America's Car-Mart, Inc.

Good morning, everyone. Thank you for holding and welcome to America's Car March fourth quarter fiscal 2022 conference call. The topic of this call will be the earnings and operating 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's website at www.carmart.com. As you all know, some of management's comments today may include forward-looking statements, 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 company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information regarding forward-looking information, Please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30, 2021, and its current quarterly reports furnished to or filed with Securities Exchange Commission on Forms 8-K and 10-Q. Participating on the call this morning are Jeff Williams, the company's President and Chief Executive Officer, and Vicki Judy, Chief Financial Officer. And now I'd like to turn the call over to the company's chief executive officer, Jeff Williams.

Okay, well, thank you for joining us this morning. We're very proud of our team and all of our great associates living out our mission, vision, and values in our daily work. We give our customers peace of mind by keeping them on the road. That's our purpose, and we have an obligation to serve more customers. As detailed in our press release, we had another outstanding quarter and year in very difficult conditions. We have a number of significant initiatives in process that are allowing and will allow us to continue to grow into the future, better utilizing data, continuing to centralize certain functions, and leveraging our scale as we move forward. There is tremendous demand from consumers for our offering, and we have a lot of work to do, But the body of work is impressive. We're now serving over 95,000 customers, soon to be over 100,000, and growing from there, as we discussed in our press release. Revenues over $1.2 billion. Return on equity for the year was 21%, and averaged 18% for the previous five years. And return on assets was 9.5%, with a previous five-year average of 9.2%. And looking back, since we started our consistent share repurchase program at the end of fiscal 2010, we bought back over 6.8 million shares for $286 million, resulting in a 42% reduction in our fully diluted share count. We've grown finance receivables to over 1.1 billion, so in effect, Almost all of the $400 million in our total debt net of cash is the result of our share buybacks, demonstrating the cumulative power of our focus on operating cash flows in this capital-intensive business. We will continue our investments in the digital and data areas as we move forward. The investments are focused on inventory, underwriting and sales, and customer experience. We have over 40 years of data that we're harnessing. Our loan origination system, our CRM module, and vehicle data efforts specifically will provide us substantially more granular, accessible, and actionable data. This will help us add and retain more customers over time. As managers and owners, we are interested in deploying capital at the best rates of return available. The cash on cash returns of our business are attractive, even with a term at 43 months, which is substantially less than competition. First, growing our customer base and increasing the productivity of our existing stores is the best use of our capital. Second, acquisitions of well-operated dealership groups generate similar returns for our shareholders and provide an exit strategy for an owner-operator and future growth opportunities for their associates. We've developed a successful acquisition process, which works for everyone, and we're eager to speak with owners who share our values and commitment to associate and customer success. Third, we repurchase shares below intrinsic value. Additionally, we continue to add new stores when we find the right combination of location, personnel, and price. Our opportunities for expansion and value creation have never been greater. We believe that long-term results will be consistent with or exceed those of the past. Over the last five years, we've grown our book value per outstanding share at a compounded 19% per year. We've gone from $31 a share to $74 a share. I'll now turn it over to Vicki to go over some numbers. Vicki?

Thank you, Jeff. Good morning, everyone. We are pleased with the results for the quarter, with productivity by dealership of 35.6 units. That's second only to last year's fourth quarter at 36.5 units. Last year's fourth quarter included a significant positive impact from the largest stimulus payment, which was dispersed in March of 21. For comparison to pre-pandemic, the fourth quarter of fiscal year 19 was 30.3 units per dealership. Our objective of increasing productivity per dealership and leveraging existing talent and facilities is moving in the right direction. We added over 7,000 customers during the fiscal year. For the current quarter, net charge-offs as a percentage of average finance receivables was 5.6% compared to 4.8% in the prior year fourth quarter. Again, the prior year fourth quarter included stimulus payments, which also positively impacted collections and net charge-offs in the prior year. Net charge-offs were 5.6% for the quarter ended 4-31-20, and 6.4% for the quarter ended 4-30-19 pre-pandemic. We believe we will continue to see some normalization of credit losses as we move forward. However, we also believe that our investments in our customer experience area, our expanded service contracts, and our focus of keeping customers on the road will keep us closer to the lower end of those historical ranges. We did see improved recovery rates in the fourth quarter as well, at approximately 30.5% compared to 28.5% in the prior year quarter. Our accounts 30 plus past due was at 3% compared to 2.6% in the prior year fourth quarter. The average originating contract term for the quarter was 42.1 months compared to 37.1 for the prior year and up from 40.4 months sequentially. Our weighted average contract term for the portfolio, including modifications, was 42.9 months compared to 37.3 for the prior year. The weighted average age of the portfolio increased from approximately 8.2 months to 8.7 months. Our total gross profit per retail unit sold increased by $855 to $6,887 or 14.2% compared to the prior year fourth quarter. The gross profit percentage was 36.5% down from the sequential quarter at 37.8%. This decrease primarily resulted from the increase in the average selling price, coupled with the increased cost for repair parts, transportation fees, fuel costs, and other cost of sale expenses. We continue to leverage the investments we're making with our SG&A. We're now serving over 95,000 customers, an increase of more than 7,000, and over 2,000 total associates. As an integrated sales and finance company, we also monitor SG&A as a percentage of total revenues, less cost of sales, and provision for credit losses, as a large part of our efforts are focused on keeping customers in the family and lowering credit losses. This percentage was 53.5% for the year ended 4-30-22 compared to 57.3% at 4-30-20 pre-pandemic, excluding the impact of the allowance change. At quarter end, our total revolving debt was approximately $45 million, and we had $6.9 million in total cash and approximately $198 million in additional availability under our revolving credit facilities, which was based on our borrowing base of receivables and inventory. As we previously announced, we also completed our inaugural securitization just prior to quarter end with an initial $400 million in aggregate principal of asset-backed notes. This allowed us to diversify our funding sources with this non-recourse debt and will provide us greater access to credit with a more efficient capital structure as we grow. At April 30th, our securitized notes payable was $396 million, with $36 million in restricted cash related to those notes. Our total current debt net of cash to finance receivables is 36.1%. During fiscal 22, we added $292 million in receivables, increased inventory by $33 million, repurchased $35 million of our common stocks, and funded $21 million in capital expenditures. We will continue to focus on cash-on-cash returns, a conservative balance sheet, and investing for the future of a growing business. Thank you, and I'll let Jeff close us out.