Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart First Quarter Fiscal 2022 Conference Call. The topic of this call will be the earnings and operating results for the company's first quarter fiscal year 2022. 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 numbers 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 1 of the company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and its current and quarterly reports furnished to or filed with the Securities 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 America's Car-Mart. We're very excited to be celebrating 40 years in business, supporting our associates, our customers and making our communities better. We will carry on these great traditions and continue to improve as our industry changes, and the next 40 years will be even better. We will stay close to the consumer and focus on customer experience, providing unmatched support after the sale by keeping our customers on the road, giving them peace of mind by being part of the Car-Mart family. We’ll deliver legendary service as we move this great company forward. We're making good progress with our various initiatives, which are foundational and focused on supporting our shift from a 40-year-old collections company to a sales company that's very good at collections. Our goal is to continue to gain market share and support an ever-increasing customer base, allowing our field associates, led by our talented general managers, to have more time to focus on growing and improving their businesses. We have the balance sheet to support their growth. This sales focus shift starts and ends with our ability to efficiently and effectively source good, affordable vehicles at increasing quantities. We're making good progress with our procurement and inventory management effort. We're still in the early innings and we will continue to improve in this critically important area. We ended the quarter with 604 customers per dealership, that's an increase of 21 or about 3.6% for the first quarter. We have significant opportunity and room to continue to serve more customers. And as we stated, we believe most of our dealerships can support 1,000 or more customers in the future as we continue to centralize some key inventory procurement and management aspects, and some other non-core support functions. I'll now turn it over to Vickie to go over the numbers.

