Good morning, everyone. Thank you for holding and welcome to America's Car-Mart First Quarter Fiscal 2021 Conference Call. The topic of this call will be the earnings and operating results for the company's first quarter for fiscal 2021. Before we begin, I would like to remind everyone that this call is being recorded and will be available for replay for the next 30 days. The dial-in number and access information are included in last night's press release, which can be found on America's Car-Mart's website at www.car-mart.com. As you all know, 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 such forward-looking statements. For more information regarding forward-looking information, please see part one of the company's Annual Report on Form 10-K for the fiscal year ended April 30, 2020, and its current and 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 President and Chief Executive Officer; 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.

Good morning and thank you for joining us and thank you for your interest in Americas Car-Mart. As we mentioned in our press release, we had another solid quarter and we're very proud of our team and how we've responded during these trying times in our country. We will continue to do our part to build bridges and be a positive force in our communities. We have a unique business, that starts with a desire best reflected by our vision statement, to be America's best auto sales and finance company, in the eyes of our associates and customers, while improving the communities we serve. We have made and will continue to make significant investments in all of our associates, to allow them to grow and participate in the opportunities we're creating, as we expand our dealership and customer accounts and build an infrastructure to support a much larger business. Day in and day out, we put in the hard work required to serve our customers at the highest levels. Our purpose has never been more clear, and our offering and how we conduct business has a direct positive effect on the quality of life in the communities we serve. We give customers peace of mind by standing with them, when life's challenges happen, by keeping them on the road after the sale. Again, we are very proud of our work, but we have a real sense of urgency to improve and get better quickly as we move forward. I will now turn it over to Vicki, to go over the numbers. Vicki?

