CRMT - NASDAQ

Good day, and thank you for standing by. Welcome to the America's Car-Mart Second Quarter Fiscal 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jonathan Collins, Chief Financial Officer. Please go ahead.

Good morning. I'm Jonathan Collins, the company's Chief Financial Officer. Welcome to America's Car-Mart's Second Quarter Fiscal Year 2026 Earnings Call for the period ending October 31, 2025. Joining me on the call today is Doug Campbell, our President and CEO; and Jamie Fischer, our COO. We issued our earnings release earlier this morning, and a supplemental presentation is on our website. We will post the transcript of our prepared remarks following this call, and the Q&A session will be available through the webcast. 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. These statements are made pursuant to the safe harbor provision 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, including important cautionary notes, please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30, 2025, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. As a note, the comparisons that we will make today will be the second quarter of fiscal 2026 versus the second quarter of fiscal 2025, unless otherwise stated, and we will make several references to our supplemental materials posted on our website. Doug, I'll turn it over to you now.

Thank you, Jonathan, and thank you, everyone, for your interest in America's Car-Mart and for joining to hear more about our quarterly results. Let me start by addressing what's in the numbers and what the numbers don't fully capture. Our reported results reflect a net loss of $22.5 million, which includes approximately $20 million in noncash reserve adjustments and onetime charges related to the strategic actions we're taking to reposition this business. More details are on Page 4 in the supplemental presentation on this. These are deliberate investments in our future, and the underlying trends in our business are moving in the right direction. Let me highlight several developments from the quarter that are notable. First, consumer demand remains strong. Credit applications grew substantially year-over-year, clear evidence that despite economic uncertainty, the need for affordable, reliable transportation is robust. And Car-Mart remains a trusted solution for working families. The effects in the broader wholesale market have subsided since the update in Q1 and while elevated relative to prior year, continue to decline in alignment with what we would see seasonally. In October, we closed a transformative $300 million term loan that removes the capital constraints that have limited our flexibility we referenced last quarter. For example, under our legacy structure, certain covenants limited actions tied to optimizing our store footprint and organizational structure. Now with more flexibility, we're moving more decisively on a multiphase plan to optimize our footprint, cost structure and strengthen capital efficiency. These are hypothetical savings. We've already executed on Phase 1 in early November, which included the consolidation of 5 underperforming stores and the elimination of approximately 10% of our headcount as a company. The second phase will be completed in Q3. And when combined, the results generate more than $20 million in annualized SG&A savings. Between these 2 initial phases, we estimate a 10% reduction in our store footprint. More details here can be found on Page 7 in the presentation. I'll let Jonathan elaborate on additional efforts of the term loan and additional actions which will enhance our capital structure. But at a high level, this represents a fundamental step in removing constraints, unlocking flexibility and aligning our funding model with the needs of a more modern, scalable platform. Our enhanced underwriting platform, LOS V2, which launched in May, continues to deliver measurably better results. During the quarter, we continued to see a shift of our mix towards booking higher-quality customers. We are prioritizing value over volume to build a portfolio that delivers stronger returns. More importantly, this higher-quality underwriting is needed to navigate uncertain environments. As we continue to see customer behavior shift with our Pay Your Way platform, which we relaunched late last quarter, customers continue to migrate from making payments in-store to online, which is an important trend as we look to leverage our new collection CRM. We're also seeing an increase in the accounts with auto recurring payments, which reduces the effort needed to collect. Lastly, customers are utilizing new payment channels like Apple Pay and PayPal. While these do add a level of convenience for our customers, it's also driving more consistent payment behavior, reducing in-store payment-related traffic and associated costs while improving the overall collection efficiency. As adoption continues to grow, we expect these benefits to compound when combined with our collection CRM powered by Salesforce. Jamie will expand more on this in a minute. With this infrastructure now in place or nearing completion, it's creating competitive advantages that will translate into better unit economics and stronger returns. The work we've done positions us to execute from a position of strength, clarity and discipline. And while there's more to do, the building blocks are in place. These efforts are creating a platform that will enable higher-quality growth and improve our financial performance. And with that context, I'd like to turn the call over to Jamie to review our operational performance for the quarter. Jamie?

