CRMT
Americas Carmart INC
NASDAQ
8-K: Americas Car-Mart Completes $200 Million Securitization with Improved Coupon Rate
Sentiment:
Securitization Announcement
5 February 2025 1:46 PM
Americas Car-Mart finalized a $200 million securitization, achieving a 95 basis point improvement in the weighted average coupon rate compared to its previous transaction.
Better than expected
The weighted average coupon improved by 95 basis points compared to the October 2024 securitization.
Summary
- Americas Car-Mart completed a $200 million securitization transaction on January 31, 2025.
- The transaction involved issuing $150.77 million in Class A Notes with a 5.38% coupon and $49.23 million in Class B Notes with a 7.87% coupon.
- The notes are collateralized by $337,286,838 of accounts receivable from installment sales contracts.
- Net proceeds of approximately $198.5 million will be used to pay outstanding debt and fund collection and reserve accounts.
- S&P Global Ratings rated the Class A Notes as A (sf) and the Class B Notes as BBB (sf).
- The notes mature on November 20, 2031.
- The weighted average coupon rate improved by 95 basis points compared to the October 2024 securitization.
- Credit enhancement includes over-collateralization, a reserve account initially funded with 2.50% of the pool balance, excess interest, and subordination of payments.
Sentiment
Score: 8
Explanation: The document presents a positive outlook due to the successful completion of the securitization, the improved coupon rate, and strong investor demand. The management's comments further reinforce this positive sentiment.
Positives
- The weighted average coupon rate improved by 95 basis points compared to the October 2024 securitization, indicating improved market confidence.
- The transaction was over 10 times oversubscribed, demonstrating strong investor demand.
- Proceeds from the securitization will be used to pay down debt, improving the company's financial position.
Risks
- The notes are not obligations of or guaranteed by Americas Car-Mart or its other affiliates or subsidiaries; the Issuer will be the sole obligor of the Notes.
- The Servicer may default on its obligations under the Sale and Servicing Agreement, it may, and under certain circumstances, will be terminated and replaced as servicer.
- If certain events of default were to occur under the Indenture, the Trustee may, and at the direction of the required noteholders, shall cause the unpaid principal amount of all of the Notes outstanding, together with accrued and unpaid interest thereon, to be immediately due and payable.
Future Outlook
The Servicer will have the right at its option to purchase (and/or designate one or more other persons to purchase) the Receivables and the other issuing entity property (other than the reserve account) from the issuing entity on any payment date if both of the following conditions are satisfied: (a) as of the last day of the related collection period, the Note balance has declined to 10% or less of the Note balance as of January 31, 2025, and (b) the sum of the purchase price (as described below) and the available funds for such payment date would be sufficient to pay the sum of (i) the servicing fee for such payment date and all unpaid servicing fees for prior periods, (ii) all fees, expenses and indemnities owed to the Trustee, the owner trustee, the backup servicer, the certificate registrar, the paying agent and the calculation agent and not previously paid (without giving effect to any caps), (iii) interest then due on the outstanding Notes and (iv) the aggregate unpaid Note balance of all of the outstanding Notes.
Management Comments
- We are encouraged by the strong demand for our 2025-1 securitization.
- Compared to our October 2024 securitization, the weighted average coupon improved by 95 basis points.
- We believe this reflects confidence in our asset quality, particularly as the portfolio continues to benefit from the migration to our new loan origination system (LOS).
Industry Context
This securitization is part of a broader trend in the auto finance industry, where companies pool and securitize auto loans to access capital markets, manage risk, and improve liquidity. The improved coupon rate suggests positive market sentiment towards Americas Car-Mart's portfolio performance and credit quality.
Comparison to Industry Standards
- Comparable securitizations in the auto loan ABS market include transactions from companies like Ally Financial, Capital One Auto Finance, and Santander Consumer USA.
- The coupon rates and credit ratings achieved by Americas Car-Mart are generally in line with industry standards for similar risk profiles.
- The over-collateralization and reserve account levels are also consistent with common practices in auto loan securitizations to provide credit enhancement to investors.
Stakeholder Impact
- Shareholders: The securitization strengthens the company's financial position and provides capital for growth.
- Employees: The company's continued financial stability supports job security.
- Customers: The company's ability to access capital markets allows it to continue providing financing options to its customers.
- Creditors: The securitization helps the company manage its debt and maintain a healthy balance sheet.
Next Steps
- The Issuer will pay interest and principal on the Notes monthly on the 20th day of each month, starting on February 20, 2025.
Key Dates
- January 24, 2025: Date of the final offering memorandum for the notes
- January 31, 2025: Effective date of the Indenture, Purchase Agreement, and Sale and Servicing Agreement
- February 3, 2025: Date of the company's press release announcing the securitization transaction
- February 5, 2025: Date of the 8-K filing
- February 20, 2025: First Payment Date
- November 20, 2031: Notes mature
Keywords
securitization, asset-backed notes, auto loans, Americas Car-Mart, receivables, financing
CRMT
Americas Carmart INC
NASDAQ
Sector: TBD
Filings with Classifications
Better than expected
18 June 2025 6:34 PM
Beneficial Ownership Statement
- The purchase of company stock by a Chief Financial Officer is generally viewed as a positive signal, indicating management's belief that the stock is undervalued or that the company's future performance will be strong.
