America's Car-Mart (CRMT) Q1 2025 Earnings Call Transcript

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DATE

Thursday, Sept. 4, 2024, 9 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Douglas Campbell
• Chief Financial Officer — Jonathan Collins
• Chief Operating Officer — Jamie Z. Fischer

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RISKS

• Chief Financial Officer Jonathan Collins said, "Currently, we face both a low advance rate of 30% and a cap of $30 million on our inventory advances under our revolving credit facility," which "put[s] ongoing pressure on our ability to expand retail sales and manage working capital efficiently."
• Net charge-offs as a percentage of average finance receivables increased slightly to 6.6% from 6.4% a year ago. Collins attributed approximately half of this increase to softer sales, which muted growth in the denominator, and the other half to higher loss frequency and increased severity in legacy pools, affecting the numerator.
• Total revenue (GAAP) declined 1.9% to $341.3 million in the fiscal first quarter ended July 31, 2024, primarily due to a 5.7% decrease in retail unit sales.

TAKEAWAYS

• Gross margin-- 36.6%, up 160 basis points from the prior-year quarter, driven by improved product mix, higher ancillary product prices, and stronger wholesale retention.
• Total revenue-- $341.3 million, a 1.9% decline attributed to lower retail unit sales.
• Retail unit sales-- 13,568 units sold in the fiscal first quarter, a 5.7% decrease reflecting volume discipline amid tariffs and elevated procurement costs.
• Interest income-- Increased 7.5% due to a larger receivables portfolio and higher payment collections.
• Total collections-- Rose 6.2% to $183.6 million, supported by broader adoption of digital payment platforms.
• Credit applications-- Up 10% in the fiscal first quarter, with application volume spiking 26.5% in July; this trend continued through August and into early September.
• Average vehicle procurement cost increase-- $500 per unit, incremental to the $300 increase noted last quarter, directly linked to tariffs and wholesale pricing pressures in the fiscal first quarter.
• SG&A expenses-- Totaled $51.4 million, up 10.1%, with two-thirds driven by payroll and one-third by technology investment; management expects to "unwind approximately half of total SG&A growth in the back half of the year."
• Interest expense-- Down 6.9% to $17 million, reflecting cost improvements from securitization structures.
• Allowance for credit losses-- 23.35% allowance for credit losses at quarter end, improved from 25% as of July 31, 2024, and up slightly from 23.25% as of April 30, 2024 (sequentially).
• Receivables portfolio composition-- Nearly 72% of portfolio dollars originated under enhanced underwriting standards.
• Capital markets activity-- Closed a $172 million 2025-3 securitization at a weighted average interest rate of 5.46% on Aug. 29, 2024, an improvement of 81 basis points versus the May 2024 transaction; the latest Class A notes were almost eight times oversubscribed, and Class B nearly 16 times for the 2025-3 securitization.
• Operating initiatives-- The LOS V2 and Pay Your Way platforms were accelerated, driving digital adoption and expected to deliver annual SG&A savings of approximately 5% over time.
• Advance rate and inventory financing cap-- Advance rate under the revolving facility remains at 30%, capped at $30 million for inventory, constraining retail growth and prompting management to pursue alternate solutions.

SUMMARY

Management reported that digital collections adoption and enhanced underwriting shifted the customer mix toward higher-ranking profiles, which is expected to generate stronger returns over the loan lifecycle. Securitization execution demonstrated rising investor demand, with four consecutive improvements in pricing and significant oversubscription on the most recent deal, though ongoing inventory capital constraints remain a clear limit on sales expansion.

