Q2 2025 America's Car-Mart Inc Earnings Call
Oh.
Hello, and thank you for standing by welcome.
Welcome to America's car Mart's second quarter fiscal 2025 results.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you would need to press star one on your telephone.
You would then here automated message advising your hand is raised.
To withdraw your question. Please press star one again.
Speaker Change: I would now like to hand, the conference over to Vickie Judy you may begin.
Vickie Judy: Good morning, and thank you Judy the company's Chief Financial Officer, Welcome to America's car Mart's second quarter fiscal year 2025 earnings call for the period ending October 31 2024.
Vickie Judy: Joining me on the call today is Doug Campbell, our company's president and CEO.
Vickie Judy: We issued our earnings release earlier this morning, and it is available on our website along with supplemental slides detailing our cash on cash return and our new loan origination system performance improvement.
Vickie Judy: We will post a transcript of our prepared remarks, following this call and the Q&A session will be available through the webcast.
Vickie Judy: During today's call certain statements, we make may be considered forward looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view.
Vickie Judy: These statements are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
Vickie Judy: 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, including an important cautionary note. Please see part one of the company's annual report.
Vickie Judy: On Form 10-K for the fiscal year ended April 32024.
Vickie Judy: And our current and quarterly reports furnished to or filed with the Securities Exchange Commission on forms 8-K and 10-Q.
Vickie Judy: I'll, let Doug start with color on the quarter and perspective on car Mart business strategies.
Speaker Change: I'll turn it to you now.
Doug Campbell: Thank you Vicky we have significant activity during this quarter that I want to comment on which were designed to shape our outcomes in the future.
Speaker Change: In September we amended our revolving credit facility.
Speaker Change: The purpose was to provide additional cushion around our financial covenants to help navigate uncertainty around the macroeconomic environment in the back half of the year.
Speaker Change: We also raised approximately $74 million of net proceeds through the issuance of new shares.
Speaker Change: It's important for me to explain the rationale for this decision our management team and board of Directors gave very thoughtful consideration review ahead of this decision given its dilutive effect on current shareholders.
Speaker Change: Our performance over the past few quarters was below our expectations, which was an important factor in our decision to bolster our balance sheet as.
Speaker Change: As we've talked about in the past we've been challenged by marketplace factors on the sales side, we've tightened underwriting standards given the industry wide auto loan loss pressure evident by the performance of our own back book.
Speaker Change: Our consumer is and has been more susceptible to challenges in today's inflationary environment.
Speaker Change: We needed breathing room in our forecast to account for these factors.
Speaker Change: We did consider options that would increase additional leverage in various forms but ultimately we felt that equity was more prudent.
Speaker Change: This decision paint us to execute however, we felt it was the best decision for all shareholders to maintain flexibility during marketplace challenges and the higher interest rate environment.
Speaker Change: With the equity raise completed the company is currently in discussions to extend the revolving credit facility, which matures in September 2025.
Speaker Change: And we're working through potential initiatives to expand the company's funding program, while also making it more robust.
Speaker Change: These initiatives include options to add warehouse capacity, a redesign floor plan facility and a bespoke line of credit for receivables originated by our acquired dealers.
Speaker Change: The objectives of these facilities are to increase overall availability.
Speaker Change: Optionality and when we entered the ABS market and to build a level of redundancy and conservatism in our funding structure.
Speaker Change: We appreciate the support of our ABL partners and it will continue to be a critical part of our capital structure.
Speaker Change: They have been supportive for many years and we appreciate your consideration and navigating near term challenges to date, we will share more with you on our progress on these initiatives in the coming quarters, we completed our fifth ABS transaction in October this transaction was $300 million in size and well oversubscribed generating over 1.5.
Speaker Change: And demand.
Speaker Change: We believe improved demand was for loans underwritten by L. O S, which represented approximately 70% of the receivables in this transaction.