Thanks, Doug. Good morning, everyone. Historically, when the macro environment softens on consumers, our business gets more robust. This quarter was another proof point of that with credit application volume up 14.6% from prior year. This is notable for 2 reasons. The first of which is that the company continued to navigate lower-than-normal inventory levels throughout the quarter. This is particularly evident and reflected on the balance sheet when observing the 6.8% variance between the periods. The second is the fact that this has a knock-on effect of reducing website traffic when less vehicles are advertised. Despite those headwinds, the team was able to deliver a sales volume result within approximately 1% of prior year. This performance reflects the resilience of the team and a vote of confidence from consumers in our offering. The launch of LOS V2 at the start of Q1 gave our store teams the ability to take advantage of the increased customer applications by prioritizing the highest ranked customers more effectively. Customers in these higher ranks demonstrate lower loss frequency and severity, faster time to breakeven and stronger returns on invested capital. In fact, as highlighted in our supplemental presentation on Page 10, you can see that 76.5% of our volume came from our highest ranked customers, ranks 4 through 7, a 12% improvement in higher-quality bookings compared to prior year since the system went live in May. Revenue increased 0.8% year-over-year, primarily driven by higher interest income and a nominal increase in the average retail sales price. It's important to note that the company had a onetime benefit of $13.2 million related to a change in service contract revenue recognition in the prior year. Absent that benefit, revenues would have been up 4.8%, primarily driven by an increase in vehicle price due to increased procurement costs related to tariffs outlined in the prior quarter. Gross profit margin was 37.5% compared to 39.4% in the prior year. Adjusting for the aforementioned onetime benefit, margins improved by approximately 100 basis points year-over-year and 90 basis points sequentially, driven by reduced repair frequency and severity and improved wholesale retention values. Turning to the operational progress from our enhanced payment infrastructure. The benefits of Pay Your Way program are becoming increasingly clear. We're seeing measurable improvements in both the customer experience and payment behavior across the portfolio. Over the past 4 months, we've shown significant momentum in customers enrolled in and utilizing our updated digital payment options. These trends are driving improved collections efficiency, reducing in-store payment traffic and increasing overall payment consistency. During the second quarter, we also exceeded 5% of our portfolio on Auto Pay recurring payments, which represents a 3x improvement to when compared to our legacy platform. This is partially driven by our customers opting to utilize our incremental payment types for recurring payments like debit card, Venmo and PayPal as compared to our previous offering of only ACH. We are encouraged by the early success of the Pay Your Way strategy and expect adoption and efficiency gains to continue as the program matures. As Doug mentioned, we're advancing efforts to enhance collection performance through the rollout of a new Salesforce-based collection CRM. Development is complete, and the tool has begun testing in a live environment in one of our stores. We expect to begin piloting in the second half of the fiscal year. This next-generation platform will deliver immediate benefits, including streamlined workflows, improved account management tools, enhanced data collection, virtual payment modification capabilities and a better customer contact experience. Looking ahead, we plan to introduce additional features such as advanced account routing, AI-driven customer engagement strategies and self-service options. These enhancements will create a scalable solution capable of supporting a larger portfolio without a proportional increase in headcount. With the investments we are making to support our Pay Your Way program and the upgrade of our collection CRM, we believe this data-driven collections platform will generate meaningful results. In Doug's remarks, he mentioned a multiphase plan to optimize operations and reduce SG&A. The process for this plan included an exhaustive review of our footprint and talent to ensure our resources are generating the appropriate returns. We evaluated underperforming stores, mapped customer concentrations and geographical overlapping and assessed market coverage and service levels. From this, we established a phased approach to improve operational efficiency and performance. In November, we executed on Phase 1 by consolidating 5 locations into nearby better-performing stores. The intention with this first phase of consolidation was to specifically solve for underperforming locations that were sharing the same geographical footprint as that of a better performing store. Early results confirm that this approach was sound. Our existing and new customers continue to be served seamlessly from one location in the same geographical area with a larger staff, more inventory selection and the same great service they have become accustomed to at Car-Mart. We also conducted a comprehensive review of both field and corporate headcount. Where technology, automation and process improvements have eliminated manual tasks, we made targeted reductions. These changes were implemented smoothly and operational continuity has been fully maintained. Importantly, these initiatives provide valuable insights that will inform decisions for future phases as we continue to optimize our footprint, cost structure and enhance scalability over the next several phases. As you can see, we are taking meaningful steps to improve the efficiency of our operations with urgency. With this overview, I'll now turn it to Jonathan to cover our financial results.