Good morning, everyone. Our total revenue for the quarter increased 49.2%, up to $280 million. That resulted from a 25% increase in retail units sold, a 20.4% increase in the average retail sales price, and our interest income increased by 33.7%. Same-store revenues were up 46.7% with revenues from stores over 10 years of age, up 48%. Stores in the 5 to 10 year category were up 56% and revenues for stores in the less than 5 years of age category were up to approximately $26 million. Our productivity improved to an average of 33.6 units sold per store per month, compared to 27.4 over the prior year quarter and to 29 units per store per month for the quarter ended July 31, 2019 pre-pandemic. We continue to invest in inventory to accommodate the higher sales volumes and to provide customers with a quality mix of vehicles. Our retail inventory was up due to higher quantities, about 50% of the increase combined with higher pricing compared to the same time in the prior year. At quarter end, 16 or 11% of our dealerships were from 0 to 5 years old, 38 or 25% were from 5 to 10 years old, and the remaining 97 were 10 years old or older. Our 10-year plus lots produced 35.2 units sold per month per lot for the quarter compared to 31.2 for July 31, 2019 pre-pandemic. Our lots in the 5 to 10 year category produced 31.3 and 26.5 for the quarter ended July 31, 2019. Our lots less than five years of age had productivity of 29.5 units per month per lot for the quarter. Our down-payment percentage was 6.9%, compared to 7.6% for the prior year quarter, and collections as a percentage of average finance receivables was at 11.5% compared to 13% for the prior year quarter. Our collections remained strong with the reduction in line with the expected change due to the average term increases. The prior year also included the impact of the pandemic-related stimulus payments, which contributed to a higher collection percentage. The average originating contract term for the quarter was 38.8 months, compared to 32.4 for the prior year quarter, and up from 37.1 months sequentially. The average selling price was up 20.4% or $2,600 with a 6.4 month increase in the term, compared to the prior year's first quarter. Our term increases are necessary to be competitive and to ensure affordability for our customers as retail sales costs increase. The quality of the vehicle, in terms of age and mileage, continues to improve as well. And as always, we will continue to be mindful of balancing the term length with affordability but we believe we're putting a better customer and higher quality vehicle for the most successful outcome, combining that with our commitment to keep customers on the road with excellent service after the sale. Our weighted average contract term for the entire portfolio, including modifications, was 38.7 months compared to 33.9 for the prior year quarter. The weighted average age of the portfolio decreased slightly from approximately 9 months to 8.2 months. Interest income increased $8.5 million or 33.7% compared to the prior year quarter, primarily due to the increase in average finance receivables, a 34.4% increase. The weighted average interest rates for all finance receivables at the end of the quarter was approximately 16.5%, relatively flat from the prior year quarter. Total gross profit per retail unit increased $596 to $6,175, a 10.7% increase compared to the prior year first quarter. The gross profit percentage was 38.1% compared to 41.7% for the prior year quarter and also down from the sequential quarter at 40.2%. The reduction in gross profit percentage resulted primarily from the lower margin on the retail units, partially offset by slightly lower repair costs. Increasing average selling prices result in lower gross margin percentages but higher gross margin dollars per unit as our gross margins are lower at a higher selling price. Increasing average selling price will continue to put pressure on our gross profit percentage. The mix at the top of vehicles sold was comparable to the sequential quarter with increases in car and SUV sales and pickup trucks decreasing due to the high price and tight supply of trucks. SG&A for the quarter was up $10 million compared to the prior year quarter and up $2.7 million sequentially, but down as a percentage of sales to 15.7% compared to 17.7% for the prior year quarter and up from 14.5% sequentially. SG&A as a percentage of total revenues, less cost of sales and provision for credit losses is an important metric for our integrated sales and finance business as a large part of our efforts are focused on keeping our customers on the road. This metric was 52.8% compared to 50.5% for the prior year quarter. The prior year first quarter reflected significantly reduced expenses and credit losses due to the impact of COVID-19. We are now serving over 91,000 customers, an increase of more than 9,400 compared to this time last year with over 2,100 associates. The SG&A increases have primarily been investments in our associates with increased headcount, increased wages and benefits, and increased commissions related to the higher net income. We're also continuing our investments in our infrastructure with our ERP and CRM projects, facility updates, as well as expanding our marketing and advertising to support the transition to a sales company and our goal of increasing market share. All of this while continuing our commitment and investments in recruiting, training and retention, our inventory procurement and management, customer experience, and our digital efforts. For the current quarter, net charge-off as a percentage of average finance receivables was 4.3%, down from 4.8% in the prior year first quarter, and down from 5.4% for the quarter ended July 31, 2019 pre-pandemic. Both our frequency of losses and severity of losses on a relative basis improved compared to the prior year quarter. Recovery rates have repossessed units also contributed to the decrease in net charge-offs. Recovery rates for the quarter were approximately 28.7%, compared to 24.5% in the prior year quarter. Our accounts 30 plus past due were at 3.3%, compared to 2.6% in the prior year first quarter and 3.8% at July 31, 2019 pre-pandemic. Although our portfolio continues to perform well and our focus is to support and serve our customers at the highest levels, there is still much uncertainty as the enhanced unemployment and stimulus payments end and the Delta variant continues to impact businesses and our customers’ lives. The effective income tax rate was 21.4% for the first quarter of fiscal '22, compared to 23.4% for the prior year quarter. Income tax expense included an income tax benefit of $644,000 and $91,000 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 24% going forward, prior to any excess tax benefits from stock options exercises. At quarter end, our total debt was approximately $272 million. We had $2.7 million in cash and approximately $53 million in additional availability under our revolving credit facilities. Our current debt net of cash to finance receivables ratio is 30.2%, compared to 25.4% at this time last year. A large part of this increase relates to the increase in our inventory investment compared to this time last year, which was historically low due to the pandemic, an additional $40.8 million, and also due to our repurchases of our common stock. During this past quarter, we added $80.9 million in receivables, increased inventory by $14.8 million, repurchased $11.6 million of our common stock, and funded $1.7 million in capital expenditures, a total of $109 million, with only a $46.1 million increase in debt, net of cash. We are well-positioned to serve more customers and grow our market share.

