America’s Car-Mart, Inc. (NASDAQ:CRMT) Q2 2022 Earnings Conference Call November 18, 2021 11:00 AM ET Company Participants Jeff Williams - President and Chief Executive Officer Vickie Judy - Chief Financial Officer Conference Call Participants Kyle Joseph - Jefferies Vincent Caintic - Stephens John Rowan - Janney Operator Good morning, everyone. Thank you for holding and welcome to America’s Car-Mart Second Quarter Fiscal 2022 Conference Call. The topic of this call will be the earnings and operating result ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 0-14939 AMERICA'S CAR-MART, INC. (Exact name of registrant as specified in its charter) Texas 63-0851141 (State or other juri ...

America's Car-Mart, Inc. (NASDAQ:CRMT) Q1 2022 Results Conference Call August 18, 2021 11:00 AM ET Company Participants Jeff Williams - President & Chief Executive Officer Vickie Judy - Chief Financial Officer Conference Call Participants Kyle Joseph - Jefferies Vincent Caintic - Stephens John Rowan - Janney Montgomery Scott Operator Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart First Quarter Fiscal 2022 Conference Call. The topic of this call will be the earnings and ope ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) The company is an integrated auto sales and finance retailer, selling used vehicles and providing financing to sub-prime customers - The company operates as an "Integrated Auto Sales and Finance" business, selling older used vehicles and providing financing to sub-prime customers through **151 dealerships** as of April 30, 2021[14](index=14&type=chunk) Dealership Growth (FY2019-2021) | Fiscal Year | Beginning Dealerships | Opened/Acquired | Closed | Ending Dealerships | | :--- | :--- | :--- | :--- | :--- | | **2021** | 148 | 3 | 0 | 151 | | **2020** | 144 | 5 | (1) | 148 | | **2019** | 139 | 5 | 0 | 144 | - The business strategy emphasizes collecting customer accounts, maintaining decentralized operations, expanding through controlled organic growth and strategic acquisitions, and operating primarily in smaller communities with populations under 50,000[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) Key Operational Metrics (FY2020 vs. FY2021) | Metric | Fiscal 2021 | Fiscal 2020 | | :--- | :--- | :--- | | Average Retail Sales Price ($) | $13,621 | $11,794 | | Portfolio Weighted Avg. Term (months) | 37.3 | - | | Credit Losses as % of Sales (%) | 20.3% | - | - As of April 30, 2021, the company employed approximately **1,850 full-time associates**, with **49% being women** and **32% being racially or ethnically diverse**[70](index=70&type=chunk)[71](index=71&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from COVID-19 impacts, credit-impaired borrowers, credit loss allowance, competition, regulation, and geographic concentration - The COVID-19 pandemic poses significant risks to the business, potentially impacting sales, finance collections, inventory acquisition, and associate productivity[84](index=84&type=chunk)[85](index=85&type=chunk) - Financing sales to credit-impaired borrowers creates a higher risk of delinquency, default, and repossession compared to traditional lenders[88](index=88&type=chunk)[89](index=89&type=chunk) - The allowance for credit losses may be insufficient to cover actual losses. In Q4 FY2021, the allowance was decreased from **26.5% to 24.5% of finance receivables principal**, reflecting improved credit performance[91](index=91&type=chunk)[92](index=92&type=chunk) - The business is geographically concentrated in twelve states, with approximately **27% of revenues from Arkansas customers**, making it vulnerable to local economic downturns[103](index=103&type=chunk)[104](index=104&type=chunk) - The company's growth strategy is dependent on favorable operating performance, availability of suitable dealership sites, ability to attract and retain management, and successful integration of acquisitions[118](index=118&type=chunk)[120](index=120&type=chunk)[124](index=124&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) The company leases approximately 82% of its facilities, including most dealerships and its 34,000 sq ft corporate office in Rogers, Arkansas - The company leases approximately **82% of its facilities**, including most dealerships and its corporate office in Rogers, Arkansas[132](index=132&type=chunk) [Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not anticipate a material adverse effect on its financial position or operations - The company is a defendant in various legal proceedings but does not anticipate a material adverse effect from their outcomes[133](index=133&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ (CRMT), retains earnings for growth, and conducts share repurchases without paying cash dividends - The company's common stock is traded on the NASDAQ under the symbol **CRMT**[136](index=136&type=chunk) - The company has a policy of retaining earnings for growth and has not paid cash dividends. Its ability to pay dividends is also restricted by its credit facilities[141](index=141&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2021) | Period | Total Shares Purchased (shares) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Feb 1 - Feb 28, 2021 | 6,521 | $122.13 | | Mar 1 - Mar 31, 2021 | 0 | - | | Apr 1 - Apr 30, 