Good day, everyone. Thank you for holding, and welcome to America's Car-Mart’s Third Quarter Fiscal 2023 Conference Call. The topic of this call will be the earnings and operating results for the company's third quarter of fiscal year of 2023. Before we begin, today's call is being recorded and will be available for replay for the next 12 months. As a reminder, some of management's comments today may include forward-looking statements, which inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update forward-looking statements. For more information regarding forward-looking statements, please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30, 2022 and its current quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. Participating on the call this morning are Jeff Williams, the company's Chief Executive Officer; Doug Campbell, President; and Vickie Judy, Chief Financial Officer. And now, I'd like to turn the call over to the company's Chief Executive Officer, Jeff Williams.

Okay. Well, thank you for joining us this morning. We saw an increase in unit volumes for the quarter both on an absolute basis and on the same store basis and absent weather challenges would have seen more unit volume increases, Doug will cover sales for the quarter in just a minute. Our volume increases are in the face of affordability challenges and overall inflationary pressures, and when compared to the previous two years a lack of stimulus in the marketplace. However, overall used car prices did come down in 2022. As expected, we are seeing a normal tax season uptick in the most recent months, but we do expect pricing to level off in the short-term and experience more gradual normal decline for the balance of the year. The car we do buy is expected to better hold value due to supply-demand affordability dynamics. Customer’s wages are expected to continue to rise, leading to improvements in affordability and higher future sales volumes. We expect that use car affordability will shift back to historical levels over time bringing with it an increase in customers seeking credit and the outstanding service they received from America's Car-Mart. According to Cox Automotive access to auto credit tightened again in January, reflecting the conditions that were the tightest since June of 2021 for all loan types, there was a slight loosening for the independent dealer channel in January from December. But on a year-over-year basis, all channels were tighter with credit unions tightening the most. We will benefit as good folks migrate down into our market. The timing of our loan origination system rollout, which we will discuss more could not be better, picking up market share and setting ourselves up to sell between 40 and 50 cars per dealership per month over the…

Thanks, Jeff, and good morning everyone. I'll cover two more initiatives before providing some color on our sales performance. Our reconditioning pilot is moving along nicely. And we're processing several 100 vehicles per month now with strategic partners who have footprint in our trade territory. We've been pleased with the results thus far. And are seeing cost reductions and quality improvements when compared to other channels. Our expectation is that within six months, we'll be processing north of 1,000 units per month, utilizing this channel and we'll continue to scale it as needed. At maturity, we see a scenario, where we could source 50% of our vehicles utilizing this channel. Our preliminary findings indicate the effort is worth $300 to $500 per unit. However, the indirect benefits are enormous and will allow us to grow sales and volume productivity. Next, I spoke a fair bit regarding our new loan origination system on the last call, where I outlined that we had successfully installed the credit application portal throughout 23% of our stores. Our original goal was to complete the balance of the installation by May 1. I want to take the opportunity to thank all of the teams, who have worked tirelessly on completing the installation are now 100% of our operation as of February 1. All customers who apply online are receiving text message responses, as to the status of their application, including payment requirements and what they're qualified for. Customers who reply to these messages are interacting with team members here at headquarters on follow up questions and appointment setting needs, any customers who require more time, cascade into a different workflow, where one of our stores will ensure that it worked alongside them until they're ready to purchase. We're currently prioritizing what functionality to deploy for dealerships…

Hey, Doug that was a great point. I'd like to add a few others to consider. The LOS will allow us to streamline underwriting, including credit reports and income verification, eliminate the manual processes and capture documents more efficiently than we have in the past. The opportunities around regression analysis, marketing and data mining are huge. In addition, we'll also be leveraging a third party to perform tax and fee calculations, which have historically done been done by internal resources. So the LOS benefits are both better efficiencies and cost savings, and the total CapEx for this – this initiative is very minimal with ongoing incremental cost of around $13 per unit sold. So hugely positive, all the way around.

