CRMT - Earnings call transcript Q4 2022 | America's Car-Mart, Inc.

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Operator

Good morning, everyone. Thank you for holding, and welcome to America’s Car-Mart Fourth Fiscal Quarter 2022 Conference Call. The topic of this call will be the earnings and operation results for the company’s fourth quarter and full 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 number and access information are included in last night’s press release, which can be found on America's Car-Mart website at www.car-mart.com.

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

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

Jeff Williams

Okay. morning. by our the our and We're work. out That's in give Well, daily mission, our of of peace have vision, we very us on obligation associates our great our this joining and more all an of and customers. team We proud keeping values purpose, you them serve customers mind for thank road. living our to

we release, and quarter outstanding our year difficult another in had conditions. very detailed press As in

XXX,XXX assets our better impressive. we do, work the that but data, equity on started scale in body five-year XX%, leveraging repurchase of $XXX million in we end for lot reduction forward. work diluted significant for a return five the resulting averaged billion, XXXX, grow of process We and XX% a over previous over for over in $X.X soon certain and $X.X over from X.X%, of we Revenues future, is at initiatives grown for serving number a continue the growing X.X%. is back, and from allowing shares share demand as have on over discussed tremendous move our now customers, was there, previous the be of our release. share since centralize our press was we’ve return with in we XX,XXX year bought looking and functions, And continuing And average us to of consumers million, X.X offering, our finance We're utilizing have to XX% back to There will We've consistent a program are billion. receivables to count. years. into fully as the to and allow fiscal to

flows our business. So, cash of the debt this almost operating in million of result cash all share our our power focus in is total on buybacks, demonstrating of $XXX the cumulative the effect, net capital-intensive of in

continue our the on We sales, and investments investments and The will data as and are focused digital inventory, experience. areas in customer forward. we move underwriting

We have we're data harnessing. of that XX over years

add Our substantially actionable and and This will specifically, retain granular, system, more CRM loan vehicle us efforts our customers accessible, and data us help will origination time. data. over more module provide

in attractive, are owners, which our of at substantially XX even returns with the best term return we months, deploying The than interested cash-on-cash of As less managers and rates are business competition. capital the available. at is

best the increasing First, existing use of our and customer productivity the base growing our capital. our of stores, is

who customer successful We've associate developed commitment and exit share with groups, and shareholders, works a to an dealership Second, for well-operated success. generate growth which and opportunities strategy values for process, returns their and future for similar speak eager provide and associates. to of for acquisition everyone, our owner-operator acquisitions an owners our we're

Third, value. we intrinsic repurchase shares below

and add to combination price. right personnel, the when location, of find continue we new stores we Additionally,

greater. long-term We been Our the results with have exceed be opportunities consistent will past. for expansion believe or of and that never creation those value

compounded at now numbers. five share turn years, to year. grown Vickie per to it over XX% over value from share I'll last the go book outstanding our we've Over We've Vickie? per some $XX share. a gone to a a $XX

Vickie Judy

morning, you, Thank everyone. Jeff, and good

are We significant only stimulus included of fourth results payment, quarter, last was units. - by the disbursed with largest impact quarter the impact XXXX. in March with fourth year's pleased units. dealership XX.X Last That's for year's of productivity XX.X second the from positive quarter to which at a

pre-pandemic, units dealership. of quarter fiscal the was XXXX fourth per year For to XX.X comparison

is of We year. Our per the customers direction. moving X,XXX dealership during over objective increasing right productivity the existing facilities, added in and fiscal talent leveraging and

fourth For of to charge-offs net fourth charge-offs the percentage positively X.X% which we year was and X.X% finance the pre-pandemic. see receivables losses compared current collections of quarter, normalization quarter. forward. year. X/XX/XX, a quarter year in Again, quarter and prior ended payments, prior for stimulus X/XX/XX also net move as average in the included charge-offs the the quarter X.X% continue impacted We X.X% to believe prior Net were some we for credit ended will the as

our and compared recovery in keeping the customer the .X% the fourth prior on road, customers We that XX focus in expanded well experience will keep XX.X% quarter. our of those quarter historical as rates believe ranges. investments did the approximately see our in end year closer at of also our we lower us area, However, to improved service to contracts,

