CRMT - Earnings call 3 2024 | America's Car-Mart, Inc.

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Operator

Good day, and thank you for standing by. Welcome to America's Car-Mart Third Quarter Fiscal 2024 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Vickie Judy, Chief Financial Officer. Please go ahead.

Vickie Judy

Thank you. to for third XX, the welcome XXXX fiscal XXXX. and call earnings period morning, America's quarter Car-Mart year Good ending January

CEO. supplemental is available Joining company's our website release Doug is a on this We've slide with and of earlier it me earnings issued and Campbell, morning, along our material. today President our

uncertainties to statements through statements management's and this we cannot risks today's April any the statements.For XX, it ended Commission notes, of it on does that any the update undertake Annual year the materially Q&A company's could for session Part pursuant the Act We made important Litigation the Form cautionary to or of transcript results including and for considered call.During cause Report Safe These and be will company may differ introductory the XX-K our forward-looking of the our estimate be XXXX, forecast make please view. call Securities Forms the of the available forward-looking provision reports now on Securities the The will of and comments X-K XX-Q.I actual post Exchange our information, over Private or guarantee filed to fiscal and present call, accuracy involve after third certain to Harbor from obligation quarter. prepared remarks following inherently are webcast will furnished Reform XXXX. such and turn quarterly X to see nor and Doug about with his current more

Douglas Campbell

hard release or interest this I'm output, our in positive in customers when the to the to because for fell team.I'll so effort acknowledge one align during items those of take our the care quarters. effort level results joining the was and you the mentioned I of start more and during road. and out the that our Last earnings of there some sales to they quarter. it and about and do internal work degrade, would them the our much are of expectations put produced sales don't by I of company. of direction with quarter, highlighting that credit occurred speculation associates of was on of There times drivers very want we the volumes quarter and the appreciative the decrease. the your keep for the of short our in morning, whether thank Good improve. even by flatten discuss detail loss continue or us

worked unit consumers the ongoing have taken associates tirelessly our the to Our assist in losses number reduced Throughout we by sequentially of X%. compared an challenging when navigating quarter, environment.

trends backdrop, worsened As delinquency throughout the an industry quarter.

favorable for a our loan system. million we However, This by XX adjustment day XX-plus credit our improved drove completed basis origination now planned in the $X.X the loss.We've provision points. delinquencies rollout of

now have As that challenges implementation But with on behind challenges driving more us. system with originations money X those that getting some LOS place. quarters there implementation are lengths. in stronger We management, shorter-term is it we're consumer in the of change large-scale profiles fully happy were now and any down, the built

in entered and about we LOS a the on game the for this and also The revenue start will down is by repairs, in make really the we're remarketing. leaving partnership Automotive, aid but let several X.X% into vehicle point for more and future.As quarter, acquisitions quarter fourth with factors. me cover which with this strategic changer me the release, Car-Mart, Let clear. in press the was sales.Revenue Cox detail, driven and I'll a imprint movement, excited its system, mentioned

quarter challenges structure stronger with benefits fourth deal X.X%. trends also report, by that. Those the with in with balancing implementation the plan into of First, and to Overall, quarter for October decrease. primary holiday industry augmented selling October had volumes roughly LOS of our that accounted The to some along to and flat shifts. mentioned, overall LOS the softness also said X and back half Recall driver. the volume was contributed volumes decline. we for second volume contributing updates persisted days August or the decrease softening to a third expected an XX.X% marketing volume of The are were quarter fewer the along that in the system September unit application deliver win because outcomes.We with up in quarter,

always in landing Day when closed added Christmas Day quarter days were the X compared to to Monday, shift and stores year's prior but on closure days on a Year's for quarter. the the Sundays, Our New more

a driven a retail severe more and there up when credit that weather the we're mix interest January, partially necessitated in legacy in our positive the average seeing the system. on That LOS specifics these which which Additionally, ancillary was very kept X/X X the retail Vickie the vehicle January, average loan at products winter consumers here closures in to in income XX% from on shopping. days X.X% of increase the by on XXX in results our to losses of equally of of sales deal in let are structures. dealerships and revenue were These by comment headwinds offset price. increase minute, originations on sales price was roughly me a increase from sold a compared The price.You'll but hear

