Good morning, everyone. Thank you for holding and welcome to America’s Car-Mart’s Third Quarter Fiscal 2021 Conference Call. The topic of this call will be the earnings and operating results of the company’s third 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 of 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 I 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.

Okay. Well, thank you and good morning. We appreciate you joining us this morning and for your interest in America's Car-Mart. We are pleased with our results and the progress we're seeing with our various operational initiatives. We have a lot of work to do, but we're optimistic that the improvements and the investments we're making will solidify our unique place in the market. We give our customers peace of mind by keeping them on the road. We try to eliminate the stress of car ownership, which can be one of the more stressful areas of life. We have an obligation to serve more customers as our customers’ lives and the communities we serve are better because we're there. We currently serve close to 86,000 customers or about 570 customers per dealership, and we're building a platform to increase that number significantly over time. We believe that a large majority of our dealerships can serve 1,000 or more customers at some point in the future. Our balance sheet and our historical focus on cash flows has put us in a great position to continue to deploy capital and grow market share in the areas we already serve, as well as looking to new markets through new lot openings and acquisition opportunities like the Taylor acquisition which is going very well. Our business model is strong and getting stronger. Our people are difference-makers, and the amount of capital required to operate effectively in our market continues to increase giving us a distinct competitive advantage. We are transitioning from a collections-based company to more of a sales company that can collect our bricks-and-mortar structure, along with an outstanding digital presence will put us ahead of the pack and solidify our place. Better cars and better support infrastructure gives us confidence to move forward more aggressively. Our improvements in the inventory management and procurement area of the business, which includes preferred vendors, reconditioning, logistics, and overall inventory and replenishment flow are progressing, and our IP investments will most certainly help us in this area, specifically the Microsoft Dynamics 365 project that we mentioned in our press release. We have tremendous opportunities in the procurement area, and we're very excited about the team we have in place to maximize our efforts here and to continue to provide our valuable customers with quality, affordable vehicles. We must be excellent with our inventory management as it's make or break to the overall customer experience. Once again, above all else, our customers demand a mechanically sound car that is affordable, and they need us to help keep them on the road. We're making good progress in our efforts to streamline our sales process and seamlessly support our customers physically and/or digitally in whatever manner they want to be served. We understand that the car buying experience is not high on anyone's list of things they enjoy, and we're devoting significant efforts to continue to improve our online digital experience, including online credit approval and enhanced home delivery and curbside options. We're investing significant resources in our corporate customer experience team, as we continue to centralize certain functions that can be better, more consistently, more efficiently, and effectively provided centrally, leaving key customer face-to-face engagement to the field to allow our field associates to focus on growing their businesses. Our recruiting, training, and retention efforts are extremely important, and we are continuing to see very good progress and enthusiastic engagement as we support our associates, and they take advantage of individual growth opportunities with our growing company. And with that, I'll now turn it over to Vickie to go over some numbers. Vickie?

