A：Vicki Judy transitioned into the newly created role of chief accounting officer. Jonathan Collins was formally welcomed as the new Chief Financial Officer. Marie Porchetta was announced as the new senior vice president of capital markets.

A：Jonathan Collins brings over 20 decades of global finance experience, including roles at Walmart, Flipkart Group, and KPMG. He has a background in operational transformation, capital efficiency, and long-term value creation.

A：America's Car Mart successfully closed its seventh term securitization, issuing $400 million in asset-backed notes. The market received the transaction well, achieving a weighted average coupon 25 basis points improvement and a 10 basis points tightening compared to the January and October issuances, respectively.

A：Jonathan Collins plans to leverage current investments, capitalize on the strength of the balance sheet, maximize the unique integrated sales and financing business model, capture additional market share, and continue building on the depth of talent to establish a foundation for significant future growth.

A：The fiscal year was a defining year for the company, marked a clear operational and financial turnaround with a net income of $48.8 million, an improvement of more than $49 million from the prior year's net loss of $49.1 million. This performance reflects the strength of the strategy, disciplined execution, and the commitment from the team.

A：The Pay Your Way platform is designed to give customers more control and convenience by offering widely used digital payment methods like Apple Pay, Google Pay, Venmo, and PayPal, which do not require a traditional bank account. It has also made cash payments easier with access to a cash payment network at over 10,000 locations and a mobile pass stored in a digital wallet for self-service without needing account details.

A：The purpose of the new campaign launched in the stores is to allow customers to sign up for autopay at the time of sale with different payment options, which aims to reduce missed payments, provide customers with more peace of mind, and alleviate the day-to-day account management burden on store teams.

A：The new 7 by 7 scorecard was tested in parallel with the existing model for about a year, during which the company observed customer migration between score bands and analyzed the impact with real-world data. The expanded scorecard is believed to improve the accuracy of loss ratio projections and it's still early, but there is optimism about how it will translate into improved credit performance and more informed capital deployment.

A：The pilot involving risk-based pricing showed valuable insights that shaped the go-forward strategy. The tests included rate increases for riskier segments (Ed and Ed rated customers) and modestly lower interest rates for higher quality customers, resulting in no material drop in application conversion and a meaningful improvement in sales volume. These results have led to the acceleration of the risk-based pricing rollout nationwide across all stores, except for acquisition dealerships.

A：The transition to higher-rated customers through new underwriting and pricing methods will influence the inventory mix over time, which should lower reconditioning costs, reduce claims on warranty products, and create margin leverage or financial relief for the consumer. This approach is seen as a major enabler of smarter growth, better risk-adjusted returns, and a more resilient business model.

A：In the third quarter, the company made a strategic decision to increase inventory levels by approximately script compared to the prior year ahead of the tax season. This was done to avoid the normal tax season bump in procurement prices and the reliance on the volume of cars procured during the season, ultimately benefiting customers with vehicle sales price decreases.

A：The fourth quarter had a positive impact on the company's revenue and overall performance. There was a decrease in selling prices, but incremental revenue of 1.5% was driven by a 2.6% increase in unit sales volume and a 4.2% increase in interest income. For the full year, although unit sales decreased 1.7%, the company managed to sell vehicles and saw growth in revenue, with the Q3 decision to raise service contract pricing continuing to contribute to incremental revenue growth.

A：The fourth-quarter gross margin improvement is significant as it reflects stronger performance in the wholesale channel due to market reactions to ongoing tariff uncertainty. Elevated prices allowed the company to capitalize on recovery values, resulting in stronger retention on units sold in the quarter. The gross margin finished at 36.7%, a 200 basis point improvement from the prior year, contributing to a positive outlook for pursuing opportunities to leverage technology and enhance profitability.

A：The improvements to the CECL allowance methodology led to a net reduction of $130 million in the reserve balance. These enhancements have improved the precision of the model, especially regarding the performance of recently originated loans. The company now has over 12 months of actual loss history, which allows for more appropriate weighting and a lower expected loss profile overall. This results in stronger underwriting and data maturity, enabling more precise reserves, which align capital with risk and is positive for the business and investors.

A：The weighted average total contract term for the portfolio was 48.3 months, and the weighted average age was 12.4 months, marking a 5% improvement over the prior year's quarter.

A：Overall collections are up 2.1% over last year, with a monthly average total collective per active customer of $612, an improvement from $607 in the same period last fiscal year.

A：The company has achieved a 6.1% increase inSG&A per customer, notably lower than the overall dollar increase, and interest expense has decreased by $388000, or 2.2%, benefiting from improvements in benchmark rates and securitization rates.

