America's Car-Mart, Inc.

Good day and thank you for standing by. Welcome to America's Car Mart fourth quarter fiscal year 2024 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vicki Judy, America's Car Mart CFO. Please go ahead.

Good morning and welcome to America's Car Mart's fourth quarter fiscal year 2024 earnings call for the period ending April 30th, 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 one of the company's annual report on Form 10-K for the fiscal year ended April 30th, 2023, and our current and quarterly reports furnished to or filed with the Securities Exchange Commission on Forms 8-K and 10-Q. I will now turn it over to Doug for his perspectives on our business and strategies moving forward.

Thank you, Vicki. And thank you everyone for your interest in America's Car Mart and for joining us to hear more about our fourth quarter and full year results. Our customer focused associates are dedicated on helping our customers navigate life's challenges and did so throughout the last fiscal year, especially during the fourth quarter. I'd also like to take a moment to acknowledge the associates and members of our community here in Northwest Arkansas who were devastated by the recent tornadoes that touched down here in Rogers and the surrounding areas. Despite the personal hardships that many associates experience, they didn't miss a beat on serving our customers. We appreciate their tremendous dedication. Let me start off with some perspective on the tax season. It was a slow start to the season as refunds trailed about a week behind normal timing. From an industry perspective, overall demand was strong and refunds were up just slightly for our consumers, which was good despite the season being somewhat abbreviated. At CarMart, there was certainly consumer interest as we had healthy website traffic. The fact that we carried about $20 million less in inventory to start the season certainly had an impact on our results. It was a challenge to balance operating leaner and capturing available demand. Consumers continue to struggle with the economic pressures of covering basic living expenses and skyrocketing costs like auto insurance rates, which are now averaging 50% more when compared to just the same time period three years ago. We are identifying ways that we can help the consumer in this area due to its importance as part of overall car ownership. Sales were down 13.6% during the quarter, which was up against the highest ever quarterly sales volume for us as a company. I mentioned overall website traffic was healthy, but total application volume was down 9.8%. This is a function of a couple different dynamics, including a higher vehicle price and the $20 million in inventory less that we carried during the tax season. Conversely, I'm pleased to see that we are closing the gap sequentially in sales, from being down 19.6% in the third quarter to being down 13.6% this quarter. Continued progress in gross margin was a bright spot, with a 200 basis point increase over the prior year's quarter and a 120 basis point increase when comparing the full fiscal year's results. We're pleased that pricing discipline and improvements in transportation and vehicle repairs continue to drive increases in gross profit. Last quarter, we reported on the start of our partnership with Cox Automotive to drive efficiencies within our vehicle supply chain process. This initiative is centrally managed, removing the day-to-day burden from our dealership managers of processing and overseeing the disposal of our assets. We can leverage additional reconditioning opportunities through their infrastructure for retail vehicle preparation. These can be future incremental drivers of gross margin and give us options to source more affordable vehicles at the point of disposal. It's early in the program, but we're already seeing favorability in the economics in these areas. This program has improved the operating efficiency of our wholesale process, including logistics flow. These factors and others will contribute to having a better flow of affordable vehicles for our customers and give us the flexibility to scale up and down quickly, given the cyclicality of our business. We remain extremely focused on inventory improvements, and opportunities remain in optimizing inventory levels, pricing, and mix to meet sales demand. We've also just completed our first full quarter of LOS originations post-implementation. Approximately 85% of our sales for the quarter were on the new platform. The remaining 15% of originations outside LOS are primarily attributable to recently acquired stores where LOS has not been yet implemented. The LOS is allowing us to spend more time evaluating the characteristics of our applicants who didn't purchase a vehicle to inform us how we can serve more customers in the upcoming fiscal year. It is also providing additional data and insights on consumers to allow us to augment our underwriting standards and identify opportunities for portfolio growth while mitigating risk. At year end, 20% of our overall portfolio was comprised of LOS originations. With the implementation completed, and our store-level users becoming more proficient, we expect that our teams will realize more of its benefits during the current fiscal year. However, it's been tremendously beneficial to date. We've used it to curtail originating terms, generate better deal structures, and ultimately improve loss rates. On the last call, I was hesitant to speak directly to some of what we're seeing. It's now a fifth of the portfolio, and I think it merits some additional conversation. During the implementation, we isolated a quarter's worth of originations out of the old and new systems and been tracking the performance from both originating pools. From a frequency standpoint, the LOS through an eight-month period is generating a 15% improvement in the number of losses taken. The severity of those losses has also improved by 9% due to stronger down payments in short originating terms. The benefit of both the frequency and severity is a 20% reduction in the cumulative net loss rate for these static pools. While impressive, LOS originations are still only 20% of the portfolio. It's still early, but we expect to see continued benefits around the reduction of losses or increase in sales volumes as we make adjustments to the system. We continue to enhance our capabilities and technology to better position the company for long-term growth. In addition to LOS, Our company invested significantly over the past three years in the design, training, and implementation of an enterprise resource planning system. The dynamics of this system conversion should prove to be foundational in improving efficiencies and operational flexibility within finance, accounting, and other customer management functions. These technologies will also lay important groundwork for the support of future strategic growth. I mentioned that this would be completed within the calendar year. We went live on the system on May 1st and have closed out our first month of usage. Like other initiatives, we'll highlight the benefits over time, but this should aid in leveraging SG&A. On June 3rd, we closed the transaction we announced in early May to purchase Texas Auto Center. This is the largest acquisition in company history. We welcome the Texas Auto Center teams at their two locations in Austin and San Marcos, and we expect them to complement our footprint as we expand in Texas. We anticipate the acquisition to be meaningful in terms of driving revenue and generating net income for the fiscal year as we build out our portfolio. Together with the acquisition in the third quarter of central auto sales in Hot Springs, Arkansas, we expect these will generate annual revenues in excess of $60 million. These acquisitions remain the best use of our capital and are a key driver for our overall growth strategy. Now I'll turn it over to Vicki for more details on our financials. Vicki?