America's Car-Mart, Inc.

Good day, and thank you for standing by. Welcome to the America's Car Mart's first quarter fiscal 2025 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 the session, you will 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 11 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 of America's Car Marks. Please go ahead.

Good morning, and welcome to America's Car Marks first quarter fiscal year 2025 earnings call for the period ending July 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 detailing our cash-on-cash returns. 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, 2024, and our current and quarterly reports furnished to or filed with the Securities Exchange Commission on Forms 8-K and 10-Q. Doug will start us off with his thoughts on the business and strategies for this fiscal year.

Thank you, Vicki, and thank you, everyone, for your interest in America's Car Mart and for joining us to hear more about our first quarter results. As I mentioned in the earnings release, I'm pleased about the improvement in sales volume versus the prior year when viewed sequentially. If you recall, we were down almost 20% in the third quarter. We then finished down 13.6% in the fourth quarter and have closed the gap to be just under 10% now. We're pleased that website traffic increased both year over year and sequentially indicating strong consumer demand. However, application volumes were slightly softer. contributing to the decline in sales. We believe that part of this decline is the need for more affordable vehicles. We've been working hard to bring down the average retail price during the quarter. When viewed sequentially, we had a reduction of approximately $100 in the average retail price when you exclude ancillary products. Vehicle procurement prices are a good leading indicator for our average retail prices. And with the progress we've made during the quarter, we expect these benefits to both improve and continue. Gross margin continues to be a positive story, up 30 basis points for the quarter. We remain very focused on gross margin improvement through pricing discipline, reduced transportation costs, and lower vehicle repair costs. The biggest challenge for our industry and for us is ensuring we match inventory levels and pricing to the demand and the type of consumer we're seeing in the marketplace. We've taken several actions in the value chain to lower vehicle acquisition costs, which means we can pass those savings on to our consumers. Our partnership with Cox Automotive is a key component in our plan to address affordability for consumers and improve gross profit margins for the company. Recall that this partnership is centrally managed, removing the day-to-day burden from our location managers to oversee the complete process for the disposal of our assets. We've been optimizing agreements with vehicle repair shops and consolidating suppliers to lower acquisition and transportation costs. We've set new expectations for vehicle quality, especially with preferred vendors, and continue to consolidate vehicle vendors. The vendor consolidation process is also improving title flow, which speeds up the time in getting inventory to the sales lot and then displayed online. For example, In fiscal year 23, we purchased an average of 10 vehicles from close to 400 vendors monthly. In fiscal year 24, we dropped that to roughly 270 vendors. And this year, we plan to bring that down to under 200 vendors. While we still need local relationships in many markets that we operate, the partnership with Cox Automotive is giving us additional options. Like any transition, the onboarding process of a new partner for our business operations is not without its challenges. We believe those are mainly behind us now as it relates to the procurement and the remarketing of vehicles. I'll switch now to the consumer facing aspects of our business. The LOS is fully in place at 147 of our 156 dealerships. The remaining nine dealerships which were acquired are still in their earn out period or have yet to be integrated. As of July 31st, almost 40% of our total portfolio dollars originated within the LOS. The speed at accomplishing sales and financing process is at least one hour faster for each customer. Because more of these sales are starting online, it allows for a better overall customer experience. And we're pleased to see this kind of adoption. And it gives us additional data on consumer preferences and the pre-qualification trends we're seeing. The benefits from LOS that we discussed last quarter, which include curtailing originating terms, generating better deal structures, and ultimately improving loss rates, continue to build momentum. Deals originated through the loan origination system versus our legacy system have a lower frequency and severity of loss, thus producing a lower overall cumulative net loss rate than loans originated during the same period. This improvement is also very much in contrast with our back book of originations, which are now approximately 33% of our portfolio when looking at overall fiscal year 2023. I'll let Vicki get into more detail here in a moment on that. We're moving quickly to reshape our future without changing our core mission, keep customers on the road. Our initiatives are strengthening CarMart's competitive position, enhancing our ability to innovate, and increasing operational efficiency. I reported last quarter on the implementation of additional multi-year tech investments in our business. Specifically, and Enterprise Resource Planning System, or ERP. This was a significant multi-year investment and it's weighing on our operating expense line. The benefits of this ERP conversion are designed to improve efficiency and operational flexibility within finance, accounting, and customer management functions, and provide capacity for growth. We went live on the system on May 1st and are confident that we can help provide leverage in SG&A. We also completed important enhancements to our CRM during the quarter, which are designed to assist us in credit application conversion. A better customer experience will drive higher conversions to sales. We're very pleased with the recent addition of the two dealerships at Texas Auto Center, which delivered strong results as expected in the quarter, including a record month in July. We have ambitious plans to grow America's Car Mart and become a more dominant company in our segment. This is evident in the turnaround we're beginning to see. Our teams will be a key component of our success. I'll now turn the discussion over to Vicki for more details on our financials. Vicki?