Car-Mart(US:CRMT)2024-06-18 14:33Financial Data and Key Metrics Changes - Revenue decreased by $22.3 million, or 5.8%, primarily due to a decline in retail units sold, although interest income increased by 10.5% due to a $91.2 million rise in average finance receivables [47] - Gross margin improved by 120 basis points for the full fiscal year and 200 basis points compared to the prior year's quarter, driven by pricing discipline and improvements in transportation and vehicle repairs [37][47] - SG&A expenses were $44.5 million, showing an improvement of $1.3 million, with the lowest percentage change in annual SG&A in over five years at just a 1.5% increase [21] Business Line Data and Key Metrics Changes - Sales were down 13.6% during the quarter, with average units sold decreasing from 37.7% to 33%, while the average retail sales price increased by 6.2% [37][47] - The average retail price dropped sequentially by approximately $200, while the average retail sales price was up over $1,100 [48] - The company reported a 5% increase in total collections over last year's fourth quarter, with the monthly average total collected per active customer rising 3.6% to $607 [49] Market Data and Key Metrics Changes - The company faced challenges due to economic pressures affecting consumers, including rising auto insurance rates, which are now averaging 50% more than three years ago [36] - Delinquency percentage improved by 50 basis points to 3.1% at quarter end, with a 42 basis point improvement in the allowance for credit losses, now at 25.32% [19] Company Strategy and Development Direction - The company remains committed to growth through strategic acquisitions and prudent financial management, with a focus on operational excellence and improved affordability for core customers [2][6] - The implementation of technology initiatives, including the Loan Origination System (LOS), is expected to position the company well for fiscal 2025 [2][39] - The acquisition of Texas Auto Center is anticipated to drive revenue and generate net income, with expected annual revenues exceeding $60 million from recent acquisitions [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges of affordability in the industry and emphasized the importance of technology investments for future operational efficiency [17][37] - The company is focused on value creation for shareholders through improvements in volume, margins, cost efficiencies, and returns [23] - Management expressed optimism about the future, highlighting the benefits of recent technology implementations and strategic acquisitions [42][44] Other Important Information - Interest expense increased by $4.9 million, or 38.2%, due to rising rates and increased debt, with total interest expense up $27 million on an annual basis [22] - The company has completed the rollout of several large-scale technology projects, which are already delivering benefits [5][42] Q&A Session Summary Question: What is the current store count? - The current store count is 154, which includes recently acquired locations [10][12] Question: Can you explain the differences in loss content between severity and frequency? - For the quarter, frequency accounted for about 58% of the change in the provision, indicating higher frequency of losses throughout the year [14]