2021 | 0 | - | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2021 saw strong revenue and net income growth, improved credit loss performance, strengthened financial condition, and solid liquidity despite increased investments [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenues increased 23.4% in fiscal 2021, driven by higher sales prices and units, with gross margin stable and credit loss provision significantly reduced Consolidated Operations Summary (FY2019-2021) | (In Thousands) | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$918,610** | **$744,611** | **$669,122** | | Sales | $808,065 | $652,992 | $586,508 | | Interest & other income | $110,545 | $91,619 | $82,614 | | **Income before taxes** | **$134,441** | **$64,351** | **$59,851** | | Retail units sold (units) | 56,806 | 52,914 | 50,257 | | Average retail sales price ($) | $13,621 | $11,793 | $11,125 | - The provision for credit losses as a percentage of sales decreased to **20.3% in FY2021 from 24.8% in FY2020**. This was driven by lower net charge-offs and a **$15.1 million pretax decrease** to the provision from reducing the allowance for credit losses from **26.5% to 24.5%**[167](index=167&type=chunk) - Gross margin per retail unit sold increased by **$791** in fiscal 2021 compared to fiscal 2020, despite pressure from rising vehicle purchase costs[163](index=163&type=chunk) [Financial Condition](index=30&type=section&id=Financial%20Condition) Total assets increased to $822.2 million, with net finance receivables growing 34.1% and inventory surging 125.9% to support business expansion Key Balance Sheet Items (As of April 30, In Thousands) | (In Thousands) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Finance receivables, net | $625,119 | $466,141 | $415,486 | | Inventory | $82,263 | $36,414 | $37,483 | | Debt facilities | $225,924 | $215,568 | $152,918 | - For fiscal year 2021, the growth in finance receivables (net of deferred revenue) was **28.7%**, exceeding the revenue growth of **23.4%**, primarily due to an increase in the average contract term to **37.3 months from 33.3 months** in the prior year[175](index=175&type=chunk)[176](index=176&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is primarily from operations and credit facilities, with net cash used in operations due to funding a $159.0 million increase in net finance receivables Cash Flow Summary (FY2019-2021, In Thousands) | (In Thousands) | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($53,812) | $20,917 | $24,902 | | Net cash used in investing activities | ($8,258) | ($9,886) | ($3,887) | | Net cash provided by (used in) financing activities | $5,403 | $46,777 | ($20,285) | - At April 30, 2021, the company had **$99.1 million of availability** under its revolving credit facilities, which mature in September 2022[197](index=197&type=chunk) - The company plans to use cash for growing its finance portfolio, purchasing approximately **$25 million in fixed assets** over the next 12 months, and repurchasing common stock[198](index=198&type=chunk) [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) The allowance for credit losses is the most significant estimate, adjusted in Q4 FY2021 to 24.5% of finance receivables due to improved credit performance - The allowance for credit losses is the most significant estimate, amounting to **$184.4 million**, or **24.5% of the principal balance** in finance receivables, at April 30, 2021[207](index=207&type=chunk) - A **1% change** in the allowance for credit losses as a percentage of finance receivables would result in an approximate pre-tax change of **$7.5 million**[211](index=211&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk from variable-rate debt, with a 1% rate increase impacting annual interest expense by $2.3 million - The company is exposed to interest rate risk from its variable-rate revolving credit facilities. A **1% increase in interest rates** would increase annual interest expense by about **$2.3 million**[222](index=222&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements and the auditor's report, identifying the allowance for credit losses as a critical audit matter - The independent auditor, Grant Thornton LLP, issued an unqualified opinion on the financial statements and identified the allowance for credit losses as a critical audit matter due to significant management judgments[227](index=227&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) [Consolidated Financial Statements](index=42&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements for fiscal 2021 show significant growth in total assets, revenues, net income, and equity Key Financial Statement Data (FY2021 vs FY2020, In Thousands) | (In Thousands) | April 30, 2021 | April 30, 2020 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | $822,159 | $667,324 | | Total Liabilities | $415,263 | $364,165 | | Total Equity | $406,496 | $302,759 | | **Income Statement** | | | | Total Revenues | $918,610 | $744,611 | | Net Income | $104,139 | $51,343 | | Diluted EPS ($) | $14.95 | $7.39 | [Notes to Consolidated Financial Statements](index=46&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, finance receivables, credit loss allowance, debt facilities, and stock-based compensation, highlighting improved delinquency