Good morning, everyone. Our total revenue increased 22.2%, up to $228 million. We were happy to see a 5.6% increase in retail units sold and the improvement in productivity by dealership. The average retail selling price per unit also increased up to $13,688. Interest income increased by 20.5%, and same-store revenues were up 16.9%. Revenues from stores in the over 10 years of age category were up 15%. Stores in the five-year to 10-year category were 25%, and revenues for stores in the less than five years of age category were up to about $20 million. The supply of units at the lower price points continued to be tight. But as Jeff mentioned, we continue to invest in and improve our procurement processes, and we feel confident with our inventory as we move into tax time. At quarter end, 16 or 11% of our dealerships were from zero to five years old, 42 or 28% were from five to 10 years old, and the remaining 93 were 10 years old or older. Our overall productivity was 31.2 units per lot per month compared to 30.6 units for the prior year quarter. Our 10-year-plus lots produced 32 units per month per lot for the quarter compared to 32.7 units for the prior year. Lots in the 5- to 10-year category produced 30.2 units compared to 28.3 units for the prior year quarter. Lots less than five years of age had productivity of 27.4 units compared to 20.9 units for the third quarter of last year. Our down payment percentage was 5.5% compared to 5.4% for the prior-year quarter, and collections as a percentage of average finance receivables was at 12.1% compared to 13.2% for the prior-year quarter. However, absent the increase in the average contract term, collection percentages would have improved over the prior-year quarter. The average originating contract term was 35 months compared to 30.8 months for the prior-year quarter and up from 33.8 months sequentially. The average selling price was up $1,938 with a 4.2-month increase in the term compared to the prior year third quarter. Our average monthly payment is approximately $440. Our weighted average contract term for the entire portfolio including modifications was 35.7 months compared to 32.5 months for the prior-year quarter. The weighted average age of the portfolio was basically flat at nine months. Interest income increased $4.8 million or 20.5% compared to the prior-year quarter, primarily due to the $116.3 million increase in average finance receivables at a 19.5% increase. The weighted average interest rate for all finance receivables at the end of the quarter was approximately 16.5%, relatively flat from the prior-year quarter. Gross profit per retail unit increased $836 to $5,774, which is up 16.9% compared to the prior year third quarter. The gross profit percentage was 40.6% compared to 40.3% for the prior-year quarter and down just slightly from the sequential quarter, which was at 40.7%. The improvement in gross margin over the prior year resulted from improved wholesale margins, again due to the strong demand and the low supply of low-priced units and lower repair costs. However, that was partially offset by the lower margin on the retail units. As you recall, increasing average selling prices result in lower gross profit margins, higher gross profit dollars as our gross margin percentages are lower at a higher selling price. The mix of the type of vehicle sold was fairly consistent with SUV sales increasing approximately 3% over the prior year quarter. Pickup sales decreased due to the high price and the tight supply of trucks. SG&A for the quarter was up $3.1 million compared to the prior-year quarter, but down as a percentage of sales to 16.7% compared to 18.6% for the prior year quarter. SG&A as a percentage of total revenues less cost of sales and provisions for credit losses was 54.1% compared to 61.9% for the prior-year quarter. Again, this metric is important for Integrated Sales and Finance business as a large part of our efforts are focused on keeping good customers in their cars and driving down credit losses. Our investments continue to be primarily payroll-focused, as we build our customer experience team and investment procurement, combined with increased commissions as a result of the higher net income and increased stock compensation. For the current quarter, net charge-offs as a percentage of average finance receivables were at 4.9%, down from 5.9% in the prior year third quarter. We saw improvements in delinquent accounts, and our accounts 30 days past due were at 2.8% compared to 3.6% in the prior-year third quarter. The CARES Act enhanced unemployment benefits and stimulus payments possibly still contributed to some of this improvement along with our efforts to work with our customers to keep them in their cars and on the road. We have continued to provision at 26.5%. Although our portfolio continued to perform well in the current quarter, there still remains 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 22.8% for the third quarter of fiscal 2021 compared to 19% for the prior-year quarter. Income tax expense included an income tax benefit of $341,922 related to share-based compensation for the current quarter and prior-year quarter, respectively. We expect our base effective tax rate to be approximately 24% going forward prior to any excess tax benefit during the stock option exercises. We were pleased to increase our credit facility by $85 million during the quarter and also added a new lender to give us more headroom as we grow our portfolio and customer count. At quarter end, our total debt was approximately $210 million, and we had $4 million in cash and approximately $115 million in additional availability under our revolving credit facilities. Our current debt net of cash to finance receivables ratio is 27.7%, compared to 30% at this time last year just prior to the pandemic. During the quarter, we added $51.7 million in finance receivables, funded $10 million in net capital expenditures, increased inventory by $1.1 million, and repurchased $3.7 million of our common stock, a total of $58.5 million, with only a $12.3 million increase in debt net of cash. As a point of reference, in the last 12 months, most of which were during the pandemic, we added $137 million in receivables, increased inventory by $14.5 million, repurchased $10 million of our common stock, and funded $9.3 million in capital expenditures, a total of $170.8 million, with only a $24.1 million increase in debt net of cash. We are well-positioned to serve more customers and grow market share. Now, I’ll turn it back to Jeff.

Okay. Well, thank you, Vickie. We have recently rolled out our new logo and tagline, "keeping you on the road," and our associates in the market see the changes very favorably. They represent a new beginning and a fresh look at the business and are another foundational piece to our future growth prospects. We want to keep every customer for life and never have a bad customer experience. And we believe we can do this. We're in the process of rolling out our new service contracts to all locations. And these contracts will include oil changes and roadside assistance in longer terms. And they've been very favorably received. Again, it's all about keeping customers on the road. We're working on our new advertising and marketing strategy and expect to see positive results from this effort. As a collections company, we have not had to invest a lot in advertising and marketing. But as we focus more on productivity and market share and growing customer count, we will be devoting more resources to this very important area of the business. Again, we believe we have created a unique position in the market by anticipating, investing, and staying ahead of changes in the last few years as the industry has changed significantly. It's all about improving the customer experience from top to bottom. We are prepared for and have the ability and the passion to keep investing in the key areas and to reach excellence in everything we do. We will continue to gain market share, add new locations, and look for additional acquisition opportunities and the future is bright. Once again, we're in a position with our bricks-and-mortar structure, and the digital efforts to secure and leverage our place in the market as we go forward. And lastly, as stated in our press release, we have over 2,000 associates. We have close to 86,000 customers and thousands of vendor partners. And collectively, we have a responsibility to help make the world a better place, and we take this responsibility very seriously. Thank you, and we will now turn it over for questions. Operator?

