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]