rates - The allowance for credit losses decreased to **24.5% of finance receivables in Q4 FY2021 from 26.5%**, resulting in a **$15.1 million pre-tax decrease** in the provision for credit losses[268](index=268&type=chunk) - Net charge-offs as a percentage of average finance receivables decreased to **19.3% for fiscal 2021 from 23.1% for fiscal 2020**, due to lower loss frequency and severity[307](index=307&type=chunk) - The company increased its total revolving credit facilities to **$326 million**, which mature on September 30, 2022. The interest rate at April 30, 2021 was **2.85%**[325](index=325&type=chunk)[327](index=327&type=chunk) [Controls and Procedures](index=66&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that the company's disclosure controls and procedures are effective as of April 30, 2021[368](index=368&type=chunk) - Management assessed the company's internal control over financial reporting as effective, and the independent registered public accounting firm issued an unqualified opinion on its effectiveness[372](index=372&type=chunk)[376](index=376&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=70&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the company's forthcoming definitive proxy statement for its 2021 Annual Meeting - Information for Part III (Items 10-14) is incorporated by reference from the company's forthcoming proxy statement[387](index=387&type=chunk) Equity Compensation Plan Information (as of April 30, 2021) | Plan Category | Securities to be Issued Upon Exercise (shares) | Weighted-Average Exercise Price ($) | Securities Remaining Available for Future Issuance (shares) | | :--- | :--- | :--- | :--- | | Approved by stockholders | 566,400 | $72.43 | 468,851 | Part IV [Exhibits, Financial Statement Schedules](index=72&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8 and all exhibits filed with the Form 10-K, with financial statement schedules omitted - This section lists all financial statements, which are located in Item 8, and notes that financial statement schedules are omitted[397](index=397&type=chunk)[398](index=398&type=chunk) - A list of exhibits filed with the report is provided, including articles of incorporation, bylaws, loan agreements, and executive compensation plans[399](index=399&type=chunk)[403](index=403&type=chunk)

America's Car-Mart, Inc. (NASDAQ:CRMT) Q4 2021 Earnings Conference Call May 25, 2021 11:00 AM ET Company Participants Jeff Williams - President & Chief Executive Officer Vickie Judy - Chief Financial Officer Conference Call Participants John Murphy - Bank of America Kyle Joseph - Jefferies Vincent Caintic - Stephens John Rowan - Janney Operator Good morning, everyone. Thank you for holding, and welcome to America's Car-Mart Fourth Quarter Fiscal 2021 Conference Call. Topic of this call will be the earnings ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2021 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 0-14939 AMERICA'S CAR-MART, INC. (Exact name of registrant as specified in its charter) Texas 63-0851141 (State or other j ...

Financial Data and Key Metrics Changes - Total revenue increased by 22.2% to $228 million, with a 5.6% increase in retail units sold and improved dealership productivity [14][15] - Average retail selling price per unit rose to $13,688, while interest income increased by 20.5% [14][20] - Same-store revenues were up 16.9%, and gross profit per retail unit increased by $836 to $5,774, reflecting a gross profit percentage of 40.6% [14][21] Business Line Data and Key Metrics Changes - Revenues from stores over 10 years old increased by 15%, while those from stores aged 5 to 10 years rose by 25% [15] - Productivity per lot per month improved to 31.2 units, with lots less than five years old showing significant growth from 20.9 units to 27.4 units [17] - Down payment percentage slightly increased to 5.5%, while collections as a percentage of average finance receivables decreased to 12.1% [18] Market Data and Key Metrics Changes - The supply of lower-priced units remained tight, impacting overall inventory management [15] - The weighted average interest rate for finance receivables was approximately 16.5%, remaining relatively flat from the prior year [20] - The mix of vehicle sales showed a 3% increase in SUV sales, while pickup sales decreased due to high prices and tight supply [22] Company Strategy and Development Direction - The company is transitioning from a collections-based model to a sales-focused approach, enhancing its digital presence and customer experience [9][12] - Investments in procurement processes and inventory management are expected to improve operational efficiency and customer satisfaction [10][11] - The company aims to increase market share through new lot openings and acquisitions, with a focus on maintaining a strong balance sheet [8][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming quarter, citing strong inventory levels and expected tax refunds and stimulus payments [36][37] - The competitive environment is challenging, but the company believes its financial strength allows it to maintain a diverse inventory and better serve customers [43][46] - There is a recognition of ongoing uncertainties due to COVID-19, but the company remains committed to