Earnings call transcript Q1 2024

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Operator

Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart's First Quarter Fiscal 2024 Conference Call.

Before we begin today's call is being recorded and will be available for replay for the next 12 months.

During today's call, management may make certain statements that are considered forward-looking, which inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. the undertake any such any guarantee nor or forward-looking cannot it does obligation company accuracy forecast of estimate statements. The to update

X currently report information the April the the filed XX, more Exchange Please regarding the a its Securities information, reports ended see and For current furnished news and and Commission or forward-looking quarter fiscal for year see earnings company's company's the X-K quarterly Form on second Part annual XX-Q. XXXX, XX-K -- on for please XXXX, of with and leadership fiscal for the website release the along first of Forms transition. with about release to

call Jeff morning are the Campbell, Williams, on President; this Judy, Doug Participating CFO. CEO; and Vickie

call over CEO. the Williams, turn Jeff to now will I

You begin. may

Jeff Williams

you revenue joining morning, discuss improvements had the America's minutes. results we'll Car-Mart. solid in that the call thank business. Near-term and you few your that Well, in just are report growth areas in strong to credit a many on for we interest challenge, this for detail us delivered more for a I'm in of thank our and We Okay. quarter. pleased

President, to me Before the into details, today I'm will as Campbell, our we other news excited that CEO effective get X. Doug succeed cover October

opportunities first years Doug the year responsibilities, ahead many at now. In top role two are with capitalize as my the a planning set last a President, navigate Doug candidate a the ago strong readiness challenges me, role. on new member, has succession role fit, for there we the skill the almost engaged identifying in Over as has his why very cultural CEO to his the more than for is with of list demonstrated but and board been and

perfect culture, next company's and us to why agent change is the being he's of the level. knowledge industry a fit strong the lead appreciation Doug's to

to fully be support smooth allow move Our forward. handoff Doug for will and we a transition as here I'll plan

thank congratulations, you, So and Doug.

quarter results, initiatives an Vickie turn it to now of on I'll outlook you over business. provide update to the on Doug? our the review status and Doug and

Doug Campbell

to Jeff done for over as X of in he's I service particular, the CEO. for thank all last the and Jeff. years XX years Thanks, want his company that

to and volatile our industry We have continued of grow and couple despite being years. the inventory the source business constrained last over very

the business constraints, exiting are we our to in competitors capital investing While have manage unable business. been

last and facilitating serve that spent appreciative transition I'm during in with valuable. guidance equally my working members have It's one in managing in time and Jeff's in testament stark debt for I of been environment Jeff been me ahead. year, over to a us of we've through has that he been who fantastic leadership contrast and our and of will relationship most gratitude investing their and what are both has a challenging feedback the company owe the has industry. our to development and others the Chair cultivated the for with a history environments Board time, how in the vision the our the

On I'm note, a opportunity. and the humbled personal deeply for thankful

any enthusiastic the on and about We're ago. of demonstrating our long-term at in health forward, success a was look business our ability environment. I it As year here our more than Car-Mart focused operate to I'm and America's future are

winning to both like combination. pursuit and we and thank spend. reductions to in to wholesale be worked Before associates improvements procurement efforts, the sales relentless volume, over to continues I'd in deliver Their our customers to put gross the tirelessly keep our transition who on performance repair margin, road quarterly results, a

start Let's performance. with sales

from the inventory X.X% units mentioned which for about X.X%. XX,XXX press impressive our on including This drive X.X up base for in moved that turns we year's to That had to nice power of turns. traffic. of was contract quarter, spend was release. when LOS application is see which volume That generating up credit in applications over the up especially was XX% sold, was dealerships. prior augment up accounts a advertising online strong, up sales impact its all that you is now because Overall, Growth to of was the quarter. the X.X XX% in as our consider our of performance we've sales X.X% online those begun when Our ability applications. the Same-store and

to LOS growth down period. the sales during of despite industry continues with cycle in same what many a the sales primary year-over-year our be for The remainder the for driver is the down

track Credit industry shown availability the has in than as or This credit. two, still now month looking the when periods. is COX a tighter but for year us consumers continues it to it's last to credit for some benefit pre-pandemic comparing dealer worse is us for at to to access look availability Automotive It improvement be and mild an index. previous when issue