Thank you, Jamie. For the quarter, SG&A totaled $57.2 million, including $3.5 million in onetime expenses, primarily related to store impairment costs from the 5 closures Jamie discussed. On a reported basis, SG&A as a percentage of sales was 20.0% and 18.8%, excluding the onetime charges. Last quarter, I shared that the growth in our SG&A was driven by investments in our people and technology. At that time, I said our goal was to reverse about half of this growth in the second half of the year. I also mentioned that a modernized collections infrastructure would eventually deliver around 5% annualized cost savings, and I outlined that our target to reduce SG&A was to 16.5% of sales. The structured multiphase plan we're announcing today clearly demonstrates that we're making strong and urgent progress toward these commitments. Our first phase covered 4 components: IT spend reduction through contractor and legacy software rationalization, consolidation of 5 underperforming stores, reorganization of headquarters and field roles and optimizing marketing spend. Combined, these actions are expected to generate $4.9 million in savings this fiscal year and $10.1 million annualized. The store consolidations alone, moving customers in the nearby better-performing locations, as Jamie described, are expected to contribute approximately $1 million this fiscal year and $2 million annualized. We've also identified additional opportunities in subsequent phases, estimating to deliver another $3.5 million in this fiscal year and $21.3 million on an annualized basis. Upon completion of all phases, our cost reduction initiatives are expected to generate $31.4 million in annualized savings. This is outlined on Page 7 of our supplemental presentation. Building on Jamie's update on our Pay Your Way program, average collections per active customer increased to $582 this quarter compared to $561 in the same period last year. The strength in collections underscores the quality of the portfolio and the effectiveness of our Pay Your Way platform. I want to frame our credit results around a simple theme. Charge-offs were elevated due to normal seasoning and some macroeconomic pressures, but the leading indicators are improving. Net charge-offs increased to 7.0% from 6.6% in the prior year, reflecting the expected seasoning of the loans originated over the past 18 months. This is not surprising. As newer originations mature, they build loss history. What matters is whether the newer vintages are performing better than the older ones, and they are, as shown on Page 8 of our supplemental presentation. The leading indicators support this view. Delinquencies over 30 days improved 62 basis points to 3.14%. Modification activity declined to 6.19% from 6.91%, loss severity declined from $10,677 to $10,325 per unit sequentially and collections grew 4.6%, outpacing portfolio growth of 2.8%. These metrics tell us the portfolio is getting healthier even as the seasoning math works its way through the P&L. Contracts originated under our enhanced LOS platform now represent over 76% of the portfolio, excluding the nonintegrated acquisition lots, up from 72% last quarter. As legacy originations continue to run off, we expect portfolio quality to improve further. Our allowance increased to 24.19% of finance receivables, up sequentially from 23.35%, but down from 24.72% a year ago. The CECL reserve reflects observed loss history and includes a prudent overlay for macroeconomic uncertainty. While underlying credit quality is improving, we believe it's appropriate to maintain this level of reserve until we see further stabilization. The provision for credit loss was $119.1 million compared to $99.5 million last year. The increase was driven by the 40 basis point rise in charge-offs, reserve builds for macro factors, and continued seasoning such as at our acquired locations. As Doug outlined, we made significant progress transforming our capital structure this quarter. On October 30, we closed a new $300 million term loan facility with Silver Point Capital. The loan is 5 years, matures in October 2030 and bears interest at SOFR plus 750 basis points. Importantly, this transition allowed us to fully repay and retire our revolving line of credit. Additionally, we retired a $150 million uncommitted amortizing warehouse facility. As disclosed in our 8-K, the term loan included warrants issued to Silver Point to purchase up to 10% of our fully diluted shares at the market price at closing with a 6-year expiration. While dilutive, we believe this was the right path forward, striking a balance between deal economics and ensuring stakeholder alignment. Our securitization platform continues to perform well. Since the start of the fiscal year, we've completed 2 ABS transactions, 2025-2 and 2025-3 and called our 2023-1 deal in July. In our most recent securitization offering, our Class A notes were almost 8x oversubscribed and our Class B notes nearly 16x oversubscribed. In light of the turbulence in the bond market related to several subprime auto finance companies, we have proactively engaged with our current and prospective bondholders as well as ratings agencies. To highlight our differentiated business model, the controls we have in place and to maintain confidence in our financial position. We believe this positive engagement reinforces the continued strength of our platform as evidenced by the strong demand on our credit and our ability to attract capital in a challenging environment. The weighted average life of our ABS structures and the maturation of receivables are also important components of our strategy. As ABS notes are retired, the residual collateral becomes available to fund our business in a way that is distinct from our legacy revolving structure. Total cash, including restricted cash, increased to $251 million at October 31 from $125 million at April 30. Debt net of total cash decreased from $652 million to $646 million despite the increase in gross debt related to the term loan. Debt to finance receivables and debt net of cash to finance receivables were 59.2% and 42.6% at quarter end compared to 51.8% and 43.0% a year ago and 51.5% and 43.2% at the start of the fiscal year. Loss per share for the quarter was $2.71. Our net income loss of $22.5 million included approximately $20 million of noncash and onetime charges, $11.8 million from CECL reserve adjustments related to portfolio seasoning and macroeconomic factors, $4.5 million from the retirement of our revolving line of credit and $3.5 million from store closures and impairment costs. Adjusted EPS loss, excluding these items, was $0.79 per share. With that, I'll turn it back over to Doug.