Speaker Change: Ultimately this enabled us to have the tightest spreads we've had to date, which when combined with lower benchmark rates resulted in overall coupon of seven 4% a nearly two point improvement over January transaction.
Speaker Change: This platform is important for us given its material improvement in the advance rate relative to the ABL and the access to additional capital for our growing portfolio.
Also in October we welcomed our new Chief operating officer, Jamie Fisher to our leadership team.
Speaker Change: Last quarter, I mentioned, how important existing and new talent will be and rounding out our leadership team.
Her skill sets will complement and accelerate our growth and she has already proven to be a great fit within the organization.
Speaker Change: Before turning it over to Vicki I want to comment on our continued improvements in underwriting.
Vicki: Back in June I spoke about the <unk> results relative to the loans generated in our legacy system during the LLS rollout.
Vicki: At the time, we noted that it was too early but we were optimistic that the results that we see that we were seeing showed a 20% improvement in cumulative net losses to me.
Vicki: An update through October is now showing this at a 21% improvement in cumulative net losses.
Vicki: On the surface, it's very difficult to see where such nominal changes to down payments originating term lengths payment to income ratios and overall amounts finance could represent such an improvement to cumulative net losses.
Vicki: But our focus has been on the cohorts of customers with the most risk within our customer rankings.
Vicki: We rank our customers one through six with six having the very best credits and one ranked customers holding the most risk.
Vicki: Approximately 40% of our sales come from ranks <unk> for consumers and that has been where most of our focus has been for us on improving loan structures, and allowing more flexibility to five and six rig customers.
Vicki: On these lower cohorts, we systematically now can hold more control over these structures when compared to our legacy system.
Vicki: This has resulted in a 15% improvement in down payments, allowing us to carry smaller loan sizes of four to $800 less depending on the customer Frank.
Vicki: And curtail originating terms by three months on average in addition to lower payment to income ratios.
Vicki: Looking at the bottom quartile of stores those results are even more pronounced.
Vicki: Otherwise receivables within the portfolio at quarter end represent almost 50% of the portfolio.
Vicki: In terms of the number of contracts, it's about 38%.
It's why we're starting to see an improvement sequentially in the severity of loss, but the volume of contracts originated in the legacy system are still driving frequency of loss.
Vicki: We were able to take another reduction in our loan loss reserve percentage based on the improved performance and increasing size of the portfolio impacted by it.
Vicki: We expect a crossover point at the end of the fiscal year, where the L. O S will start to be a larger driver on both frequency and severity.
Speaker Change: With that overview, let's turn to the second quarter financial results Vicky.
Vicky: Thanks, Doug.
Vicky: Before I get started on the details I want to cover an accounting adjustment that we made in the quarter related to our service contracts.
Vicky: Our longer term service contracts that we rolled out in 2021 have now been through a full cycle and based on a detailed performance analysis. We found that customers reached the mileage portion of their service contract earlier than the contract term.
Vicky: Because of this we reduced our revenue recognition period to better match the time of usage by the consumer.
Vicky: This resulted in an acceleration of deferred service contract revenue of $13 $2 million during this quarter.
And will result in a 25% quicker recognition of revenue on both existing contracts and any new contracts originated going forward.
Vicky: This started in the second quarter and is expected to improve gross margin of approximately 1% on a go forward basis absent any other variances to gross margin.
Vicky: In my remaining commentary the comparisons that I'll cover will be the second quarter of fiscal 2025 versus the second quarter of fiscal 2024, unless otherwise noted.
Vicky: Total revenues decreased $12 5 million or three 5% largely due to a nine 1% decline in retail units sold this was partially offset by a three 6% increase in interest income and the $13 2 million dollar service contract benefit.
Vicky: Sales volumes were impacted by a number of factors, including the affordability of vehicles bracket consumers. Although we did see sequential improvement. This past quarter was also impacted by some weather events and the closing of two dealerships early in the quarter accounting for about 15% of the sales Miss to the prior year.
