America's CAR-MART Inc (CRMT) 2015 Q1 法說會逐字稿

Good morning, everyone. Thank you for holding and welcome to America's Car-Mart first-quarter 2015 conference call. The topic of this call will be earnings and operating results for the Company's fiscal first-quarter 2015. Before we begin, I would like to remind everyone that the call is being recorded and will be available for replay for the next 30 days. The dial-in number and access information are included in last night's press release, which can be found on America's Car-Mart's website at www.car-mart.com.

As you all know, some of management's comments today may include forward-looking statements which 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 provisions 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 regarding forward-looking information, please see Item 1 of Part 1 of the Company's annual report on form 10-K for the fiscal year ended April 30, 2014, and its current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q.

Participating on the call this morning are Hank Henderson, the Company's Chief Executive Officer and President; Jeff Williams, Chief Financial Officer. Now, I would like to turn the call over to the Company's Chief Executive Officer, Hank Henderson.

Good morning, everyone. Appreciate you joining us today. As you saw in our press release, this first quarter was a very solid start for the year. Our unit sales were right in line with our internal sales targets for the quarter and actually we exceeded those slightly by about 150 sales.

I do need to tell you that even more satisfying, though, than our overall unit sales number was the number of stores we had hitting their sales goal. As we finished out the quarter in July we had almost 90% of our stores hitting their individual sales targets. And I can't stress enough the significance of that achievement. That's a very strong indication that we truly are getting better at executing the Car-Mart plan at every store. So hats off to our associates, general managers, area managers for their great progress.

We've had a big sales month as a company many times before, but typically when that has happened in the past we've had a number of stores knocking it out of the park. This time was different and even better to see most all of our stores coming in right on target is very exciting.

Also with regard to sales we successfully managed to bring down our average sales price from last year's same quarter and also from our most recent quarter. Jeff will go over the particulars on that in just a minute. This does obviously make it a little tougher to see as much growth on the top line. But as many of you know, our focus on affordability pays off over the long-term. Our customers need payment terms that better fit their budgets, and this effort certainly makes that happen. And when what we offer our customers better suits our customers' needs we are rewarded over time with happier customers and more repeat business. That has long been the cornerstone of building and growing our Company.

During just this quarter we added about 2000 more customers to our active paying customer base. That obviously helps cash flow throughout coming year and also gives is that many more contacts with customers' friends, families, coworkers, etc., for more sales opportunities.

And while overall losses are continuing to run in the high range, I would like to highlight that we have seen a positive direction of the collection side. As we saw, our collections as a percentage of finance receivables increased from 3.8% last year to 14.1% this year. That is a significant improvement in the right direction, and it is a strong indicator that staying disciplined on our terms of structure, despite some of the noise going on with auto financing these days, is serving us well. And we believe it is also serving our customers well.

So, I'll go ahead and turn it over to Jeff to give you more details now.

Thank you, Hank. As I mentioned, total revenues for the first quarter was just over $127 million, up 3.9%. Same-store revenues were down slightly compared to the prior-year quarter but up about 4% sequentially. Revenues from stores in the 10-plus-year category was down 2.8%, a significant improvement from the fourth quarter when we were down just over 10%. We are really closing the gap with these older dealerships. Stores in the five- to 10-year category was up 2.3%. The fourth quarter was down almost 5% and revenues for stores in the less than five-year age category was up about 39%.

While we continue to face some top-line headwinds due to the tough environment, we are making solid progress and we will continue to try to find just the right sales volume credit risk balance with the goal of helping customers successfully complete contract terms and owning their vehicles. Once again, something that many current market participants have not appeared to be overly concerned with. Our continuing efforts to sell less expensive, more affordable vehicles is helping with our recent volume challenges. But that does present some short-term issues on the SG&A side as we try to leverage our fixed cost structure. Selling less expensive vehicles is the direction we need to continue to go, as it reduces the cash cost of running the business in addition to the positive affordability effects for our customers.

As we have continually stated, we have significant room for volume increases, especially if conditions move in our favor. And our push to offer for less expensive vehicles is certainly helping. Our new 12-month service contract priced at [595] will increase our ASPs in the future as we continue to roll this new product out. Our old service contract was priced at [395] and was for 5 1/2 months.

As always, we will focus on basic transportation needs and we know that we compete much more effectively at the lower price points, especially when the competitive landscape is out of balance. We will continue to target flat to slightly decreasing overall sales prices in our efforts to keep payments affordable with rational term lengths, to increase customers' success rates and further differentiate Car-Mart from the competition.