Thank you, Jonathan. I want to address what I believe is a significant disconnect between how the market is valuing this business. Our stock is trading at roughly 1/3 of book value. The market sees challenges, our capital structure evolution, macroeconomic pressure on the customers and broader sector concerns. Those are legitimate issues for the industry and for Car-Mart. But here's what I believe the market is missing. In the middle of all of this turbulence, there's been a validation point. Our term loan provider has provided and committed $300 million into this business. They conducted an extensive due diligence on our platform, our locations and the quality of our assets and our path forward. It's not theoretical that sophisticated capital validators putting real money behind what we've been telling you. We have substantial residual equity in our ABS structures, improving credit performance and strong operational fundamentals. At current valuations, I believe the market is significantly undervaluing what we're building here. Looking ahead, our priorities are straightforward: Complete our capital structure transformation with another ABS transaction and our revolving warehouse facility in the second half of the year; normalize inventory levels to meet strong demand we're seeing and to set ourselves up for the tax season; execute Phase 2 of our cost reduction initiatives here in the third quarter and continue demonstrating improving credit performance as higher-quality LOS originations mature. As these initiatives progress, we expect to return to positive GAAP earnings and demonstrate the earnings power of this improved model. We've built the foundation, the path is clear. The demand is there. Now it's about execution. We look forward to updating you on our progress in subsequent quarters. Thank you for your interest in America's Car-Mart, and we look forward to your questions. Operator, please provide instructions for the Q&A session.

[Operator Instructions] Our first question comes from the line of John Hecht with Jefferies.

Definitely looks like you're positioning yourself to deal with the ongoing challenges, but also to be better positioned when things actually lighten up a little bit. I'm just wondering, so it looks like just looking at the loss curves, the newer vintages are performing pretty well. Maybe can you -- is there a way to quantify that like maybe cume expectations for cume losses in the newer vintages versus the COVID vintages versus prepandemic vintages? Or any sort of directional way to quantify how the newer -- the new book, I guess, is performing relative to the, you call it, the legacy stuff?

Yes, John, thank you for your question. Good to chat. If you recall, in prior quarters, we had a chart in there about a specific static pool. At the time we did the conversion over to LOS, we originated a set of loans, a significant set of loans under ALIS, our old underwriting system and LOS, and we track those over a period of time. And generally, those were in the 18% to 20% differential in terms of improvement. That continues to hold up for those -- that particular pool. What makes the kind of comparison, if you go back, you mentioned a couple of periods like pre-COVID and et cetera, is the significant change in what's happening with customers, our offer, et cetera, the price of the car has almost doubled. Term loans have -- a term on the loans have extended. And so the curves look a little bit different from that perspective. Some of them in some years were influenced by government subsidies. Some of them were influenced by the dynamic of car prices, et cetera. And so how we're measuring ourselves is really against what we presented in the supplemental presentation, which is we feel like the best comparison is our FY '24 vintages, which is most of that fiscal year, which is just before we converted over to LOS. And so both of those pieces are sitting in there. But broadly holding up, broadly, we're still seeing that good differential between specific vintages.