supporting customers and improving credit performance [24] Other Important Information - The effective income tax rate for the quarter was 22.8%, with expectations of a base effective tax rate of approximately 24% going forward [25] - The company increased its credit facility by $85 million, enhancing its financial flexibility [26] - Recent investments include a new logo and tagline aimed at improving brand perception and customer engagement [28][29] Q&A Session Summary Question: Impact of tax refund season and stimulus on fourth quarter - Management noted that last year's fourth quarter was negatively impacted by the pandemic, but they expect strong sales volumes this year due to favorable inventory conditions and potential stimulus [34][36] Question: Outlook for retail sales prices in the used car market - Management anticipates that prices will remain elevated due to ongoing shortages and the introduction of new service contracts, although significant increases like those seen in the past year are not expected [38][39] Question: Competitive environment and credit availability - Management highlighted that competition is limited by capital constraints, allowing the company to leverage its strong balance sheet to maintain a diverse inventory [42][44] Question: Additional investment expenses and CapEx - Management confirmed an increase in CapEx limits to $25 million to support dealership expansion and improvements, with additional SG&A spending expected for marketing and IT investments [50][51] Question: Service contracts and customer penetration - Management indicated that about half of the customer base currently has service contracts, with expectations of increased average selling prices as these contracts are rolled out [61][63] Question: Weather impacts on operations - Management acknowledged recent weather challenges but does not expect significant long-term impacts on fourth quarter results [65][66]

Part I. FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements and management's analysis [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, highlighting significant growth in net income and total assets [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 31, 2020 | Apr 30, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $19,533 | $59,560 | | Finance receivables, net | $519,810 | $466,141 | | Inventory | $67,428 | $36,414 | | **Total Assets** | **$716,344** | **$667,324** | | **Liabilities & Equity** | | | | Debt facilities | $213,523 | $215,568 | | Total liabilities | $372,313 | $364,165 | | Total stockholders' equity | $343,531 | $302,659 | | **Total Liabilities & Equity** | **$716,344** | **$667,324** | - Total assets increased by **7.3%** to **$716.3 million** as of October 31, 2020, from **$667.3 million** as of April 30, 2020, primarily driven by an **11.5%** increase in net finance receivables and an **85.2%** increase in inventory[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income over specific periods Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Oct 31, 2020 | Three Months Ended Oct 31, 2019 | Six Months Ended Oct 31, 2020 | Six Months Ended Oct 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $223,360 | $190,310 | $411,271 | $362,188 | | Income before taxes | $27,750 | $17,957 | $53,289 | $37,796 | | Net income | $21,196 | $13,887 | $40,760 | $29,398 | | Diluted EPS | $3.05 | $2.00 | $5.88 | $4.21 | - For the three months ended October 31, 2020, total revenue increased by **17.4%** year-over-year, and net income grew by **52.6%**[10](index=10&type=chunk) - For the six-month period, total revenue increased by **13.6%** and net income grew by **38.7%**[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary for Six Months Ended October 31 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(29,733) | $(8,379) | | Net cash used in investing activities | $(4,400) | $(1,652) | | Net cash (used in) provided by financing activities | $(5,894) | $10,753 | | **(Decrease) increase in cash** | **$(40,027)** | **$722** | - The company experienced a significant decrease in cash and cash equivalents of **$40.0 million** for the six months ended October 31, 2020, primarily due to increased cash used in operating activities, driven by **$333.3 million** origination of finance receivables[12](index=12&type=chunk) [Notes to Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies, financial statement accounts, and business operations - The company operates **150 dealerships** in the South-Central U.S., focusing on selling older model used vehicles and providing financing to customers with limited credit histories[15](index=15&type=chunk) - The allowance for credit losses is a significant estimate, calculated based on historical loss experience, recent trends, economic conditions, and portfolio characteristics[20](index=20&type=chunk)[33](index=33&type=chunk) - As of October 31, 2020, the allowance for credit losses was **$173.0 million**, or **26.5%** of the relevant principal balance[20](index=20&type=chunk)[33](index=33&type=chunk) - The company's revolving credit facilities, totaling **$241 million**, mature in September 2022 and are collateralized by finance receivables and inventory[80](index=80&type=chunk)[81](index=81&type=chunk) - The interest rate on these facilities is