At this time, the participants will answer questions from the callers. I want to emphasize that my previous comments about forward-looking statements apply to both the participants’ prepared remarks and anything that may arise during the question-and-answer session. Our first question comes from Kyle Joseph with Jefferies. Your line is open. Please go ahead.

Good morning. Congratulations on another very strong quarter. I wanted to discuss the fourth quarter, understanding that you don't provide guidance, but there are many factors to consider. It's tax refund season, and there are also some stimulus developments. Can you walk us through how last year's fourth quarter was affected by the pandemic and share your expectations for this upcoming fourth quarter considering all these factors?

Last year, we had a positive start to the quarter in February, but then the pandemic hit in early March, which disrupted that momentum through the end of April. Despite the challenges presented by the pandemic, we performed well, though volumes were below our initial expectations. We experienced strong results in the third quarter, and our inventories are healthy as we head into the fourth quarter. There was a stimulus check in January, but with some delays in tax refunds this year, we anticipate that these refunds will negatively impact the total compared to the stimulus payments in January. However, we expect additional stimulus to come through in the fourth quarter. With our inventories in good shape and anticipated tax refunds and stimulus on the way, we expect strong sales volumes. Our dealership personnel are prepared for increased activity, and overall, we're optimistic as we approach the fourth quarter.

That's very helpful. Thanks. And then, in terms of the retail sales prices, obviously it takes the used car market and those have been trending up although, quarter-on-quarter, they were fairly stable. Can you just give us a sense of if you anticipate further upward pressure on those given your outlook for the used car market?

Yeah. I think we do believe that prices are going to stay up for a while, maybe even drift up just a little bit more as the stimulus money gets out there and tax refund money is out and new car production has been limited since the pandemic started. And more recently, with some microchip shortages, there is a continuing shortage of good, affordable, mechanically-sound good cars out there, so we expect the prices to stay up for the foreseeable future, although increases like we've seen in the last 12 months are not expected. We do see and are seeing some leveling off of prices, but we do expect on a go-forward basis to see some increasing prices especially if we roll in our new service contracts, there's going to be a few percentage point increases in the sales prices just by us rolling out the new service contracts, but we do expect a continuing shortage of good used cars. And as a result of that, we expect prices to stay up and maybe even continue to drift up just a little bit.

Got it. Very helpful. Please go ahead, Vickie.

No. I was just going to say I will add that even with the selling price being up, we do feel like the quality of the car that is out there is much better and overall does have fewer miles. So the quality is better, which should lead to a better customer experience and lower credit losses, too, from a unit perspective.

Understood. Thank you. And then just one last one for me. On the competitive environment, obviously, it's been a pretty unique environment the last year but walk us through what you're seeing both from other buy-here-pay-here operators as well as from indirect lenders and the overall availability of credit.

The cost of cars is impacting competition in terms of both inventory quantity and quality. With our strong balance sheet and cash flows, we can stock more vehicles and offer a diverse selection to our customers. We believe some of our volume growth is due to our investment in inventory, whereas our competitors may have more limited capital for inventory. This gives us an advantage in serving subprime consumers, and we feel well-positioned in the market. We provide unique options, particularly with our new service contracts, which our competitors lack. While we are gaining market share, we think that if used car prices were lower, our volumes could increase even more. Currently, prices have risen and remain high, which could mean some customers are not re-entering the market yet. If prices stabilize or decrease slightly, along with our efforts to improve the reconditioning of cars at lower price points, we expect to enhance the flow of products in that segment, which is challenging for our competition to match. Although competition remains and there is significant lending capacity, we believe we are flexible and capable of offering additional services to enhance customer experience, leading us to gain meaningful market share and feel optimistic about our competitive position moving forward.

Got it. Thanks very much for answering my questions and congrats again on a good quarter despite an uncertain market backdrop.

Thank you, Kyle.

Thank you. And our next question comes from the line of Vincent Caintic with Stephens. Your line is open. Please go ahead.

Thank you for taking my questions. My first question is regarding the significant investments you're making to grow the business. I noticed the mention of Microsoft Dynamics in the marketing efforts and am curious about the additional expenses we should be anticipating as a result of these investments. I also saw that in the February 10 loan amendment, your CapEx limit was increased to $25 million. Could you clarify if that is the correct figure and provide any insight into the dollar amount of additional investment expenses we should expect moving forward?

We have increased our CapEx limit under our debt agreement from $10 million, which has been in place for many years, to $25 million. As we look to expand our dealerships and improve our current facilities, especially those handling larger volumes, it became clear that the previous limit would not suffice on an ongoing basis. This change in our lending agreement allows us to invest additionally in areas like marketing, as Jeff mentioned. We plan to allocate more funds to grow our market share. Our new ERP project in IT is aimed at enhancing customer experience, which is a significant motivation behind this initiative. Therefore, we anticipate an increase in SG&A expenditures moving forward, and we will be strategic about the timing of these investments to ensure we do not miss any opportunities in the market.

