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 previous year [11] - Gross margin for Q4 increased to 36.4%, up from 35.5% in the prior year, with a full-year gross margin of 36.7%, reflecting a 200 basis point improvement [24][25] - Net charge-offs as a percentage of average finance receivables improved to 6.9% in Q4 from 7.3% in the prior year [27] Business Line Data and Key Metrics Changes - The company sold 57,022 units for the full year, a decrease of 1.7% year-over-year, but Q4 saw a 2.6% increase in unit sales volume [21] - Interest income increased by 4.2% in Q4, contributing to incremental revenue growth despite a decrease in vehicle sales price [21] - The average time to repossession improved by 14% compared to the same period in the prior year, indicating better customer retention [27] 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 [21] - The company experienced a tighter supply environment, with procurement costs increasing by approximately $300 per unit due to tariffs [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 [12][13] - A new seven by seven underwriting scorecard has been implemented to improve risk assessment and pricing strategies, which is expected to enhance credit performance [15][19] - The company aims to leverage its balance sheet and integrated sales and financing model to capture additional market share and drive future growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic used car market and emphasized the importance of diversifying underwriting to expand the asset base [34][35] - The leadership team acknowledged the ongoing challenges posed by a tighter supply environment but remains optimistic about the company's strategic initiatives and growth opportunities [36] 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 improved 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 [31] 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 is seen as sustainable rather than a pull forward from tax season [40][41] Question: Updates on operational upgrades and partnerships - Management highlighted that gross profit margins have improved, and they are optimistic about the ongoing partnership with Cox Automotive to enhance operational efficiency [46][47] Question: Effects of risk-based pricing on P&L - The rollout of risk-based pricing is expected to improve returns on lower-ranked customers while also driving volume growth among higher-quality customers [53][54] Question: Condition of low-end consumers - Management indicated that while there are signs of strain on consumers, there are no significant cracks in the foundation yet, and the company remains a competitive option for financing [70][73] Question: Future direction of underwriting changes - Management is exploring opportunities to move upmarket while ensuring that core customers continue to have access to financing options [75][78] Question: Capital markets success and its impact - The company is focused on maturing its capital structure and has successfully securitized over $2 billion in receivables, which is expected to lower interest rates and fuel growth [82][84]