarter, The COVID-XX of forward. quarter in third

stock to we our to portfolio benefit availability $XX lender revolving end, by million $X headroom credit our more additional in our a and and grow million option customer the give as be rate expect quarter At us debt the added approximately excess XX% our million new any was count. exercises. $XXX prior and million had were approximately under to tax total we tax during facility We $XXX increase approximately quarter credit and effective going during cash facilities. pleased also We base forward in our to

to finance last the and that's cash of at year prior XX% net just to receivables ratio this debt time is current Our XX.X%, compared to pandemic.

$X.X During inventory the capital finance we net increased $XX.X million net million in repurchased increase our of of only funded added cash. by million a of common debt $X.X a million receivables, stock, with $XX.X million, and $XX.X million total quarter, $XX in in expenditures,

reference, of million of $XXX.X million net pandemic, of during and only increase point most million, common our a inventory stock of $X.X total receivables, were in added million, million increased which last As we in XX a debt of funded $XX in by capital the in expenditures, $XX.X $XX.X $XXX a million with cash. the months, repurchased

well-positioned and grow to are more serve market customers share. We

it Jeff. to turn I’ll back Now,

Jeff Williams

you, Vickie. Well, Okay. thank

never marketing our you see keeping and We a keep very and working market prospects. customer favorably see our new very tagline, from to expect experience. Again, want customers new recently new all favorably. we We're the a customer strategy have results and our and are out have represent beginning have longer growth on all it's and And to And to advertising new rolling can a We're road. the and for And this the every they've will contracts changes on in locations. roadside business another our we bad future of to piece They been positive and believe on ever these received. do road, effort. process rolled terms. about keeping fresh at in look our assistance in oil out changes and the We this. associates logo the contracts life the foundational service

resources market marketing. advertising to As growing we a will area But It's as all by be lot the the top we business. Again, important has a significantly. more and industry ahead have collections the experience have bottom. years believe we to from had and unique as created invest productivity position customer on more changed about we we and a company, in of anticipating, in market the few investing, and customer count, very last changes improving staying in focus of share not this the devoting to

the for passion and to and areas prepared we in are have keep ability the and in We to excellence key investing do. the everything reach

share, continue leverage we Once bright. look future will position gain our as for to add market digital as we again, release, press structure, opportunities in acquisition to additional X,XXX our We a lastly, place is over with associates. our new market in and bricks-and-mortar and stated go the and the secure the locations, forward. And in we're have efforts

for of Thank We we questions. we world close have to you partners. vendor a have very we collectively, now better this Operator? thousands a place help and and will XX,XXX make over to customers And turn and responsibility seriously. take it responsibility the

Operator

my the callers. the participants’ would to come during comments question anything from forward-looking regarding and the Joseph with may prepared that the like that statements remarks At question-and-answer participants apply Our from Instructions] reiterate will I this Jefferies. time Kyle line to both questions answer [Operator to of session. earlier first now up the comes

Your is open. go line ahead. Please

Kyle Joseph

given -- very on then refund a get your this moving of Good quarter. parts. Obviously, Kind just remind to top kind guidance, give but all impacted into stimulus. you, And that, we walk us into quarter guys, fourth another going the for the tax don't it's year's I know how strong by those quarter, there's moving of last have fourth on quarter I Hey. -- Congratulations us fourth of and morning. of pieces. pandemic season. of was lot and through expectations wanted some

Jeff Williams

Well, the the for of we then had to last pandemic the start first a year, And good in part quarter hit March. February.

than but March to the that So, We the Refunds stimulus and April. volumes was our fourth stimulus but good threw were it well quarter, very to lower the pandemic but did kind the from results pandemic, in the Strong quarter. third good year. much quarter. this was tailspin of a the in year of end pandemic even perform going light more that of during the stimulus in a January There to year even a of of fourth through start the the to prior into in -- are some January, anticipated Xst some negative the is through payments against expected out be net-net going all market tax. maybe with the shape in check come are to money in this delays month. a during additional But quarter. Inventories income

are So, inventories fourth There quarter. and the be should good coming stimulus in in shape. refunds tax

this strong expect So, But and in sales to we inventories think know our it's hard how be the shape. settles good that out. I volumes to are exactly

this spot volumes, dealerships the we're with quarter ready and fourth for personnel the like we increased of a Our in good are feel year. into going

Kyle Joseph

market stable. trending outlook sense anticipate and up give although, just given pressure those for That's used car they obviously, used in fairly prices, takes car very market? Can have the helpful. upward a us those you were you sales Thanks. quarter-on-quarter, And for on if retail terms then the it further of your been

Jeff Williams

Yeah.

limited shortages, more started. been affordable has that shortage we there stimulus cars out and are just little money new more stay And production since tax good even good is think refund do for there I as continuing with mechanically recently, going of a bit while, up gets the there. drift some believe prices and car out sound microchip up out to the money a pandemic maybe a is

and like new prices We rolling although see that, do see And service be by months do used of the are do dip to prices, we we increases shortage prices if we've stay a some out contracts, to good prices there's and to up maybe continue maybe we increasing a just service us cars. we seeing expect up but result a even and a going the new we expect expect of last the a stay of in leveling off as to seen to our expected. some roll bit. in stay point So foreseeable few to the expect continue not sales just up prices future go-forward to even continuing are in contracts. But increases on XX for prices the percentage especially little basis

Kyle Joseph

Got -- it. Very helpful. then And Go Vickie. oh, ahead, sorry.