• Chief Executive Officer Douglas Campbell explained, "Gross margin expanded to 36.6%, interest income increased 7.5%, and total collections rose by 6.2%, while we stayed disciplined on volume to protect returns and affordability."
• Chief Financial Officer Jonathan Collins stated, "We expect to unwind approximately half of total SG&A growth in the back half of the year," reflecting anticipated cost efficiencies as technology initiatives scale.
• The average FICO score of originations increased by approximately 20 points year over year from the fiscal first quarter of 2024 to the fiscal first quarter of 2025, following the rollout of LOS V2 and strategic customer rank targeting.
• Management noted that 15% more volume was directed toward customer ranks five through seven, while bookings from the lowest ranks fell by nearly 50% during the quarter, directly impacting unit economics and risk profile.
• Average selling price per vehicle, excluding ancillary products, decreased by $144 year over year in the fiscal first quarter, as inventory included stock acquired before procurement cost increases.
• New recurring payment enrollments nearly doubled since the late June launch of Pay Your Way, reducing reliance on in-store channels.
• Debt to finance receivables and debt net of cash to finance receivables improved to 51.1% and 43.1%, respectively.

INDUSTRY GLOSSARY

• LOS V2: The second version of the Loan Origination System, incorporating risk-based pricing and an updated customer ranking scorecard for credit decisioning.
• Pay Your Way: A digital payment platform facilitating online and recurring payments, aimed at improving collections efficiency and customer convenience.
• Securitization platform: A structure through which finance receivables are pooled and sold as asset-backed securities to investors, providing alternative funding and optimizing cost of capital.
• Advance rate: The percentage of an asset’s value that a lender will provide as a loan, relevant here to inventory or accounts receivable under a revolving credit line.

Full Conference Call Transcript

Doug, I'll turn it over to you now.

Douglas Campbell: Thanks, Jonathan, and good morning, everyone. As outlined in our release this morning, the quarter reflects steady progress on the fundamentals we control. Gross margin expanded to 36.6%, interest income increased 7.5%, and total collections rose by 6.2%, while we stayed disciplined on volume to protect returns and affordability. Demand remained solid. Credit applications were up about 10% year over year. The website traffic was flat year over year, but we are seeing a higher conversion rate from consumers completing applications, indicating there's a higher level of intent. This dynamic really started to play out in July and has continued since. I'll allow Jamie to provide more color on this in a moment.

Although demand was solid, we paced volume as tariffs and wholesale pricing created temporary constraints. We saw a knock-on effect from tariffs, which drove a $500 per unit increase in the procurement costs during the quarter. This is incremental to the $300 I called out last quarter, but the increases we are seeing have since smoothed out. This has ultimately put downward pressure on the inventory capacity under our current capital facility. We're actively evaluating actions to expand that capacity, so it's not a limiting factor to sales going forward. There are a few themes driving the momentum we're seeing on some of the aforementioned items. First, underwriting and pricing quality.

With LOS V2 now live across our entire footprint, embedded risk-based pricing is now better aligning expected returns with customer profiles. The new scorecard is delivering exactly what we designed it to do, shifting mix towards our highest-ranked customers and away from the lowest tiers. During the quarter, 15% more of our volume came from ranks five through seven, while bookings in some of our lowest ranks were reduced by nearly 50%. This higher quality mix historically drives lower loss frequency and severity, faster breakeven, stronger returns on invested capital, and lower downstream costs, all of which improve expected unit economics over the life of the loan.

As a result, we expect originations from the quarter to generate stronger returns even on lower overall volumes, given the concentration of customers with stronger credit profiles and better unit economics. Second, payment experience and portfolio health. Our upgraded Pay Your Way platform is resonating with our consumers. Since the late June launch, we've already seen a shift from in-store to online payments, and recurring payment enrollments have nearly doubled, enhancing the convenience for our customers and supporting a more consistent payment behavior and collections efficiency. Both LOS V2 and Pay Your Way were originally scheduled to be implemented throughout the fiscal year. We pulled these initiatives forward, which will enable us to unlock SG&A savings.