in the However, of like results their mind legacy our to materially XX,XXX to effect to these by the and Springs We're proud for to but the plan is company. being Hot that of the opportunities we announce in critical detail both one words our than of other importance but close want the caution material to Central more very of share generated when in come of loans We substantial report. start pursuing out quantify frequency with and teased to that now performing acquisitions last future, purchase and this uses loss.We've the system. that quarter's actively more year.I times complete, and preliminary expect we numerous strongest specifics are to the the mentioned calendar changing, in we different want on nature, severity provide it I that's we're Auto in the originations capital initiative on rapidly

a As chain noted a supply our we've strategic This team essentially managed morning, entered affordability I and day-to-day their aid with industry, details will begun the with value customers assets from challenges operations time customers selling logistics Strategically, burden long We and ownership. greater leadership to our disposal shareholders believe vehicle this Automotive that more processing expect our some personally driving to our Vickie? creation across into in our and history helping organizations financials. in this more within removing release assets in will Cox efficiencies Cox and large-scale it of and leverage several overseeing Vickie to expect allow to partnership team. and digital have on our have address as we in to vehicle exist driving will their initiative physical to alike.I'll of for we lead be navigate our process. the projects the help this over turn teams cover it have reconditioning to now driven dealership tremendous as of our value. services. and We've that well partnership

Vickie Judy

commentary, that of will of third third otherwise the will Thank XXXX you, noted. the Doug. I XXXX, comparisons versus In cover my quarter be the unless quarter

XX As Doug up for basis points improve upon with also by average the points. quarter, X.X%, payments us trending mentioned, down has sequentially up LOS allowed to structure our basis deal XX to

dropping year of contracts the well focused stabilize. profit months, gross on table very as finance X.X% prior quarter. over longer-term sequentially. to on was of We compared XX.X is when This and returns retail the total the or to collections down expenses. portfolio ultimately, average a from to unit release quarter our increase the profit age modifications. structure losses $XXX. charge-offs improvements cash-on-cash about improved active point reflects compared cash-on-cash of average the sales from over dollars the also This days past the demonstrates term for by XX months points primarily year sequentially, QX, versus cash-on-cash our average and time. which We're prior and in deal considering prior We to There XX%.Accounts XX.X percentage returns in X.X%. third increased receivables to repair has basis and contract weighted the increase initiatives per from second frequency further average months to was website metric decline. customer The IRR row. XX underway.Net our over in in of a chart an XX.X and sequentially although XX up impacted improvement are data They collected improved to months our supplemental the as total history the strong We XX% due chain and returns a earning improved that an and due continues was This monthly for of XX.X in Severity quarter, year.Our expect and were sequentially. values originations XX returns XX also Recovery months quarter in pleased and an X.X% originated nearly basis an as term that supply months earnings of were increase volumes severity. in to sequentially our almost affordable vehicles the to XX.X%, XX%. profit a positive in increased quality improved this, rose percentage begun have to also conditions. provided over especially margin XX% various pricing experienced our points. was X.X%. gross the produce improved we macroeconomic expected basis We originating with points increase The we rise more lengths, portfolio to gross including and in last dollars these compared XX maximize last a quarter profitability.The Our year, market for better the discipline total of in as per $XXX were X year The improved approximately and that the be compared at were from to third basis

child related care, Our insurance. customers for energy, auto housing, cost the ongoing face pressures continue to increased to

of quarter a the summary, improvements made age average drivers that's decreased in in repossessions. to outlook.In future.Moving operational However, portfolio, better to some lower resulting we to and the to million we've initiatives lower customer delinquencies by to at $X.X company SG&A. increased key slightly a adjustment SG&A dollars in lead cost from receivables Sequentially, losses inflation in success of steps on to to higher contributed the The million. able improvement the losses reduce delinquencies inflationary provision. were offset lower expected expenses the lower groceries fuel. lower took the Sequentially, $X.X benefit the deal credit and we allowance of collections and offset The related by structure, were overall our the to for lower the slightly by to in are XX.XX% second was XX.XX% the end and quarter credit sequential