I during half average about When quarter, to About price the that related by of year-over-year. vehicle. up think X.X% prices they the the were was selling of

half The products to ancillary was related the other sell. that we

last cars during we were the discussed call, the I purchasing market so about should no up spring be the On surprise there X%, were that here.

and revenue that generates This the are longer for more cars the mileage. makes that in mentioned also eligible lower prices. selling buying ultimately newer we have we it which warranties, However, are

service is increase even December this of price more year. we our reminder, to last that a pronounced when you As contracts the made in now consider

May saw in in industry and pricing rate. a prices sharply decreased The June, while July at decline normalized more wholesale

strength quarter, where contributing X% showing low of It the the price seeing started. related in year. pricing sequentially could wholesale is be During the a to August we August which this we're prices increases, first quarter, at the lowered prices ground. from is our marketplace procurement sales inventory in to in reduction the on teams purchase overall supply normal time throughout days or

what's the and Big UA to working in X We're on close effects any there. of and mitigate of some effects its keeping think team and that between speculation with happen I negotiations a And what will Detroit. some transpiring and the eye

year Gross articulated it margin XX when quarter. came up at to the bit fair in sequentially basis our plan a was went versus last compared what at of regarding and call. last release XXX margin gross points on the which look and points in We detail fourth XX.X%, up I press into basis was the

I plan too So we're out. elevated redundant. simply, level had be at laid to that on to want don't an put it But the executing we

we we are initiative, as newer operations We're it has reconditioning We through to which our scale per lower mileage teams those assets of are to and target are vehicle to of a $XXX ecosystem. and -- our now the relates performance our trickling and buying savings unit. improving $XXX continue repairs

really margin in We're in we could recover last we a gross target XXX encouraged surprising, the all of which on which we're I seeing XX% guess at but isn't seeing of points progress I'm rate estimated some call. basis this benefit. to at three the that We that areas, to had achieve alluded

there However, exploring. that other now opportunities we're are

last of quarter we're an the gross when but in fourth an by this to improvement We use give Last we XX margin the these. technology you first seeing example. the basis year. ecosystem the quarter, to in stack and began It that of loads throughout be Transportation one compared benefit. our quarter routes. to points we vehicles would is optimizing roll out full QX I'll of year, represented move the changed first

indicated. saving initially we're the beyond opportunities about and improvements ultimately, our with that at And further way on There ancillary vehicles. even wholesale now was we're what are move XX% drive looking we products, other repairs to

nature. opportunities of Some during fiscal these be can this term will year. long be Others in realized more

it to our cover turn Vickie, will now financial results. over who I'll

Vickie Judy

Good Doug. morning, and you, thank

X.X% the first That's quarter sequentially. to percentage average finance It of of period. current these include for above five-year for first Both the our average quarters. the XX-year of net as charge-offs For of X% 'XX our and loss quarter, were X.X% low is our receivables X.X%. and pandemic average compared credit a X.X% of

'XX A of losses. increase was of fiscal the 'XX were compared some an comparisons of for over severity increased the being to pandemic, 'XX remainder contributed to year our frequency the due losses and little first For and to the X.X%. quarter half first losses fiscal losses in the in higher quarter

high quarter XX% approximately held were in of and flat at down values historically XX%. year levels recovery Our the prior sequentially from

was the press in XX, July for finance of charge-offs allowance exceeded release, revenue. discussed of As losses receivables, by loan XX.XX% our actual million. net the as provision of And deferred $XX.X

million interest income, deferred have we $XX revenue over increase of in on of to We when of also 'XX. in QX And million $XXX compared an XX.X% balance collected addition, fiscal an sheet. additional the

once customers also the all is structures helping the customers. the in mentioned lots. LOS success us to additional also attracting We deal press going benefit and ultimately, of implemented fully and It's of be rate instrumental our in the improve across release it

with during the consistent year. prior the Our customer scores quarter remained

to in the continuing our past of on quarter. On negative Sunday Monday the accounts our inflationary prior X.X% as the year side, a a this well compared prior contributed due ending customers. in year impact The to versus on delinquency at month of part the as plus the environment was X.X%