Thanks, Vickie. Those points really underscore the importance of the initiative. I'll take a moment to provide some additional color on sales. We finished the quarter with a little over 14,500 units. As Jeff mentioned earlier, the adverse effects from weather had an impact on our operations team. There were a couple of weather events during the quarter, but I'll limit my commentary to the events that took place in late January. Almost, every store was impacted in some way. But over half of our stores were located in areas, where a state of emergency had been declared. During this period, we requested our leaders to priorities the safety of our associates, and our customers by providing adequate time to hunker down, and to return to work when it was safe to do so. We believe this event had a drag on our sales volume for the quarter of roughly 300 to 400 units, which impacted our pre-tax income by about a million dollars. Absent that impact, our sales performance versus a prior year would have been up about 5% or 6% versus the 2.7% positive that we finished the quarter with. We're very proud of our leaders and associates for navigating all of these challenges, and still finishing the quarter on a positive note. When looking at the average selling price, it was up 8% or about $1,341, when compared to the same period last year. We continue to manage the issues in our industry regarding affordability and supply chains. Some of which is reflected in our sales price. When comparing the average selling prices of vehicles sequentially. They're relatively flat. Additionally, as a reminder, we made some decisions as a management team in the prior quarter to increase the selling prices of vehicles and ancillary products, given the average selling price for the first time as they went into effect in mid December. Lastly, I'll cover gross margins. We finished the quarter at 33.6%. And on the prior call, we mentioned wholesale performance having a negative contribution on these gross margins by approximately 200 basis points. While there's much we can and will do to improve the margins as a general statement. The quickest way to add some benefit here was to centrally manage the sale of these wholesale vehicles. During the quarter, we ran a pilot on a subset of wholesale volume, which got us a healthy bump in retention prices. That's reflected in the 147 basis point improvement you see here sequentially. Given wholesale volumes for us as a company, have hovered around 20,000 units a year and have been for about the last five years or so. This represents a huge opportunity when you annualize that benefit. We'll be continuing to scale the pilot and anticipate the entire company benefiting from this over the next couple of quarters. Now, I'll turn it over to Vickie, who will highlight our financial results. Vicki?

Thank you, Doug. For the current quarter, our net charge-offs, as a percentage of average finance receivables, were 5.9%, relatively flat sequentially, but also flat compared to the pre-pandemic third quarter fiscal year 2019. They were slightly above our prior five year average of 5.6%, but still below our 10 year average of 6% for third quarters. The primary driver of the increased charge-offs was an increased frequency of losses, but we also experienced an increase in the relative severity of losses. The declining wholesale prices also had an effect. Recovery rates decrease to about 28%. As Doug discussed, we will be focused on maximizing our efficiencies around the wholesale process to offset a piece of the declining market impact. We are focused on keeping customers in their vehicles as always, but especially working with them during the upcoming income tax refund time. The quality of the portfolio remains strong. With applicant quality consistent with prior year, we continue to improve the percentage of the portfolio held with our highest credit quality customers. Delinquencies have remained in line with historical percentages and are trending positively over the prior year. Our accounts 30-plus days past due, was at 3.7% compared to 4% in the prior year quarter. This is particularly notable since this year's quarter end was on a Tuesday, the highest delinquency day on average versus the prior year quarter, which ended on a Saturday, the lowest delinquency day on average. Total collections were up over 11% to $153 million and total collections per active customer per month were up 5.9% to $519. The average originating contract term for the quarter was 42.5 months compared to 40.4 for the prior year quarter and down slightly from 42.6 months sequentially. As Doug mentioned, the average selling price was up $1,341 for…

Okay. Thank you, Vickie. Obviously, we're very proud of our company. I wanted to take and give you a perspective on where we are, where we've come from in the last three years and most importantly, where we're going. Since January of 2020, our book value per share has grown from $44 to $78. That's a 77% increase, while equity is gone from around $290 million to almost $500 million. This in an environment where the average retail sales price has moved up 50% and inflation and all other areas of the economy has increased the cost of doing business. For many years, we've talked about the need to hold on tight to our conservative balance sheet with a historical debt AR of around 30% or less, so that we would be in a great position to accelerate growth when conditions moved in our favor. The pandemic resulting stimulus in the return of inflation with higher interest rates presented such an opportunity to us and we've taken advantage. Our debt to AR net of cash is 42% extremely healthy, and the increase can be looked at as representing a one-time investment in moving our book from 32 months to 45 months with the increase in car prices plus additional investments in the initiatives that we have funded. Investments have been made to position the company to come out on the other side of this historic period in better shape with more opportunities that we had – then we had going in. These investments are individually and collectively heavy lifts that are all necessary for us to reach our full potential and to be the company that we all want to be. Also as Vickie mentioned, a significant amount of our current investment in SG&A is long-term focused to be leveraged…

And thank you. [Operator Instructions] And we ask that you limit yourself to one question, one follow-up. Again, we ask that you limit yourself to one question, one follow-up. And one moment for our first question. And our first question comes from John Murphy from Bank of America. Your line is now open. John if your line is on mute, could you please unmute it? One moment our next question. And our next question comes from John Rowan from Janney. Your line is now open.