I'll have Jonathan expand upon in a minute. Third, capital efficiency and funding. We continue to strengthen our securitization platform. On August 29, we closed our 2025-3 securitization, $172 million issuance at an overall weighted average coupon of 5.46%, an 81 basis point improvement when compared to our May 2025 deal and our fourth consecutive improvement in the overall weighted average coupon. Since our 2024-1 issuance, the team has improved on the overall coupon by over 400 basis points, 75% of which is related to tightening the spreads. Strong capital markets receptivity to our new collections platform is paving the way for more incremental reductions in the cost of our capital and lowering financing costs associated with our securitization platform.

At this point, I'd like to turn the call over to Jamie to review our operational performance for the quarter. Jamie?

Jamie Z. Fischer: Thanks, Doug, and good morning, everyone. Total revenue for the quarter was $341.3 million, a decrease of 1.9% from the prior year, primarily resulting from fewer retail units sold. This was partially offset by a 7.5% increase in interest income, supported by a larger portfolio and more payments collected year over year. Growth in the receivables base reflects disciplined originations as well as the benefit of our expanding footprint from acquisition locations. As highlighted on our last call, wholesale pricing pressures began to emerge late in the prior quarter. That trend continued into Q1 with procurement costs rising an incremental $500 per unit.

At the same time, we were deliberately focused on quality vehicles and a stronger mix to better serve the needs of our higher rank customers. The combination of these two factors created additional strain on our ability to expand sales volumes. And as a result, volumes declined 5.7% to 13,568 units compared to 14,391 units a year ago. The average selling price of vehicles, excluding ancillary products, decreased by $144 year over year, reflecting that much of the inventory sold in the quarter had been acquired before the most recent procurement cost increases.

We also realized margin benefits from the ancillary product price increases taken in Q3 of last fiscal year, which continue to flow through as favorable year over year variance. Combined with strong attachment rates and disciplined vehicle pricing, these actions contributed to gross margin improvement to 36.6, a 160 basis point increase over the prior year quarter. Gross margin also benefited from improved wholesale retention as well as favorable trends in post-sale vehicle repairs, both in frequency and severity. Looking ahead, we expect average selling prices, excluding ancillary products, to have a positive effect on revenue, and the company will remain disciplined on its approach to gross margin rate.

Turning to demand, as Doug previously mentioned, credit applications were up 10% year over year for the quarter, underscoring the strength of customer need for our offering. We saw a sharp uptick in July with a 26.5% increase in applications year over year. That growth spanned all customer ranks, from our strongest profiles to those with more challenged credit, with an overall average FICO score slightly up from prior year averages and was driven by strategic marketing and customer outreach strategies. The month of August maintained that same level of elevated application flow, and we are pleased to see September has started just as strong.

As we've said before, when the macro environment tightens and traditional credit access becomes more constrained, our business is positioned to grow. The past sixty days have been a positive indication of that dynamic. Because of the aforementioned surge in applications and constraints on inventory available for sale, our LOS V2 played a critical role in actively steering our field teams toward booking the best-ranked customers. As a result, we ensured that the vehicles we did have were placed into the healthiest parts of the portfolio. I'll now turn it over to Jonathan to cover the remainder of our results.

Jonathan Collins: Thank you, Jamie. Operating expenses for SG&A totaled $51.4 million, a 10.1% increase from $46.7 million in the prior year. Roughly two-thirds of this increase was related to payroll growth, including strategic hires in areas like finance and accounting, and one-third was driven by technology investments such as the rollout of LOS V2 and Pay Your Way. We expect to unwind approximately half of total SG&A growth in the back half of the year. Notably, the implementation of the upgraded Pay Your Way technology is expected to guide a shift towards a more modernized collections infrastructure, which will deliver approximately 5% annual cost savings over time.

These efforts are expected to drive SG&A efficiency, improve operational performance and move us closer to our target of mid-sixteen percent SG&A as a percentage of retail sales. On the collections side, performance remained robust with total collections rising 6.2% to $183.6 million. This improvement highlights the effectiveness of the Pay Your Way platform and the expanding adoption of digital payment channels, resulting in a higher average collection per active customer, $5.85 this quarter compared to $562 in the same period last year. The strength in collections underscores the quality of the portfolio and the success of recent operational enhancements.