Okay. That's helpful. And then, I mean, it feels like to some degree, like you said, everybody is going through the same challenges, but you're spending time on improving your positioning relative to those environmental headwinds. Given that, I got to believe the competitors and particularly the smaller ones are under intense pressure. Maybe can you give us an update on the competitive environment? And does that -- how that affects your thinking about strategy going forward?

Sure. The sector, obviously, we play and there are not a lot of public comps, John, as you know. What gives us insight and a little bit of confidence into keeping our pulse on the market is obviously, we had built out and still have an acquisitions team. And so we feel a lot of calls from operators who are interested in either selling their business or partnering, et cetera. And we get a lot of feedback as it relates to that. And the sector is under a lot of pressure. It is really, really difficult for operators to both procure capital, to find inventory. And so these are some of the things that are differentiating us from our peers. And then obviously, in markets where there was prior competition, some of those have eased up for us. And so there's this push and pull dynamic where we're seeing some benefits on supply. You have pricing that had been elevated. And so that's providing a tailwind on recoveries, which flowed through to gross margin, which is nice, but obviously showed itself as a headwind on the procurement. What's interesting about our business is that 5 short years ago, we used to sell a car for $10,000 or $11,000, and now average retail sales price has doubled. And despite that, we're finding homes for these vehicles and customers. And so we don't believe that, that dynamic is going to change, right? We're going to have to adjust. And what we're trying to do is set ourselves up for the future, set ourselves up in this model to be able to serve customers up and down the credit spectrum so that we can continue to grow through that. And that requires technology. We believe our foresight in trying to make sure that we get these things done and what we've been working on for the last 18 months are really important and differentiate us from our competitors, especially when you consider things like AI and how that will change our business and trying to make sure we stay in front of that.

Okay. That's super helpful. And then I guess one more question, if that's okay. you mentioned that the ongoing industry challenges, you guys have spent a lot of time managing what you can in terms of execution, the things you can control, expenses and underwriting factors and so forth. Doug, in your mind, though, what -- I think affordability is probably one of the biggest constraints to improving industry. But Doug, maybe give us your thoughts on what other factors are you looking for that present, call it, good signals on the horizon? And what -- how long does it take to get there? What are the, call it, junctures in the road that we're looking for to just tell us that the environment is starting to become more constructive?

Yes. I think -- so a great question, John. For us, we have to sort of prepare ourselves to navigate any environment. And obviously, with these changes to our cost structure and optimizing our footprint with this new flexibility that we have, we're preparing to make sure we can weather anything. And I think that's important just given as you look across the industry, sort of what's transpiring. To your point, we have to create our own green shoots in this business. And for us, that means like going after higher-quality customers. That means making sure we have optionality on the type of car we procure and not being so narrow as to the type of vehicle that we're going after. Things like that are going to create optionality within the business. In addition to that, how we collect from our customers, there's a lot of transformation going on given how we've collected historically. And so we're focused on those things that we can control. I don't know when the environment sort of abates and gets a little bit better for consumers. But I think this sort of new normal that we're operating in, in terms of the car price, that's sort of to be expected. And so for us, there are lots of creative ways in this business that we can position this business to generate value, and we're looking at all of them. And so I think as quarters progress, the most important thing for us is to make sure that we optimize our cost structure and that we start to have positive earnings. That's the most important thing. And then we can focus on the flexibility we have as it relates to rebuilding our inventory and trying to capture some of this demand that's out there. We've been in a really sort of positive credit cycle for many, many years. And so it's just now turning the corner and this pressure that's on the consumer is really unfortunate. But it is when our business thrives. Historically, there's been validation points along the way that we have really, really robust times in our business. What's important is to make sure you get to the other side and that you can enjoy the fruits of that. And so we're just making sure that we're going to be set up and positioned for whatever transpires in the business.

Our next question comes from the line of Kyle Joseph with Stephens.

With the new debt in place and you guys talked about application flow is really strong, give us a sense for the timing in terms of being able to meet that strong demand.