per as prior credit we X% with was Our a $XXX dollar increased $X on for XXX,XXX with bonds $XXX a expense credit fourth along and from advantage to approximately $X.X and interest based remains terms, our facilities all compared while a quality of the to the company the quarter focused X.X%. weighted during to and to rate $XXX fixed accordion very In coupon service.Interest December, paid X.X%. due credit and our agreement its financing average serve under quarter down tranches increase borrowings [ many facility interest million notes competitors. sales customers over to a a of feature.At we In of and Kroll average account average availability approximately securitization and a quarter, cost Access revolver, and revolving to us unrestricted of increasing expense million capital We're our and and our $XXX XXXX-X with completed In $XXX of million February, our increased providing SG&A securitization extended in XXXX ] to inventory. million successful million continuing In base issuing funding end called X.X% program at $XXX January, efficiency the of the $XXX. notes, million the percentage of XXXX-X end, to over renewed rates off them million in with an revolving had access quarter. strong. year.Our upgraded in over revolving we cash September additional program flexibility in our receivables distinct borrowing gives on and

our fluctuates financial let of well notes and rates our and the I'll of cost non-recourse and growth, spreads. committed credit of shareholder thoughtful profits funds improving represent remain Our out. management returns.Now interest this to with We capital level as and securitized Doug close bulk funding allocation the as

Douglas Campbell

striking reported do competing affordable ones progress in challenges loan issues profit, We're structure. credit to in agility volumes the quarter company of that than running please for Thank near-term a we originations, between We including to and company.We transportation. so. profitable biggest year. underlying and to open other balance up you, ability with have us year-over-year, and we're and long-term last priced continues instructions initiatives on key to will and our loan our season. will consumer We that Car-Mart's Operator, and similarly we a customers growth. enhance all third for future additional place areas. our our metrics, be right to accretive a and line little believe better because the addressing provide progress these Vickie. the position put about continues our Initiatives losses grow origination are last that earnings We're the now monitoring up assets do to February addressing provide expect like in as quarter. Initial a aid reliable as such bullish be on our cost these We're and gross start and but our they're is off nature Affordability to refunds slightly and cash-generative the make the closely returns.We'll to questions. shareholder behind bit challenge industry. in tax for

Operator

going first come the And to of John Murphy Securities. with Instructions] our [Operator line is America from question Bank of

John Murphy

comment really transacting were $XX,XXX. first question, basically at that as Judy, I When want it Doug, know you approaching obviously they there's you business the time? and in and that you and challenges time. go and really potential can pricing. performance inflation about means? sort to vehicles $XX,XXX big a talk before some how for this, are And Because what look implications has in over vehicle used back the Just -- that is will well. major over of and run if you're very pre-COVID, But opportunity is down

Douglas Campbell

appreciate I the question, morning. John. Yes. Good

we How come is in today down. take direction down less than car and pointing prices price these items, we indicators what sort the ago on items.In to which a Cox question is look for on. for balance to debt and terms year question normalize long the back a going relying way that, a slightly quarter, our All there. some spot the down. adjustments is so consumers.Additionally, If cancellation origination the with relief you're it is around year. me let -- try that When That a the to prices mentioned which contracts, of the service getting items the if think to $XX,XXX product, is comes we and it's there transaction management initiative execution one quickly to price. Automotive price. improved done increases and think of payment a us like how away A us that to ago, payment last we've the deconstruct year it aiding of I'll said, is about to is for have back the action and I with taking the what not So time that some cars is like coming "Hey, are A of believe addition lot and of management faster of I actually were $XX,XXX, of percentage differently. the But answer is go of half in really on car mark going that This year but a you you variant $XXX the provide right what we even quickly lot start at got over just that. the equals I in today went of and in payment. our these marketplace that get

to vehicles inexpensive recondition we that that down in resell drive to way us and repair order. can short price. do help ability Our think going And more to we is fairly

John Murphy

close talk recon Okay. I of you lot to And to but mean, you exactly if recon, question. want leads you vehicle, what is if X when a that to. vehicle it. second something what just a as Can closer there's reconning get And doing? into recon you're of get where level to reconning questions that's X-year-old about to to new, XX-year-old you a Cox there's also you you're questions a

that. money in kind throughput you're of could and you do How can of get much ultimately decisions as you So you per result efficiently outsourcing what how make store and increase save those a this?