On the credit side, net charge-offs as a percentage of average finance receivables rose slightly to 6.6% from 6.4% last year. Approximately 50% of this increase was due to softer sales, which muted the growth in the denominator and 50% due to higher loss frequency and some severity in legacy pools, which affected the numerator. Delinquencies greater than thirty days or 3.8% at the end of the quarter, representing a 30 basis point increase. Our allowance for credit losses improved to 23.35% compared to 25% at 07/31/2024.

Sequentially, the allowance increased slightly from 23.25% at 04/30/2025, resulting in a $3 million increase to the allowance, which was driven equally by portfolio growth as well as by the frequency and severity of loss. Our portfolio quality continues to strengthen with nearly 72% of the portfolio dollars originated under enhanced underwriting standards and our top three customer ranks increasing by seven ninety basis points during the quarter versus fiscal 2025 average. The average originating term for new contracts was forty-four point nine months, up zero point six months from last year. And our weighted average total contract term for the portfolio stood at forty-eight point three months, a modest increase of zero point two months compared to last year.

The weighted average age was twelve point six months, a 5% improvement over the prior year's quarter. Importantly, our active customer account grew by 1.4% to almost 104,700 customers, reflecting the resilience and ongoing strength of our portfolio. Debt to finance receivables and debt net of cash to finance receivables were 51.1% and 43.1%, respectively, both improved from last year. Interest expense decreased by 6.9% to $17 million as we continue to benefit from the improvement in our securitization platform. During the quarter, we successfully completed a $216 million term securitization at a weighted average interest rate of 6.27%. After the quarter ended, we also finalized our 2025-3 securitization, raising $172 million at a weighted average interest rate of 5.46%.

While there is still room for further improvement, we are encouraged by the progress our platform has made so far. Market interest in our securitizations remains high, with the Class A notes almost eight times oversubscribed and the Class B notes nearly 16 times oversubscribed on our most recent transaction. Strong demand, combined with favorable operating performance within our portfolio, has significantly improved the pricing of our notes. Notably, our most recent transaction marks the fourth consecutive improvement in our overall weighted average coupon, and we have reduced our weighted average spread by 308 basis points since our 2024-1 transaction.

In our last transaction, 21 out of 26 investors who had previously participated in our securitization chose to invest again, which demonstrates the continued confidence they have in our platform. As Doug highlighted earlier, I'm also very encouraged by the impact that our upgraded Pay Your Way platform and our broader collections modernization will have on our ABS platform and future cost of capital, as enhanced payment consistency and less of a reliance on field operations should support a stronger outlook from our rating agencies and unlock more favorable terms on upcoming securitizations. I'd also like to address several important operational disclosures. First, as previously communicated, our annual report on Form 10-Ks was filed after a brief delay.

The delay was related to the prior adoption of enhanced contract modification disclosures. These disclosures provide additional detail on the frequency and nature of modifications, their impact on our portfolio performance and our approach to managing risk in this area. We believe these enhanced disclosures will provide greater transparency and help investors better understand the dynamics of our receivables and credit performance. Further, we have taken significant steps to remediate the associated material weakness, including enhanced oversight, additional training and the implementation of new review procedures. We are committed to maintaining strong controls and transparency, and we will continue to update stakeholders on our progress. Second, I want to highlight the capital constraint impacting our working capital and inventory management.

Currently, we face both a low advance rate of 30% and a cap of $30 million on our inventory advances under our revolving credit facility. While these limits have existed in the past, the significant rise in vehicle prices since COVID has amplified their impact, putting ongoing pressure on our ability to expand retail sales and manage working capital efficiently. We are actively exploring alternative financing solutions to address these constraints and unlock additional capacity to serve our qualified customer demand. Looking ahead, our focus remains on disciplined execution, portfolio quality and capital efficiency. The successful rollout of LOS V2 and risk-based pricing is already driving measurable improvements in deal quality and cash flow predictability.

