CRMT - Earnings call transcript Q1 2022 | America's Car-Mart, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart First Quarter Fiscal 2022 Conference Call. The topic of this call will be the earnings and operating results for the company's first quarter fiscal year 2022.

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 numbers 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.

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

Jeff Williams

Good and communities interest thank and celebrating associates, our morning, customers in very We're business, you joining to XX-years excited our us, for America's Car-Mart. your supporting in making for our thank better. you and be

and continue changes will carry on be improve these great the as our We industry next better. to traditions and even will XX-years

giving after stay from Car-Mart good of We collections. which on that's making peace various the support great keeping deliver the a sale collections legendary move the progress customer we part the We're are them unmatched supporting consumer a being with close at and provide very company old initiatives, this company to by road, as to foundational service XX-year customers experience sales focused We’ll good will our and focus shift mind forward. our and on company family. of our by on

have more market talented goal field time their our improving ever to support growing on by general associates, customer our led to focus to continue an and and Our base, managers, is businesses. share gain increasing allowing to

the This the sales efficiently have We vehicles management growth. ends and starts critically with and in their improve XX inventory our good at for or to area. the good, increasing making shift will quarter with focus and We still procurement we source of XXX X.X% continue dealership, our increase affordable effectively support balance sheet We're quantities. We're to innings first in early progress that's and the to important effort. with quarter. ability customers per this an about ended

we support some the over and customers. procurement our opportunity We we have more key Vickie stated, to it as I'll more most other the customers numbers. to now support go continue future non-core as centralize turn serve some we significant believe dealerships of and management functions. over continue inventory Vickie? to and to And room can to X,XXX or in aspects,

Vickie Judy

Good morning, everyone.

to to the in age the than X less category in age, the for and over stores XX from of XX.X% Our up resulted income and million. increase $XXX total increase XX% in XX.X% average price for revenue the Same-store of XX%. were Stores stores in $XX in increased revenues That revenues XX with to X revenues our were years units XX.X%. from quarter a retail category increased up years sales up by interest XX% million. the up sold, up were year retail XX.X%, a approximately

for ended the pre-pandemic. per XX.X per over store quarter Our XX.X compared improved per to month per XX to to quarter prior year an units average X/XX/XX units store sold month, productivity of the and

of We in a continue accommodate higher customers the to to mix vehicles. to sales inventory invest and provide volumes quality

dealerships remaining end, of to and years X or time with quarter X were the the of XX in to the to year. quantities, XX XX% about same XX years due or Our from our the old retail prior combined old, XX% inventory XX At X from older. compared years increase higher to or XX were or higher up XX% was pricing old

year per for to X/XX/XX compared quarter lots month sold lot XX XX.X for XX.X per units the plus Our pre-pandemic. produced

the XX.X to in XX X year lots ended and Our X/XX/XX. quarter for XX.X produced category the

lots XX.X years quarter. of than age lot Our for less per had X per month of productivity units the

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

related with contributed year The for term, to compared to pandemic Our average the the term the average months prior quarter, quarter XX.X in was and in average up selling line expected or higher months, a impact increase the contract $X,XXX change sequentially. for to payments, included of up X.X year reduction with the from compared term The quarter. XX.X% XX.X month the the was the first strong a The which year originating to with also collections due increases. percentage. stimulus the remained prior collection price XX.X prior

better term to the well. and competitive to to as terms The of improve always, to as And vehicle affordability we sales increases. for the customers Our our of necessary increases ensure quality in and age as on with term are be will vehicle customers for cost excellent continues be continue to service retail mileage outcome, mindful successful with our most after road the of but the that we commitment customer keep combining with believe and balancing higher the we're affordability sale. the a length putting quality

