America's Car-Mart, Inc.

Good day and thank you for standing by. Welcome to America's Car March 3rd Quarter Fiscal 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vicki Judy, Chief Financial Officer. Please go ahead.

Thank you. Good morning and welcome to America's Car Mart third quarter fiscal year 2024 earnings call for the period ending January 31st, 2024. Joining me today is Doug Campbell, our company's president and CEO. We've issued our earnings release earlier this morning, and it is available on our website along with a slide of supplemental material. We will post the transcript of our prepared remarks following this call, and the Q&A session will be available through the webcast after the call. During today's call, certain statements we make may be considered forward-looking and inherently involve risk and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the safe harbor provision 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, including important cautionary notes, please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30, 2023. and our current and quarterly reports furnished to or filed with the Securities Exchange Commission on Forms 8K and 10Q. I will now turn it over to Doug for his introductory comments about our third quarter.

Good morning, and thank you for joining us and for your interest in our company. I mentioned in our earnings release that sales volumes fell short of our internal expectations during the quarter. There are times when the results you produce don't align with the level of effort or output, and this was one of those quarters. I want to acknowledge the hard work of our associates because they do so much to take care of our customers and keep them on the road. Very appreciative of the effort put out by the team. I'll start by highlighting some of the positive items that occurred during the quarter and discuss more in detail the drivers of the sales decrease. Last quarter, there was speculation about direction of the credit loss and whether it would continue to degrade, flatten, or even improve. Our associates have worked tirelessly to assist our consumers in navigating an ongoing challenging environment. Throughout the quarter, we reduced the number of unit losses taken when compared sequentially by 9%. As an industry backdrop, delinquency trends worsened throughout the quarter. However, we improved our 30-plus day delinquencies by 30 basis points. This drove a $3.9 million favorable adjustment in the provision for credit loss. We've now completed the planned rollout of our loan origination system. As with the implementation of any large-scale system that is built on change management, there were some challenges in getting it fully in place, but we're happy that those implementation challenges are now behind us. We now have two quarters with the LOS originations driving more money down, stronger consumer profiles, and shortened term lengths. Let me make this point clear. The LOS is a game changer for Carmark, and we're really excited about the system leaving its imprint on the fourth quarter and into the future. As mentioned in the press release, We also entered a strategic partnership with Cox Automotive, which will aid in vehicle movement, repairs, acquisitions, and remarketing. I'll cover this more in detail, but let me start with revenue and sales. Revenue was down 7.9% for the quarter, driven by several factors. First, a 19.6% decrease in unit volume was the primary driver. Overall industry softness accounted for roughly half of that. Recall that in our second quarter report, we said that August and September volumes were up or flat. with October contributing to the decline. Those October trends persisted into the third quarter, with overall application volume softening by 8.3%. The LOS implementation challenges mentioned, along with balancing volume and deal structure, also contributed to the decrease. The benefits of system updates to the LOS, along with an augmented marketing plan for the fourth quarter, are expected to win back some volume and deliver stronger outcomes. We also had two fewer selling days in the quarter because of holiday shifts. Our stores were always closed on Sundays, but the shift in days for Christmas Day and New Year's Day landing on a Monday added two more closure days to the quarter when compared to the prior year's quarter. Additionally, there was severe winter weather in January, which necessitated closures of up to three days at roughly a third of our 154 dealerships in January, which kept consumers from shopping. These revenue headwinds were partially offset by a 16% increase in interest income and a 7.5% increase in the average retail sales price. That increase in the average retail sales price was driven equally by a mix of ancillary products sold and vehicle price. You'll hear more from Vicki on the specifics on the LOS here in a minute, but let me comment on the results of these deal structures. The credit losses that we're seeing on our loan originations are very positive when compared to the legacy system. However, I want to caution these results are very preliminary in nature, but that's rapidly changing with now 10,000 originations performing materially different than the loads generated by our legacy system. We plan to share more specifics in the future, but words like substantial and material come to mind when we start to quantify their effect on both the frequency and the severity of loss. We've mentioned numerous times the importance of acquisitions, and it being one of the strongest uses of capital for our company. We're proud to announce that the purchase of Central Auto in Hot Springs is complete, and we're actively pursuing other opportunities that we expect to close in the calendar year. I want to provide more detail on this critical initiative that we teased out in last quarter's report. As noted in our release this morning, we've entered into a strategic partnership with Cox Automotive to aid in driving efficiencies within our vehicle supply chain process. I personally have a long history with Cox and their leadership team across several organizations in driving large-scale projects that have driven tremendous value. We've begun to leverage their digital and physical assets, as well as their logistics services. This initiative will be centrally managed, removing the day-to-day burden of processing and overseeing the disposal and reconditioning of assets from our operations team. Strategically, we expect this to allow our dealership teams to have more time selling and helping customers navigate vehicle ownership. We believe this partnership will help address some of the affordability challenges that exist in our industry, and we expect it will lead to greater value creation for our shareholders and customers alike. And I'll turn it over to Vicki to cover more details on our financials. Vicki?