Vicky: We continue to balance the appropriate underwriting risks with sales volumes and has limited originations at a select number of dealerships to focus on collections and servicing to maximize returns.
Vicky: This is also contributed to lower productivity on average, but improved asset quality I'll cover more on the portfolio statistics in a moment.
Vicky: The average vehicle retail sales price, excluding ancillary products was $17251 a reduction of $212 or one 2% sequentially. We've provided a breakout of the total average retail sales price per unit versus the ancillary sales and our earnings release. This morning.
Vicky: This should make it easier to isolate the vehicle price movement going forward.
Vicky: Gross margin as a percentage of sales was 39, 4% or 36, 5%, excluding the impact of the $13 2 million service contract revenue recognition benefit.
Vicky: The initiatives around procurement and our partnership with Cox continue to drive improvements to vehicle affordability and the resulting gross margin percentage. We're pleased with the continuing progress in improving the gross margin percentage and we will continue to be focused on driving to the 37% to 38% that we've mentioned in prior quarters.
Vicky: Net charge offs as a percentage of average finance receivables for the quarter were six 6% compared to seven 2% our fiscal year 2023, and earlier originations are still the primary cause of underperformance that represent less than 30% of the portfolio dollars. Currently however.
Vicky: As Doug mentioned, the LLS originations represent approximately 50% of the portfolio and are continuing to drive the improvements in the allowance for credit losses.
Vicky: <unk> as a percentage of finance receivables net of deferred revenues and accident protection plan claims was $24, 72% at quarter end down from 25% at July 31 2024.
Vicky: That covered the work we've done to achieve improvements in underwriting to our lowest system down payments for the quarter were up 30 basis points to five 2% the focus of our sales teams on larger down payments, especially with higher risk customers is benefiting the performance of fiscal 2025 pool and will benefit our customers.
Vicky: Well.
Vicky: Our average originating term was $44 two months close to flat compared to the prior year and a slight reduction sequentially. This term flattening is improving collections and benefiting loss improvement.
We continue to optimize the distribution of the terms of our customer score shortening term for our highest credit risk customers and allowing additional term for our best credit scoring customers at.
Vicky: At the end of the quarter the weighted average total contract term for the portfolio is $48 two months with $35 nine months remaining the weighted average age of 12 three months.
Vicky: We continue to make progress on boosting overall collections, which are up three 3% over last year.
This is also a sequential improvement from the first quarter.
Vicky: The monthly average total collected per active customer was $560 from $533.
Delinquencies are accounts over 30 days past due improved 10 basis points to three 5% at quarter end and was flat with the first quarter of fiscal 2025.
Vicky: Recency was 81, 8% for the quarter.
Vicky: Moving to SG&A.
SG&A expense was up $2 5 million an increase of five 7%. This was primarily driven by $2 1 million increase related to the two acquisitions completed since last year.
As mentioned, we measure SG&A efficiency on a per account basis in the short term these acquisitions create headwinds in our ability to leverage SG&A on a per customer basis, while they build out a portfolio of customers. These acquisitions are expected to add 5000 or more accounts over the next 18.
Vicky: To 24 months.
Vicky: Sequentially SG&A increased approximately $697000, primarily due to stock compensation increases interest expense increased by approximately $1 5 million or eight 8% due to the rising rate and secondarily an increase in debt.
Vicky: Sequentially, we had a decrease of approximately $270000 in interest expense as we began to see the improvement in rates and results from the equity raise and reducing the amount of debt net of cash.
Vicky: As of October 31, we had $8 million in unrestricted cash and approximately $97 million and additional availability under our revolving credit facilities calculated on our borrowing base of receivables and inventory.
Doug Campbell: Now I will turn things back to Doug.
Doug Campbell: Thanks Vicki.
Doug Campbell: We're pleased with the progress we've made on underwriting powered by our technology investments. However, last quarter I discussed the importance of unlocking more capability of the Pos system.
Doug Campbell: By utilizing risk based pricing for certain customers.