Kyle, thanks for the question. So Jamie referenced the deviation in sort of inventory position through the 2 periods, declining about 7% in terms of total inventory on the balance sheet. We're in that phase of sort of rebuilding inventory. And I think that takes us to work through the quarter and it's more important as we set up for tax time. So in my mind, Q3 is that time to sort of rebuild inventory. And so Q3, just given sort of what's on the slate, we're going to be working on an ABS transaction, rebuilding inventories and then making sure we set up for a tax time and obviously executing Phase 2 on our SG&A plan. So I think we will be set up nicely here for the fourth quarter to make sure that we can get after it in tax time, especially considering that tax refunds are supposed to be elevated here going into the season. So we're excited to take advantage of that.

Got it. And then yes, obviously, you guys were able to complete the term debt despite unfavorable market conditions, which is an understatement. And kind of walk us through -- I know you talked about completing another ABS, but in terms of the next phase on the right side of the balance sheet, it sounds like a warehouse. Can you give us a sense for some of the discussions you've had and how you're thinking about structuring that, whether it's 1 or 2 facilities and where you are on that?

Yes. Kyle, good to talk to you. Yes, if you go back for a long time as a company, we managed ourselves with a very simple capital structure and ABL. And one of the things that this term loan provides us with is flexibility. And one piece of that flexibility is to move to what we describe as our capital structure. And so we do anticipate putting a couple of warehouses into our capital structure, and that will provide us with some flexibility from that perspective. We'll continue to leverage the ABS market. That's an important platform that we've engaged with and built over time. Going back, we started this process probably about a year ago. And so part of that process was engaging with various warehouse providers that you needed to complete the term loan first to put cash on balance sheet. And so we do believe that the warehouse structure will be a fast follow, and we're actively working on that from that perspective.

Got it, Jonathan. Last one for me. Just in terms of credit performance, just a lot of moving parts out there, and it sounds like some are specific to Car-Mart and some are just kind of the macro more broadly. But at least in terms of leading indicators, it seems like credit is getting better. You guys have rolled out LOS V2. Again, we can see the curves there look like there's overall improvement. And then you balance that with higher charge-offs, which I think you guys explained well, the higher reserve and then broader macro uncertainty. Is that kind of a fair way to think about it? Just that what you're seeing at Car-Mart, you're seeing general improvement. But given what's going on in macro, you're not really willing to call it at this point. Is that a fair way to assess how you're seeing credit?

That's correct. There's no doubt that this environment is putting a strain on all customers, our customers included. We've been pedaling really, really hard to ensure that the type of customer that we're putting in the portfolio is more durable, and we've spoken about that a number of times through the quarter, the consumer has been navigating continued pressure seen on tariffs and the cost of goods, et cetera. And then, of course, all of the SNAP benefit speculation, et cetera, which we were getting in front of and messaging our fields to ensure that we could deal with that and use the levers within our toolbox to help consumers navigate that. And that was right at the period in closing the quarter. I think that's especially notable just given that we finished off delinquencies at 3.1%, and those continue to trend well. Into November, that low delinquency rate has worked out sort of favorably in terms of the number of unit losses that we take, and that's about down 10% in November when averaged across what we saw in the quarter. I don't know how that plays out through the rest of the third quarter, but it certainly is a good leading indicator, which is why we really focus on that as a key metric, a managerial metric for credit on how we manage our business. And to your point, the dynamic is really fluid. But what's been important to us and this consumer, given our 1 million-plus cars sold in the space, is to ensure that we stick to the playbook on helping customers navigate this environment where we can. And that if it is not going to be successful to call it and get the asset back and ensure that there's quality in the asset and we can recover that and provide good returns to our shareholders. And I think that playbook is working well. Obviously, we'll continue to look at that as we navigate new headwinds like the SNAP thing as an example. But we continue to do that and booking larger amounts of stronger consumers in our portfolio is an important piece of that.

[Operator Instructions] Our next question comes from the line of Vincent Caintic with BTIG.

I appreciate all the detail that you provided on the call and on the presentation. You did a particularly good job highlighting the SG&A improvements that we are going to generate as well as what to expect to annualized. I did want to focus on revenues and sales expectations going forward, thinking about all the operational improvements that you've already made and are underway as well as the changes and the flexibility from the new capital structure and then also your underwriting changes. So kind of putting that all together, should we be expecting sales volume, sales per store per month sort of to accelerate from here? If you could maybe talk about your confidence? Or are there some changes like -- I know you talked about some of the store closures and something that where maybe there's a bump in the near term but that results in some strength in the long term. So if you could maybe give us some thoughts on how we should think about revenues, I would appreciate it.