Good morning.

Good morning.

Great morning.

So I was wondering I’ll drill down on duration a little bit. So the originating duration is relatively flat sequentially, actually down a little bit sequentially. But the effective entire portfolio duration was actually up sequentially and up year-over-year. I'm assuming that this is due to higher modifications. Is that correct?

Yes. We did have slightly higher modifications this quarter. Not anything out of our ordinary range, but certainly a time for us to continue to work with our customers, certainly, as we approach the income tax refund season as well.

Okay. So most of it, John, might relate to the fact that the average age of the entire portfolio went up 12.5%, from 8.8 months to 9.9 months. So that's going to shift out the overall age of the entire portfolio, which is representative of just the increase in age and turn.

Okay. And then if there were some increased modifications, does that have any impact on delinquencies. I mean, you did get a lower delinquency number for 30 days year-over-year, but in the press release, it shows the average, or the total current portion of the portfolio is down year-over-year. So you can just compare the two, one going up, one going down and whether or not modifications had any impact on those? Thank you.

Yeah, I mean, I would have some impact, again, our modifications were not outside a normal range, pretty consistent with where we usually see modification.

Okay, all right. Thank you.

And thank you. [Operator Instructions] Our next question comes from Vincent Caintic from Stephens. Your line is now open.

Hi, good morning. Thanks for taking my question. So first question is a broad one, one I've been getting a lot from investors. But if you could maybe talk about what you think would be a right post-pandemic annual earnings run rate, so you have $0.22 of EPS for this quarter. Consensus for fiscal 2024 is about 535 [ph]. So just wondering, what you think, annual earnings should be when we think about a post-pandemic number, and then how we get from this quarter to where you'd like to be on a run rate basis going forward? Thank you.

Yeah, as we mentioned in the press release, in the comments earlier, we do expect to return earnings to -- return on equity more in line with historical results pre-pandemic. And to do that, all the initiatives in place on volume and productivity improvements, gross margin improvements, expense management, and better credit results should get us there over time. We’re currently adding a lot of reserves to the balance sheet on the credit reserve side. But cash-on-cash returns for us look very healthy. And we expect over time again, as we mentioned, dollar returns and percentage returns to be in line on a cash-on-cash basis with historical results. So we're optimistic that what we're doing and the initiatives in place and productivity improvements will come along nicely. And spot within three years, five years to get ROE back, closer to historical levels.

Okay, perfect. So like historical metrics are, sort of, you think we can get back to that, or even the improved from that level? Is that fair from your comments?

That would be, yes, that would be our intentions with all the investments we're making in the business.

Okay, great. Thank you. And my follow-up, so a more specific question just about the inventory. So I appreciate your comments on the press release about that inventory levels. We're getting back to historical levels. But if you talk about what's the average age inventory, and are we pretty much done from this point, or maybe after tax refund season, we're done from this point in terms of inventory normalization? Thank you.

I think we've worked through a good percentage. The majority of our inventory challenges, there's some left to work through. But we are getting there making progress, fully focused on improving efficiencies and inventory turns and working through some product that has been acquired over the last year. So, but I'd say we're, we're well on our way. And we're not fully finished yet. But making good progress.

I’d add the inventory that we're sourcing out of this new channel, as it starts to make its way through the ecosystem. We'll also have a benefit there, and the wholesale, what I'll call the centralized wholesale selling that to be accretive to the margins that we'll have going forward to, so that's, that's exciting as well.

Okay. Great. And sorry, did you have the days of ages inventory. I think last quarter was in the mid or high 50s, just want to have that comparison. Thank you.

That was totally -- that was days inventory in days sales in inventory. That's relatively flat with what it was last year. I think the aged inventory has come down. We are making progress again. We've worked through most of it. We have a little work to do there.

Okay. Gotcha. Thanks very much.

Thank You.

And thank you. And I am showing no further questions. I would now like to turn the call back over to Jeff Williams for closing remarks.

Okay. Again, well, thank you for listening in today. I appreciate your interest in America's Car-Mart. And again, thanks to all of our associates out there for all they do to keep our customers on the road. Have a great day. Thank you.

This concludes today's conference call. Thanks for participating. You may now disconnect.