America's Car-Mart Inc (NASDAQ:CRMT) Q1 2020 Earnings Conference Call - Final Transcript

Aug 16, 2019 • 11:00 am ET

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America's Car-Mart Inc (NASDAQ:CRMT) Q1 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

At this time, the participants will now answer questions from the callers. I would like to reiterate that my earlier comments regarding forward-looking statements apply both to participants prepared remarks and to anything that may come up during the Q&A. [Operator Instructions] Our first question comes from John Murphy with Bank of America. You may proceed with your question.

Analyst
Yarden Amsalem

Good morning, guys. This is Yarden Amsalem on for John. Could you share with us what you're seeing in terms of credit available space as well as the competitive environment there? And I guess relatedly, how will low interest rate impact this dynamic?

Executive
Jeffrey A. Williams

Well, we can continue to see a healthy competition out there. There's still a lot of money available for subprime and deep subprime. So it is competitive. We do believe that our offering and the pricing of our offering is very attractive to consumers, when you look at the total cost of ownership, and our job is to educate those consumers on the value that we have on our offering compared to others and -- but it is competitive. The market certainly is flush with cash, and we're trying to make our offering better, our customer experience better and to educate those consumers about the benefit and the cost savings they're dealing with Car-Mart. And we do have a lot of room, we believe, to be more aggressive with our repeat customers and the customers we know and keeping those customers in the family, but the competitive market is -- it's pretty intense.

Analyst
Yarden Amsalem

Okay, thank you. And I guess relatedly, are you seeing any change in the credit health of your consumer? Obviously your credit metrics improved materially in recent quarters, but accounts over 30-day past due ticked up a little bit. What do you think was driving that?

Executive
Jeffrey A. Williams

Well, that was such a slight -- we don't look at that as a big deal, a slight increase in 30-plus. I'd say overall the health of our customers is pretty strong. The wages are up, the hours worked are up. We're attracting more repeat customers with the offering. We believe that the overall portfolio is healthier today than it was a year ago.

Analyst
Yarden Amsalem

Okay, thank you.

Executive
Vickie D. Judy

I'll just add to that the 30-plus and some of those, they're pretty sensitive to the day of the month that the -- or the day of the week that the month closes on. So, you know, unless we're seeing something out of the ordinary, we're not too concerned about where that right now.

Analyst
Yarden Amsalem

Thank you. Thank you for the color. I guess my last question, can you maybe talk more broadly on your capital allocation strategy? How are you prioritizing share buybacks versus investment in managers, store openings, paying down debt and then so on?

Executive
Vickie D. Judy

Well, our first order of business is to always make investments for the business first prior to buyback. And then when we have excess cash, then we reinvest in those buybacks opportunistically. But certainly, our first order