Doug Campbell: Our goal was to have the pilot kicked off before the calendar year ended.
Doug Campbell: We were successful in that effort.
Doug Campbell: We're currently in a few markets testing pricing structures and the results to date are good in this pilot we enabled risk based pricing and the implementation of a new scorecard that adds more granularity to the African pools and gives us better predictability of loss.
Doug Campbell: This gives us another lever to pull to help both routine and grow the business.
We believe this makes us more competitive in the upper end of our credit spectrum and will also allow us to pricing appropriate returns from lower ranked customers in our system.
Doug Campbell: Our credit team has done a nice job of ensuring this was delivered timely and without issue.
Doug Campbell: We should have a more comprehensive update by the fiscal year and as we get more data and results flowing through the system.
Doug Campbell: Additionally, we are pleased to see gross margin continued to improve and vehicle price come down sequentially.
Speaker Change: In fact.
Speaker Change: Excluding the service contract benefit this was the highest gross margin percentage on a quarterly basis in the past 10 quarters.
Speaker Change: We expect to see continued benefits in the back half of the fiscal year on affordability and it's especially important to get this right is the tax season approaches.
Speaker Change: Our teams are critical to the company's success.
Speaker Change: Their hard work and focus on the execution of our initiatives continue to drive. These improvements. We appreciate the contributions of all of our associates and serving our customers overall, we're focused on our stakeholders.
Customers associates and shareholders. We appreciate their belief in the platform and we believe <unk> is well positioned for future growth and profitability.
Speaker Change: We will move on to the Q&A session now operator, please provide instructions to ask questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone.
Speaker Change: Wait for your name to be announced to withdraw your question. Please press star one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Kyle Joseph with Stephens. Your line is open.
Kyle Joseph: Hey, good morning, guys. Thanks, very much for taking my questions Vicki.
Kyle Joseph: Can you just want to make sure I understand the the service contract adjustment. So the big the big adjustment was in this quarter, but then going forward I think you mentioned kind of a.
Kyle Joseph: Positive 100 basis point impact on the on the gross margin is that is that about it.
Speaker Change: That's correct, so essentially what we did.
Speaker Change: If you go back historically, we had a one year service contract.
We added in 2021, we added multiple years, one two and three year service contract at the time, we rolled those out.
Speaker Change: It was unclear on the timing of claims the mileage driven by customers under these new contracts and so we were conservative in our revenue recognition and recognized at just over the contract term.
Speaker Change: Those have now completed our lifecycle.
Speaker Change: Our three year contracts are completing their third year, we began our full performance review.
Speaker Change: And determined that our consumers are using up the contract in a shorter period of time than the actual contract term.
Speaker Change: So we had a onetime pull forward of the $13 2 million.
And then on a go forward basis, each contract that still sits on our books today and any sold going forward will be recognized over that shorter time period.
Speaker Change: Got it very helpful. Thank you.
Speaker Change: And then I appreciate all the color you gave on the on the new LLS, but can you just kind of frame where you are in terms of underwriting versus when you first rolled out the LLS.
Speaker Change: LLS.
Speaker Change: Over that timeframe and how much how much that's changed under the new Nevertheless, or whether you kept that fairly consistent since the LLS was rolled out.
Doug Campbell: Great question. Good morning, how are you doing it's Doug.
Speaker Change: So great question. If you remember it was this time last year, we had just rolled it out and we were talking about being too tight.
Speaker Change: And.
Speaker Change: Certainly we've gone back and revisited some of our assumptions and those are mainly around our higher ranked customers in terms of what we did in terms of term and down payment. We have stayed focused and we have obviously kept the underwriting much tighter on the bottom 40% of those customers, which are one through four rent customers.
Speaker Change: And continue to iterate, there and focus on down payments and so the color around there around getting more money down that wasn't.
Speaker Change: I would call it a step change for those customers.
Sort of still living in that same environment of tightness. When we initially rolled it out I would say, it's largely unchanged fiddled around with some other things in terms of PPI.