Vickie Judy

was car miles. quality with just do I there feel have of is will and No. selling much fewer overall to is I going we the even does say price being out the add that up, that like better the

too, experience better lower is to losses, from quality the which and should perspective. lead a customer better credit unit So

Kyle Joseph

then And me. you. Thank last Understood. for one one just

environment, from the competitive been seeing it's us last year as you're the buy-here-pay-here as from environment and operators obviously, availability through well unique credit. the a lenders other walk indirect overall what On pretty both but of

Jeff Williams

the cost effect inventory. Well, in an of quantity the quality have they an the certainly of having is the can cars on car that competition of and terms

and and So going a able cash and But our our cars of a to balance for from. and more flows, increases inventory. investments we feel our mix related carry allocate customers of capital on volume presentation choose our the like are is -- to sheet we so more with to better competition in have many more that can be cases they some inventory, limited to the is in to

that to there competition unique market So lower little from consumers some we've at on this serving new seeing got the We like But up if we would stayed the like were the subprime market up. But by do used We contracts. share. good a service gone we’re consumer. offer have picking point. spot in We and up good with a volumes be side prices we're a even our a car deep feel we to doesn’t, especially feel prices offerings good subprime advantage like a perspective. that more feel

haven't we so, prices with to yet. in had for recondition much price internally points, down to we and lower like efforts which competition recon flow And even probably do at if manufacture there some lower been trying market level product that the price create the customers replicate. of feel a the harder cars And are back or better little is bit points, come conjunction at we're in some some off our to

to like the money experience on services feel and the still lot competition But up there. forward. we optimistic be about been that we out provide real pretty customer is nimble, can nimble we share So, and extra market feel of a There's picking land side. are land competition and like against we going we've where some

Kyle Joseph

much very and quarter again an Thanks for market my it. congrats Got answering a questions uncertain backdrop. good on despite

Jeff Williams

Kyle. Thank you,

Operator

And comes of from you. Thank our next Caintic Vincent line with Stephens. the question

line ahead. go Your open. Please is

Vincent Caintic

Thanks. you And my for thank taking questions.

business. First a be it you forward if wondering investments within Microsoft just lot a expenses saw so I I'm investments. modeling you're going question, the give in we could sense additional making should maybe the these much like sounds how growing Dynamics from the of marketing. us

XX actually of can February so how any -- the help be dollars things that’s investment noticed to maybe expecting. right additional amendment that’s reviewing you give is increase us number limit we should the on of just expenses loan your much I or million One the CapEx $XX you that if

Vickie Judy

of the dealerships, volumes, million that's we again, currently facilities that and many as run rate some enough debt add to CapEx. and we're going just -- years. dealerships, remodel basis. agreement has wasn't under that And a $XX on could that larger be CapEx Yeah. to see just limit in been especially improve And look for we for We our did our new increase both

to So our did we change that agreement. lending make

like talked things We are SG&A the in in Jeff other about. investing just

grow marketing some We more we market to share. as will be spending look on

Our us make the that our side that. big ERP at experience. really very project doing advancement the new good is we're customer one in IT of with going to That's reasons

move the here. SG&A as to share of be timing market going on as some forward that to We're going of we go spend of missing very and we is there So out though. without thoughtful be mindful any increasing

Vincent Caintic

Okay. That's Thanks, Vickie. helpful.

and on. prices sources get on supporting ex-rental about Second, efforts selling increasing, price the and so like know I been cars you've the your [ph] average used car procurement rental talking different to cars,

even Just the on but as goods if used are so were seems the and on the sourcing? seeing line there wondering sold we well, be you prices -- you're issue issues, of to so hold car cars cost demand able supply increasing that to

Vickie Judy

we're especially with feel demand I pretty high supply-and-demand we're forces and prices that us. supply feel Yeah. costs of to down keeping on, And procurement our our market that to of like better efficient low part There's as we providing and we good all -- controlling overall, do for. to out we is of cars the those some formed some just our we we the market like I is going outside areas. are job are in there, benefits hold efforts some in imbalances. and holding going hands in these by area in of But as can. there we in feel we And feel just And get control. and the efforts But about looking very costs our to that out on some partnerships area. points forces down of of price that we're all of of doing good It low a terms these but doing can. costs a are our some and in like But operational as are additional certainly being area. efforts continue best working