Our down payment percentage was 6.9% for the quarter, up from 6.6% for the prior year. As a reminder, our down payment percentage for the most recent fourth quarter was significantly higher than prior-year and actually was the highest we've seen in the last six years. Higher downs contribute to better credit results in the future.

Collections as a percentage of average finance receivables improved 14.1% from 13.8% last year. Now, this is a big deal and represents the first quarter since the fourth quarter of 2011 where we have seen higher year-over-year collection percentage. Our average initial contract terms was down to 27.2 months compared to 27.7 months for the prior-year quarter and down from 27.4 months sequentially. We continue to work hard at keeping the term length down and the customer equity up, again to help success rates.

The lower ASP and higher down payment percentage contributes to this decrease in the originating terms. Our weighted average contract term for the entire portfolio including modifications was 29.6 months, which was up slightly from 29.5 months for the prior-year quarter and flat sequentially. A slight increase in total term with modifications from the prior-year relates primarily to the fact that the weighted average age of the portfolio was 8.4 months at the end of the current quarter compared to eight months at this time last year. For competitive reasons term lengths may continue to increase some in the future, but we are committed to minimizing the increase and we are happy to see the leveling off and even decreases in recent periods.

The overall average retail units sold per month per lot in the quarter was 28.4, flat with the prior year and up 6% from 26.9 sequentially. At quarter end 42 or 31% of our dealerships were from 0 to 5 years old, 23 or 17% were from five to 10 years old with remaining 71 lots being 10 years old or older. Our 10-year plus lots produced 30.7 units sold per month per lot for the quarter compared to 31.2 for the prior-year quarter. That was a 1.6% decrease or about 0.5 units per month per dealership. But it was up significantly from the 29.5 sequentially.

Our lots in the five- to 10-year category produced 28 compared to 27.5, a 1.8% increase. And the lots in less than five-year age category produced 24.4 compared to 22.7 for the first quarter of last year. This was a 7.5% increase. We are very pleased with the productivity improvements in our lots less than 10 years old, and even though we were down slightly year-over-year with our older dealerships, again sequentially we are really closing the gap with these stores, which have been much more affected by competition.

As we have been saying for some time now, if market conditions turn in our favor we have significant upside with all of our dealerships but especially with older, more mature dealerships. It still may be just a little early to say that this is happening. But our solid credit results could indicate some positive movement for our business model as we have been expecting. Any tightening on the lending side by the competitors can have a pretty quick positive impact for us based on how our market functions. Again, it may be just a little early to say that this is happening but we are hopeful.

We will continue to focus on customer retention, repeat business, and offering good quality, lower-priced vehicles that are affordable under rational terms. We will continue to highlight the benefits of our excellent service and the local face-to-face offering to the market.

Interest income was up $522,000 or 3.9% for the quarter, due mostly to the $12.7 million increase in average finance receivables as well as better collection results. The weighted average interest rate for all finance receivables at the end of the quarter was approximately 14.9%, which is flat with this time last year.

For the first quarter gross profit margin percentage was 42.3% of sales compared to 42.5%. This small decrease related to slightly higher repair costs and slightly lower margins on payment protection plan and the service contract products, offset by the benefit of pricing for the lower-priced cars, which carry a higher gross profit percentage.

As we have stated previously, we expect the new 12-month service contract to not only help more customers succeed, which is why we began offering it, but it is also expected to have a slight positive effect on overall gross margins, once fully rolled in. Our goal is to balance affordability for our customers with appropriate gross margin percentages to enhance customer success. We expect gross margin percentages to remain generally in the current range over the near-term.

For the quarter, SG&A as a percentage of sales increased to 18.4% compared to 18% for the prior-year quarter, the $1.2 million increase in overall SG&A dollars compared to the prior-year relates primarily to higher payroll costs and other incremental costs related to the 10 new auto (inaudible). Additionally, we did incur around $400,000 in GPS expenses for the quarter and ended the quarter with right at 67% of our accounts having the product. We are aggressively managing our expenses and we continue to expect some SG&A leverage and in the future as we grow our revenues.

Had our ASP been flat for the quarter, we would have seen some leveraging. But once again, the long-term benefits of a lower ASP are significant and we always look to the long-term. However, we will continue to invest in our infrastructure to support our growth. The GPS effort is a long-term infrastructure investment that is enhancing our operational efficiencies out in the field. We expect the cost to be from between $3 and $4 per account per month and it is continuing to look like it will be closer to $3. We continue to believe that many market to suppress maybe underpricing the servicing side of the business, where customer success is in many, if not most, cases determined.