Total $XXX quarter. $XXX prior $XXX customer compared per the were and in to collections to month collections million were year up XX% total active per

modifications on We continue the payment to keep their customers with in them our effort contract. an options and successful vehicle work on and to in

sequentially. quarter quarter the compared term X.X added We first average our was year months to the XX.X contract contract an payment. with The months months originating assist and affordable slightly originating for for quarter term to year XX.X up prior the the to compared customers from XX.X to prior

portfolio, XX the portfolio held quality The year prior compared Our the the weighted approximately to prior to for months. weighted including of highest months for by XX.X average age XX.X to the portfolio term quarter. the increased credit entire modifications, continues of improve customers contract percentage year. compared The to was the average

we've the quarter, of we side, as with identifying A across on savings And been our spend mentioned percentage board. SG&A in advertising. $XXX,XXX of savings business from in excluding in fourth a SG&A the the was the large had the over On the efficiencies compensation. focused the stock-based release,

and shift to our more LOS digital dollars advertising continue of efforts. more help We supplement which to is our spend, efficient also

count the prior by increased almost customer year XXX,XXX over to X.X% Our customers.

per over SG&A year over prior first Our average improved the and customer sequential the spend quarter quarter.

serve being this growing the made to while as forward. efficiencies are investments move better improving base we Our

in to With allocation to this even funding dealerships in investments allocate monitor we of We'll important becomes continue And our during in other available environment underperformed dealership increasing on of close better capital to did costs. capital. two it and maximize each continually mind, and the that and more although our review returns. we capital, investment evaluate quarter return invested

end, current our borrowing facilities on million in base availability our under and based receivables At had cash inventory. credit we additional unrestricted $X.X of approximately in $XXX million quarter and revolving

related to on cash paid notes notes. Our restricted coupon $XXX our non-recourse in with securitization proceeds July of payable We X.X%. third total million securitized early line closed And those net of a million, credit. with $XXX.X $XX revolving this and was in of off million our

cash of at net and that of debt, million and to over finance the related with total April of result increased year the rates is receivables XX.X% XX% Our the expense XX. the Interest to a from increased increased prior borrowings. at ratio approximately $X.X up remainder XX.X%

I'll now let Jeff to close this out.

Jeff Williams

The for you, continue Vickie. to offering Well, demand Okay. increase. will our thank

that decisioning Our we it challenges we striking as way our balance, can scale average market right what as that transportation face-to-face to the just where apparent base decentralized for balance We're be will continue unique up sense. model improve affordability makes require pick and to very and the over is believe time must a basic exceeds available and consumers. that's Current share. customer supply. best high-touch We more demand serve between the leveraging

on come. service are not leveraged, outstanding the back will current to become in the Currently, be many yet affordability completion and sitting us nearing seen keep into In flow efficient makes company. benefit are Foundational customers and always environment investments many ideal data-driven that customers we over our time. which focus respects, customers delivering to are the allowing and a will as market We've more our the will out on recession, road.

the and XX X,XXX serve per eventually the per XX opportunities the results years We're increasing improve, with units and month per we as on dealership next will especially and few track LOS, levels. execution We believe retail car between sell at to in look quality credit dealership. customers

we the and we the SG&A in percentages have a profit discussed improve move and unique gross highly And leverage talking operators the believe in about areas. forward. we're period opportunities will in we're as We as acquisitions And press accretive that. release, in to strong opportunities, several excited significant very industry, with will

forward. and is ahead our lead days to We great have ready Doug team

passionate about our time. while of all one customers we associates could be our to who the care taking at you have and what our big Thank to to of be signed best vision dreams on a

you, we'll Thank and questions. up for open Operator? it now

Operator

first Murphy question from you. America. Thank And [Operator of John comes our Instructions] from Bank

Your line is open. now

John Murphy

Good over is over something When you just Doug affordability reverses? is and next to the and if been everybody. in structurally that Jeff time? to your question. the time Or this that have ever contract think now a where once place the we'll I'm has period time terms to shortened curious legs terms careers Car-Mart's help in morning, extension think there with first lengthening? continue I equation, contract guess a here. on Or you Congrats see entered history or been that actually of they've of monthly just about