Okay. That's helpful. Thanks, Vickie. Second, regarding the rise in used car prices and your average selling price, I know you've been discussing efforts to explore different procurement sources like rental cars and ex-rental cars. I'm curious, even with the increases in used car prices and apparent demand issues, are you managing to maintain the cost of goods sold for the cars you're sourcing?

I believe we are effectively managing to keep costs low and being efficient in our operations. There are external market factors that are beyond our control, specifically a high demand and low supply of cars in the price ranges we are targeting. However, I am confident that the partnerships we've established and our procurement initiatives are yielding positive results. We are diligent in controlling costs as much as possible, even though some aspects are influenced by market dynamics and supply-demand discrepancies. We will continue to improve in these areas, and I feel we are doing our part to maintain lower costs and prices.

Thank you for your comments. I have one last question. It’s more of a broad inquiry, but I found your remark about transitioning from being a collections company to a sales company that also focuses on collections intriguing. You mentioned an increase in marketing expenditure, but I wonder if there’s a deeper philosophical shift behind that statement. I’ve noticed the rebranding and the new logo, so I’m curious if you could elaborate on any philosophical or operational changes in how you are approaching the management of the company. Thank you.

I believe it begins with our growing confidence in the products we offer, which are reliable, affordable cars. We're also gaining assurance in our infrastructure, particularly concerning customer experience, as well as the investments we're making in procurement and IT. These efforts are providing us with a strong foundation. As we evaluate our cash flows, returns, and credit performance, it's becoming clearer that there are opportunities to enhance productivity at the lot level. In the past, we may not have had as much confidence in our infrastructure and the quality of our vehicles, but we are progressing toward a stage where we feel confident across all aspects of our business. While we acknowledge there is still much work to be done, we believe we are establishing solid foundational elements in every area, and we are seeing significant consumer demand. What we offer is distinctive, and consumers show enthusiasm for our work. We have a responsibility to serve a larger customer base, and we are committed to that. As our infrastructure improves and we can provide top-level support to more customers, we must actively seek and retain those customers for life. There are indeed some philosophical differences in our approach. We're continuously exploring ways to improve operations centrally, allowing us to free up valuable time in the field to concentrate on customer experience and serve more customers more efficiently, minimizing back-office tasks that have traditionally consumed time. Therefore, we have real opportunities to implement changes from a central office perspective that can significantly benefit field operations as they aim to grow their respective businesses.

Thank you. And our next question comes from the line of John Rowan with Janney. Your line is open. Please go ahead.

Yeah. What percent of your current customer base already has a service contract in place?

It's just slightly below half. It’s typically been a 12-month product.

So, there are two ways to approach this question. As you begin to roll it out and reach the other half of customers with service contracts, how much duration does that add to the portfolio? Alternatively, how much has the duration of the portfolio increased over the past year? Was car pricing competitive compared to including the service contracts in the upfront cost of the car?

Most of the increase is due to inflation on the cars themselves. There has been some impact from the rollout of the service contract so far. Looking ahead, we anticipate an overall increase in average selling prices of around $400 to $500 across the entire portfolio as we implement the higher rates for service contracts. We can expect an additional month of term and another $500 increase in average selling price specifically tied to the launch of the new service contracts.

I wanted to clarify that you are currently at 35 months compared to 31 months last year. This indicates a duration increase of slightly over four months. Therefore, considering that half of the portfolio would represent about one month of that increase, am I correctly understanding what is driving this change?

John, what's out there now, the portion specific to the rollout of the new service contract is very minimal. It is almost entirely because of the increased selling price. We just started piloting this new service contract this past year, and they just got rolled out in February. And we're not going back to any existing customers and offering these extended contracts. It is just on new contracts.

That's fine. I just wanted to check if you are experiencing any weather impacts.

Yes, we are. We've had a lot of snow and ice and freezing temperatures. And we've had to scramble around to keep lots open and associates getting to and from work. So, it's been a little bit of a mess the last week.

I've been is to one, we’re in New Jersey than it is in some of parts of the country at least supposed to be hot. Are you guys having power outages? Do we see this impacting the next quarter results?

No. I mean, we are having some power issues and some rolling blackouts or brownouts and some of that, but the sun is supposed to come back out at some point soon. And so, we don't expect anything more than a temporary blip from the weather for the fourth quarter.

Okay. Thank you very much.

Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Jeff Williams for any additional remarks.

Okay. Well, once again, thanks for joining us this morning. And as always, we want to thank our associates in the great work that they're doing out in the field to keep our customers on the road and to give them real peace of mind as being part of our Car-Mart family. So, thank you. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a great day.