Car-Mart(CRMT) - 2025 Q3 - Quarterly Report

Revenue Performance - Revenue for the first nine months of fiscal 2025 declined by 0.8% compared to the same period of fiscal 2024, primarily due to a 3.2% decrease in retail units sold[133] - Revenues decreased by approximately $8.5 million, or 0.8$26.1 million, or 8.7%, for the three months ended January 31, 2025, compared to the same period in the prior fiscal year[145] - Same store revenue growth was 3.1% for the three months ended January 31, 2025, compared to a decline of 9.3% for the same period in the prior year[145] Profitability Metrics - Gross profit per retail unit sold increased by $562, or 8.2$7.3 million, a significant improvement from a net loss of $31.8 million in the same period of the prior year[172] Credit Losses and Allowances - The provision for credit losses as a percentage of sales declined to 33.7$333.3 million, representing 24.31% of the principal balance in finance receivables of $1.5 billion[192] Interest Income and Expense - Interest income increased by 5.1$30.9 million increase in average finance receivables and an increase in the weighted average interest rate to 17.5%[145] - Interest income increased by 5.3% to $184.3 million for the nine months ended January 31, 2025, attributed to a$28.6 million increase in average finance receivables[155] - Interest expense as a percentage of sales increased to 6.4% for the nine months ended January 31, 2025, compared to 5.6% for the prior year period, with a dollar increase of $5.7 million[161] Inventory and Finance Receivables - Finance receivables, net, increased by 4.3$1.146 billion as of January 31, 2025, compared to $1.099 billion as of April 30, 2024[162] - Inventory increased by$36.5 million compared to April 30, 2024, due to acquisitions and increased volumes across dealerships[163] - Finance receivable collections increased to $338.7 million for the nine months ended January 31, 2025, compared to$324.7 million in the prior year[172] Expenses and Investments - Selling, general and administrative expenses increased by approximately $5.7 million, or 4.2$9 million in the next 12 months and fund dealership acquisitions as opportunities arise[185] Financing and Credit Facilities - The Company completed a public offering of 1.7 million shares at $43.00 per share, raising approximately$68.2 million in net proceeds[170] - The Company entered into Amendment No. 9 to its revolving credit agreement, extending the maturity date to March 31, 2027, and increasing total permitted borrowings to $350 million[183] - The Company had an outstanding balance of$73.1 million on its revolving line of credit as of January 31, 2025, with a potential annual interest expense increase of approximately $7.3 million for a 1% rise in interest rates[201] Market Conditions and Future Outlook - The Company expects tight used vehicle supply and strong demand to keep purchase costs elevated in the short term[177] - The Company expects the historical sales pattern to continue, with a higher proportion of revenue and operating profit realized during the first and fourth fiscal quarters[198] - The Company is exposed to market risk from changes in interest rates, particularly related to its debt obligations and revolving credit facilities[200] Accounting Standards Updates - The Company adopted ASU 2022-02 on May 1, 2023, which changes the methodology for measuring credit losses on financial instruments, affecting vintage disclosures related to current-period gross write-offs[195] - The Company plans to adopt ASU 2023-09 for its fiscal year beginning May 1, 2025, which is expected to enhance transparency in income tax disclosures but not materially affect financial statements[197] - The adoption of ASU 2023-07 will result in additional segment disclosures but will not impact the Company's consolidated financial position or results of operations[196]