Jeff Williams

and the forward. as an We opportunity decrease in Yeah. see terms back future to go reel we do in

continue up. think real for our And wages I increases few last quarters, go seen Our consumers. the customers' we've months, wage to few

like So term, of different the at as and and think get especially do we look and inflationary the forward and move there's feel But like features very other moving a we car extent we going But be fully we in. term and on happens when to in all pressures. go other eventually, with direction, that rolled do to possibility realistic prices that and can real gets a tool based certainly would large as we in wages benefits really and functions direction. that's what to the going that we're to we LOS us

John Murphy

more at it could then it expand into helpful. are sounds we're and for that on press that there making just I'm slightly in of at newer time? actually efficiencies is vehicles. that's have comments and you That's the vehicles good just where changes put that's the costs, made been on some that being occurred? inventory you've just a and something that recon but in release what are changing improvement. purchase pretty you over lower Because of thought I looking about that the actually the room sort And follow-up And changes were have like just gained that see what's historically, efficient disposition wondering of And if

Doug Campbell

call spoke to as that Yeah. Thanks had would say -- we It I how I that on we for was, the historically, very at very good been I that. have question. my about with first lever little the mitigate used some upfront, think, little bit it costs. been And cost there's a bit which somewhat with has we to And older car higher a a of went downstream, while problematic. associated mileage. benefits had that its repair a

we're historical And so back to is do trying our norms. get what to

we've are levels. that, pre-pandemic call what gains efficiency would beyond that to But closer I seen more

XX,XXX and or the able a by to XX,XXX so XX car would we're to call mileage And what off been versus might old, used nine years sell miles, to we have shave pre-pandemic. that the year I overall improve

car, at mileage repairs the chance ultimately, It repossession in it gives to and to go retailing should us business. another for chance I have think the inventory should a a have inherently generate car to is the we route. a down lower creates second second So which -- in purpose our unit, the less

Jeff Williams

had John, pandemic I the all making the good and chain that and that performance at with time procurement internally. in last improvements historical the some the is real issues of car would we our and itself product was used working the shortage out supply or chip some in we're add same three and two disruption and kind issues the on years there

John Murphy

the you. very much, interesting. Thank guys. All get back right. That's very I'll queue. in Thank you

Jeff Williams

you. Thank

Operator

Jefferies. Kyle Joseph from our Thank And you. next question comes [Operator from Instructions]

Your open. line is now

Kyle Joseph

Hey, Jeff. guys. morning, Congrats good

if so has gross changed it coming time for you back that prices be to elevated. play profit me everyone profit car you or and was? know margin. Let they gross golf. kind over may of do longer question of Anyway, while. piggybacking gradually on get margin terms back go have last But think seemed like earth It in the you do to term, used systemically? been Obviously, think where Or a

Doug Campbell

the Yeah. question. Kyle, Thanks, for

I especially items to improvements drive benefits we earlier, think sort opportunity beyond but called consider what a and all of our we're like wasn't there's expectations of at that maybe sort a we in as initially there. time. real out XX%, business initially to you realizing transportation of But have set there. little sort too table, the the when There's low sort things ground middle anticipated, we that maybe in and on we're looking of on any an

relative And what time didn't own call if I current last cars last back, to it, that just I thing the mention we to in go value. the the time. I was answer year I those book used, if One this

own X%. XX the how cars we So relative over the or improved months, has book XX to last or those X%

it's these how credit all our benefits It car improvement value of the have right? lower takes portfolio. life of downstream in exposure sort which improvement younger loss of There's some So should in with the market a combination of miles starting cars that table. in off fair of a an are retention, and risk and terms

Kyle Joseph

of the then, Got and it. And my health -- know still on inflation quarter the day you pressures health at of ended be would are I easing would consumer? but bit? How Very the you a helpful. underlying underlying low-end different consumer your of the the mentioned consumer. follow-up day, employed the a yeah, gauge the end

