Car-Mart(CRMT) - 2026 Q1 - Quarterly Results

First Quarter Fiscal Year 2026 Results Overview America's Car-Mart reported its first-quarter fiscal year 2026 results, highlighting strategic investments, operational performance, and financial position Key Highlights & CEO Commentary America's Car-Mart's Q1 FY26 results show positive impacts from tech investments on demand, underwriting, and collections, improving portfolio quality - Application volume increased over 10% year-over-year, indicating elevated consumer demand[3][12] - Deployed and implemented LOS V2 with an advanced underwriting scorecard and risk-based pricing across the entire footprint (excluding acquisitions)[3][7] - Upgraded 'Pay Your Way' consumer-facing collections platform, driving a shift to online payments and nearly doubling recurring payment enrollments, improving convenience and predictability[3][7] - Credit applications from top three customer credit rankings grew by 790 basis points, or 15%, compared to FY25 average, with nearly 72% of the portfolio now under enhanced underwriting standards[5] First Quarter Fiscal Year 2026 Key Operating Metrics Summary The company saw slight revenue and sales volume decrease, but improved gross margin and credit loss allowance, with wider net loss | Metric | FY'26 Q1 | FY'25 Q1 | Change | % Change | | :------------------------------------------ | :------- | :------- | :----- | :------- | | Total revenue | $341.3M | $347.8M | ($6.5M) | (1.9)% | | Sales volumes (units) | 13,568 | 14,391 | (823) | (5.7)% | | Interest income | $65.1M | $60.5M | $4.6M | 7.5% | | Total collections | $183.6M | $172.9M | $10.7M | 6.2% | | Gross margin percentage | 36.6% | 35.0% | 1.6 pp | 160 bps | | Allowance for credit loss | 23.35% | 25.00% | (1.65 pp) | - | | Net charge-offs as % of avg. finance receivables | 6.6% | 6.4% | 0.2 pp | - | | Interest expense | $17.0M | $18.3M | ($1.3M) | (6.9)% | | Loss per share | ($0.69) | ($0.15) | ($0.54) | - | Business Review and Operational Performance This section details the company's operational performance, including technology implementations, revenue trends, expense management, credit quality, and financing activities LOS V2 Implementation and Underwriting Enhancements LOS V2 deployment shifted applications to higher-ranked customers for enhanced portfolio quality and sustainable returns - LOS V2 features an updated, more predictive scorecard and risk-based pricing, enabling more accurate risk identification and granular customer ranking[9] - A dramatic shift occurred with 15% more customers booked in ranks 5-7 (higher-ranked) compared to FY25, indicating improved customer quality[10] Revenue and Sales Performance Total revenue decreased by 1.9% to $341.3M due to 5.7% decline in retail units, partially offset by gross margin and 7.5% interest income increase | Metric | FY'26 Q1 | FY'25 Q1 | Change | % Change | | :-------------------- | :------- | :------- | :----- | :------- | | Total Revenue | $341.3M | $347.7M | ($6.4M) | (1.9)% | | Retail units sold | 13,568 | 14,391 | (823) | (5.7)% | | Interest income | $65.1M | $60.5M | $4.6M | 7.5% | - Customer demand was elevated, with a 10% year-over-year increase in credit applications, but sales volumes declined due to fewer units available for sale[12] - Cost of procurement increased by 5.2%, pressuring inventory capacity and leading the company to prioritize vehicle quality and higher credit quality customers[12] Gross Profit Analysis Gross profit margin improved by 160 basis points to 36.6% year-over-year, driven by pricing, ancillary products, reduced repairs, and improved wholesale retention | Metric | FY'26 Q1 | FY'25 Q1 | Change | | :---------------------- | :------- | :------- | :----- | | Gross profit margin | 36.6% | 35.0% | +1.6 pp | - Improvements were attributed to vehicle pricing, strong ancillary product attachment rates, reduced repairs, and improved wholesale retention[13] SG&A Expense and Efficiency Initiatives SG&A expenses rose 10.1% to $51.4M due to investments, with Q2 completion expected to yield future annual 5% reductions | Metric | FY'26 Q1 | FY'25 Q1 | Change | % Change | | :---------------- | :------- | :------- | :----- | :------- | | SG&A expenses | $51.4M | $46.7M | $4.7M | 10.1% | - Investments in people and technology initiatives drove the increase, with technology initiatives expected to complete in Q2 and lead to future SG&A reductions of approximately 5% annually[14] Credit Quality and Portfolio Management This section reviews the company's credit quality, including net charge-offs and allowance for credit losses Net Charge-Offs (NCOs) Net charge-offs increased slightly to 6.6% from 6.4%, driven by softer sales and higher frequency/severity of losses, with modest delinquency rise | Metric | FY'26 Q1 | FY'25 Q1 | Change | | :------------------------------------------ | :------- | :------- | :----- | | NCOs