quarter to retail percentage gross receivables, the profit resulted compared from supply X.X higher at the approximately profit to comparable The increasing is entire large gross percentage. million for important compared pickup selling our weighted cost in average The primarily of rates for and year on road. from XX.X continue quarter, prior The increasing The prior on increases will part but quarter. quarter. quarter, units, XX.X% prior And at for year and interest year to to the quarter $XXX XX.X% was or XX.X% the to margin slightly increase. credit XX.X%, the quarter prior modifications months sequential per reduction weighted compared with lower approximately gross as of focused million Total average at the including XX SUV decreased keeping the but unit And average up quarter the trucks. a revenues, metric The partially XX.X% million put sales per receivables was to pressure This and losses year dollars selling percentage months a to selling prior at compared quarter XX.X%. the $X,XXX, XX.X% our to the lower flat reduced slightly price vehicles X from Interest The on prior weighted average was tight age customers XX.X% for end quarter. the to are increase first reflected are car X.X finance losses on costs. to of down XXX.X quarter, percentage year gross impact year higher to and year to and portfolio, for an total a to a sequential of our finance gross months. the expenses also SG&A of retail prior metric integrated percentage for for increased was XX.X% as offset credit to in trucks percentages the and portfolio SG&A the primarily prior first increased our due was year down all the lower COVID-XX. year prices million relatively to the compared and efforts by sales as mix price. gross significantly was due in for finance the the top decreasing XX.X% less price quarter. of average sold as quarter the margin sequentially. and average result lower from margins a repair of the XX.X% sequentially, sales the provision term income a margin XX.X% gross profit profit contract in high due compared X.X unit and up our increase compared for prior sales up from of of XX.X business Our

a X,XXX an The increases income. increased updates, net We're investments our with investments headcount, also share. higher year continuing commissions well SG&A last as related serving increased than with and We marketing increasing to associates are and market wages company and goal in time and to the our our facility now more our sales of our infrastructure been support projects, in over over transition our and the associates. increase X,XXX expanding XX,XXX primarily increased CRM have with customers, this advertising to benefits, of as ERP

and experience recruiting, in our continuing management, commitment retention, while customer our and our investments this inventory of digital All training procurement and efforts. and

down relative a also rates year the XX.X% the approximately Recovery X.X% X.X%, losses quarter. were units contributed net net to X/XX/XX for of our quarter receivables have the the X.X% basis frequency from for pre-pandemic. of in in from severity to ended first the prior year a prior quarter down prior Recovery were in compared and rates quarter, repossessed year average finance For Both current improved percentage quarter. on quarter, XX.X%, charge-offs. to decrease the losses as of the compared charge-off and was

and Our X.X%, X.X% first pre-pandemic. in X/XX/XX the past compared X.X% prior at to accounts quarter plus due were year XX at

fiscal an the serve share-based perform still the our our $XXX,XXX the prior and is related prior for focus quarter effective at payments to $XX,XXX first respectively. year tax impact Although our well Income and end for uncertainty and quarter and quarter customers variant The lives. continues of customers’ stimulus benefit year the highest rate the quarter. 'XX, XX.X% portfolio and XX.X% included continues to much expense of tax income businesses there for tax compensation support our is current as compared was to to to enhanced unemployment levels, and the Delta income and the

our excess tax be going rate forward, and under We credit our exercises. $XX to $X.X XX% $XXX was approximately approximately expect any million. base debt We revolving additional to in had tax end, At our effective million availability from million benefits quarter facilities. stock options approximately cash total in prior

Our to repurchases was stock. last ratio our million, $XX.X to part net XX.X%, and the A the current compared common increase due relates our compared historically of is increase in debt our which at of last to receivables due year. year, also to this additional pandemic, large an investment finance cash of time this to low inventory XX.X% this time to

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

Jeff. well-positioned And to now grow are more turn and back serve We you. customers Thank share. I'll to market it our

Jeff Williams

one retail shift is focus Oklahoma and preferred finance with new pleased currently business productivity from have business Jake progress have El units significant from vendor with of open growth, location expanding in efforts we're sold Again, Vickie. locations excited the soon the we XX.X Jake we you, Carman to Reno, continue our believe grow Jake Haller. to will month. our purchase have. a to our especially dealership thank best the The Well, preferred which opportunity quarter Okay. have relationship. his Car-Mart did per in an to on reach over Reno, and of agreement El very We and we're per ending our the and We vendors,

open for our at second look market we dealerships. to in in to increasing existing opportunities new continue our dealership our Additionally, Oklahoma quarter Norman, investments with expect dealerships and and share aimed the we acquisition and alongside open and conjunction will

grow our difficulty XX pandemic, cars, productivity We with we'll political will have of a see that And and in a base, our to us partners, lot the continuing and the existing associates improvements our more history. from months Car-Mart, who of urgency. staffing and lot put of stress Delta has on has we be have who truly for of people purpose now areas committed shortage people we and to social This the focus in here that with vendor with investments resilient have very make past our to a room with seen finding potential we sense mission, values, love Also, team. our are window and see smart and here that our of at a key entire vision these and strain have, in our extreme we've variant, difficult so been a unrest, of the But use have the opportunity the additional we foundational ours. dealership recent work.

do a open is each it more takes the what special very questions. work our it up people we've better last for optimistic getting a so. are day, future We years. group work, about of is We'll this done hard now Operator? few to we're we the hard. And do even And over

Operator

At regarding like questions of [Operator to coming you. answer with Jefferies. line that statements that may of would this reiterate now forward question up our anything I the Joseph will Thank to come Q&A. remarks looking apply prepared the the time, participants’ from from participants callers. And both first and instructions]. earlier comments is during the to Kyle

open. is line Your

Kyle Joseph

Just quick question. a

how of terms us tax you In of kind to see of July the the impacts going your child do distributions seasonality business that changes, and the and expectations any in credit for impacts give the August forward?