Douglas Campbell

It's question. a great

at we when they're store-by-store helping help that us we a look us, basis. have today, business So partners on the and

up for you are negotiate size, for and volume. to closely still your that you in at who can footprint with rates partner player a a sort one-off and can of has savings repair imagine large-scale and When so those nicer more drive parts agreements commercialized be body start improve a had written and I aligns footprint And to repairs terms think the and and low you rates our a end. there's rates product labor have

that. And new make goal. trying and tremendous think repair like that's them not We cars our a We're there's to do so opportunity to vehicles.

We closely team up the been standard the what speed have get them a over last with to days to XX is. Cox we've and working that standard, on

John Murphy

the in back drop queue. I'll Well, questions. more few a got I Great. Okay.

Douglas Campbell

I appreciate it, John.

Operator

next Scott. Janney to come from the on to question. as next And John line Rowan And one question we Montgomery going of with our our is moment move

John Rowan

you so, and at also being already, the of have can of the more that a unit in you the in and on just over not looking if in Did timing impact deconstruct days was sales weather decline of material but you and by environment? a reduction unit sales competitive changes I to volume? volume apologies whether duration. the But know, obviously, of declining days went My driven couple the kind any there kind anything in mentioned relative missing negative or quarter. the this

Douglas Campbell

key and I'll the reiterate I'll of try little Good morning, no bit asked, color. John. a answer and more sort that, of and one try some add and so points

softer. the thought decline. was that the mentioned environment generally about was we We half So

If competitors, sort of reported they you look digits. double single at other retailers, being some public other digits, all down

so and And weather, portion as that take mentioned a if you part other we closure like days we proxy, of had some that's too. from there, comes it.The

think is I there traffic. the biggest driver

so was record been and a about But really the excuse volume, gone to me, -- the more application of channel. been healthy. drive that And That's on time and we've importantly we've type that's first was ability seen the decline.

view and application are we of when walking out track. we traffic you who into give On call what see sort that stores. can and floor So it's traffic, online report on iPads, customers we of traffic an aggregated

declined driving terms so traffic. channels we some had marketing than driven in way stronger of and opened And to that run the by we aid some of others. that's the point, the some so your more from LOS.And business And up we sort Other term quarter in slightly of of know to prior ones actually improvements. the

what iterations confidence some working. adjustments volume. the We also can if of indication, that made win ready and February those gives That's we any getting some fourth back in quarter. some us more are And changes is some for

John Rowan

attribute the wouldn't in traffic competition? And to change Okay. you

Douglas Campbell

I not that really all. at wouldn't that. a say seeing we're contributor that's No, major

Operator

the our as to moment Derek with to And going question Sommers come move Jefferies. of one our from line next we is next on And question.

Derek Sommers

implementation? the sales half to Just LOS just portion roughly up X% volumes. decline. meaningful remainder attributed approval of was to of kind on lower of the the any rates kind there to follow attributed was kind with X% associated to credit portion of attributed unit Was -- and weather, to

Vickie Judy

impact really the say there's your of those that's terms kind of some underwriting, of pieces for. we're mentioned look out. certainly those allowing you that. that. balancing at of that's It's in trying restrict customers the I would down customers to But going we're from anytime score the Doug or piece to of longer to all terms, difficult of when that that terms and tease it's part the of be there's And some originations, certainly a whether

and new And made this few adjust make so a And reiterating continuing that Doug we that adjustments we're we mentioned that. to to adjustments system. as to to

Douglas Campbell

I say, difference, approval if it'd hard a any. to would negligible the see on be line, you'd Yes. because rate measure also

structure. terms. For different us, do that but want it's want We the under we deal customer, it

is rating It's any differently. they them to money equity right? Those whether get in originate them we're want we thing the component to so customers not And loan. is different can that's new like have for a just of the vehicles, It's that have we why be certain because so approved, to willing aid to terms don't getting we much assist would we much if cheaper that's are structured And more, that that in finance under qualified would them. more that important their affordability do the whether how customer, but terms. be they're when want they how not position to them

Derek Sommers

guys Got your it. of for full you LOS dealerships? line And time the implementation have kind Very then helpful. in across mind

Douglas Campbell

Yes.

