Car-Mart(US:CRMT)2020-11-17 19:13Financial Data and Key Metrics Changes - Total revenue increased by 17.4% to $223 million, driven by a 15.3% increase in average sales price and a 1.9% increase in retail units sold [12][13] - Interest income rose by 18.2%, with same-store revenues up 12.8% [12] - Gross profit per retail unit sold increased by $770 to $5,705, a 15.6% increase compared to the prior year [20] - Net charge-offs as a percentage of average finance receivables decreased to 4.7% from 6.1% in the prior year [24] Business Line Data and Key Metrics Changes - Revenues from stores over 10 years old increased by 13%, while stores aged 5 to 10 years saw a 16% increase [13] - Productivity per lot per month was 31.2 units, slightly down from 31.6 units in the prior year [14] - The average down payment percentage improved to 6.4% from 6% in the prior year [16] Market Data and Key Metrics Changes - Inventory volumes returned to pre-pandemic levels, supporting higher sales volumes as the company approaches tax time [21] - The weighted average interest rate for finance receivables remained flat at approximately 16.4% [19] Company Strategy and Development Direction - The company is focused on capital allocation to gain market share in existing areas, with plans to open new dealerships [30] - Significant investments are being made in customer experience, inventory procurement, and technology upgrades to support future growth [8][9] - The company aims to centralize non-core functions while maintaining a localized decision-making structure [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing consumer preferences and market conditions [7] - There is uncertainty regarding the impact of COVID-19 on collections and the overall economic environment, leading to a conservative approach in credit loss reserves [25][36] - The company anticipates that supply challenges in the used vehicle market may ease after tax time [40] Other Important Information - The effective income tax rate for the quarter was 23.6%, up from 22.7% in the prior year [26] - The company maintains a conservative balance sheet with total debt of approximately $214 million and $19.5 million in cash [27] Q&A Session Summary Question: What is the company's experience with credit loss reserves in light of COVID-19? - Management noted increased demand for vehicles but expressed caution due to macroeconomic uncertainties and potential impacts on customers [35] Question: How significant have stimulus checks been for consumers? - Management acknowledged the positive impact of stimulus checks on consumers and emphasized their efforts to work with customers [37] Question: When does the company expect supply relief in the used vehicle market? - Management indicated that supply challenges may persist until after tax time, despite some improvements in repossessions and new car sales [40] Question: What are the company's growth parameters moving forward? - Management highlighted ongoing investments in inventory management, customer experience, and plans for new store openings as key growth strategies [42][44] Question: How does the company view the current portfolio duration in relation to used car prices? - Management expressed confidence in the quality of their vehicles and the ability to adapt to market conditions, indicating that they are not overly concerned with extending contract terms [51][54]