For the current quarter, net charge-offs as a percentage of average finance receivables was 6.3%. That's up slightly from 6.2% from the prior year. The increase for the quarter related to hire severity of losses, which resulted from lower wholesale values at repo and, to a lesser extent, on the longer contract terms.

Frequency of losses was actually down for the quarter as we did a good job of working the customers to help them succeed. Competitive pressures both at the point of sale and the default point and the prolonged negative macro factors for customers are contributing to the higher losses when compared to historical levels. However, we are seeing a leveling off of losses which could be a very good indicator for the future. We are hopeful that the worst could be behind us and that the decreased frequency of losses and the other positive credit metrics are good indicators as we look forward.

Principal collections as a percentage of average finance receivables for the quarter was once again 14.1%, up from 13.8% from the prior-year quarter. The increase in principle collected percentage between periods resulted from lower delinquencies. The average age of the portfolio was a little older. Contract modifications were down. This was offset by slightly longer overall contract terms including modification. Also the average percentage of AR current for the quarter was 81.6%, up from 80.5% and, once again, lower modification levels -- modifications were down about 8% for the quarter.

Excluding the effect of the increase of 200 basis points on our provision for new receivables -- remember that we did increase our reserve at the end of our third quarter last year and we have been provisioning at the higher level since then -- credit losses on the income statement would have been basically flat this quarter.

We saw a slight improvement with our 10-plus, five to 10-year dealerships, offset by slightly higher losses for our less than five-year dealerships. As we look out, we do expect losses in the near-term to be closer to historical levels, and we are optimistic that our third- and fourth-quarter credit results will be better than the prior year. The competitive landscape during the upcoming tax season will play a big role but we plan to execute well and we are optimistic.

We will continue to focus on things that we can control -- buying great cars, structuring deals so that our customers can succeed, and then earning repeat business by providing excellent service. The quality of the portfolio is good and delinquencies are down significantly. Our 30-plus was down to 4.7% from 5.4% at this time last year. We will continue to try to find just the right balance between sales and customer success in a challenging environment.

At the end of July, with our total debt at $94 million, we did reduce debt by $2 million during the quarter. We had $48 million in additional availability under our revolving credit facility. Our current debt to equity ratio is 43.2% and our debt to finance receivables ratio is 23.8%.

Our first priority would be to continue to grow the business in a healthy manner and we are very encouraged by productivity improvements with our older dealerships, which appears to a trending in the direction that we have been expecting. We continue to keep an eye on the competitive landscape and our future decisions on capital allocations will take this into account. We did repurchase about 75,000 shares for $2.8 million during the quarter, and we have repurchased 3.3 million shares or 28% of our Company since February 2010.

Now, I will turn it back over to Hank.

Thanks, Jeff. Earlier I mentioned how pleased we are in having such a high number of our stores hitting their sales targets. And I would like to mention one of the reasons we are seeing such a solid results across the board. And that is our improvements with our general manager turnover. I think we first began talking a little bit about this a couple years ago with the growth of our Company all levels. We were seeing turnover with our general managers and that was something that was really not an issue when we were a smaller company. And we have been working very hard to improve our hiring and training processes prior to putting them in place.

We've also made even more improvements on the support our new GMs receive when they get their own store. We made it everyone's top priority here to better develop and support our general managers to put a stop to this unnecessary turnover we have been experiencing. I am very proud to say that those efforts are paying off and that turnover now is about a third what it was the same time a year ago. And that does show up in our first-quarter results.

But in addition to helping our current results, it also grows our confidence with regard to opening new stores as well. We opened two new lots this quarter -- Hixson, Tennessee and Dothan, Alabama. And we do plan to open a total of eight for this fiscal year. And provided we stay on track we intend to increase the rate of new store growth for the following year.

So that does conclude our prepared remarks. So we would now like to move on to your questions. Operator?

(Operator Instructions) Elizabeth Suzuki with Bank of America Merrill Lynch.

I just have a couple of quick questions about the quarter and what you are seeing in the broader industry. It looks like the comps are starting to improve and it seems like pricing is coming down somewhat, which should be a positive for volume if it continues. Does it look like the industry-wide pricing for six- to 12-year-old vehicles is coming down in general or was the lower pricing more of a Car-Mart-specific strategy?