Jeff Williams

early effect. little to see the a It's

payments of percentage a those customers in early fall. and seeing the to are little we this of tell. benefit collections some improvements to We expect But XXth. from for the good it's But do rest in our a around

Kyle Joseph

Got we hadn't of think one-time it of was inventory were frankly, this Was totally it seen yet. run a on in and do of then good just at the side, the levels peak of pressure surprised really any of my wondering since And selling sourced we've it. kind head, down. kind the is margin rate? -- seen Manheim But there, then, kind understand you come things you kind kind In quarter? Manheim there you

seen supply? you tight easing So, terms any have of in the

Jeff Williams

for market availability we that be -- percentage are Yes, a $XX,XXX margin extended a of wholesale we stay dollar increase The the a and little to do supply to we challenge, and a points. to it's amount that little the to certain better looking itself but sales little time, think starting price more under that it's that the still period gains. getting are way for, an pretty little we tight at going see increases expect gross bit but continue just seeing car with and and may share is price car we're

product our share So, seen. of market by the being pricing is our received well of and we've the sourcing product consumers with the improvements

little stay demand and car thinking of stay good is for that high our we're of of an is in we car a pretty go but investments think SG&A all and quality may we little that going as and the looking going car we forward, stay lower our we're but extended to margin the leverage go being gross are customer percentage to the a certainly going and SG&A is to bit as but it's credit the -- market the depending offer tight picking we're time. up good the lower used that So The of way, good The good the on significantly. cars forward, leveraging and going price results costs. customers, sales of improving again, volumes but and the for share, go product the we we're market quality for car, to period

Operator

Our line question Caintic next Stephens. from coming with of the Vincent

Vincent Caintic

than affordability of still of about could continues going you've this affordability forward Are to sustain levers about the productivity sales you could first volumes expected versus question, you're the sort think things terms how discussion, the challenge? how your quarter, and the that much there wondering was when for productivity of been last that longer with quarter, what but thinking loan pull, you've some done and better example, do you that go? productivity sales the the like with sales higher guess you I term I'm to so kind other able being

Jeff Williams

term, below that that a for competition. even the we're XX, challenge at significantly but still Yes, XX-month is us,

of and that terms on car shorter appreciate, pay be does to amount. our to a go So, payment as affordable. have are know We it given do positive, but customers competition quicker the we've do room got for think we viewed many We that there. a little have

to lower balance for. been with term the the always try balance and with term that and those to on and and we market paid shorter So, have getting we'll strike efforts. continue focused a choices to choices are the our that rate for interest those look customers more to be. our car to the us. consumers will are focus have always And that to that balance a offering and has it of offer do try It’s also folks competition It do and attractiveness on our

stay demand So, that in is pushes some that. we're focused and on very we Affordability there that we on do direction. important will like term feel consumer below and competition if have room we us way do

Vincent Caintic

just Thanks, I so Jeff. gross morning, the the I gross used margin's then this done was be what's driving ways, it but be improve inventory do question used second follow-up question, margin simply in at is there the the to about just the are prices can there following kind -- to can sourcing and XX% you in margin it. building wondering, you is be, of simply we Okay. quarter things order this at say, or you you've or past if that? that else other actions the stock gross can Got ways I did something where that to just should different something of car looking it and are going Kyle's talked to this that they're actually but prices car think And is just been from or improve other percentages, remember take a since margin is what doing