variable, based on LIBOR plus a spread[81](index=81&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) effective May 1, 2020, which requires estimating credit losses over the life of financial assets, with no material impact on financial statements[62](index=62&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and liquidity, highlighting revenue growth and credit loss management [Overview](index=24&type=section&id=Overview) This overview describes the company's business model, recent revenue drivers, and COVID-19 impacts - The company operates **150 dealerships** focused on the 'Integrated Auto Sales and Finance' segment, primarily selling older used vehicles with financing to customers with limited credit[121](index=121&type=chunk) - Revenue increased **13.6%** for the first six months of fiscal 2021, driven by a **16.7%** increase in interest income and a **13.9%** rise in average retail sales price, while retail units sold decreased by **0.3%**[122](index=122&type=chunk) - COVID-19 has impacted vehicle availability and prices, leading to elevated inventory purchase costs, with the company adapting by establishing relationships with rental car companies to acquire newer, lower-mileage vehicles[123](index=123&type=chunk) - Credit loss results for the first six months of fiscal 2021 have returned to levels comparable to the prior year, following a negative impact in Q4 2020 due to COVID-19, though uncertainty remains[124](index=124&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section analyzes revenue, income, and expense trends, noting strong growth and improved credit loss metrics Three Months Ended Oct 31, 2020 vs 2019 (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $223,360 | $190,310 | 17.4% | | Pretax Income | $27,750 | $17,957 | 54.5% | | Retail units sold | 14,022 | 13,763 | 1.9% | | Average retail sales price | $13,365 | $11,589 | 15.3% | Six Months Ended Oct 31, 2020 vs 2019 (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $411,271 | $362,188 | 13.6% | | Pretax Income | $53,289 | $37,796 | 41.0% | | Retail units sold | 26,198 | 26,286 | -0.3% | | Average retail sales price | $13,102 | $11,504 | 13.9% | - Provision for credit losses as a percentage of sales improved to **22.3%** from **24.5%** for the three-month period, and to **22.2%** from **22.9%** for the six-month period, primarily due to a lower frequency of charge-offs[138](index=138&type=chunk)[145](index=145&type=chunk) [Financial Condition](index=28&type=section&id=Financial%20Condition) This section details changes in key balance sheet accounts, including finance receivables and inventory - Finance receivables, net, increased by **11.5%** to **$519.8 million** since April 30, 2020, reflecting the growth in sales[147](index=147&type=chunk) - Inventory increased significantly by **$31.0 million** since April 30, 2020, as the company replenished levels that were kept low during initial COVID-19 uncertainty and invested in newer model vehicles[148](index=148&type=chunk) - Accounts payable and accrued liabilities rose by **$7.4 million**, primarily due to increased inventory purchases and the deferral of employer payroll taxes under the CARES Act[151](index=151&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section outlines the company's funding sources, cash uses, and available liquidity - The company's primary sources of liquidity are cash from operations and borrowings under its revolving credit facilities, with growth largely self-funded[156](index=156&type=chunk)[165](index=165&type=chunk) - In the first six months of fiscal 2021, the company funded finance receivables growth (**$71.6 million**), inventory growth (**$31.0 million**), stock repurchases (**$6.1 million**), and capital expenditures (**$5.0 million**) with income from operations and a net increase in debt[154](index=154&type=chunk) - As of October 31, 2020, the company had **$19.5 million** in cash and an additional **$27 million** available under its revolving credit facilities[165](index=165&type=chunk) - Future uses of cash are expected for growing the finance portfolio, capital expenditures of approximately **$6.5 million** in the next 12 months, stock repurchases, and debt reduction[166](index=166&type=chunk) [Critical Accounting Policies](index=31&type=section&id=Critical%20Accounting%20Policies) This section highlights significant accounting estimates, particularly the allowance for credit losses - The most significant accounting estimate is the allowance for credit losses, maintained to cover estimated losses over the remaining contractual lives of the finance receivables portfolio[172](index=172&type=chunk)[173](index=173&type=chunk) - The allowance for credit losses was **$173.0 million**, or **26.5%** of the relevant principal balance, at October 31, 2020, an increase from **24.5%** at April 30, 2020, due to the economic impact of COVID-19[173](index=173&type=chunk)[179](index=179&type=chunk) - The calculation of the allowance considers historical data on repossessions and charge-offs, the average net loss per unit, and the timing of losses, supplemented by macroeconomic forecasts for the next twelve months[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section assesses the company's exposure to market risks, primarily interest rate