X% months XX.X was for quarter. prior originating for fourth account Our term from the average at prior XX-plus contract the compared to was and year compared quarter The pass X.X% XX.X year, the months to XX.X in sequentially. due up

was portfolio, the the of the for year. X.X age to for average months. term weighted XX.X approximately portfolio months increased months to from contract X.X average including The prior compared XX.X modifications, weighted Our

parts, cost fees, costs, This resulted the expenses. cost average the unit transportation sequential repair and retail at the fuel increased compared XX.X%, coupled selling year sold for down profit primarily XX.X% decrease from with other gross XX.X%. per percentage to from $XXX the profit The in the gross total increase or quarter. fourth of sale Our price, increased $XX.XX by quarter prior to was

of We making than more continue our with investments X,XXX to and associates. an the over serving customers, X,XXX, We're leverage now increase over we're SG&A. total XX,XXX

in sales As finance compared monitor sales family, X/XX/XX, of as of to revolving we our facilities, our company, credit the allowance based was receivables XX.X% provision part base efforts lowering $XXX debt X/XX/XX percentage cost $XX under as was year focused At total pre-pandemic, on quarter and million and million end, credit of in a an and borrowing the cash less large are revenues, also customers credit the and was the our our million, total losses, impact on percentage at and for approximately of SG&A which $X.X XX.X% inventory. availability change. we total for This a additional losses. had of in ended revolving approximately excluding keeping integrated and

aggregate quarter with access million to will credit As April XX, prior as initial with to us capital this in we also and previously $XX with greater was $XXX cash securitization inaugural those structure notes restricted million, efficient a we announced, with million to our end, of notes. we notes. an funding us related This payable just completed non-recourse allowed $XXX more in asset-backed to debt, provide securitized principle grow. At our sources our diversify

net receivables, to debt XX.X%. of current finance is cash total Our

repurchased XXXX, million $XX stock, $XX and million $XX we in our $XXX receivables, funded expenditures. During of fiscal increased million added common in capital inventory million, by

a cash-on-cash sheet, business. to out. you, focus I'll the We on will close let us and continue of future balance returns, Thank a for and conservative investing Jeff growing

Jeff Williams

our our and we never work way. be sentiment. productivity, we sales we not volume by will been higher will continuing do, a in Thank at centralization solid, Okay. to support though of primarily even in and Collections efficiency and content growth are more increased all pleased, will have to handle continue you, are and including allow Rising expect business. with support interest results rates with addressed Vickie. volumes a lot larger consumer headwinds that improvements. strong. around areas prices us the infrastructure, inflation to us, credit In have but substantially light which to of efforts, summary, Even Investments car come

with used product price for prefer car we will While believe drastic the an environment reductions short-term. that to would we wholesale prices, we over lower not any see continue our

for lower results the great vehicle our However, And has business in as performed we very us all best used well be were have over during Again, credit model conditions. some our longer-term. with prices for the our good actually recession would results to stated, good, in point, that of history.

as market. are today, in down up much better capture able consumers above we'll We share credit market tightens us and be move our a into place more to and structurally

questions. it open now will We up Operator? for

Operator

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

Your is now line open.

John Murphy

morning, Good your question a of state Actually, on consumer. everybody. your first

said your you for I think press in offering. you have demand your high release, consumer

but the So, car different things slices have different demand, really it used in strong certainly we're hearing you sounds and like of in market, retail.

you ultimately the curious of credit your car curious what on slice the that into demand down alluded just Just tightening maybe used if to market. for consumer. you could well. kind just and I'm your And consumers comment pushing of state Jeff, can of mean as

Jeff Williams

at the demand, especially credit same higher volumes we're challenges seeing with are but we with Yes, solid time, standpoint. good an customer, the from type seeing affordability some

for up points those just demand prices get be room and we a But customers, So, even credit factor we more to expect or hopefully pick maybe some level down solid price as at affordability we even us, we move bit, continue risk are volumes. a as more that do come expect, us lower have seeing allowing to relief good less off, may good of and forward. that car from little and

John Murphy

around I follow we that, average to then And the two about up on over last look it's years, selling from your Okay. at price if gone $XX,XXX. mean,

Now, near-term, to mimicking different to because it's we means what's change? going two opposed consumers And fade on big I’m up. did business. increase. just in business up that for car a market. used coming to saw years structurally just quarter your the finished big understand that you of that XX% I approaching the kind was step you what is I what the mean, car mean, as the How $XX,XXX. I a They're used seeing trying are that's in expecting Because not lots, a ago? the - you're mean,

Jeff Williams

upstream pandemic on Right. Yes. moving big prices. the run-up car side We before the actually the were consumer before in and

focused in customers the really We on keeping for have family life.