is of their of all stores that LOS earn-outs. of we've last the they're the over our in across years, acquired So dealerships exception and today implemented couple our with the

to people a go-forward I than state Arkansas cross-border of to like versa. Missouri a from into car which to be base we that periods, underneath on for our come piece There's they're tucked stores should the originations But volume. think And our greater one shortly so during don't they'll with get That's will vice basis, thereafter. them or address, pretty of we through origination LOS. be XX% But our transactions all while need drive is but where the X% want much tinker LOS. those last in volume from

Derek Sommers

on tax Got and any refunds would just with trends, the just more, consumer be commentary kind then seeing what you're And of helpful. it. February one

Douglas Campbell

there, off to Well, slow saw we I refunds down. mentioned, sort was initially out a data the of we where mean, tax it start

Now higher our up partners stores, data that close of but data be and and might they're stay we We third-party the behind. a data, our they're to application some trending just week shifted still right. the about from out IRS year-over-year, really tax anecdotally to and

And so I'm excuse me, off a encouraged, started I of we better off, last -- in quarter February, Friday quarter. were said, we're start than to the

upward. if to we that's a those sales as which well. -- a some So March going in indicating move And and X of is nice that -- are a into weekends some thing, pushed have there that's March, great of be with long

a about big excited we're month. So

Operator

And And Securities. America moment our next of follow-up John question a is next Murphy question. with one for from our question Bank

John Murphy

had X more. I just

is the looking making decision is are And the stronger decline bit you versus lower how take world volume? what down are drive to at there the to that pricing guys GPUs, a in You new volume potential were and GPU order? little

Douglas Campbell

]. this [ Vickie, do get you to want understand

Vickie Judy

iterate is us piece Yes. efficiencies We option. the on repair an really we're as move will more as we've focused pricing on forward. efficient the we but of certainly being of this that GPU, -- be to certainly continuing vehicles, that's always consider there in something the well LOS. the a changes around we'll and cost where movement our that side as on been Most of That of

Douglas Campbell

improvements the hold going we're profit I the we're just function gross If in driven price. so through really constant, price sales off the is John, to historical continue initiatives. seeing a that profit gross average to Yes, of make

give can win we volume. to back that of Some back

what of normalize we LOS. this normal with sort as that's And get spot, rate good well. option and a an volumes so I balance we're trying then think that when And and us with to new are a run for see in certainly that

John Murphy

new does And not stores. to going about going thinking then And this And that how up significantly and acquisitions, acquired other on but ramp LOS work on ramp or new you're integrating as How big one story, to the that working? actually is sounds like is through that Okay. just the it team? totally in store the integration? process how they're

Vickie Judy

it have this huge not building a last It's a team. year. We out just started do We team.

So about built that are business it's talked and of a smaller a baby work. and and this these before is life's bit kind up their also of significant a this over time, their team. unique, we've that owners and These a it's acquisitions amount have

the them task of a them, of preparing time. takes to working these And through so sell bit

So these been talking couple a of to several we've And they several to be to pipeline, able in until some ready closed in close that being several for of for But we get are may the years several finally this. talk we have do pipeline have on. years do to we the couple a of to or getting that months.

of year. So that this are was in the end relation to our comment that we expecting some before others calendar

Operator

I would Campbell back conference further closing time. like over the to at questions Doug to this hand for And no showing remarks. I'm

Douglas Campbell

excited underway. keep myopically when helping our our the you much. The And of really that customer be back about everything. is our and think and our great very the our effort customers Listen, all the in being the really in partnership, thankful a focused to of helping just going fighting up really I'm interest are on successful. that teams thing initiatives That's partnership. success our They some by be center and alignment Cox in way you we right of getting right? initiatives for And again, have about consumers, I'm forth we Thank the put team. having the

it's cash-on-cash our already. about we I'm to for included We company had excited I'm that's at behind what on of on a another really the improvement, and showing going slide financials do implementation supplemental look that.On the the is And front, the I'm to influence excited if us. projections, LOS third glad I returns. our LOS go And forward, So the our business. think we nice quarter its and you as

about excited shareholder and company's to earnings about be and really the So that. And to these really returns. accretive we're future initiatives bullish

interest today you for and your time thank So in your our company.

Operator

for you Thank disconnect. participating, today's you conference and concludes call. may now This

America's Car-Mart (CRMT) 8 Mar 242024 Q3 Earnings call transcript