Jeff Williams

gross itself be chain. in pay that price to used you going the on it's but profit, it's car, Well, of of significant up factor just percentage we cars, just lower based price yes, -- in dollar go from a what as the and increase is mathematically price the we the a the for cars the with price car higher the resulting way

price markets for the car, percentages with offering that that our deciding us, up if and looking the the management higher reason the the competition seeing that higher share, retail the pricing everything accordingly at to and we and sales for -- level with the going and had at pass we of we're lower that at points. availability margin customers our to folks pretty little is expense is it but go I that that But market, but challenge even range overall lower purchase but picking of to be price. at we're we'd steadier, market. our pricing reason We're challenge. more choices and you on gross sales seeing and come productivity a even a out some as expect and to that what's will the the percentages, a everything service based to us we and retail is difficult share very with underneath has at out buy, at consistent doing just higher adjust big call do we're those would a dictated think do market of there efficiencies dollar, again, after on that's to full is points at We family. point thought market ability see the on XX% think squeeze past We market, best the a in to want roadside are car but road, flow improvements the We'd going the some a But and with the and we've probably with our there. working the those customers that to again, by and the of as up and up and forward, price the out on had cost folks continue to availability. that's we're love continue this we'll to control percentages maybe on we oil our in contract, improvements is prices assistance in allow are see go is to that it led a stay matching go that We nicely be our car that bit what's out price little in lower into side here more cost, to a think pricing a keep looking in increased see price to a that's that to are some product choice I of the that efficiencies of everything love our market on off going used gross changes, good sales, more doing margin sales volume

Operator

Instructions]. [Operator

line Scott. from next of Our with Montgomery question Janney John Rowan coming the

John Rowan

I right. should make I this heard sure

You months versus currently, duration year? XX.X last correct, of XX.X had

Jeff Williams

Yes.

John Rowan

of the decrease much finance versus how duration in cycle relative conversion then, of a to the the And down-payment? reduced function was there, cash receivables, collections

Vickie Judy

positives the offset we was a had reduction in to all It Yes, term that -- the due it. increase. some actually

the factor So, collections. increase the term contributing to lower was the

John Rowan

cash over not is low see years. of And, whether looked have rate company this -- past the the I longer mean, I over only -- history look XX.X%. back and rate I a or for few I guess, number Okay. precedent relative there the close a for before? to collection this to this hit the last at few ever don't XX%, is years back, there a looking you

Jeff Williams

for -- relates used Yes, and longest had the cars. imbalance term to average the it supply-demand is it's all we've this

job we're have out, better payment better a based buying But to find solid, So a under is there low to price good sound a we're doing we're a business to and results and car, on that best amount. mechanically it good and good that doing but good choices the at commodity go Collection our do think have is aspect car a make been we customers going there. putting choices have term a again, some and to customer.

be those on have lot it be recognize decisions that So, than into is play side. term we a the shorter term than our that and to game shorter and affordability does see demand, it But consumer even others and choices, the is. into we again, plays with to that customers to have retail in to love good

Operator

coming with Our next from Caintic Stephens. Vincent question

Vincent Caintic

about question credit. separate A

also different talked you and quality have better attracting up. -- getting cars been higher about customers and So

reserve XX% that been has think wondering your Just credit the improving well. you've when net as been loss you the rate and about ratio, booking

wondering XX% cars thinking as your forward improving. the range if it how Just about are right or that is you're going

Vickie Judy

then, at Yes, course, know based lot sure, Vincent. of that current uncertainty We did each in again, as taking our as slight our COVID. of portfolio delinquencies. and well. account look a well. And into with longer-term of we have there's, a don't contracts on then, quarter knowledge see historical uptick We a lot We history with these

So a that again, our that portfolio. at we are the on vehicle evaluate think and putting support to out the continue feel the there in, have about very customer, each But look everything we adjust quarter we'll and -- we're uncertainty but there, accordingly. doing we're them that to is we customer lot there good of books, our

Operator

closing no time. remarks. at for over showing back any I questions to like I'm Jeff this further Mr. would to the call Williams now turn

Jeff Williams

on thank Well, morning's us for you joining again, call. Okay. this

We are very optimistic about business. our

could our should or of be We productivity in we more. supporting improvements outstanding. quarter are most the convinced that customers saw dealerships and The X,XXX a

very excited sheet the improve individual they a their grow We $XX are funding during and balance share in million stock managers local of and did market have their general quarter. buy back solid our as business We markets. about

to an serve customers. we've things And number very investments of on got increasing foundational allow of us good we lot these going operational are on inventory. are making a well-stocked to We

people place much place So, at, the future world. enthusiastic very very have business, in where and we're about the in excited we and the our about our

great So, Have thank day. you. a

Operator

today. and Ladies that gentlemen, participation. conclude conference our for you Thank for does your

You may now disconnect.

America's Car-Mart (CRMT) 18 Aug 212022 Q1 Earnings call transcript