Well, good morning. We had a strong quarter with a revenue increase of 9.3% up to $188 million. The increased revenues resulted from an 8.5% increase in sales. This was due to a 12.2% increase in the average sales price, partially offset by a 2.8% decrease in the retail units sold. Interest income increased by 15.2% and same-store revenues were up 5.5%. Revenues from stores in the over 10-years-of-age category were up 5%; stores in the five to 10 year category were up 7% and revenues for stores in the less than five years of age category was up about 63% to about $18 million. Our first quarter sales volumes were impacted due to the reduced inventory levels, especially at the lower price points, and lower customer traffic, both as a result of the pandemic. At quarter end, 20 or 13% of our dealerships were from zero to five years old. 41 or 27% were from five to 10 years old, and the remaining 89 were 10 years old or older. Our overall productivity was 27.4 units per month per lot compared to 29 for the prior year quarter. Our 10 year plus lots produced 29.6 units sold per month per lot for the quarter, compared to 31.6 for the prior year quarter. Lots in the five to 10 year category produced 24.6 compared to 26.2 for the prior year quarter, and lots less than five years of age had productivity of 23.3 compared to 20.2 for the first quarter of last year. Our down payment percentage was 7.6% compared to 6.5% for the prior year quarter and collections as a percentage of average finance receivables were 13% compared to 13.5% for the prior year quarter. An extension in the average contract term and slightly higher modifications were the primary drivers of the lower collection percentage. This was partially offset by improved collections on delinquent accounts. The average originating contract term was 32.4 months, compared to 29.9 months for the prior year quarter, and up from 31.8 months sequentially. The average selling price was up $1,390 with only a 2.5 month increase in the term compared to the prior year first quarter. Our average monthly payment is approximately $430. Our weighted average contract term for the entire portfolio, including modifications, was 33.9 months compared to 32.1 for the prior year. The weighted average age of the portfolio was basically flat at approximately nine months. Our interest income increased $3.3 million or 15.2% compared to the prior year quarter, primarily due to the $78.6 million increase in average finance receivables, at a 14.2% increase. The weighted average interest rate for all finance receivables at the end of the quarter was approximately 16.4%, flat from the prior year quarter. Gross profit per retail unit sold increased by $693 to $5,579 up 14.2% compared to the prior year quarter. The gross profit percentage was 41.7% compared to 40.8% for the prior year quarter, and up from the sequential quarter at 40.5%. The improvements in gross profit resulted from improved wholesale margins due to the strong demand and the low supply of the lower priced units, and also reduced expenses of the payment protection plan product. This was partially offset by the lower margin on the retail unit. Increasing average selling prices result in lower gross margin percentages, but higher gross margin dollars per unit, as our gross margin percentages are lower at a higher selling price. The mix of the type of vehicles sold was fairly consistent with SUV sales increasing approximately 3% over the prior year quarter. Our inventory volumes are back up to pre-pandemic levels, and we've been able to take advantage of recent efforts by rental car companies to reduce their fleets, allowing us to acquire some newer model, lower mileage vehicles at affordable prices for our customers. This will continue to be a part of our procurement effort, as we move forward. SG&A for the quarter was up $86,000 compared to the prior year quarter, but down as a percentage of sales to 17.7% compared to 19.1% for the prior year quarter. SG&A as a percentage of total revenue, less cost of sales and provision for credit losses, was 50.5% compared to 58.7% for the prior year quarter, excluding the reduction in the allowance for losses in Q1 of the prior year. This metric is important for our integrated sales and finance business, as a large part of our efforts are focused on keeping good customers and driving down credit losses. As a reaction to COVID-19, we did significantly reduce expenses, including part-time and hourly payroll, as well as other non-associate related expenses, and this continued through most of the first quarter. All associates are now back to normal working hours, and we're moving forward with the investments and initiatives that we were working on pre-pandemic. These initiatives include our revamped procurement efforts with preferred vendors, purchases from rental car companies and reconditioning efforts. Our customer service efforts in the digital area and improved service contracts, along with the continued investments in the recruiting and training of our associates. All of this with the goal of great customer service and increasing the number of customers served at each dealership. We will continue to focus on efficiencies and cost control, while continuing to invest for the long term, and the health and safety of our associates and customers continues to be a top priority, as we adapt to the changing environment amidst the continued pandemic. For the current quarter, net charge-offs as a percentage of average finance receivables was 4.8% down from 5.4% in the prior year first quarter. Our collection efforts returned to normal operating procedures during the first quarter, while continuing safety measures related to COVID-19. We did see improvements in our delinquent accounts and our accounts 30 days past due was at 2.6% compared to 3.8% in the prior year first quarter. The CARES Act enhanced unemployment benefits did contribute to this improvement, along with our efforts at working with our customers to keep them in the car and on the road. At the end of the fourth quarter, we did increase our allowance for credit losses by $11.7 million pre-tax to 26.5% related to COVID and macroeconomic uncertainties. And although we have seen improvements in our portfolio in the current quarter, there continues to be much uncertainty caused by COVID-19 and its potential impact on our customers, collections, repossessions and the overall economic environment, as we move forward. The effective income tax rate was 23.4% for the first quarter of fiscal '21 compared to 21.8% for the prior year. Income tax expense did include an income tax benefit of $91,000 and $276,000 related to share-based compensation for the current quarter and the prior year quarter respectively. We expect our base effective tax rate to be approximately 23.5% going forward, prior to any excess tax benefits from stock option exercises. We continue to have strong cash flows and a solid balance sheet. At quarter end, our total debt was approximately $214 million and we had $50.6 million in cash, and over $26 million in additional availability under our revolving credit facilities. Our current debt, net of cash to finance receivables ratio is 25.4% compared to 28% at this time last year. During the quarter, we added $22.2 million and finance receivables under $2.9 million in net capital expenditures, increased inventory by $19.8 million for a total of $44.9 million with only a $7.7 million increase in debt, net of cash. Thank you. And now, I'll turn it back to Jeff.

Okay, well thank you, Vicki. As we have said, we believe we have an obligation to serve significantly more customers over time. To position our company to do this, we will focus our efforts on investing in the recruiting, training and retention of all of our associates, with special emphasis on the general manager position. We will continue to invest in our digital efforts, aimed at improving efficiencies, reducing friction and making seamless, the overall customer experience. There are many touch points before, during and after the sale of the vehicle, and many opportunities to give great customer service along the way. We will continue to look to improve and enhance our service contract offerings, with longer terms, oil change, roadside assistance, and other features that are very important to our customers, and in line with our message to keep customers on the road. Additionally, we will continue to invest in the area of inventory procurement, as we look for opportunities to leverage our size and improve the quality and the consistency of the vehicles we sell. We will continue to push for growth from our existing dealerships, and believe that a large percentage can support 1,000 or more customers over time. This represents significant growth opportunities for us, as we look forward. We opened our Cabot, Arkansas and Chattanooga, Tennessee locations during the quarter, and we have Edmond and Norman, Oklahoma locations in process. Additionally, we believe that more acquisition opportunities will be available to us, and we're open to looking in that direction also. We are excited about our future and look forward to continuing to improve our business in this dynamic environment. As always, thank you to our associates for giving 100% to each other, to our customers, and to making our communities better. We will now open it up for questions.

