America's Car-Mart (CRMT) 5 Dec 242025 Q2 Earnings call transcript

" Welcome to America's Car-Mart Second Quarter Fiscal 2025 Result. [Operator Instructions] I would now like to hand the conference over to Vickie Judy.

You may begin.

Good morning. I'm Vickie Judy, the company's Chief Financial Officer. Second ending Year October Car-Mart's for Earnings America's period the XX, to Quarter XXXX Fiscal Call Welcome XXXX.

release We Joining is me our system cash-on-cash our website, CEO. detailing supplemental available loan origination returns Doug today morning, earnings issued our Campbell, our along performance it on company's President on the is earlier this call and slides new and with and improvements. our

be of transcript the will prepared through following this a and will We call Q&A session remarks our available webcast. the post

certain XXXX. or cannot today's considered pursuant any forward-looking to made The accuracy view. During cause uncertainties make of the update forward-looking nor obligation estimate the company Securities present and statements harbor are results safe of call, of the guarantee we forecast that to may inherently provision differ it such actual and management's statements Private to be undertake materially from does involve risks statements. any These could Act Litigation Reform

notes, more April XX, company's for ended including year For information, Form fiscal the please important report see on annual XXXX. of XX-K the X Part cautionary

I'll perspective current Doug on Doug, reports furnished to XX-Q. and Exchange to with or start Our I'll on and you Commission Car-Mart's on it and business the X-K turn and with quarter the color Forms filed quarterly Securities let strategies. now.

around to the outcomes and was of uncertainty I Thank help significant covenants to our during future. comment the cushion to want the around that facility. half the which macroeconomic September, back you, The on, revolving had our designed we quarter provide credit purpose We shape in Vickie. this amended environment navigate In year. were to activity financial additional our

for approximately proceeds It's decision. issuance million this $XX new rationale to me through We shares. the explain net the raised also important for of of

and this gave current given and management of shareholders. Our Board ahead effect decision very dilutive of Directors consideration review thoughtful its on team

factor important was to our below quarters in balance our bolster expectations, over sheet. an the was few past performance our Our which decision

As we've about past, factors. in marketplace by we've talked the been challenged

tightened loss given we've side, own by sales loan back underwriting the the industry-wide auto the evident standards On performance of book. our pressure,

and to was in is these did would in decision for We more challenges factors. This to room forecast we consider in equity our to needed execute. ultimately, environment. consumer increase has more prudent. breathing account options various today's We Our leverage been felt additional forms, but pained us susceptible that that inflationary

we for higher challenges However, during it to marketplace all a felt maintain decision in best environment. rate was flexibility the shareholders interest

of support of these structure. a the to facilities market completed, matures conservatism near-term funding when to navigating add our partners, raise enter credit currently increase consideration the extend XXXX. continue build to to ABS will years, program facility, of more been overall discussions funding dealers. redundancy and receivables expand also capital to critical They in making challenges through acquired include We're ABL potential capacity, for revolving a and and we a the objectives structure. date. is they The With their company in initiatives the company's a in the we redesigned which and facility credit equity part We our in and while optionality options on level warehouse plan availability, September robust. our floor bespoke These initiatives line be to appreciate have the of are by originated for of many appreciate supportive it our to working

over improvement us the material its over and rate in the access million in was This improved advance us progress to well we initiatives in Jamie October. ABL the October, our Operating more capital our share $X.X coming and demand oversubscribed, believe and in new transaction demand. is will a We our welcomed billion given our portfolio. with these relative on in platform on completed improvement important to transaction. for for generating Officer, quarters. January additional This the Also in Chief $XXX will fifth growing ABS team. you rounding We Fisher, in transaction was to within We size tightest coupon Her receivables the will and how proven organization. skill and of the for I date, our sets overall rates, she's approximately team. great this to mentioned spreads enabled an had leadership represented existing which our in X-point be quarter, when to a X.XX%, our accelerate which we've in nearly with benchmark be transaction. LOS, have resulted combined leadership Last important loans of out new lower growth, the XX% complement a by Ultimately, underwritten to fit this already talent

