CRMT
Americas Carmart INC
NASDAQ
10-Q: Americas Car-Mart Reports Q3 2025 Results: Revenue Mixed Amidst Strategic Shifts
Sentiment:
Quarterly Report
10 March 2025 4:08 PM
Americas Car-Mart's Q3 2025 results show a mixed performance with revenue fluctuations and strategic adjustments in inventory and credit management.
Capital raise
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.
Summary
- Americas Car-Mart's Q3 2025 revenue increased by 8.7% compared to Q3 2024, driven by a 13.2% increase in retail units sold.
- Interest income also contributed to the revenue increase, rising by 5.1% due to higher average finance receivables and a higher weighted average interest rate of 17.5%.
- Cost of sales decreased as a percentage of sales, leading to an improved gross margin of 35.7% compared to 34.2% in the prior year.
- Selling, general, and administrative expenses increased by 6.7%, primarily due to recent acquisitions and higher stock compensation.
- The provision for credit losses decreased to 32.9% of sales, reflecting improved contract performance under the new loan origination system.
- For the nine months ended January 31, 2025, revenue decreased by 0.8% compared to the same period in the prior fiscal year, mainly due to a 3.2% decrease in retail units sold.
- However, interest income increased by 5.3%, and the average retail sales price increased by 2.5%.
- Gross margin improved to 36.7%, including a 1.0% benefit from a service contract accounting change.
- The allowance for credit losses was 24.31% of finance receivables, net of deferred revenue and pending accident protection plan (APP) claims, an improvement from previous quarters.
- The company completed a public offering of common stock, generating net proceeds of approximately $73.8 million, which were used to pay down the revolving line of credit.
- Amendment No. 9 to the revolving credit agreement extends the maturity date to March 31, 2027, and increases total permitted borrowings to $350 million.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While revenue growth is mixed, there are improvements in gross margin and credit loss provisions. The company is also taking steps to improve its financial position and operational efficiency.
Positives
- Revenue increased in the third quarter due to higher retail unit sales and interest income.
- Gross margin improved due to better procurement processes and operational efficiencies.
- The provision for credit losses decreased, indicating improved contract performance.
- The company successfully completed a public offering of common stock, strengthening its balance sheet.
- The revolving credit facility was extended and expanded, providing greater financial flexibility.
Negatives
- Revenue decreased for the nine months ended January 31, 2025, primarily due to a decline in retail units sold.
- Selling, general, and administrative expenses increased, impacting profitability.
- The average retail sales price decreased slightly in the third quarter.
Risks
- General economic conditions, including fluctuations in gas prices, grocery prices, and employment levels, could impact the company's performance.
- The availability of quality used vehicles at affordable prices is a concern.
- The company's ability to underwrite and collect contracts effectively is crucial.
- Changes in consumer finance laws or regulations could adversely affect the business.
- Security breaches, cyber-attacks, or fraudulent activity pose a risk.
Future Outlook
The company anticipates that the growth in finance receivables will generally be slightly higher than overall revenue growth on an annual basis. The company expects the tight used vehicle supply and strong demand for the types of vehicles we purchase to continue to keep purchase costs and resulting sales prices elevated for the short-term but anticipates that an increase in marketplace wages for our customers could enhance affordability.
Management Comments
- The Company has been focused on improving vehicle quality by bringing lower mileage and on average newer model-year vehicles to our consumers, while balancing this with affordability.
- The Company believes this will aid in driving down our customers vehicle repair costs, reduce our service contract repair expenses, and lead to better recovery values in the event of repossession.
- The Company plans to continue to focus on managing gross margin dollars in the near term, as demonstrated by the increase during the first nine months of fiscal year 2025, as well as continuing to focus on improving wholesale results, cost controls, and operational improvement around the acquisition and disposal of vehicles.
- The Company continues to prioritize investments to improve its products and services and operate more efficiently over time.
Industry Context
The company operates in the Integrated Auto Sales and Finance segment of the used car market. The report notes that the used vehicle market is influenced by factors such as new vehicle sales, consumer credit availability, and general economic conditions. The company's performance is affected by the supply and demand dynamics of used vehicles, as well as the affordability for its customer base.
Comparison to Industry Standards
- It is difficult to compare Americas Car-Mart directly to industry standards due to its unique integrated sales and finance model focused on the subprime market.
- However, key metrics like provision for credit losses as a percentage of sales (33.7% for the nine months ended January 31, 2025) can be compared to other subprime auto lenders.
- Companies like Credit Acceptance Corporation (CACC) also operate in the subprime auto lending space, but their business models and reporting may differ.
- Comparing Car-Mart's delinquency rates (3.7% of finance receivable balances were 30 days or more past due) to those of other auto lenders can provide insights into its credit risk management.
- Gross profit per retail unit sold ($7,429 for the nine months ended January 31, 2025) can be benchmarked against other used car retailers, though Car-Mart's integrated finance model adds complexity.
Stakeholder Impact
- Shareholders: The company's performance impacts shareholder value, and the public offering of common stock diluted existing shareholders.
- Employees: Hiring, training, and retaining qualified associates is critical to the Company's success.
- Customers: The company's focus on improving vehicle quality and affordability impacts its customer base.
- Lenders: The company's ability to meet its debt obligations and maintain compliance with covenants is important to its lenders.
Next Steps
- The company plans to continue focusing on managing gross margin dollars.
- The company plans to continue focusing on improving wholesale results, cost controls, and operational improvement around the acquisition and disposal of vehicles.
- The company expects to use cash from operations and other financing sources to grow its finance receivables portfolio, purchase fixed assets, fund dealership acquisitions, and reduce its remaining debt.
Legal Proceedings
- In the ordinary course of business, the Company has become a defendant in various types of legal proceedings.
- While the outcome of these proceedings cannot be predicted with certainty, the Company does not expect the final outcome of any of these proceedings, individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or cash flows.
Key Dates
- 2015-08-05: Shareholders approved the Amended and Restated Stock Option Plan.
- 2018-08-29: Shareholders approved an amendment to the Restated Stock Incentive Plan.
- 2020-08-26: Shareholders approved amendments to the Restated Option Plan.
- 2020-12-14: Board of Directors authorized the repurchase of up to an additional one million shares of common stock.
- 2022-08-30: Shareholders approved amendments to the Restated Option Plan.
- 2024-06-03: The Company completed its business combination of Texas Auto Center (TAC).
- 2024-07-12: Americas Car Mart, Inc., and a newly formed affiliate entered into a loan and security agreement.
- 2024-08-27: The 2024 Equity Incentive Plan was approved by the Company's shareholders and became effective.
- 2024-09-16: The Company entered into Amendment No. 8 to its revolving credit facility agreement.
- 2024-09-20: The Company completed an underwritten public offering of 1,700,000 shares of its common stock.
- 2024-10-22: The Company completed the sale of 138,272 common stock in connection with the partial exercise by the underwriter of the Over-allotment Option.
- 2025-01-31: End of the quarterly period.
- 2025-02-28: The Company entered into Amendment No. 9 to its revolving credit agreement.
- 2025-03-06: Number of shares outstanding of each of the issuers classes of common stock.
- 2027-03-31: Extended maturity date of the credit facility.
Keywords
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.
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
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.
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.
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.
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
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.