It was definitely Car-Mart specific. We have talked about this for some time. With the added competition over the past couple of years we definitely had felt more of the pressure of that at the top end and also, aside from just what's going on with regard to car financing our customers is feeling quite a bit of pressure. So, we certainly feel like we own the market down below some of the top-end range of where some of our sales, particularly on our older, larger stores have been taking place. And so, we have moved that down because we certainly are far more competitive in that range. And we also feel like that these times right now our customers need more affordability. So that was definitely our own doing.

Great. And given the improvement in some of your financing metrics such as down payment percentage, collections rate, and accounts over 30 days past due, do you foresee provisions for loan losses getting a bit lower over time or are you likely to remain cautious in the current environment?

I think when we adjusted the reserve up, historically we really don't like to take that reserve up or down without extended positive results. We do expect better results in the future, but we certainly feel like losses have leveled off. Whether we get significant improvement going forward is a little more cloudy. But we are getting more and more convinced that maybe the worst is behind us. And we may have some good times ahead, but we're certainly always going to stay in the conservative side.

Great, thank you. And one last quick one, which is that we've seen some recent headlines about CFPB increasing its scrutiny on subprime auto lenders. And I believe the last time we spoke to CFPB was not investigating Car-Mart specifically. But is that still the case?

Yes, that's still the case.

Great, thanks very much.

David Scharf from JMP Securities.

A couple things -- Jeff, when you look at the big improvement in collections in the quarter, I'm just curious. If you had to rank the reasons behind that, how much of it is related to the GPS rollout versus just the improvement in the terms of your loans over the last couple quarters? And then lastly, just any kind of general macro trends.

Well, it's kind of hard to specify which component had the biggest effect. Certainly we feel like the GPS products are helping us in the field. We feel like the shorter-terms that we've seen recently is helping us, the better underwriting we've had recently is helping the collections side. We are executing better at the lot level and really focused on delinquencies and helping these customers succeed. And we believe we are starting to see a little relief on the competitive side. It's more anecdotal than anything right now, but just a little change on the competitive side can have a big effect on our collection results.

Sure. As we think about just the operational impact of the GPS rollout, just by virtue of going from two-thirds of the fleet out there to fully deployed -- I assume that should happen over the next year. Is there a way for us to think about, holding all other factors constant, how much of an impact that might have on the collection rate?

I would have to tell you that the jury is still out a bit on that. I think it does make us better, provided we use it correctly. But it is still new to us. When we made the decision to invest in the GPS our focus was to help us make contact sooner with our customers so that we can work with them and help them pay for the car and reduce losses, not just so that we had an easier way just to find them later when they are severely delinquent. And so this thing still relatively new and, again, not even all the customers having it, we're still working it in and refining our practices. So, I think that's something we could talk more about in the future. But right now we are still working through our own processes with regard to that.

But without a doubt, it is helping with the efficiencies at the lot level. To manage 65,000, 130,000 accounts, it was something we felt like we had to do just from an efficiency standpoint. It's a little harder to pencil out credit loss savings at this point, as Hank mentioned.

Fair enough. I believe last quarter the recoveries as a percentage of losses, I think maybe down to about 30% -- what was that figure for (multiple speakers)?

It essentially dipped below 30% at this point. The wholesale pricing continues to be a little under pressure. So we continue to see some decreases in the fair market value of cars taken back at repo. But had a big positive on the frequency so we are seeing fewer cars come back. But those that do come back are worth a little less than they were at this time last year.

Got it, got it. Jeff, I know the last caller asked about the provisioning. And I know you don't like to change that period ending allowance too frequently. You raised it around 23.5 couple quarters ago. But loss rates are still elevated. But to the extent that you are correct and that they've potentially leveled off and maybe the worst is in the rearview mirror, can you give us a sense for how many months or quarters of stable loss rates we need to see before potentially that allowance figure would come down again?

Well, we've always been really, really conservative. And we think the most visibility we can give readers of the financial statements is leaving that reserve alone. If we start monkeying with that -- we really look at that seriously and don't adjust it until we have to. But looking forward, if we have a really outstanding end of the third quarter and a really outstanding fourth quarter on collections, best case is we might be compelled to look at it at that point.

Got it. Got it. That's helpful. And then lastly, and I'll get back in queue. But just trying to get a sense for at the end of the day on the strong unit volumes how much you would attribute to your decision to obviously go after lower-priced vehicles or lower your price on older vehicles versus some of the anecdotal signs you are seeing that competition might be easing a bit. If we had to think about the next six months and how you're looking at the market, should we still be thinking that Car-Mart is going to have to look at 3%, 4% year-over-year decline in average sales price in order to move things? Or do you get a sense that any competition on the low-end is easing a bit and you won't have to be as aggressive on pricing in order to help your closure rate?