fluctuations on variable debt - The company's main market risk is interest rate risk on its **$214.0 million** of variable-rate revolving credit facilities as of October 31, 2020[187](index=187&type=chunk)[188](index=188&type=chunk) - A **1%** increase in interest rates would lead to an approximate **$2.1 million** increase in annual interest expense, reducing pre-tax income by the same amount[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and internal financial reporting controls - As of October 31, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[190](index=190&type=chunk) - There were no material changes in the company's internal control over financial reporting during the quarter[191](index=191&type=chunk) Part II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and required exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses ongoing legal matters and their expected financial impact - The company does not anticipate any material adverse effects from current legal proceedings[193](index=193&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section updates on potential risks affecting the company's business and financial performance - No material changes to risk factors were reported since the last Form 10-K filing[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchase activities under the authorized program Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Aug 1 - Aug 31, 2020 | - | - | 125,109 | | Sep 1 - Sep 30, 2020 | 68,870 | $88.29 | 56,239 | | Oct 1 - Oct 31, 2020 | - | - | 56,239 | [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists all documents and certifications filed as part of the report - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[209](index=209&type=chunk)

Financial Data and Key Metrics Changes - Total revenue increased by 17.4% to $223 million, driven by a 15.3% increase in average sales price and a 1.9% increase in retail units sold [12][13] - Interest income rose by 18.2%, with same-store revenues up 12.8% [12] - Gross profit per retail unit sold increased by $770 to $5,705, a 15.6% increase compared to the prior year [20] - Net charge-offs as a percentage of average finance receivables decreased to 4.7% from 6.1% in the prior year [24] Business Line Data and Key Metrics Changes - Revenues from stores over 10 years old increased by 13%, while stores aged 5 to 10 years saw a 16% increase [13] - Productivity per lot per month was 31.2 units, slightly down from 31.6 units in the prior year [14] - The average down payment percentage improved to 6.4% from 6% in the prior year [16] Market Data and Key Metrics Changes - Inventory volumes returned to pre-pandemic levels, supporting higher sales volumes as the company approaches tax time [21] - The weighted average interest rate for finance receivables remained flat at approximately 16.4% [19] Company Strategy and Development Direction - The company is focused on capital allocation to gain market share in existing areas, with plans to open new dealerships [30] - Significant investments are being made in customer experience, inventory procurement, and technology upgrades to support future growth [8][9] - The company aims to centralize non-core functions while maintaining a localized decision-making structure [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing consumer preferences and market conditions [7] - There is uncertainty regarding the impact of COVID-19 on collections and the overall economic environment, leading to a conservative approach in credit loss reserves [25][36] - The company anticipates that supply challenges in the used vehicle market may ease after tax time [40] Other Important Information - The effective income tax rate for the quarter was 23.6%, up from 22.7% in the prior year [26] - The company maintains a conservative balance sheet with total debt of approximately $214 million and $19.5 million in cash [27] Q&A Session Summary Question: What is the company's experience with credit loss reserves in light of COVID-19? - Management noted increased demand for vehicles but expressed caution due to macroeconomic uncertainties and potential impacts on customers [35] Question: How significant have stimulus checks been for consumers? - Management acknowledged the positive impact of stimulus checks on consumers and emphasized their efforts to work with customers [37] Question: When does the company expect supply relief in the used vehicle market? - Management indicated that supply challenges may persist until after tax time, despite some improvements in repossessions and new car sales [40] Question: What are the company's growth parameters moving forward? - Management highlighted ongoing investments in inventory management, customer experience, and plans for new store openings as key growth strategies [42][44] Question: How does the company view the current portfolio duration in relation to used car prices? - Management expressed confidence in the quality of their vehicles and the ability to adapt to market conditions, indicating that they are not overly concerned with extending contract terms [51][54]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 0-14939 AMERICA'S CAR-MART, INC. (Exact name of registrant as specified in its charter) Texas 63-0851141 (State or other juri ...