Financial Data and Key Metrics Changes - The company reported a net income of $17.9 million for the fiscal year 2025, a significant improvement of over $49 million from a net loss of $31.4 million in the prior year [12] - Gross margin for Q4 was 36.4%, up from 35.5% year-over-year, while the full fiscal year gross margin finished at 36.7%, a 200 basis point improvement [25][26] - Net charge-offs as a percentage of average finance receivables improved to 6.9% in Q4 from 7.3% in the prior year quarter, reflecting overall improvements in loss frequency and severity [28] Business Line Data and Key Metrics Changes - The company sold 57,022 units for the full year, down just 1.7% year-over-year, with a 2.6% increase in unit sales volume in Q4 [23] - Interest income increased by 4.2% in Q4, contributing to incremental revenue growth despite a decrease in vehicle sales price [23] - The average time to repossession improved by 14% compared to the same period in the prior year, indicating better customer retention [28] Market Data and Key Metrics Changes - The average selling price of vehicles decreased by $316 to $17,240 in Q4, yet the company managed to drive a 1.5% increase in revenue compared to the prior year's quarter [23] - The company experienced a $300 increase in procurement costs per unit due to market conditions, but this was deemed manageable [34] Company Strategy and Development Direction - The company is focusing on enhancing its collections infrastructure and has relaunched the "Pay Your Way" platform to provide more flexible payment options for customers [13][16] - A new seven by seven scorecard for underwriting has been implemented to improve risk segmentation and pricing accuracy, which is expected to enhance credit performance [17][20] - The company aims to diversify its underwriting and expand its asset procurement strategy to navigate tighter supply environments [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and team, noting that the used car market remains dynamic and that they are well-positioned to navigate challenges [34] - The leadership team highlighted the importance of maintaining strong relationships with customers and adapting to their needs in a changing economic environment [36] - Management acknowledged the potential for growth among higher-rated customers while continuing to support their core subprime consumer base [72] Other Important Information - The company successfully closed a term securitization, issuing $216 million in asset-backed notes with a weighted average coupon of 6.27%, reflecting growing investor confidence [9] - SG&A expenses increased by 8.6% due to investments in technology and talent, but the company achieved a 6.1% increase in SG&A per customer, indicating improved cost efficiency [32] Q&A Session Summary Question: Impact of macroeconomic factors on business - Management noted that the speculative nature of the wholesale environment began affecting pricing towards the end of the quarter, but overall sales growth was sustainable [40][41] Question: Updates on operational upgrades and their impact on margins - Management reported a gross profit increase of 98 basis points for the quarter and emphasized ongoing optimization efforts to enhance margins [46] Question: Condition of low-end consumers - Management indicated that while there are persistent economic pressures, there have been no significant changes in the condition of low-end consumers, and demand remains strong [70][71] Question: Underwriting changes and market positioning - Management acknowledged the potential to move upmarket while still focusing on core subprime customers, indicating a strategic approach to capture a broader customer base [72][75] Question: Capital markets success and its implications - The new CFO highlighted the company's successful securitization efforts and the potential for lower interest rates as the market becomes more comfortable with the company's improving economics [81][82]

Financial Data and Key Metrics Changes - Total revenue increased by 8.7% despite average selling prices declining by 90 basis points [18] - Interest income rose by 5.1%, driven by overall receivables growth of $31 million year-over-year and a 50 basis point increase in the portfolio's weighted average interest rate [19] - Net charge-offs as a percentage of average finance receivables improved to 6.1% from 6.8% in the prior year quarter [26] - The allowance for credit losses as a percentage of finance receivables decreased to 24.31% from 25.74% a year ago [27] - SG&A expense increased by $2.9 million, or 6.7%, primarily due to acquisitions and higher stock compensation [31] Business Line Data and Key Metrics Changes - Sales volumes were up 13.2% for the quarter, attributed to improved execution and an earlier launch of the annual tax season promotion [21] - Gross margin improved to 35.7% from 34.2%, driven by vehicle procurement and disposal initiatives [23] - Collections increased by 5.2% over last year, with the monthly average total collected per active customer rising to $568 from $540 [29] Market Data and Key Metrics Changes - Delinquencies increased by 40 basis points to 3.7% at quarter end, influenced by winter weather impacts [30] - The application volume was up over 3.5%, indicating stronger demand from consumers [79] Company Strategy and Development Direction - The company is focused on improving and diversifying its balance sheet by adding new capital and lenders, as well as enhancing its securitization program [9] - A new Vice President of Capital Markets and Treasury was hired to support the growing ABS platform and capital market strategy [13] - The company aims to provide affordable financial solutions for vehicle ownership and exceptional service to customers under financial pressure [36] Management's Comments on Operating Environment and Future Outlook - The management highlighted the challenging environment for customers due to inflation, higher used car prices, and elevated interest rates [9] - The company is optimistic about its position heading into the strong fourth quarter and spring selling season, with increased inventory and refined marketing strategies [38] - Management remains cautious about the macro environment but believes that the company's foundational improvements will lead to future growth [40] Other Important Information - The company completed an extension and upsizing of its ABL facility to $350 million, maturing in March 2027 [10] - The sixth ABS transaction was completed in January, totaling $200 million and was more than 10 times oversubscribed [11] Q&A Session Summary Question: Update on unit recovery and underwriting trends - Management indicated that underwriting has been cautiously relaxed, with current volumes expected to be down 6% to 8% compared to fiscal year '23 [46][47] Question: Impact of weather on delinquencies - Management acknowledged the difficulty in isolating weather impacts but noted that delinquencies have trended back down quickly [49] Question: Timing and ramp-up of acquisitions - The company closed on a dealership in December and two larger dealerships in June, expecting to add over 5,000 accounts in the next 18 to 24 months [52] Question: Provisioning benefits and consumer stress - Management believes most benefits are from improved underwriting practices rather than an overall improvement in consumer conditions [58][59] Question: Update on application pool and tax season - Management reported a slower start to tax season but noted stronger demand and improved application volume, indicating positive consumer behavior [74][79]