offering the at car prices. price a were higher we in a nicer prior run-up to product So,

the those of cost to forward be levels - gone have a to to serve than something and to prices feel at having payments in XX% better anyone we've road, as keep keep shape, like having been with, the made up. or that up. we and returns all we the dealing But payments has version keep at our as business. have car we're those extend customer that a with So, we're the best The base term cash in we've deal sales cars but historical expect We're cycle. gone to with and increase we customers certainly improvements everybody's it a longer we affordable, position those the level. And go price is at as on longer-term to a the high good but discussed, above can,

John Murphy

which of with that maybe a rising labor, then around And dealing directly. increasingly also, lastly, is you're you some consumer, to then discussed. inflation how costs of how wages your in just for help Okay. tailwind offset much curious these particularly just that for there's And costs,

Jeff Williams

markets, packages adjustments and our - benefit we've want continue to and to of to made especially business our our are wages that to Vickie, associates. very best we'll with adjustments and pressures And we and to sure our add? Well, and it's competitive the aware make a retain stay competitive process adjusting are make you in for anything areas, on we in continuous inflationary side. all certainly wage us

Vickie Judy

Jeff we're ways just for to that our implementing, evaluate systems mentioned Yes, more associates be We to use our our data, again, efficient. better our we be efficiently wages. look several continually to more of always efficient.

of that. all So, are evaluating continually we

Jeff Williams

offset And effective productivity increase continuing about gain for share, and to serve it's customers, sell cars, to market us, more that all the inflation. more

John Murphy

Thank Great. very much, you guys.

Operator

question comes And Montgomery from Rowan Scott. next you. our Janney from Thank John

line open. now Your is

John Rowan

as are loss prices do prices what I longer Good make in your higher initial mean, go that morning. about is. for term. you of Jeff, the reaction? business What lower term impact severity more is kind your charge-offs point like come near-term, what kind curious the actually right? immediate increases? good down, the of the the If I'm

Jeff Williams

would recoveries and for that would the serving results some current more negative, going a the expect car, negatives our consumers there car if don't to credit. more that's and be much on think it of eight-year-old in we consumers have last affordability, customers. an the contract don't front buy price to than of near on us the the see much does, be overall any. and reduction, on short-term more contract end mechanically supply car, greater and have happen, might going we some the is a in value and midterm. decreasing does, that other effect It's beyond that for that but side to the we but a to qualifying Again, that it the terms if that Well, a demand car positives on terms, don't sound if But time any we to with

John Rowan

some in it’s to Okay. And stating the normalize historical press going around the then you end gave guidance of ranges. credit, the release lower that towards

five else that that supposed we're and to figures. look charge-off supposed to is the guide something those are gave - that we're the I'm or look XX-year it points curious, for, at? You

Jeff Williams

to structurally go just side. we're back if those than averages, we've with Well, on the been improvements range you end the we've that with just the support made look and better the more efforts, centralization ever business, at up

us, look it'll credit So, closer we we of be go But end of end than there's normal the to to of going lot lower think those terms are to unknowns the higher like. a ranges in what as losses forward.

John Rowan

Okay. down? profit car dip any Do on was the margin Obviously, with down the a fourth migrate And Or think to guidance then, gross going quarter. forward? it in you there think prices profit improves to you relatively stable inventory gross comes same do or and it if flattens here, the flat, I'm down, out? least keep that stays at percentages your trying gauge you continues number

Vickie Judy

set of piece our and the big Again, on prices. that on purchase market our based will is used pricing depend A car the cost. guideline

So, to improve, it pressure becomes if lower. prices percentage. the gross does on continue The percentage but put purchase margin that increase, dollars more

The again, that margin change of this did - biggest gross stabilize the due we pressure the So, inflationary then and if pricing, well. though, prices some stabilize, quarter as And on primary to see was will of it. as well. fuel half some transportation the over

John Rowan

you. Okay. Yep. Thank

Operator

for no Thank question. further would turn instructions]. remarks. I you. back like over [Operator I’m to showing call now And the closing to Jeff Williams

Jeff Williams

look this as helping a got we your Well, lot for We’d Okay. momentum that a spot and us Thank America's We've as of lives stay you of forward. in to you group customers once to again, all you to a our for our interest of we're succeed. dedicate joining thank associates thank a associates, Car-Mart. company, in their great morning. like great

So, day. thanks and have a great

Operator

This you participating. concludes for today's call. Thank conference

disconnect. now may You

America's Car-Mart (CRMT) 24 May 222022 Q4 Earnings call transcript