A：The evolution and growth of Carmarthen over the past 15 years, with the speaker now in the role of Cao, include expanding financial capabilities and continuing to take the company to the next level.

A：Strategic initiatives such as enhancing the risk-based pricing strategy and continuing to manage customer relationships are expected to strengthen credit performance and grow the portfolio size in fiscal year 2023.

A：The company is focused on being more selective and optimizing the use of capital given the supply environment and industry trends. They are leveraging their risk-based pricing model to navigate potential headwinds and have made progress in their partnership with Cox Automotive.

A：The risk-based pricing model has been rolled out across all stores, ahead of the original plan, to serve as a lever in the business. Early indicators suggest that it can drive double-digit growth in certain bands, providing an opportunity to navigate additional headwinds.

A：The upgrades to operations and the partnership with Cox Automotive are in progress, with the details and anticipated effects on gross profit margins and sales per store per month not fully provided in the transcript.

A：The gross profit has shown a significant improvement, with a year-over-year increase of 98 basis points and a 200 basis points improvement. The target was to reach a 37% to 38% range over several years, and the speaker believes that this target can be met sooner.

A：The operational focus has been on optimizing the partnership and enhancing the collection process for consumers, particularly through improving how they pay for their purchases.

A：The first step in enhancing the collection process is the relaunch of the Pay Your Way campaign. This is significant as it aims to utilize non-traditional banking mechanisms to pay bills, representing a substantial opportunity to alleviate the burden on store-level work, improve collections, and reduce friction in the process.

A：The plans involve improving the interface with consumers and ensuring a positive experience through diverse payment channels and effective communication. This effort aims to maintain 'stickiness' with consumers and is already in progress, expected to be completed in the back half of the fiscal year.

A：Risk-based pricing has been implemented throughout all stores in the fourth quarter, using a script for risk-based underwriting with a scorecard that improves accuracy in underwriting and loss ratio projections. The shift to a script-by-script scorecard and the identification of a 'veined customer' group have led to a 200 basis point improvement in yields without affecting conversion rates or down payments. The company plans to continue testing this approach, focusing on the lower end of the risk spectrum to improve returns on lower-rent customers.

A：Risk-based pricing has shown positive effects on the lower-risk customer segment, with the potential to drive more volume among similar customers. A second pilot is scheduled to launch this month to further test these strategies on the upper end of the risk spectrum. The goal is to continue attracting high-quality customers and diversify the portfolio, which could improve credit quality and, consequently, gross margins.

A：There was not a significant pull-forward effect from the fourth quarter into the third quarter regarding unit volumes. However, there was a slight impact in January due to a marketing campaign and stocking efforts that began in December, leading to a heavier inventory before tax season.

A：Average selling prices have been influenced by the reduction in tariffs and the management of retail selling prices. The supply of vehicles in the market is managed through strategic procurement and is considered to be a tight environment. Additionally, the expansion of the base of assets that can be stocked and procured is seen as a potential way to mitigate supply challenges.

A：The company is focusing on strategies to manage the supply of inventory and balance it as the summer approaches. These strategies are designed to address the challenges arising from the difficulty in finding the right supply.

A：The company's end consumers are living in a recessionary environment, but there are no cracks in the foundation of consumer behavior. The company is focused on indicators such as delinquencies, contract modifications, and net charge offs to gauge consumer health. While there are external factors like fuel costs and auto insurance that impact defaults, the company has not seen these factors causing problems for the consumers. The origination interest rates offered by the company are competitive compared to its peer set, and there has been no breakage from customers, indicating the company is still a viable option for consumers.

A：The company is adapting its underwriting strategy by pushing toward the Tier VI customer segment and potentially higher, similar to historical subprime auto financing companies. This is driven by an intersection of marketing the right asset type to consumers that the company has not typically seen before. The company is focusing on providing options to consumers during an environment that may be degrading, which creates an opportunity to grow the brand with a new consumer base. While it is very early to predict the extent of this strategy, the focus is on capitalizing on the opportunity at the top of the current customer segmentation and potentially expanding slightly into a higher customer and vehicle segment that competes with brands like Carmax and Carvana.

A：The company's success in capital markets andABS issuance is seen as a competitive advantage, as it presents a more consistent and higher quality product to the market. The Los underwriting now covers two-thirds of the portfolio, which is reflected in the market's perception and the coupon offered. The company is also hiring a thought leader in capital markets to help shape a more mature capital structure that matches the current size and improving economics of the company. This includes considering new financial tools like warehouse loans and longer-term debt facilities. The intention is to continue utilizing the securitization market and potentially return to a normal cadence of ABS issuance with larger deals, which could lead to lower interest rates and improved income statements as the market becomes more comfortable with the company.