Speaker Change: Canadian term links but for the most part it's been our focus has been around the 1% to four rent customers. We're trying to not deviate too far off of what we did for them because the results are really really positive.
Speaker Change: As I mentioned, when Youre getting 15, sometimes 20% more down on those lower rent customers. That's a really really big difference in the portfolio, especially when you can take out a bunch of term there as well so we like the results of what we're seeing there.
Speaker Change: Okay.
Got it. Thank you and then yes, you mentioned tax refund season I think.
Speaker Change: Over the last five years call it between stimulus and inflation.
Speaker Change: The traditional tax refund season.
Speaker Change: Anything, but traditional kind of can you give us a sense for your.
Speaker Change: What your expectations are for this year's tax refund season.
Speaker Change: So being better prepared to be one of them and just making sure were staying on top of it the pricing market has been.
Speaker Change: Somewhat volatile is a little softer in the summer than we expected, we certainly took advantage of that.
Speaker Change: But obviously given the storms that have come through and then what I would call all of the software noise and nonsense, which create a bunch of turmoil in the wholesale market from a pricing standpoint is really sort of kept pricing propped up in the back half of the year, we've sort of capitalized where we can and are in a good position here is setting up for tax season. In fact, we're starting to AD campaigns and all of that.
Speaker Change: Right now so that will be probably earlier in the season than we have in most cases because to your point. It has been anything but normal the last couple of years. So we wanted to just ensure we are set up from an inventory and an advertising standpoint, obviously, having.
Speaker Change: Jamie Fisher on the team is going to go a long way. She certainly added some perspective on things we can do differently. So we're excited about.
Speaker Change: This year's tax season coming up.
Speaker Change: Great. Thanks, and then one last one for me just an update on the competitive environment and then.
Speaker Change: I do that.
Speaker Change: The M&A environment as well.
Speaker Change: Sure.
Speaker Change: It is it is.
There is still a lot of I would call M&A activity.
The acquisitions, we've talked about that in the past in terms of building out a small team. There is so much that we're learning have any opportunity to talk to a lot of owners.
Speaker Change: And the competition on the M&A side.
Speaker Change: I'd say smaller nonexistent almost.
Speaker Change: The environment is still tough for these folks to navigate in terms of the higher interest rate and floorplan cost and so theyre really looking for help. These conversations we have been really really selective on what we're looking at.
Speaker Change: It's very proof of what we can do out there, but we need to get the funding set up properly before we resume that and so that.
That will be something that we take care of here over the next quarter or so and then get back in the fight on some of those because we have clear line of sight on to several opportunities we're excited about.
Speaker Change: Got it thanks very much for answering all my questions.
Speaker Change: Great well thanks, Kevin.
Speaker Change: Please standby for our next question.
Our next question comes from the line of Vincent <unk> with <unk>. Your line is open.
Speaker Change: Hey, good morning, Thanks for taking my questions.
Speaker Change: Great to see the good credit performance continue that trend.
Speaker Change: My first question actually is on credit so.
Speaker Change: So it was nice to see that trend.
Speaker Change: Otherwise having to benefit the back book shrinking and I'm just sort of wondering if you could talk about kind of how you view things. Once your portfolio evolution is complete I guess, if you could compare where your portfolio is now.
Speaker Change: Versus what Youre underwriting too so let's say.
Speaker Change: Once the back book is less.
Speaker Change: It goes to zero in Delaware as originations become 100% of your portfolio, what sort of losses and.
Speaker Change: Allowance credit reserve grade should we be expecting that that environment.
Speaker Change: Yes, if you go to we've included the first time, a supplemental chart showing the LLS improvement.
Speaker Change: You sort of buy into that rate if I remember the first time, we shared that we were four or five months and now we're here on month 12 to 13 of the cycle Theres still holding a 21% improvement.
Speaker Change: When you're coming off years, the last two years, averaging $400 million of credit loss. It would imply that business is $80 million better.