I will mention again that the 12-month service contract, when it gets fully rolled in we will get between $175 and $200 more on an ASP basis per quarter with that product fully rolling in -- it will take a while to get there but that will offset some of the decrease we've seen on the ASP on the car itself. As far as looking forward we are really looking at flat sales pricing to down a little bit, like we saw this quarter, excluding the effect of the service contract change.

Got it. Okay, thank you very much.

John Hecht with Jefferies.

Congratulations. Just parsing little bit through the increase in sales, you talk about alleviation of competition and obviously strong execution. I wonder can you talk anything to customer demand. Are you seeing more foot traffic? What's the uptick of new customers? Are you seeing greater activity amongst your customer base at all?

I would say that it's been solid. Of course, we came through spring, which is the busy time. I would say that the traffic has remained solid. I wouldn't necessarily say we've had any significant increases. And I would definitely say that the solid sales for this quarter were certainly more execution. I think that we've done some good things. I mentioned before I feel like our area managers -- their development has really improved and their ability to really put the focus on the individual stores. And that's why what we said earlier really highlighted our success in hitting targets at each of our stores. I think it had a lot to do with our focus at each individual store, figuring out what do we need to do to get the sales at a local level. And we were successful across the board. As Jeff said, anything we hear about competition easing is a little anecdotal here and there. But I certainly attribute our better sales to more effective execution at the local level. It's still very difficult for us to measure the impact of competition right now.

Okay. And then the average retail price -- it did tick downward. It sounds like you guys have been focused on that in order to keep the monthly payments down. How are you doing this? Is it more productive buying or can you give us some stats about the average age and mileage of what you are buying now versus what you had -- were buying, say, a year ago?

Yes. No surprise, the cars that we are buying are a little bit older with a few more miles on them than they were before. But cars are built so much better than they were in the past that we are very comfortable that that asset is going to last well beyond the contract terms. That's always our primary focus. We have just done a really good job, especially with some of our older dealerships, in making sure that they really focus on selling a good range of product, from the lower-priced product on up, and just some focus on making sure that those lower price points are receiving the appropriate amount of attention has certainly helped.

Okay. With respect to the new service contract, are you going to phase out the shoulder contract first and second? What is the uptake relative to total sale, unit sales on the current service contract and what would you expect it to be on the longer-term contract?

We have a couple of our discount auto locations that are going to stay with the 395 service contract. All the other dealerships have moved to the 595. And we've always had a very high take rate on that product because it is a good value. There's not a third party involved. We carry that product our sales and service that product ourselves. So at 595 for a 12-month service contract -- it's just really an outstanding value and we expect to take rates to stay in that 95% range because it does represent a significant value at a good cost for the customer. We end up earning a gross margin on that product of around 40%.

Yes, and when we moved to that we didn't leave the other one out there. So we just moved the whole thing up. It's not an option.

Jeff, do you have handy what your average monthly payment is right now?

It's right at -- we measure more on a biweekly basis. That's our most common term. It's about $177 biweekly.

Okay. Thanks very much, guys.

John Rowan with Sidoti & Company.

Jeff, can you go over your explanation again as to why the portfolio duration was up slightly yet the originating contract terms were lower and modifications were lower? I'm trying to understand how those numbers fit together.

The age, the weighted average age of all 63,000 accounts is aging out 8.4 months this year compared to 8 at this time last year, which just means we've got more seasoning in the portfolio overall. Modifications were down for the quarter. For just this most recent quarter modifications were down about 8% from the same quarter last year. But for the hope pool of loans, all 63,000, because they are that much older than they were for the overall pool, were up just slightly on the term accounting modifications.

With the average age coming up, does that indicate that the typical charge-off has moved back from the roughly 10-month timeframe?

Yes. We are actually moving up a little bit on the average default point. We are back over 11 months now.

Okay. Going back to the question on the typical payments, 177, which I think is actually kind of flat even if I go back to fiscal 2013 with the typical biweekly payment, is your strategy to bring down duration and basically offset the change in the contract terms with a lower-priced vehicle? And not actually lower the typical biweekly payment?

That would be -- if competition allows us to do that, that would be the best scenario for our customer. That means a shorter term, more equity, more payoffs. That would be a good answer and that would be, certainly, something that we would strive to make happen.