Vincent Caintic

collect. you for was guess, the Okay. philosophical I marketing And but, spend, a from has about I there is So, broader I Great. being branding higher for interesting that collections one statement? a talked that from a sales being know a comment going company It's Thank you. me. your And company thought question, can to difference changed. but last

You new logo. have

-- was company. any now running maybe I And philosophical Thank but you way you. thinking that -- the you're about or operational so wondering the about just if talk different can

Vickie Judy

do to productivity the network the at a in business. got as just we're lot level. in lot we're our lot setting cash IT of confidence have to sound, product cash starts the -- and additional experience, a are All and us a much and mechanically foundation. there, confidence giving in we good, is us cash area, confidence all in enthusiastic of areas foundational demand. infrastructure the we're side, the that about opportunities to the But opening anchors bit in of a making, when I the some the our the the work increase in with we're as we talk about do. investments the out we our But more of putting more feel affordable you especially are we're having efforts making infrastructure we do. seeing to more what procurement it What cars, customer quality think investments unique. we we the like a solid consumer Consumers little stated, up these and are it's really on car. Again, flows look where investments. solid didn't point very our tremendous and areas a as in we're the it's returns at the Historically, we we these all having confidence maybe our look credit, credit we just support moving And and eyes more of performance

an life. get infrastructure solid and keep our can And have We as serve support more the more so, And highest at customers an have we customers. then obligation and more to strongly those feel customers level, to those for we get and customers about we go there out obligation very that.

yeah, is philosophical So, some there differences.

corporate to experience up and on lot valuable We better customer to are be look done continuing historically in functions at freeing eaten the And on time up field, non-value-added of more time a less serving have in in time office. in that at time, the that back here field. things centrally, customers focus can the

businesses. some to as standpoint do real their to things some central really field opportunities grow they try benefit So, from individual the to office a we've got

Operator

next comes of our with you. And Thank from Janney. the Rowan line question John

Your open. line go is ahead. Please

John Rowan

contract Yeah. has What in percent current your already base service of customer a place?

Jeff Williams

It's little XX-month a It's been about it's -- a historically, less than a half. just XX product.

John Rowan

Okay.

to So, there ask question. I this two are guess ways

it price As you contracts, other much service customers out now the the onto what all the the in the portfolio end Or conversely, using duration does competition service -- versus the the that's do. having you past How half car up-front contracts portfolio? of presumably in roll the and and with of over how duration the that increase price Was that penetrate add much year? of you car?

Jeff Williams

Yeah.

So on $XXX of ASP the month rollout related to related entire the heading contract far. and $XXX ASP $XXX There of can car bit a overall we're most another rollout looking specifically look at I increase is another of maybe little just the as new as maybe contracts. it been service the forward, to has inflation to think contract dollars look we service itself. portfolio at so another service the higher of We rates. -- And the we term expect another to at

John Rowan

XX There’s four over at a I last year. of XX just Okay. months basically months little were increase. duration you’re wanted months; to at four -- understand, you

about out of four, I the half portfolio month mean, is equate that the so And like -- to one framing would right that causing I'm of out it? ballpark what's in of

Jeff Williams

out February. And very not back there of portion and got contract It year just customers selling extended new to rollout going any existing we're these they started offering new the rolled and past the contract service of is It is this this contracts. increased price. just the minimal. contracts. in new specific is just on John, out piloting entirely We almost what's service the to now, because

John Rowan

on check just any having also the to weather wanted guys I are impacts? fine. That's -- you

Jeff Williams

We've and had to to of getting lots lot are. a And freezing we've from temperatures. ice associates to around we had and scramble and work. snow and open keep Yes,

of little the a So, mess bit been last a week. it's

John Rowan

next I've to you is New be impacting Do guys Are the we’re one, power of see least in results? been the having it parts at outages? quarter to is country we Jersey supposed hot. of than in some this

Jeff Williams

rolling I power No. having of some back or brownouts issues some some the out is we but are supposed and and some to that, soon. point come mean, sun blackouts at

don't a for from temporary fourth weather anything blip we so, And the quarter. more expect the than

John Rowan

Okay. Thank you very much.

Operator

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

Jeff Williams

on again, we peace mind keep give to part Okay. us of for once field them great And doing of real the family. as thank joining Car-Mart customers always, out to this in in work associates our morning. thanks as that to our the our they're Well, road want the being and

you. thank So, a day. great Have

Operator

Ladies in conclude today's does day. for disconnect. program have thank all you and and a conference. great gentlemen, This the Everyone you may participating

America's Car-Mart (CRMT) 17 Feb 212021 Q3 Earnings call transcript