Before optimistic the the turning about time, Vickie, on noted to I it Back At we through is losses. in but want our seeing improvement were LOS our we the still LOS that this spoke generated May. was relative continued a October at to loans comment XX% net in update it we underwriting. I were results An the showing in cumulative cumulative that a through legacy that early, net system losses now improvements over showed during in rollout. to results the improvement June, in XX%

down our from most improvement the on see such customers customers. our X lengths, focus X improving where best that the structures loan But of has cumulative such been financed amounts credit our our an rankings. to more focus difficult with and been through with term been to ratios XX% We X of for flexibility very to us allowing come the it's risk surface, our very and cohorts consumers, X X overall having most originating and customers within losses. rank most net has nominal X payment-to-income to customer the ranked and customers ranks where holding of Approximately payments, the and has represent X could On through changes risk. sales rank on

over a improvement resulted down terms in rank control can on curtail ratios. more us lower these allowing addition lower and of $XXX smaller in payments, these loan X less average pay-to-income sizes depending structures customer on compared system. to $XXX has cohorts, legacy originating the to On our hold months when XX% in now to carry to by we This systematically

bottom end at at of the within the almost stores, portfolio XX% of even represent quarter receivables pronounced. results portfolio those LOS more are quartile The Looking the dollars.

percentage portfolio in still impacted driving In and performance the it. were terms it's another but of the take the on it's frequency able loss why contracts, about of increasing We improvement starting size by system the an loss. of the improved see reduction of contracts XX%, legacy of severity number sequentially the loan our to are the reserve based to loss, in LOS of volume originated in the we're

the a the financial crossover on Vickie? LOS of start a turn expect second the larger driver results. year will that fiscal end the frequency We where to quarter both let's and to severity. be point at overview, With

Doug. Thanks,

started an service get want to Before details, the we I the related that to accounting on I our adjustment in contracts. cover quarter made

recognition This otherwise my $XX.X interest comparisons the the commentary, or due X.X%, noted. the X% quarter to the and contract approximately a units we of impacted gross service their two was we of the offset cover a and million were This of service expected going a number improve will during accounting X.X% and time early factors, in existing contract analysis, both match reached of fiscal sales of of that the for XXXX on dealerships of contract to revenue quicker by we and by a quarter, term. XX% a sold. deferred about quarter retail rolled In longer-term in this, customers some the margin reduced second full decline performance fiscal remaining by will contract found for through sequential contracts XXXX, closing cycle. XXXX acceleration prior although of including of out margin. impacted Our improvement. of an consumers, quarter and been in year. also events the started now new Total contracts we period Sales earlier better variances have the revenues decreased portion the gross of on service our quarter that partially that based did in forward. past X.X% $XX.X see result in in of largely affordability million to miss the than will revenue their a absent benefit. XX% This revenue second any the recognition vehicles income mileage weather Because this originated by on This usage any go-forward the basis, our increase $XX.X of And volumes second service million resulted contracts other to quarter was detailed versus is I a in be unless to consumer.

and XX.X%, as This dealerships of excluding continue appropriate improvements servicing going sales originations the a improving the with around a have also cover isolate impact sales XX% and was it the average and at collections of vehicle average focus continue a to sales easier balance to the on compared and a were The earnings lower on the pleased million focused XX.X% breakout portfolio but of improved gross in to continuing $XXX to on provided per to contract to in our we've mentioned drive the the to ancillary number to forward. that this a select as continue X.X%. vehicle This excluding the We margin products, in procurement risk to sequentially. maximize service affordability Net ancillary be release $XX,XXX, asset benefit. the I'll with the and receivables contributed statistics has a moment. margin quarters. total of revenue percentage. volumes X.X% more vehicle of movement percentage, versus average was or We on partnership $XX.X in for make X.X% charge-offs the reduction with quality. sales prior Gross our returns. We're price gross to average, progress resulting limited quarter initiatives The underwriting productivity finance recognition to retail price or unit price, driving retail Cox should margin we'll morning. the percentage percentage of sales XX%

Our originations dollars the cause the are of currently. primary fiscal represent XX% year of XXXX portfolio and still earlier but less than underperformance,

credit will percentage and mentioned, Doug losses. XX% work on plan for LOS XX, from as through payments, the the However, down deferred of end, XX% of Down portfolio approximately our were the and accident net XXXX in especially represent originations revenue allowance in at the to receivables LOS done as up the larger XX.XX% are benefiting benefit we've and was our the to continuing the of our The claims as quarter drive basis a X.X%, quarter July at dollars points finance XX performance with covered allowance payments improvements down of protection system. Doug is higher-risk fiscal teams focus pool underwriting to of achieve the customers improvements well. for sales XXXX. customers

term XX.X prior benefiting flattening originating the average flat is and compared to term loss improvement. a months, sequentially. close to This Our slight was collections and reduction improving year

term is by months quarter, the contract weighted customers. weighted We XX.X term the optimize for highest the months allowing customer credit with portfolio term remaining. for and best of At score, the risk average is continue end total XX.X XX.X additional to term scoring customers the months. distribution shortening age our the average credit The our for of