Vickie Judy

inflationary the of for changes lack think worked low. point a They're good. adjustment I are inflationary hours still a But unemployment in time. wages the there working, yet. still and there point, of just seeing very pressures large to are pressures still that and still stimulus lot those good, are we're don't was any your Yeah. Again, to

credit use our that kind paycheck paycheck. again, seeing gone the are But to across typically the in our recession, always a of up back credit, of So consumers. living for consumers board. has We're almost

just to it's So them and really the in keeping an getting car. back their adjustment used them higher car and payments

Jeff Williams

the is But our quarter-over-quarter. health consumer of overall, increasing

believe wages serve. As and to be some the we customers unemployment us as historically gaining forward, situation we and forward serve going that's rates Vickie areas mentioned, steam we go we in real move a low the are better we for and are as

Vickie Judy

a market. lending environment, seeing in And I mentioned, come that Doug down the think our consumers a of into as piece are cohort is, we of the tightening different

see continue that. We to

Kyle Joseph

thanks thanks, Thanks Got Jeff. it. Doug, Vickie,

Jeff Williams

Thanks, Kyle.

Operator

you. thank next question from our from Instructions]And And Montgomery Scott. [Operator comes Rowan John Janney

is now line Your open.

John Rowan

all inventory. Good morning. some plan Congrats strike, going you larger postulated if to but inventory were immediate would there's XXXX you you be up it's inventory in this I planning obviously, take that on don't have cars, think a levels? just guys that necessarily inventory, and in potential necessarily effect floor And you bit, for Jeff ripple cause strike and increase direction? in really other everything -- think guess mentioned heavy I you Doug. shortage our in raising Obviously, in guys I'm if downstream. levels could remarks curious with an Are your prepared flows like an would lenders one used loans. dealer sure at very there midyear, looks this be little not the fiscal a that there'll raise

Doug Campbell

but our of know don't outcome. been trying of way a we're it -- to an variation it's ourselves sort great I on certainly It's any question think minds. prepare and for about of sort so I I differently. going, don't which

think those used the prices, I the go on you track last think was pressure, back brands. you you overall saw strike was GM especially if and to strike, record, go upward on car which it I ultimately,

think Motor was I General strike. a it

pricing in look real in the around because back days speculation at that. If and brands, those in there's nice increase of almost a you you supply on a It ground. diminished saw and go is pop happened time lot and

be on you strike on that, and just have you those three overall automakers, looming a potentially for to and impact be deadline the will just And be is so ready the here, shortage more It of automakers. three it's the supply on when right, to going of sort going ground. have than

supply at If sort industry, absolute you all-time still looked at really our in it's lows. of

up. could so something of this instance happening And values like drive the

lever being is event I we is buy. is, And that up stock so do on pull. for you're buying don't we what like think combat think more selective can We we side. But on that with an cars for that to some point, us, alluding that? the would a to headwind I the your necessarily

was cars a fair if that I have the some were However, value, we that values the the becomes do for it repo taken market back appreciation tailwind in on think there vehicles.

way and to lending there's our going to know the sure and -- options bad it's So job good and side available us at that, sort to ready. just to to to trying We we're we're is make for ready being of having this, be us looking we're go, don't but which those now.

Jeff Williams

of You we mentioned on or have call, six competition a too, out competitors couple in with so, business the struggling is had last go too. lot months of that of the that capital. last sizable a We

there's the side addition some on potential negatives positive So some too. in to supply

that all on we're out. our So procurement. pretty And nimble balances

address see. So and we'll to able adjust any situation be we

John Rowan

Great. Thank you.

Jeff Williams

John. Thanks,

Operator

question from Instructions] Stephens. next Caintic And [Operator from Vincent thank you. And comes our

is line now open. Your

Vincent Caintic

working with forward for questions. been my Jeff, taking past miss for Thanks you years, pleasure morning. you good a several to Doug, it's look the congratulations you. and with we'll and Hey, and working

if about has one you on for So this sounds through could out zoom the broad just It process kind been first walk past to years. And CEO that. of the transition. question few us a like going

focus like as So a to why is the Doug, particular tenure? of a sense I then for and kind start now your anything we get to for on transition you'd good in time just wanted