Our first question comes from John Murphy with Bank of America. Your line is open.

Good morning, guys. This is Yarden Amsalem on for John. So we've seen good improvement across a number of credit metrics in the quarter, but unit sales were actually down a little bit. So I'm hoping you can give us some color on the health of your underlying consumer, as it relates to both demand and credit performance? And maybe potentially the impact that you're seeing from the different government stimulus programs?

Yes. The volume reduction was, we believe, mostly related to just inventory. We were a little short on inventory coming into the quarter, especially at the lower price points. There has certainly been a nice consumer demand, somewhat related to stimulus, and so we certainly feel like the consumers were looking for cars. We were just a little bit short. There was just a frenzy, if you will, for cars at that low price point. And so we were a little short with inventory, and maybe missed a little volume at the lower price points during the quarter. The stimulus funds certainly helped on the credit side of things, but we also did a lot of things internally, to improve our credit metrics. It's hard to know exactly how much of each resulted in better results. But certainly, the stimulus funds did have an effect on credit performance in the quarter.

Can you give - maybe give us a sense of the cadence of sales throughout the quarter from May to July, and maybe even August?

Yes, I think we mentioned in the fourth quarter call that we were running around 90% of prior year in May, and that ended up being pretty close to where we ended for May, and then we did see nice improvements for June and July. And in August, and it's pretty good so far.

Okay, excellent. And I guess my next question I would love to hear your thoughts about used vehicle pricing, what you've seen in the quarter, how much it helped margins and GPUs and potentially even your forecast for the end of the year?

Well, certainly, used car prices have been up a lot more than expected, and that has to do with the combination of stimulus funds being out there, and a very low supply of used cars, especially at the lower price points. I think that most folks are saying at some point in the next six months, we're going to get some relief on the supply side. We're not sure that that relief comes at the lower price points. We may have challenges there for an extended period of time. But we are also at the same time, trying to sell a better car to a better customer, keep customers in our family longer, so we were on track to push up the quality of the car we're selling as we try to expand our market share and keep customers in the Car-Mart family longer. So we do expect a continuing increase in our average selling price and some of that relates to the overall market in the short term, at least, being very strong and prices being up, and then maybe a little further down the road, we do expect to see some price relief in terms of used car pricing, but that's going to be subject to some macro factors in repossession activity and cars coming off lease in auctions back flowing full speed. And so there's a lot going on with used car prices, but we do expect prices to continue to increase over the short term.

Okay, thank you so much.

Thank you.

Thank you. Our next question comes from Vincent Caintic with Stephens. Your line is open.

Thanks, good morning everyone. First question and kind of broad overview question, but if you can give us an update on August trends so far and any differences from what you're seeing from the fiscal first quarter? And then if there is any sort of forward look you could provide for the rest of the year, versus what we saw in the first quarter trends that you could provide for us? Thank you.

I would just say that August is as expected, pretty solid on collections and demand on the sales side. As far as looking forward, there's just a lot of things that are unknown pandemic related. And so we do expect, as we've mentioned several times, that we are going to increase market share. We're going to control the things that we can control and so we're going to get some market share increases, but it's a little bit unknown about what happens with unemployment, further stimulus and just general economic conditions. But I would tell you that our company is building for the future, building for five and 10 years from now, and we do expect to pick up market share. It's just, there's a lot of unknowns right now in the economy. But we will be picking up market share. Just we don't know exactly what that market might look like over the short term.

Thank you for the helpful information. My next question is a follow-up regarding the decline in per store sales volumes and unit volumes. I am curious if the inventory issues you mentioned have mostly been resolved, and if we should consider any pent-up demand that was not addressed during those inventory challenges. Are you currently able to meet that customer demand now that the inventory issues have been resolved? Thank you.

I think Vicki mentioned that inventory volumes are back to close to pre-pandemic levels. We are a little higher on the cost scale. A lot of independent dealers buy a less expensive used product. So that again, there has been a real frenzy for a lower priced used car for several months, and we chose as a company not to participate as fully in that frenzy as it doesn't translate into a good value for a consumer. So our overall pricing and overall cost of inventory has drifted up, but the market is a little more friendly. We are finding more cars and more cars at the lower price points. But there is still an excess demand for the low price point and our inventory overall has drifted up a little bit, and we expect that to continue until prices are more rational at those lower price points, as we go forward. We do expect that to happen at some point, but it may take a little time.