Capital raise
12 June 2025 7:30 AM
Quarterly and Annual Results
- On May 29, 2025, Car-Mart completed a term securitization transaction involving the issuance of $216 million of asset-backed notes.
- The securitization achieved an overall weighted average life adjusted coupon of 6.27%, which improved by 22 basis points compared to the Company's January 2025 issuance and by 117 basis points from the October 2024 securitization transaction.
- Net proceeds from the securitization were used to pay down the outstanding balance on the Company's revolving line of credit.
- The Company continues to explore options to diversify and expand its financing sources, such as potential warehouse lines of credit and the issuance of longer-term debt securities.
Better than expected
12 June 2025 7:30 AM
Quarterly and Annual Results
- Diluted EPS for FY25 turned profitable at $2.33, compared to a significant loss of $4.92 in FY24, indicating a strong financial recovery.
- Q4 FY25 diluted EPS significantly increased to $1.26 from $0.06 in Q4 FY24, demonstrating strong quarterly performance.
- Gross margin percentage improved by 200 basis points for the full year and 90 basis points for Q4, reflecting effective cost and pricing strategies.
- Net charge-offs as a percentage of average finance receivables improved for both Q4 and the full year, signaling better credit quality and risk management.
- The allowance for credit losses improved to 23.25% at April 30, 2025, from 25.32% a year prior, indicating a healthier loan portfolio.
Worse than expected
11 June 2025 7:14 PM
Insider Transaction Report
- The document details planned significant sales of common stock by a Director and 10% owner, Adam K. Peterson, and his affiliated entities.
- A total of 154,269 shares are planned to be sold, representing approximately 9.75% of their prior beneficial ownership.
- Such a substantial planned reduction in holdings by a key insider is generally perceived as a negative signal by the market.
Better than expected
4 June 2025 11:21 AM
Securitization Announcement
- The weighted average coupon of 6.27% is lower than previous issuances (22 basis points better than January 2025 and 107 basis points better than October 2024), indicating more favorable financing terms for the Company.
Capital raise
4 June 2025 11:21 AM
Securitization Announcement
- The Company completed a term securitization transaction, issuing $216 million in principal amount of asset-backed notes.
- Net proceeds of approximately $214.5 million were generated from the offering.
- The proceeds are being used to pay outstanding debt and make initial deposits into collection and reserve accounts.
Better than expected
13 March 2025 10:22 AM
Quarterly Report
- The company reported diluted earnings per share of $0.37 compared to a loss per share of $1.34 in the same quarter last year.
- Gross margin percentage improved by 150 basis points to 35.7%.
- Net charge-offs as a percentage of average finance receivables improved to 6.1% compared to 6.8%.
Capital raise
10 March 2025 4:08 PM
Quarterly Report
- On September 20, 2024, the Company completed an underwritten public offering of 1,700,000 shares of its common stock at a price per share of $43.00.
- The net proceeds of the public offering were approximately $68.2 million after deducting the underwriting discount and offering costs of approximately $4.9 million.
- On October 22, 2024, the Company completed the sale of an additional 138,272 shares of common stock at a price of $43.00 per share, in connection with a partial exercise by the underwriter of an option.
- The net proceeds to the Company of the underwriters partial exercise of the Over-Allotment Option were approximately $5.6 million after deducting the underwriting discount and offering costs of approximately $346,000.
- The Company used the net proceeds from this offering to pay down a portion of the Companys revolving line of credit.
Better than expected
10 March 2025 9:00 AM
Quarterly Report
- The company reported an 8.7% increase in total revenue, reaching $325.7 million for the third quarter of fiscal year 2025.
- Sales volumes rose by 13.2% to 13,198 units, indicating strong sales performance.
- The company's gross margin percentage improved by 150 basis points to 35.7%, driven by better vehicle procurement and disposal strategies.
- Diluted earnings per share were $0.37, a significant improvement compared to a loss of $1.34 per share in the same quarter of the previous year.
Better than expected
5 February 2025 1:46 PM
Securitization Announcement
- The weighted average coupon improved by 95 basis points compared to the October 2024 securitization.
Capital raise
9 December 2024 4:40 PM
Quarterly Report
- The company completed a public offering of 1,700,000 shares of its common stock at a price of $43.00 per share, raising net proceeds of $68.2 million.
- The company also sold an additional 138,272 shares through the partial exercise of an over-allotment option, raising an additional $5.6 million.
- The net proceeds from the offering were used to pay down a portion of the company's revolving line of credit.
Better than expected
9 December 2024 4:40 PM
Quarterly Report
- The company's net income of $5.1 million is a significant improvement compared to a net loss of $27.5 million in the same quarter of the previous year.
- The company's gross margin improved to 39.4% of sales, including a 2.9% benefit from a change in service contract revenue recognition.