Jeff Williams

with last through bit Things play to these for pretty getting coming as time just to long-term, in we've little and year. are are times. of level. a participate some our talent all his had tough, difficult this Doug been We've and been investments still initiatives those -- able good has Doug the the and timing, is a yes, in Well, better history. And and his we've but into labor-intensive in complex, place. experience highly those in some

for It's of to it's transition of appropriately forward. time we just transition a a time plenty the as us being extended. There will support, go especially as company, plenty perfect with be --

this and our is and Doug for our change, shareholders. be company and for in history me, So transition associates It's just we good for time plan this good time a with in making especially the have place. a to

Doug Campbell

transition to on obviously, the the first, CEO it are on as And the the about relying to -- a the to Jeff it, it again, we I'm time making up there company. transition. a things that longer the transition of know for of stayed we on day, credit of Vincent announcement but stand the the made shareholders a transition shorter My humbled, opportunity business postponing more who are assist be with side the more at sense of of especially the opposed of associates a and thought then of to of doing end period longer and lot accelerate to period having relying for sort smooth help on a And Jeff smooth the and time.

excited I'm of have loss. improvements up well. and question, what the when credit on And leading other there there, I see the of are especially I'll what given some I as opportunities my the we improvements that business, more business, about credit of to underwriting in roll the side probably we the spend of business sort of see the And other sleeves to time and think think side made areas your

Vincent Caintic

question, the could of kind Okay. you're that filing, a of of touch that seeing weeks made I excited looking for the filed Great. seeing, was the you're the wanted and to unprecedented in were that shelf My super the you about what ago couple opportunities? That's if those in shelf and you detail what helpful. next sort makes might filing some in of be on particularly that you opportunities about talk comments more

Jeff Williams

for competitors business succession don't had to have been out the don't in There's cost has the of plan, obviously, an continues the have being business. exit industry, going have The We've turmoil. lot of that been major a strategy, business folks Yeah. in a that up. go of in decades

So a get good, very for a of succession are the lot or out operators that out strong business. of there of there's size plan how looking very to

what got appealing more and And we've we've so and some what side to we going offered operators, more good and discussions the acquisition on good on. do is

able us apart more and on continue could Very needed, the support to good the to with pick other going aggressive our acquisitions. getting base acquisitions And do history point financing some to separate and be when giving acquisition's then ourselves side, add being all good optimistic and was to really more setting if it out up options about that. And stuff for and up a to shelf on. existing productivity just on profits this the us and going to from registration just from we're and store effort another a aspect and that opportunity point, be great in

Vincent Caintic

one you. And if Great. Thank for sneak Okay. more maybe I Vickie. could in

mix credit and about have the and forth. the the on the credit Just and so reserves understandably been increasing term side,

you the the where we're Just to things stand that at, is now, that level? mix way change? as of sort do foresee you. things and be right Or reserves help the Thank credit anticipating term should just right continue we

Vickie Judy

at that as historical to based some look economic in numbers Well, the events. well as what's current for forecasting we some quarterly market happening continue on Sure. and

to were in keep slightly level increase quarter. this quarter. able it We the it fourth So did we

hard of to working we're quarter-over-quarter, So on it's lot things. say a but

move on down payments As we mentioned selling in we term, in the working press release finance price comments as down and hopefully of in reducing a my bringing few some forward.

offset what quarters. few on things impact that we So next those any But we're allowance of depending will move over here happens a forward the increases. and all that's the certainly working possibility as hopefully to be on

Vincent Caintic

super that's Thanks, helpful. again, Okay, everyone.

Vickie Judy

you. Thank

Jeff Williams

Thank you, Vincent.

Operator

thank And remarks. I showing Williams closing the I turn over am you. questions. And, to Jeff back call no to for like further would now

Jeff Williams

in interest to Car-Mart. and thank you our again a once respect America's for have We'll a congratulations support Well, appreciate passion listening to do Okay. smooth customers we on and at thank have our our promotion your your all out transition call, there for and high of again, you CEO. support associates what other and we each that very and Doug, for level.

and great you, a thank So day. have

Operator

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

now may You disconnect.

America's Car-Mart (CRMT) 5 Sep 232024 Q1 Earnings call transcript