As we continue to diversify our funding sources and optimize our balance sheet, I'm confident that we are well-positioned to support both near-term performance and long-term growth. Finally, I want to thank our finance and operations teams for their commitment and agility in a dynamic environment. Their dedication is critical to our success. With that, I'll turn the call back over to Doug for closing remarks before we move to Q&A.

Douglas Campbell: Thank you, Jonathan. To summarize, this quarter we kept our focus on the fundamentals we control. We expanded gross margin, increased interest income and improved collections while being disciplined on volume as tariffs and wholesale pricing temporary pressurized inventory capacity under our current facility. LOS V2 and the new scorecard are doing the work we intended, shifting mix towards our highest-ranked customers under better pricing structures powered by risk-based pricing. And Pay Your Way is an upgrade that's laying the groundwork for more consistent payment behavior, operational efficiency and a lower cost of capital.

Looking ahead, our priorities are clear: quality, growth with affordability serving more customers and protecting returns payment and collections modernization continuing to scale digital adoption and third, our capital structure and capacity evaluating actions to expand inventory capacity so demand, not financing mechanics, determines our sales trajectory. I'm proud of the team's execution and grateful to our associates who are keeping our customers on the road every day. Operator, let's open the line for questions. Thank you.

Operator: Thank you. Our first question is going to come from the line of Kyle Joseph with Stephens. Your line is open. Please go ahead.

Kyle Joseph: Hey, good morning guys. Thanks for taking my questions. Just on the unit volume decline, I know you guys talked about applications being really strong particularly in July. But Doug, I think you highlighted some increased procurement costs in the quarter. Just wondering what you've seen kind of subsequent to the quarter end in terms of procurement costs. And I recognize that you guys are doing what you can in terms of financing solutions in order to manage working capital as well.

Douglas Campbell: Yes. Thanks for the question. Good morning. How are you doing? So I think subsequent to the quarter, we've seen the pricing smooth out. It's been sort of in that same exact range. In fact, it's come down a couple of bucks, but that's nominal. And on a positive note, we've seen the same sort of demand we saw in July sort of flow through August. And as Jamie mentioned, September is off to a great start. I think this sort of goes towards we speak about our business where when things tighten and other people tighten, consumers come to us from the top.

And we've certainly seen that based on the overall volume of applications and the quality applications coming to us.

Kyle Joseph: Got it. And then shifting to credit, appreciate that the new loans under the new LOS are over 70% of the portfolio. But as that back book wanes, you kind of expect some credit tailwinds, but we've seen increases in DQs and NCOs. So appreciate the color you gave on charge-offs in terms of frequency and severity and portfolio size. But just given DQs are up, give us your sense for how quickly you would expect that to stabilize with the new LOS systems?

Douglas Campbell: Yes. The portfolio is weighted with mostly this new underwriting in place. And so I would expect like now we sort of have like our normal cadence and normal seasonality as it relates to NCOs. And we would typically see a couple of basis points change as we sort of go in and through the year. So to me, this is just sort of more normal. Over the last several quarters, we've obviously experienced the benefit of LOS sort of building the portfolio up. Now it represents a majority of the portfolio. And I think we should expect sort of the normal seasonal fluctuations within MCOs. And certainly, where we're at today is well within our operating range.

Kyle Joseph: Got it. Last question probably Jonathan. But just on the G and A was up in the quarter. It sounds like there's a pull forward of investments, but just kind of expectations for the cadence of G and A. It sounds like should the second quarter be kind of in line with the first quarter and then we really start to see some of the benefits of the investments you've been making? Is that kind of the right cadence of expenses?