Okay, that's helpful. Just to clarify, your average sales price this quarter showed strong year-over-year growth of 13%. With inventory perhaps being cleared out a bit, should we expect this trend to continue in future quarters, or should we anticipate high average sales prices to persist?

I would say we were expecting quarter-on-quarter increases as we move forward. We've been drifting up for several quarters in a row. But you know with the supply issues on used cars and the shortage of cars at the lower ends, we do expect some continuing price increases quarter-on-quarter as we look forward until we get a little more clarity on the overall market and things return to more normal, in the flow of used cars.

Okay, thanks very much. I'll get back in the queue. Thank you.

Thank you. Our next question comes from Kyle Joseph with Jefferies. Your line is open.

Hey, good morning Jeff, Vicki. Hope you guys are doing well. Congratulations on a good quarter, given all the uncertainty right now. I wanted to talk a little bit about lending competition out there. We've heard anecdotally that a lot of lenders have been tightening. Have you guys seen any evidence of this on your side?

Well, we've heard that too. We don't see much direct evidence of that, although the fact that our down payments and deal structures and the quality of the consumer we're seeing has been quite high. So we can kind of extrapolate that to mean that the lending environment is a little more tough. But we haven't seen a huge change in the competitive landscape, at this point. We do expect that to happen over time and believe we are positioning ourselves again to pick up some significant market share, if credit constricts in a big way in our markets.

Got it. And then on the other competitive side, kind of some of the more mom and pop dealers you guys compete with, I would guess they're seeing similar difficulty sourcing inventory as well, are there any opportunities for additional acquisitions there? How would you say other dealers are doing?

Yes, good point. They are certainly having a difficult time finding the less expensive cars, and as far as acquisitions, we do feel there's a number of companies out there that would like to be part of the Car-Mart family, and so we feel like that the acquisition we did earlier or later in last year, that acquisitions like that are going to be a part of our growth plan. But I would say yes, the smaller independent dealers are having trouble with finding good used inventory and probably having a little issues with their lending facilities and their liquidity also which is a good thing for us.

Got it. Last question for me. You increased your reserve last quarter, which I believe was due to a temporary halt in some collection activities, but we definitely saw credit rebound and perform really well in the quarter. Can you address the uncertainty surrounding stimulus and the pandemic and its effects on credit? From a reserve perspective in the near term, do you think this is the right level?

Yes. As you know, Kyle, we review that in-depth every quarter, and certainly our portfolio is looking a lot better with delinquencies better. But especially with adopting CECL and taking into impact, all of the macroeconomic factors that are out there right now and the uncertainty, that higher unemployment, we decided to leave it at that higher level, until there is a little more clarity, and then we will readdress that every quarter. But we certainly feel good about our portfolio.

Got it. Well congrats again. Thanks very much for taking my questions.

Thank you.

Thank you. Our next question comes from John Rowan with Janney. Your line is open.

Good morning, guys.

Good morning.

A little surprised to see the jump in duration quite so sharply. Is that a competitive issue, or is that just a function of trying to move you know, an investment or if you will, just a higher price inventory level at a lower monthly payment?

We have been discussing ways to retain customers within the Car-Mart family for the long term. In the past, we allowed them to move on, but now we realize there’s no reason to lose them, especially considering the total cost of ownership and competitive deals available. Customers are seeking newer cars, which typically come at a higher sales price and longer terms. We've been integrating this into our models for some time. The overall increase in used car prices affects our retail pricing because our retail prices are determined by the cost of the cars. As used car prices rise, so do our sales prices. In terms of pricing, we've seen an increase of $1,400 and are currently at 2.5 months, indicating a relative decrease in prices compared to the sales price of cars. We are working hard to keep the term manageable, and by improving our procurement processes and collaborating with preferred vendors and reputable car companies, we have increased confidence in our vehicles. As a result, extending the term slightly could be advantageous for us from consumer, credit performance, and market share perspectives moving forward.

Does their confidence comes from the ability or the lower maintenance that would go into these vehicles over time?

That is certainly part of it. The less mechanical issues you have with the car, the better your credit performance and the more time our dealership personnel have, to sell cars and service accounts and give customers, a great customer experience.

Okay. Lastly, this is the first quarter I’ve noticed an increase in the share count. Can you update me on the status of the buyback program and whether you’re considering seeking additional liquidity to continue repurchasing stock? Thank you.