Okay. Well, thank you, Vickie. Again, we're pleased with our growth, especially our productivity progress, and ending the quarter with 33.6 units sold per dealership per month. We believe we have significant opportunity to continue to grow the business from the locations we currently have. We did reach an agreement to purchase the retail finance business of a vendor in El Reno, Oklahoma from Jake Haller. Jake is one of our best preferred vendors, and we're excited to have a new Car-Mart location in El Reno, which will open very soon, with Jake shifting over and focusing his efforts on expanding our preferred vendor relationship. Additionally, we expect to open our Norman, Oklahoma dealership in the second quarter and we will continue to open new dealerships and look for acquisition opportunities alongside and in conjunction with our investments aimed at increasing our market share and existing dealerships. We have a lot of room to grow from our existing dealership base, and that will be a focus of ours. And we'll see the continuing productivity improvements that we've seen in the recent history. This past 18 months has been difficult, marked by the pandemic, social and political unrest, now the Delta variant, the extreme shortage of used cars, and difficulty with staffing and finding associates for us and more so with our vendor partners, which has put additional strain and stress on our entire team. But we have resilient people here at Car-Mart, who are committed to our mission, our vision, and our values, and truly love the purpose in our work. Also, we have a lot of very smart people here who see the potential we have, a window of opportunity that we have to make these foundational investments in key areas with a sense of urgency. We are getting better each day. This is hard work; what we do is hard. It takes a very special group of people to do what we've done over the last few years, and we're even more optimistic about our future. We'll now open it up for questions. Operator?

Thank you. Participants will now answer questions from the callers. I want to remind everyone that earlier comments about forward-looking statements apply to both participants' prepared remarks and any discussions during the Q&A. Our first question is from Kyle Joseph with Jefferies. Your line is open.

Just a quick question. In terms of the child tax credit changes, do you see any impacts to the distributions in July and August, and can you give us your expectations for how that impacts the seasonality of the business going forward?

It's a little early to see the effect. We are seeing some improvements in collections around the 15th. But it's a little early to tell. But we do expect a good percentage of our customers to benefit from those payments for the rest of this fall.

Got it. I understand there is pressure on margins, and I'm a bit surprised we haven't seen it yet. I'm curious if you believe this is a sustainable run rate. Were there any one-time factors impacting the quarter? It seems like you were selling inventory sourced at peak levels, and since then, Manheim values have declined. Have you noticed any relaxation in the tight supply?

Yes, it's getting a little better at certain price points. The cars that we're looking for, that wholesale car under $10,000 is still pretty tight in supply and we think it's going to stay that way for an extended period of time, but we are starting to see a little more availability and we do expect that gross margin dollar amount to continue to increase with the sales price increases. The percentage itself may face a little challenge, but we are seeing market share gains. So, the pricing of our product and the sourcing of our product is being well received by consumers with the market share improvements we've seen. So, we're thinking that the used car market for the product we offer is going to stay pretty tight for an extended period. The car we're looking for is in high demand and we think it's going to stay that way, but our volumes are improving significantly. The quality of the car and the quality of the customer and the credit results are all looking good and we're going to leverage our SG&A investments as we go forward. But that gross margin percentage is certainly going to stay a little lower and may go a little bit lower as we go forward, depending on the sales price of the car. Again, we're picking up good market share and good customers, good cars and leveraging the SG&A costs.

Our next question is coming from the line of Vincent Caintic with Stephens.

I guess the first question, so your sales productivity was better than expected this quarter, continuing what you've done last quarter, but when you think about that versus the affordability discussion, I'm sort of wondering how you're thinking about productivity and sales volumes going forward and some of the levers that you've been able to pull, for example, the higher loan terms. How much longer could you go with the term? Are there other things that you could do to sustain the sales productivity with still affordability being the challenge?

Yes, that is a challenge for us, but even at that 38-39 month term, we're still significantly below the competition. So, we've got a little room to go there. We do think that many of our customers do appreciate that shorter car pay timeframe which is viewed as a positive, but it does have to remain affordable. We know we have competition on the payment amount. So, we'll continue to try to balance the attractiveness of our offering for those customers that do have choices and do focus on term while also providing a shorter term with our lower interest rate for those folks that are more focused on getting that car paid off. It’s a balance for us. It always has been and it always will be. We will look to the market and the competition and the choices consumers have and try to strike that balance. Affordability is very important and we do feel like we're way below competition on that term, and we do have some room there if consumer demand pushes us in that direction.