Jonathan Collins: Yes. Hi, Kyle. Good morning. Yes, that's right. I think in the second half, we'll see roughly half of the increase from this quarter unwind, as we start to kind of finish the implementation of some of the technologies that we've pulled forward. I think there's also a broader story around some of the technologies that we're rolling out, we'll modernize, for example, Pay Your Way, that'll modernize our collections infrastructure. That'll generate an additional tailwind. And we put that about 5% of SG&A cost. And as we continue to roll out the system and test the system, we should start seeing that benefit in the next fiscal year.

And then finally, all of those pieces combined will help us get towards our ultimate goal, which is about mid-sixteen percent SG&A as a percentage of sales.

Kyle Joseph: Got it. That's it for me. Thanks for taking my questions.

Operator: Thank you. Our next question is going to come from the line of John Hecht with Jefferies. Your line is open. Please go ahead.

John Hecht: Hey, guys. Thanks very much for taking my questions. Some of it's related to what Kyle was just asking. But the temporary impacts from tariffs, do we look at this as just sort of a onetime step function change in inventory pricing? Or will this just be a spike up and then the costs will go down? I guess the just question is what are your are you guys anticipating in terms of used car pricing? I mean, and like the call it the duration of how long that will affect the system?

Douglas Campbell: Sure. Good morning. How are you? I would say that the wholesale pricing, obviously, post-tax season, we should have had some sort of normal seasonality fall in pricing. We didn't experience that. I think the industry is contending with what is today represents a 5% or 6% increase relative to the prior year. I would expect that through the balance of the year, now that the effects of tariffs are sort of known, that we get some seasonality and pricing decline in the back half, all other things being equal, if we procure the same asset, etcetera. So this is really just a period of sort of managing through what that is today.

But it does sort of lend itself to this other question around our capital structure with, which we highlighted there. And really, I'll let Jonathan sort of unpack a little bit about how we think about that and how we can leverage and create opportunity there.

Jonathan Collins: Yes. If I just unpack, we currently as you're aware, John, we have a revolving line of credit. We manage that we leverage that to manage our working capital. But really the way we think about it is from a seasoning of AR and timing of entering into the ABS market. And if I just unpack that logic a little bit, we have two components within our ABL, one is an inventory borrowing base, the other one is an AR borrowing base. And I shared some metrics in the prepared remarks, 30% advance rate and $30 million cap. That doesn't cover our full inventory.

And to the degree that we see continued pressure on pricing, that chews up the desired cushion that we would want to have in the ABL that allows us to season our receivables, which in turn allows us to go into the ABS market, achieve better rates, achieve better structures, etcetera. So, what we're trying to do during the quarter is really just navigate that and what we're laser-focused on is a financial solution to unlock capacity there.

John Hecht: Okay. And then follow-up question, it's very helpful by the way. Thank you very much. Follow-up question is the excuse me, the sorry, my phone was cutting out. You guys there's still very high demand from the consumer, but I guess it's tough to complete the transactions given supply constraints and macro factors and so forth. I guess you guys are positioning yourself to be very like resourced and strong during a recovery period. So what factors should we look for in terms of like seeing green shoots maybe for the dissipation of some of these headwinds?

Douglas Campbell: Sure. I think with the release of LOS V2, which went live on May 8, that's like our second iteration for the LOS. So if you go back in time, you remember when we first launched LOS, it was around deal structures on our customer ranks one through four and tightening the credit box. The second iteration is more about identifying and properly identifying risk, more accurately identifying risk and with more granularity than we've had in the past. LOS V2 has a new scorecard embedded. And so I would expect us to continue to sort of continue to get favorability.

My hope would be that similar to what we had in terms of a step change in the credit quality that we've had over the last year and a half, that it's another step in that right direction. As an example, if you look year over year from Q1 2025 to Q1 2026, the average FICO score change was about 20 points in origination quarter over quarter. And you can see that distribution, There was a new chart we included in the presentation in our supplemental slide pack that shows us more heavily weighting these five to seven rank customers. And typically, we talked about the volume of applications that Jamie mentioned earlier.

