Car-Mart(US:CRMT)2019-08-16 17:48Financial Data and Key Metrics Changes - Overall revenues for the quarter were $172 million, with same-store revenues increasing by 3.3% [10] - The topline was up almost 5%, with 1,600 new customers added during the quarter [6] - Average selling price increased to $11,410, a 3.6% increase compared to the prior year quarter [11] - Net charge-offs as a percentage of average finance receivables decreased to 5.4%, down from 6.4% in the prior year [18] - The allowance for credit losses was reduced from 25% to 24.5%, resulting in a $2 million after-tax benefit in net income [20] Business Line Data and Key Metrics Changes - Revenues from dealerships over 10 years old increased by 2%, while stores aged 5 to 10 years saw a 4% increase [10] - Stores less than 5 years old experienced a significant revenue increase of about 34% to approximately $16 million [10] - Overall productivity was 29 units per month, slightly down from 29.8 units in the prior year quarter [12] Market Data and Key Metrics Changes - The weighted average interest rate for all finance receivables at the end of the quarter was approximately 16.4%, up from 16.3% [15] - Collections as a percentage of finance receivables increased by 40 basis points to 13.5% compared to 13.1% last year [14] Company Strategy and Development Direction - The company aims to leverage its infrastructure to grow its top line and customer count, focusing on long-term value creation [7] - Plans to continue investing in training and development of associates while educating consumers on total cost of ownership [7] - The company is transitioning to a more aggressive strategy to retain customers for life and improve inventory and facilities [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the overall health of customers is strong, with wages and hours worked increasing [32] - The competitive environment remains intense, with healthy competition in the subprime space [30] - The company is optimistic about future growth, particularly in improving online marketing and customer engagement [44] Other Important Information - The effective income tax rate for the first quarter was 21.8%, compared to 17.1% for the prior year quarter [21] - The company repurchased 55,507 shares for $4.7 million at an average price of $84.94 per share [23] Q&A Session Summary Question: What is the current state of credit availability in the subprime space? - Management indicated that there is still a lot of money available for subprime lending, making it competitive [30] Question: Are there any changes in credit health among consumers? - Management noted a slight increase in accounts over 30 days past due but overall customer health remains strong [32] Question: How is the capital allocation strategy prioritized? - The first priority is to invest in the business and associates before considering share buybacks [34] Question: What drives the improvement in collections? - Most improvements are attributed to internal efficiency enhancements rather than just the quality of cars [38] Question: How does the business perform in economic cycles? - The company performed well during the last recession, indicating resilience in challenging economic conditions [50] Question: Can you elaborate on the decrease in loss frequency? - The majority of the decrease is related to the quality of cars, along with improved internal processes [52]