Yes, the buyback program is still in place. We are considered to be an opportunistic buyer. There are still many unknowns in the world right now, and we believe there are numerous opportunities to grow our core business. Historically, our returns on growing the base business have been higher than the returns from share repurchases. Therefore, we will take some time to better understand the macroeconomic environment and ensure we are investing where necessary. This is essential for maintaining our relevance and leadership in the coming years. We need to focus significant investments in areas like digital advancements, enhancing customer experience, improving our customer care, expanding service contracts, and our procurement efforts. All of this requires investment now to grow our core business, which is our primary focus. Until we gain more clarity on the global situation and consumer behavior, we will remain conservative regarding share repurchases.

Okay, thank you.

Thank you.

We have a follow-up question from Vincent Caintic with Stephens. Your line is open.

Thank you for the follow-up. SG&A expenses remained stable year-over-year, despite a notable revenue increase of 9% year-over-year. Vickie, I recall you mentioned that employees are now fully employed after being largely unutilized for most of the quarter. I'm curious about the expected expense levels going forward, considering the strong expenses we observed this quarter. Is this sustainable, or should we anticipate expenses growing in line with revenue growth?

Yes, I think you should expect the growth in the SG&A, like you were seeing prior to the pandemic. As Jeff mentioned, we feel like we've got a lot of opportunities here and we know we've got some areas that we need to invest in, in order to support a larger business. So think if you look at the cadence of the SG&A kind of pre-pandemic. This quarter was a little, a little bit unique here.

But as always, any investments we're making in SG&A are expected to be leveraged over time. It's just a little difficult on a quarter-to-quarter basis to always get that exactly right, good or bad, it's tough to get that exactly right, especially during a pandemic, with some cost cutting in place. But the investments that we're making and we'll continue to make, are expected to provide some SG&A leveraging over time.

Yes, that's helpful. I have a follow-up question related to Kyle's earlier inquiry. Regarding the competitive landscape, I'm interested in discussing the market share opportunities you mentioned over time. You provided useful insights about the independent used car dealers, particularly the smaller operations and their challenges. Additionally, we heard about changes in financing, such as Wells Fargo stepping back from independent financing. Could you elaborate on the opportunities to gain market share? You also mentioned that some of these dealers might be interested in joining the Car-Mart family. Overall, could you discuss how to capitalize on potential disruptions or expand into more markets?

Yes, we feel like what we do is unique. As we mentioned, we provide a good quality car for an affordable price, affordable payments, and then we give incredible service after the sale, to a credit challenged consumer, that's going to need some help after the sale. So when we look at the total cost of ownership for our transaction and compare that total cost to what a consumer with choices might get down the street through special finance, we realize that we really have a better deal for that consumer. So we need to continue to look at and promote our dare-to-compare, our price comparisons to the person down the street, and educate our associates and the consumers about the total cost of ownership and the peace of mind that you get from dealing with Car-Mart. What Car-Mart does, is take a big stress point out of consumers lives. They trust us, they count on us. We're in this boat together. We're going to keep them on the road and when you think about all the stresses in people's lives, if we can take a big stress point out, related to local transportation needs, and also do that at a price that's actually more attractive than we believe we've got just significant market share opportunities, both above us on the price points and below us. And we just feel like what we're doing and how we're doing it, the fact that we live our mission, vision values from top to bottom here every day. We really are trying to make our associates better, give them opportunities help these consumers and communities. And when you combine that with a price that makes sense too, we jump in and do all the heavy lifting. We put our boots on and punch the clock every day and go to work for our consumers, and that just to us, is going to translate into significant market share increases, as we go forward. And then on the acquisition side, we know that there are a lot of good independent, Buy Here Pay Here dealers, that have been doing it a while. Might be looking for an exit strategy, or looking to team up with someone at some point in their journey. So we're open and active and believe that there are some good players out there, that would love to join our team and expand our geography. And as we said, we have an obligation to grow the customer count and we take that obligation very seriously and we're pushing on with all these initiatives, so that we can serve more customers over time.

Great. Thank you very much.

Thank you.

Thank you. And I'm currently showing no further questions. I'd like to turn the call back over to Jeff Williams for closing remarks.

Okay. Well, again, thank you for joining us and thank you for your interest in our company. Thanks to all of our associates for all their great effort out there and the hard work and dedication to our mission. And you guys have a great day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.