We're really pleased with what we're seeing there. It's really important given that we're seeing more growth at the top of the funnel and equal growth at the bottom, but more growth with these better qualified customers that we maintain the asset quality. Not going to be able to capitalize on that opportunity unless we have the right asset to match what the consumers' needs are.

John Hecht: All right, great. I'll get back in queue. Thank you, guys.

Douglas Campbell: Thank you.

Operator: Thank you. And I'm showing no further questions on the phone lines and you guys can move to your Q&A queue from the web questions.

Douglas Campbell: Thank you. We do have a couple of questions. One is related to the deal structures that rolled out with LOS V2. So what we did on deal structures with LOS V2, we took our seven rank consumers, they're getting a slight rate break and a slight down payment break. So you can see overall average down payments came down a little bit during the quarter in the aggregate. That is because we gave the most flexibility to these customers who present the least amount of risk. If I look at sort of the bottom two or three ranks of customers, they actually put 13% more down on average. They had $2,000 less financed.

They had overall higher average originating rates because our one and two rent customers saw two hundred and one hundred basis point increases in the originating rates. And those terms that we originated for those consumers were four months shorter. So the return profile on those consumers are going to be much stronger. That does not show up in the distribution of how those consumers appeared in the chart. That's the risk-based pricing factor on top of that. And so that's obviously going to drive more positive returns. There's another question here on consumer health. How would you characterize the existing health of the consumer? Jamie, if you want to take that one.

Jamie Z. Fischer: Yes, I'll take that one. I'd certainly say when credit tightens, people come to us, and we are the place where credit challenge is the landing spot for our credit-challenged customers. And as we've seen that demand increase, I think it's an indication that our consumer base is strained. However, it's generally our mission, keeping our customers on the road. I think our customer base is always in a spot of being challenged with what's happening in the macro environment. And so that's part of the reason why we pulled our LOS V2 forward, was our ability to not only tighten

Douglas Campbell: on

Jamie Z. Fischer: the bottom end, but be able to attract more of those higher customers with a stronger credit profile in the tightened environment externally. What also gives us comfort is that although they are probably more constrained today than they were a year ago, our structures with the rollout of LOS, our structures are much better today than they were a year ago. With, as Jonathan mentioned, 72 of the portfolio now made up of LOS, tighter underwritten customers.

Douglas Campbell: Cool. There's another one here. The thirty-day delinquencies were up 30 basis points. Is that a sign that the consumer is strained? Listen, I think, as Jamie mentioned, our consumer base is always strained. That's sort of our specialty. But it is a leading indicator on how we think about delinquencies. When I think about maybe the impact that happened during the quarter, take first a moment and consider the fact that we did roll out our new payment system. And so that did a couple of things. Like any technology, it sort of had its first bumps over the first couple of weeks.

But more importantly, there were a certain subset of customers who had automatic recurring payments structured and set up. To the extent that like they need to reenroll in our new system, that obviously would cause some timing delays there. And so we certainly had our challenges getting them reenrolled, but that happened in very, very short order. And we highlighted in the release there that not only did we get that cured, we actually now have doubled the amount of customers enrolled in recurring payments. And so that is going to be a key unlock for how we manage and how much work it takes to manage the portfolio.

I'd add sort of since then, delinquencies have come back into sort of a more daily normalized range of between 3.4% and 3.6%. We actually ended August at 2.8%. So we feel really good about where that sits both from a recency and thirty-day delinquency standpoint. And that thirty-day delinquency measurement is a point in time. So there is a little bit of to unpack there. So I appreciate the question. I don't think we have anything more in the queue. Yes. Don't think we have anything more in the queue. Anything else?

Operator: No. All

Douglas Campbell: right. Again, I want to thank all of our associates for their hard work during the quarter. Thank you to our shareholders and Board for their support and to the field. Our customers are always counting on you. Let's get after it in the quarter. Thank you very much, and thank you for joining the call and believing in America's Car-Mart.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

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