America's Car-Mart Reports Second Quarter Fiscal Year 2026 Results

Core Insights - America's Car-Mart reported financial results for the second quarter ended October 31, 2025, highlighting strategic transformations aimed at sustainable growth and profitability [1][4]. Financial Performance - Total revenue for the quarter was $350.2 million, an increase of 0.8% year-over-year, with adjusted revenue growth of 4.8% when excluding a one-time benefit from the previous year [19]. - Gross profit margin decreased to 37.5% from 39.4% in the prior year, impacted by a one-time accounting change in the previous quarter [21]. - Net charge-offs as a percentage of average finance receivables increased to 7.0% from 6.6% year-over-year [26]. - Loss per share was reported at $2.71, with an adjusted loss per share of $0.79 [8]. Capital Structure and Financing - The company successfully closed a new $300 million term loan and fully repaid its revolving line of credit, enhancing financial flexibility and removing restrictive covenants [5][35]. - Total cash, including restricted cash, increased to $251.0 million from $124.5 million at the start of the fiscal year [33]. - Interest expense decreased by 13.1% year-over-year, benefiting from improvements in the securitization platform and a favorable interest rate environment [34]. Operational Adjustments - Five underperforming stores were closed, with customers and inventory transitioned to six nearby, higher-performing locations, aimed at improving operational focus and cash generation [7][24]. - The company initiated a multi-phased plan to reduce selling, general, and administrative (SG&A) expenses, targeting approximately 16.5% of sales [23]. Credit and Underwriting Performance - The new loan origination system (LOS V2) has improved the quality of new originations, with credit losses from contracts under the new system tracking better than those from the legacy system [9][25]. - The allowance for credit losses as a percentage of finance receivables was 24.19%, reflecting ongoing adjustments based on historical loss trends and macroeconomic factors [29]. Outlook - The company remains focused on optimizing its cost structure, strengthening credit performance, and completing its capital structure transformation, with expectations for improved operating leverage and a return to positive GAAP earnings [37].