- The provision for credit losses decreased by 26.5% to $99.5 million.
Better than expected
5 December 2024 7:30 AM
Quarterly Report
- The company reported a significant improvement in diluted earnings per share, moving from a loss to a profit.
- Gross margin improved, both including and excluding the impact of the service contract accounting change.
- Net charge-offs as a percentage of average finance receivables decreased, indicating better loan performance.
Capital raise
5 December 2024 7:30 AM
Quarterly Report
- The company completed an underwritten public equity offering, resulting in net proceeds of $73.8 million.
- The company also completed a private asset-backed securitization offering, resulting in net proceeds of $297.9 million.
- The proceeds from these offerings were primarily used to pay down existing debt.
Capital raise
22 October 2024 4:06 PM
Capital Raise Update
- The company initially sold 1,700,000 shares at $43.00 per share, generating $67.8 million in net proceeds.
- The underwriters partially exercised their over-allotment option, purchasing 138,272 additional shares at $43.00 per share, resulting in an additional $5.6 million in net proceeds.
Better than expected
11 October 2024 8:30 AM
Securitization Announcement
- The weighted average coupon rate of 7.44% is a 198 basis point improvement compared to the January 2024 transaction, indicating better terms for the company.
Capital raise
20 September 2024 4:05 PM
Public Offering Announcement
- The company is raising capital through a public offering of 1,700,000 shares of common stock.
- The underwriters have an option to purchase an additional 255,000 shares.
- The company expects to receive approximately $67.8 million in net proceeds from the offering.
Capital raise
18 September 2024 2:22 PM
Loan Agreement Amendment
- The company is required to complete a junior capital raise of $50 million or more.
- The net proceeds of the capital raise must be used to pay down the outstanding principal balance of the line of credit.
- A fee of 0.10% of the total permitted borrowings will be charged if the capital raise is not completed by October 31, 2024.
Worse than expected
18 September 2024 2:22 PM
Loan Agreement Amendment
- The reduction in the credit line and the imposition of minimum availability requirements suggest a tightening of financial conditions for the company.
- The requirement to complete a capital raise by a specific date to avoid a fee indicates potential financial pressure.
Capital raise
16 September 2024 12:11 PM
Quarterly Report
- The amendment to the revolving credit agreement requires the company to use the net proceeds of any junior capital raise of $50 million or more to pay down the outstanding principal balance of the line of credit.
- The company will pay a fee to the lenders of 0.10% of the total permitted borrowings under the line of credit if the company has not completed such a capital raise by October 31, 2024.
Worse than expected
16 September 2024 12:11 PM
Quarterly Report
- The company's net loss of $964,000 is worse than the net income of $4.2 million in the same period last year.
- The decrease in revenue by 5.2% is worse than the prior year period.
- The increase in the provision for credit losses as a percentage of sales to 33.2% is worse than the 31.0% in the prior year period.
Worse than expected
4 September 2024 7:30 AM
Quarterly Report
- The company reported a net loss per share of $0.15 compared to a diluted earnings per share of $0.63 in the same quarter last year.
- Revenue decreased by 5.2% year-over-year.
- Net charge-offs as a percentage of average finance receivables increased to 6.4% from 5.8%.
Worse than expected
16 July 2024 4:29 PM
Proxy Statement
- The company reported a net loss of $31.4 million compared to the prior year's net income.
- Revenues decreased 0.5% over fiscal 2023, driven by a 8.8% retail unit volume decrease and a 0.1% decrease in customer count.
Worse than expected
15 July 2024 4:01 PM
Annual Results
- The company's net income decreased from a profit of $20.4 million to a loss of $31.4 million.
- The provision for credit losses increased significantly to 36.5% of sales.
- Retail unit sales decreased by 8.8%.
Worse than expected
18 June 2024 7:30 AM
Quarterly Report
- The company reported a loss per share for the full year, compared to a profit in the previous year.
- Revenue decreased both for the quarter and the full year.
- Net charge-offs as a percentage of average finance receivables increased.
- Interest expense increased significantly.
Worse than expected
11 March 2024 9:00 AM
Quarterly Report
- The company reported a net loss of $8.5 million for the quarter, compared to a net income of $1.5 million in the same period last year.
- Total revenue decreased by 7.9% year-over-year, driven by a decline in retail unit sales.
- The provision for credit losses increased to 37.3% of sales, up from 31.2% in the prior year's quarter.
Worse than expected
8 March 2024 8:00 AM
Quarterly Report
- The company reported a loss per share of $1.34 compared to earnings per share of $0.23 in the same quarter last year.
- Total revenue decreased by 7.9% year-over-year.
- Retail units sold decreased by 19.6% compared to the prior year quarter.
Worse than expected
5 March 2024 4:04 PM
Loan Agreement Amendment
- The reduction in the total borrowing capacity from $600 million to $340 million is a negative development.
- The increase in the unused line fee rate to 0.50% for low utilization is a negative development.
- The removal of pricing tiers for interest rates may result in higher borrowing costs.
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