as % of avg. finance receivables | 6.6% | 6.4% | +0.2 pp | | Delinquencies (30+ days) | 3.8% | 3.5% | +0.3 pp | - The increase in NCOs was attributed to softer sales (50%) and higher frequency (three-quarters of the remaining 50%) and severity (one-quarter of the remaining 50%) of losses[15] Allowance for Credit Losses Allowance for credit losses improved to 23.35% at July 31, 2025, from 25.00% year-over-year, with slight sequential increase | Metric | July 31, 2025 | April 30, 2025 | July 31, 2024 | | :------------------------------------------ | :------------ | :------------- | :------------ | | Allowance as % of principal balance net of deferred revenue | 23.35% | 23.25% | 25.00% | - The sequential increase in allowance was driven equally by portfolio growth and the frequency and severity of loss[16] Leverage, Liquidity, and Financing Activities Leverage ratios improved, with debt to finance receivables at 51.1% and net debt at 43.1%, completing a $172M securitization post-quarter | Metric | July 31, 2025 | July 31, 2024 | Change | | :------------------------------------------ | :------------ | :------------ | :----- | | Debt to finance receivables | 51.1% | 53.4% | -2.3 pp | | Debt, net of cash, to finance receivables | 43.1% | 46.7% | -3.6 pp | | Average down payment % | 4.9% | 5.2% | -0.3 pp | | Average originating term | 44.9 months | 44.3 months | +0.6 months | | Weighted average loan term (portfolio) | 48.3 months | 48.1 months | +0.2 months | - On August 28, 2025, the company completed a $172 million term securitization with a weighted average life-adjusted coupon of 5.46%, an 81-basis point improvement over the May 2025 issuance[18] - Net proceeds from the securitization were used to pay down the outstanding balance on the revolving line of credit, and the company continues to explore diversifying financing sources[18] Detailed Key Operating Results Comprehensive table of Q1 FY26 operating results shows declining sales volume but improved gross profit and collection efficiency | Operating Data | July 31, 2025 | July 31, 2024 | % Change | | :------------------------------------------ | :------------ | :------------ | :------- | | Retail units sold | 13,568 | 14,391 | (5.7)% | | Average number of stores in operation | 154 | 155 | (0.6)% | | Average retail units sold per store per month | 29.4 | 30.9 | (4.9)% | | Average retail sales price | $19,564 | $19,286 | 1.4% | | Total gross profit per retail unit sold | $7,456 | $6,996 | 6.6% | | Total gross profit percentage | 36.6% | 35.0% | - | | Same store revenue growth | (4.1)% | (8.6)% | - | | Net charge-offs as a percent of average finance receivables | 6.6% | 6.4% | - | | Total collected (principal, interest and late fees), in thousands | $183,571 | $172,872 | 6.2% | | Average total collected per active customer per month | $585 | $562 | 4.1% | | Average percentage of finance receivables current (excl. 1-2 day) | 80.8% | 82.3% | - | | Average down-payment percentage | 4.9% | 5.2% | - | | Period End Data: | | | | | Stores open | 154 | 156 | (1.3)% | | Accounts over 30 days past due | 3.8% | 3.5% | - | | Active customer count | 104,691 | 103,231 | 1.4% | | Principal balance of finance receivables (in thousands) | $1,515,680 | $1,465,259 | 3.4% | | Weighted average total contract term | 48.3 | 48.1 | 0.5% | Financial Statements This section presents the company's consolidated financial statements, including results of operations, balance sheet, cash flows, and non-GAAP reconciliations Consolidated Results of Operations Consolidated statement shows a net loss of $5.7M for Q1 FY26, wider than Q1 FY25, driven by decreased sales, increased SG&A, and higher credit loss provision | Statements of Operations (Amounts in thousands) | July 31, 2025 | July 31, 2024 | % Change | | :------------------------------------------ | :------------ | :------------ | :------- | | Sales | $276,240 | $287,248 | (3.8)% | | Interest income | $65,072 | $60,515 | 7.5% | | Total Revenue | $341,312 | $347,763 | (1.9)% | | Cost of sales | $175,080 | $186,570 | (6.2)% | | Selling, general and administrative | $51,408 | $46,711 | 10.1% | | Provision for credit losses | $103,036 | $95,423 | 8.0% | | Interest expense | $17,042 | $18,312 | (6.9)% | | Net loss | ($5,736) | ($964) | - | | Net loss attributable to common shareholders | ($5,746) | ($974) | - | | Basic Earnings per share | ($0.69) | ($0.15) | - | | Diluted Earnings per share | ($0.69) | ($0.15) | - | Condensed Consolidated Balance Sheet Balance sheet shows increased total assets, net finance receivables, cash, and equity, with improved allowance for credit losses percentage | Balance Sheet Data (Amounts in thousands) | July 31, 2025 | April 30, 2025 | July 31, 2024 | | :------------------------------------------ | :------------ | :------------- | :------------ | | Cash and cash equivalents | $9,666 | $9,808 | $4,748 | | Restricted cash from collections on auto finance receivables | $111,761 | $114,729 | $93,873 | | Finance receivables, net | $1,183,452 | $1,180,673 | $1,126,271 | | Inventory | $112,451 | $112,229 | $114,548 | | Total assets | $1,607,974 | $1,606,474 | $1,531,270 | | Revolving lines of credit, net | $164,394 | $204,769 | $184,846 | | Notes payable, net | $610,750 | $572,010 | $597,494 | | Total equity | $564,931 | $569,522 | $471,153 | | Shares outstanding | 8,277,613 | 8,263,280 | 6,396,757 | | Book value per outstanding share | $68.30 | $68.97 | $73.72 | | Allowance as % of principal balance net of deferred revenue | 23.35% | 23.25% | 25.00% | | Changes in allowance for credit losses (Amounts in thousands) | July 31, 2025 | July 31, 2024 | | :------------------------------------------ | :------------ | :------------ | | Balance at beginning of period | $323,100 | $331,260 | | Provision for credit losses | $103,036 | $95,423 | | Charge-offs, net of collateral recovered | ($100,066) | ($92,259) | | Balance at end of period | $326,070 | $334,424 | Condensed Consolidated Cash Flow Statement Net cash used in operating activities decreased significantly to $5.9M, while net cash provided by financing activities substantially decreased | Cash Flow Data (Amounts in thousands) | July 31, 2025 | July 31, 2024 | | :------------------------------------------ | :------------ | :------------ | | Net cash used in operating activities | ($5,918) | ($14,972) | | Net cash used in investing activities | ($439) | ($8,513) | | Net cash provided by financing activities | $3,247 | $27,659 | | (Decrease) increase in cash, cash equivalents, and restricted cash | ($3,110) | $4,174 | Reconciliation of Non-GAAP Financial Measures Reconciliation of non-GAAP Debt, Net of Total Cash, to Finance Receivables improved to 43.1%, reflecting disciplined capital management | Calculation of Debt, Net of Total Cash, to Finance Receivables (Amounts in thousands) | July 31, 2025 | April 30, 2025 | | :------------------------------------------ | :------------ | :------------- | | Total debt | $775,144 | $776,779 | | Total cash, cash equivalents, and restricted cash | $121,427 | $124,537 | | Debt, net of total cash | $653,717 | $652,242 | | Principal balance of finance receivables | $1,515,680 | $1,509,154 | | Ratio of debt to finance receivables | 51.1% | 51.5% | | Ratio of debt, net of total cash, to finance receivables | 43.1% | 43.2% | - The ratio of debt, net of total cash, to finance receivables improved to 43.1% at July 31, 2025, from 46.7% at July 31, 2024, indicating improved leverage ratios and disciplined capital management[17][37] Additional Information This section provides background on America's Car-Mart, explanations of non-GAAP measures, forward-looking statements, and investor relations information About America's Car-Mart, Inc. America's Car-Mart operates dealerships in 12 states, specializing in integrated auto sales and finance, emphasizing customer service and financing - America's Car-Mart operates automotive dealerships in 12 states, specializing in the 'Integrated Auto Sales and Finance' segment of the used car market[23] - The company focuses on superior customer service, building strong personal relationships, and providing financing for substantially all its customers in smaller cities[23] Non-GAAP Financial Measures Explanation Report includes 'total debt, net of total cash, to finance receivables' as a non-GAAP measure for leverage and risk, advising investors to review full GAAP - The company uses 'total debt, net of total cash, to finance receivables' as a non-GAAP measure to monitor leverage and evaluate balance sheet risk[24] - Investors are advised to review consolidated financial statements in their entirety and not solely rely on any single financial measure[24] Forward-Looking Statements This section contains forward-looking statements about future objectives and performance, noting actual results may differ due to various risks - Forward-looking statements address future objectives, plans, and goals, as well as expectations regarding financial and operating performance[25] - Actual results could differ materially due to various risks and uncertainties, including general economic conditions, vehicle availability, credit facility access, underwriting effectiveness, competition, and changes in consumer finance laws[26][27] Conference Call & Investor Relations America's Car-Mart held a conference call on Sept 4, 2025, to discuss quarterly results, with webcast replay and transcript available online - A conference call was held on September 4, 2025, to discuss quarterly results, with webcast and telephone access provided[22] - A replay and transcript of the conference call and webcast, along with supplemental information, are available on the company's investor relations webpage for 12 months[22]