Thank you, Jeff. My second question is a follow-up to Kyle's inquiry about gross margins. It seems that the gross margin is influencing the stock today. Is it the case that gross margin percentages will simply track used car prices, or are there strategies you can implement to enhance the margin? I recall you mentioning various inventory sourcing methods in the past. Should we focus solely on used car prices and the 38% margin from this quarter, or are there other actions that can be taken to boost that margin?

Yes, the price of the car has increased significantly due to the rise in used car prices, which directly affects how we price our vehicles based on their purchase cost. This has led to a higher dollar gross profit, although the percentage will likely decrease as prices go up. We are focusing on improving efficiencies and managing expenses related to the cost of cars to enhance our operations. However, the retail price and competition will make it challenging to pass on the full percentages we’ve enjoyed in the past. Despite these hurdles, we are gaining market share, and our retail pricing aligns well with the market, contributing to our volume growth in a tough environment. Customers are considering our offerings and recognizing their value. Our continued initiatives, such as after-sale service contracts, oil changes, and roadside assistance, are crucial in retaining customers, supporting our market share growth and anticipated productivity improvements in the future. Gross margin percentages are projected to remain around the 38% range, possibly declining slightly as sales prices increase. We aim to stabilize sales prices, but market conditions influence this. We wish to see a more consistent supply of products at lower price points to attract more customers into our business. The current pricing has deterred some potential buyers due to availability issues, so we hope for more products available at affordable prices.

Our next question is from John Rowan with Janney Montgomery Scott.

I should make sure I heard this right. You had 38.8 months of duration currently, correct, versus 32.4 last year?

Yes.

And then, how much of the decrease in the cash conversion cycle there, the collections relative to finance receivables, was a function of duration versus reduced down payment?

It was all a reduction due to the term increase. Yes, we actually had some positives that offset it. So, the term increase was the contributing factor to the lower collections.

Okay. I only looked back over the last few years. Have you ever experienced this cash collection rate before? I don't find a number this low in recent years, and I'm curious if there's any historical precedent for approaching the 11% to 11.5% range.

Yes, this is the longest average term we've had and it's all related to the supply-demand imbalance for used cars. So we're doing our best to find a good solid, mechanically sound car at a low price and we're doing a good job there. But there is a commodity aspect to the business, and that term is going to have to go out. Again, we think we're buying a better car and putting it under a better customer. Collection results have been good and good customers do have choices, and some make choices based on that payment amount. We have to be in the game. Again, our term is a lot shorter than others, and we want to see it be even shorter than it is. But that plays into consumer demand, affordability, and good customers with choices have to recognize that the term does play into those decisions on the retail side.

Our next question comes from Vincent Caintic with Stephens.

You asked about credit. You mentioned improving the quality of cars and attracting higher-tier customers. I am curious about your thoughts on the credit reserve ratio, specifically the 24% you've been booking. Your net loss rate is also showing improvement. Do you believe that 24% is the appropriate range, or how are you planning to approach it moving forward as your cars continue to get better?

Yes, sure, Vincent. We look at that each quarter based on our historical knowledge and then, of course, taking into account our current portfolio as well. We did see a slight uptick in delinquencies. We know there's, again, a lot of uncertainty with COVID. And then, we don't have a lot of history with these longer-term contracts as well. So again, we think everything we're doing to support the customer and the vehicle we're putting them in, the customer that we have on our books, we feel very good about our portfolio. But there are a lot of uncertainties out there, but we'll continue to look at that each quarter and evaluate that and adjust accordingly.

I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Jeff Williams for any closing remarks.

Okay. Well, again, thank you for joining us on this morning's call. We are very optimistic about our business. We are convinced that most of our dealerships could and should be supporting 1,000 customers or more. The productivity improvements we saw in the quarter are outstanding. We have a very solid balance sheet and are excited about funding our individual general managers as they grow their business and improve market share in their local markets. We did buy back $12 million of stock during the quarter. We are very well-stocked on inventory. And we've got a lot of good things going on these operational foundational investments we are making to allow us to serve an increasing number of customers. So, very excited about the business, where we're at, the people we have in place, and very much enthusiastic about our future and our place in the world. So, thank you. Have a great day.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.