Speaker Change: We certainly believe if we didn't change anything that we can continue to hold that but we do want to serve more customers and I think we are still writing our story for what that looks like and when they start talking about things like risk based pricing I wanted to make sure we give ourselves the latitude to make those decisions and go conquest, some new customers.
Speaker Change: <unk> customers that we were losing before at the very upper end of the credit spectrum and maybe customers that we couldnt come to terms on in today's environment in terms of pricing the appropriate amount of return in.
Speaker Change: On a risky customer that we have the opportunity to do that and so I think thats still sort of a question Mark I don't obviously think we'll hold the line exactly where we are because we have this new lever that we're going to begin to pull here. We have a handful of stores now are light Vincent and we're going to take 20% of the organization live here by the end of the year, we're going to.
Speaker Change: Quite a bit over the next couple of months and I think that will really help shape. Our outcome. So I'd ask that you give me a couple of quarters to give you a better answer on that.
Okay, great sounds good a little bit.
Speaker Change: Ask you that in a couple of quarters, but yes, it sounds like.
Speaker Change: Youre, having a nicer control of your credit versus your sales volume opportunities. So I appreciate that.
Speaker Change: And then last question.
Speaker Change: So I saw the <unk>.
Speaker Change: We sold two dealerships this quarter.
Speaker Change: And <unk> been selling a couple of dealerships here and there and then also adding a couple of dealerships here and there. If you could talk about your thought process with that so when you're looking at maybe selling or shutting down dealerships. What are you looking for in the pruning of the business and then what can you add assuming to your point earlier you get your funding.
Speaker Change: Wind up what are you looking for when you're adding business and where you're shaping the overall.
Speaker Change: <unk> company. Thank you.
Speaker Change: Yes.
Speaker Change: So some of the I would say older businesses that we have Vincent <unk> been around for quite a while some of them need facilities improvements et cetera, it's really an opportunity to revisit some of that and whether we want to make some of those investments.
Speaker Change: I certainly given the performance of the <unk> and our ability to control underwriting at a roof top level now.
Speaker Change: Sort of central oversight it has sort of changed our mind to think frame your thinking on what we can do there to manage what I.
Speaker Change: I'd call originations, if we're seeing a lack of performance, but there are serious still is this sales volume part and we still need to look at the markets and what they are bearing in sometime.
Sometimes we are in a long place for 20 or 30 years things things are different right plants closed manufacturing plants close those things have happened and we are trying to take action and we havent sold any of these these are been ones that we're closing and so what we're going to continue to look at that I've spoken about that a couple of times about the prudent deployment of capital and if we're not seeing the appropriate returns even if we can manage it.
Speaker Change: Credit side, but theres, just not healthy volume of inbound and then it sort of doesn't make sense, especially when.
Speaker Change: You have line of sight to opportunities in some of these new opportunities. The second part of your question.
Speaker Change: They range in size from things that look very similar to us to locations that have five and six ex the potential and so we want to do that where it complements our footprint, where we can operationally manage those and certainly where we can continue to exploit and manage that leverage the Cox partnership that's been a nice add on that were continuing to.
Speaker Change: Get the benefit of in terms of gross margin as well.
Speaker Change: Okay, Great Super helpful. Thanks, very much.
Speaker Change: You got it thanks for your question.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of John Murphy with Bank of America. Your line is open.
John Murphy: Hi, good morning, everybody.
John Murphy: Doug just a first question on sort of the tightening of the credit box and it sounds like with all of us in the scorecard that your <unk>.
John Murphy: Finding ways to kind of loosen that.
Speaker Change: Youre very responsibly and at the higher end I'm just curious.
Speaker Change: How much volume you think you may have lost and how much you may gain for that adjustment at the higher end of the credit the credit spectrum.
Speaker Change: Youre rankings and what percentage of your customers you think that that is a roughly yes.
Speaker Change: Great. Good morning, John good to hear from you.