And then just last question -- Hank, last quarter on the conference call I asked you what comparable deals we are seeing in the market -- your customer, your typical car that you were financing, what deals you were seeing. You told me that there are some customers that you were losing deals to because they were taking 48-month loans on comparable vehicles. That's obviously a much longer duration and what your portfolio is at close to 30 months. I'm curious; have those types of excessive deals come out of the market? Obviously, it would be anecdotal information but I'm curious what your take is and how that -- how your take on that, has changed within the past quarter.

I think that a lot of those that we were hearing about, talked about were happening more during the tax time. I think dealer were -- customers had some down payment money, they had gotten tax refunds back. And so, I think through the spring we had heard of a lot more of that. I think that offering is still out there, a lot of that is still available. But if you ask what we are hearing, I haven't heard as much about that as we did in the spring.

Okay, thank you very much.

Bill Armstrong, CL King & Associates.

With an older, higher mileage car, how are you managing the risk of breakdowns happening before the contract expires and the consequent potential for higher default down the road?

That's a good question. We stress you have to be more selective in order to buy those quality cars at that range. Our purchasing agents understand that you are going to have to drive more of them, turn more of them down. It is actually a more difficult job to buy the cheaper cars that it is the more expensive ones. And so, we just really have to crack down on being more selective and have to understand we got to roll up our sleeves and work of harder in order to get the good ones. So, we do feel like that if we do a good job with that, those are certainly as manageable as up the stream.

Okay. And when you are talking about your competitive conditions maybe easing up little bit, are we talking about on the financing side? Are you seeing any evidence that maybe some of your customers are not getting as many easy offers as they were getting in the past? Or maybe not quite the extended terms that you are seeing previously? What can you tell us about that?

I would think the same answer I just said to John. I think that we really saw a lot of that. That's one of the reasons we talked about it last time and also talked about cars being dropped at other dealers, that sort of thing. I think a lot of that was related to our customers having their tax refund money at the time where we saw a lot of the drop-off cars and that sort of thing. We still see the same advertising everyone else sees, the same offers. So I think the offers are still out there. I think some customers are still taking advantage of that. But I think that we have improved our focus on our customer retention and certainly trying to track those customers that are more interested in the affordability, the short-term, that sort of thing, rather than going and signing up for a five-year note with someone. So, I think it is still available.

Yes, but in the lower price points we know that we compete more strongly than at those lower price points, especially against the indirect lending channel.

Okay. So I guess maybe what gives you confidence that maybe we are actually hitting an inflection point and that things may -- maybe we have bottomed out here and things are going to get better? What you seeing that might indicate that?

All the credit metrics during the quarter were all very positive. We have a lot of analysis on static pools by month and by quarter. And we are seeing the leveling off in actual improvements on some of those pools. So there's a lot of things pointing in the direction of us, at the point where things could get better.

Okay. All right, great, thanks.

Chris Brown with Aristides Capital.

Good morning, gentlemen. I just had a quick question. I was wondering if you actually track the percent of sales that are from repeat customers and how that is tracking now compared to, say, year ago?

We do and how percentages of repeat customers are pretty much level with what we saw last year at this time, about a third of our sales are to repeat customers. Some of our older dealerships that repeat percentage could be about 50%. But on average we are right at a third, which is pretty consistent with this time last year.

Great. You mentioned earlier tax season is a big driver for you guys. How important would you say that is as a percent of your annual sales?

Tax time itself is -- our customer, 95% of our customers are going to get a $4000 to $5000 income tax refund in February. So it's extremely important on the sales side and on the collection side. And you can just look at the fourth quarter sales trends and the seasonality with that fourth quarter and get an indication of what effect that tax time might have. Now, we do have some promotions that start in the third quarter to try to spread out the timing of the tax time sales. But it is important to our business and to our customers and we try to do a good job managing that process. And we try to get our customers to maybe have some seasonal payments during tax time to increase their equity or keep their equity up on those transactions, keep that term down. So it is an important event for most of our customers and it does a certainly help on the collections and the sales side.

Okay, great, thank you for the color.

(Operator Instructions) And I'm not showing any further questions from the phone lines at this time. I would like to turn the call back to management for closing remarks.

All right. Well, again, thank you all for joining us this morning. As we said, we feel like we have gotten off to a very solid start for the year, very optimistic here, attitudes are good. And we are excited and looking forward to a good year here. So thank you and we will look forward to talking to you guys in the future.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a good day.