Got it, Vincent. That's a really good question. I'm going to try and unpack it here as best as I can. We mentioned that the total impact on store closures here between the first 2 phases is going to be about 10% of the company's store footprint, which is going to be in and around that 15 store range here for the first 2 phases. If you just sort of put a pen to what our average productivity per rooftop is, it would imply that we have some reduction. You can do the math there. However, what we've tried to do is really focus on the geographical overlay between the stores that we're closing and really focus on consolidating. And I use that word carefully because what we want to do is be able to serve the same customer base. And what we've done, and Jamie sort of alluded to some of that work is overlay all the accounts geographically by

Okay. That's super helpful. And I appreciate and I thought it was great that you highlighted kind of the valuation of Car-Mart stock versus it's trading at 1/3 of book value. With that, I'm wondering if there are any actions you can take to kind of force that issue to close that valuation gap. Normally, we think about share repurchases, but I know there's a lot of capital structure changes upcoming. But you also talked on the press release about the ability to access a substantial amount of the residual equity in the ABS deals. So just kind of throwing that out there, if there's anything you can do, any thoughts from a structure level to be able to realize some of that value?

Yes, Vincent, thanks. The -- I think an important piece of closing that gap is information. And in the absence of information, fear sits there. And so as noted in both the press release and the supplemental presentation, we are trying to provide our investor base and the guys who cover us here more information so they understand. And I think actions like articulating out exactly with a level of precision, SG&A actions that we're taking and what the quantifiable benefit that you can expect, both in the fiscal year and annualized are really important components of that. And I believe that will help people sort of understand how they can sort of close that gap. That would be my expectation. In addition to that, behind us results, and that's really what we're focused on.

Okay. Great. And last one for me, and I think this one is for Jonathan. Just wanted to maybe talk about the credit allowance percentage. So on that slide that we moved or that talked about the adjusted EPS and removing the onetime impact of the allowance percentage adjustment. I'm wondering then if that implies that the -- I think the 24% where it currently stands, if that's the right percentage we should be thinking about going forward. So I just want to be sure I understood that, that's -- we're now making a onetime adjustment and so 24% is the right place to be.

Yes. Thanks, Vincent, how are you this morning. Yes. I mean, if you go back in history, the allowance moves around within a range, right? And it -- there's a piece of it where we're looking at the portfolio itself and how is it performing. But there's also a piece of it where you're looking at the macroeconomic factors. And so we just came out of a period with government shutdown. We kind of came dangerously close to kind of SNAP benefits not happening and et cetera. If you look forward, the consumer, as Doug mentioned, is under stress. I don't know that we can say with confidence that 6 months from now, a year from now, like the macroeconomic environment, there's like a path to like 100% goodness. It doesn't necessarily mean that it's going to be bad or good or whatever. But there's some uncertainty there. I think we could all agree to that. And so some of that uncertainty is built into kind of our allowance. I would expect it to be within this historical range. Is it going to be exactly 24%? I don't know that I would commit to that. But I also wouldn't commit to like it growing significantly higher than what it is today. So I think it will sit within a range. I think we're currently in our kind of historical range as a percentage of receivables. And then time will tell with what happens with the macroeconomic environment.

I'd only add there on top of that, Jonathan, the -- it is a bit of a tug of war on that front where you have this deteriorating environment with the consumer. They're navigating and COs are ticking up a bit. There's no doubt that, that's happening. You also have, as every month and every quarter that goes by, improving quality of customer entering the portfolio. And then there's this qualitative overlay that Jonathan alluded to. And like as an example, one of those is a forward-looking outlook on interest rates and inflation. And last quarter, there were certain we were going to get cuts and now maybe not so much and maybe they're pushed into '26. And those things have an impact on what the provision and the allowance is going to stand at. And so we -- it's tough to really quantify that. But given that it's still under where it was a year ago and it's ticked up a bit, like I think it's moving in and moving it around in the ring that it should be, but it's really difficult to tell and understand what the outside environment is going to do that as well.