Speaker Change: So the $5 six ranked customer what we have been sort of deeming that the upper end is about on any given month, 55% to 60% of our customer base. What we've seen over the last year is sort of those customers sit on the sidelines, a little bit but over the last quarter. So those trapped that traffic has been pretty robust. We're excited about the opportunity. If you think about the <unk>.
Can you just sort of yield up on these lower ranked customers or potentially give away some price gets stronger down payments incentive ice's customers to work with us more the opportunities certainly exist on the volume side and so.
Speaker Change: We're excited in terms of the pilot and where we can do that especially when you consider we have a large density of stores.
Speaker Change: Arkansas Homebase.
Speaker Change: Theres a user recap there and so our ability to go after those customers, which have some of the highest incomes in the country for US certainly gives us volume opportunities in and around their Missouri, Texas, Oklahoma, We're certainly looking that as an opportunity to drive and grow volume, but there are these other areas, where we need customers, they're our customers to serve but we just haven't been able to price.
Speaker Change: And the appropriate returns and so on the other end of the spectrum.
Speaker Change: We're excited about what we can do to still have a way to serve these customers while getting the appropriate return.
Speaker Change: All of the rising rate environment, we didn't really pass much if any of that to our consumers.
Speaker Change: Yeah, because we couldnt do it sort of across the board we have no surgical systematic way to do it but now we do.
Speaker Change: So we're excited about that John.
Speaker Change: And then just a second question around the confidence of your consumer because obviously that plays a big.
Speaker Change: A big part in getting them into the.
Speaker Change: And to the transaction.
Speaker Change: What are you seeing.
Speaker Change: In in traffic with your customers and it seems like there's a little bit of a spurt that's coming in.
Speaker Change: Consumer confidence at the low end and also in some of your states it might be a little bit more red where recently and some of the readings I mean, how much of a help could that be going forward.
Speaker Change: It could be a huge help obviously, we hope that lower end consumer.
Speaker Change: What you're saying.
Speaker Change: Certainly they have spoken and they want to help and I think there from a consumer confidence index standpoint.
Maybe feeling a little bit more confident about the future hopeful.
Speaker Change: For us we try to be agnostic to all thats going on that outside of environment. Our job is to stay focused on the consumer and find them every way to help it I feel like today, where we stand we certainly have more tools in our toolbox to be able to serve more of these customers and help them smartly to your point earlier, it's like.
Speaker Change: We want to do it and take those risks appropriately just given the backdrop with everything thats going on.
There will be a day, where we will sort of throttle volume higher maybe returned to the normal little bit, but that's not today today, we want to make sure that we're setting up our future to be a very bright one.
Speaker Change: And then just lastly on the recap.
Speaker Change: For the equity raise and the avs.
Speaker Change: You mentioned, obviously it was a bit painful, but probably the right thing to do for the company in total or what's the right thing that probably was the right thing to do for the company in total.
Speaker Change: Why wouldn't you have maybe done a little bit more to get the funding to maybe get a little bit more aggressive on the acquisitions of folks that might be a little bit more motivated sellers more recently.
Speaker Change: Yeah. It's a great question, we certainly considered that as an option, but what we're banking on is a convergence of several things right falling interest rates the initiatives coming into place and we wanted this to be as as.
Speaker Change: As least dilutive as possible and so when we have line of sight to these things that we can do which we'll announce here in the upcoming quarters around ways that we can help our customers in terms on the collection side.
Speaker Change: Got to get some of those things right and we don't think we have to do it all through equity raise there are certainly things we can do as a management team to drive some of those benefits and we have clear line of sight to that but Theres certainly gave us some breathing room and doing that.
Thank you very much.
Speaker Change: Great well, thank you Jeff thank.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, im showing no further questions in the queue.
Speaker Change: I'd now like to turn the call back to Doug for closing remarks.
Doug Campbell: Thank you operator thank.
Doug Campbell: Thank you guys for your interest in America's car Mart, and we'll talk to you next quarter.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].