monthly overall or days quarter at for Recency make was The past quarter was is average a from points also XX.X% XX the active end accounts with X.X% over year. XX fiscal customer on sequential collected flat basis boosting $XXX collections, to improvement and per We first $XXX. This improved up of continue last progress XXXX. the due quarter. which total from first the are Delinquencies X.X% quarter. was to over

two up to related of since was by $X.X increase last SG&A completed a driven SG&A. an X.X%. year. the $X.X expense Moving acquisitions was primarily million, million This increase to

add due build to As mentioned, began of X.X% equity per headwinds an months. SG&A a acquisitions while stock amount XX to due on customers. SG&A decrease in basis. SG&A primarily accounts the improvement approximately portfolio these or had a we X,XXX the $XXX,XXX million rates the customer approximately per and In they These interest in rates net XX Interest reducing a secondarily, increases. results of the expense we Sequentially, out acquisitions by rise the next in as cash. to leverage see measure and from expense create a we over expected more in or compensation increased and to in debt of approximately basis on $X.X increase efficiency debt. are increased of raise our short-term, account to $XXX,XXX, ability to the Sequentially,

receivables credit As unrestricted availability under XXst, revolving in additional base in of facilities had we our inventory. of approximately $X calculated borrowing our on and million million October cash $XX and

turn I'll things Doug. Now back to

powered pleased the we've our Vickie. Thanks, by investments. with We're on underwriting technology progress made

However, more risk-based by pricing last quarter, the system for I utilizing capability discussed the customers. importance certain of of unlocking LOS

and Our to the pricing ended, that currently in In pilot, year we pricing more the calendar few to competitive will us before good. the grow of pull scorecard another were and appropriate in new a structures us the upper customers We results business. markets was this us off gives enabled the predictability to to in our our rank adds goal us successful better implementation have allow pilot and for kicked this testing This in are applicant risk-based a retain granularity effort. the returns date we pools in of that and and the We're lever loss. system. of lower to and both price also to end makes believe spectrum more gives credit help

get team nice data was Our of as by fiscal comprehensive ensuring through flowing a update done this we results year-end and more the delivered credit job more and system. the have issue. should has We a without timely

margin are gross come price to pleased sequentially. and vehicle we see continue improve to down Additionally,

quarters. contract service the excluding a quarterly past basis fact, the highest In margin gross on the XX this benefit, in was percentage

We to important affordability, half benefits back the expect to and it's continued season in approaches. as get right tax the fiscal this of on the year see especially

and Operator, to of company's focus our the the session our instructions and continue positioned our appreciate Car-Mart Overall, the is of teams the customers, contributions these focused and believe platform, future Our ask our provide and growth stakeholders. move on Q&A associates on the now. to shareholders. Their We'll well appreciate to drive to execution associates in on We belief customers. are their We profitability. work please initiatives of all improvements. we questions. in hard critical serving we're success. for

the Instructions] Stephens. [Operator with Our comes Joseph first from of Kyle line question

I Vickie, service understand the just I to want sure make adjustment. contract

this gross then impact that XXX was it? of big you positive in on kind going mentioned basis margin. the quarter, adjustment I Is point So but about think forward, a the

correct. That's

we unclear on a it of contract. did, customers we X-year a those what out, had if mileage At service the essentially, under contracts. years, We these we So multiple back the added contract. new go X-, by you historically, XXXX, service we in added claims, X-year and time timing rolled driven X- was the

contract And recognized so recognition we were term. conservative in our revenue and it just over the

contracts now actual period As X-year year, those completed contract third or and their we are the have full of than a contract consumers our the a that of up our completing using cycle began in shorter determined review life our term. performance time

sold on a $XX.X we million. any forward going contract pull over So of that and onetime be had the period. shorter on each a then still will And go-forward that sits forward time books basis, recognized today our

I frame then the you gave can the you first of under but on underwriting where that the when changed you of LOS you new new that how LOS, in whether all just And versus since the LOS Very fairly much time helpful. the terms it. kind frame? LOS appreciate rolled you consistent or rolled out was are Got And out? color over kept that's

question. Doug. Great It's

So great question.

rank rolled payment. just we certainly, it some And talking higher terms revisited what term and was back did and remember, around are we being gone of assumptions, were terms in too about tight. of mainly you we out it down time year, customers our those had this of and last If and in our we've

bottom continue and we focused, much X underwriting on through XX% have the those are payments. on of there tighter customers the which iterate have We rank X stayed to customers, and obviously kept and down focus

when We're Like rolled deviate X the did well. not out wasn't XX% largely really, focus has so same of those mentioned, and them our fiddled the and sometimes been all when you're They a the to I around are the originating for tightness sort of But it, as there initially customers. too more more some call through really for trying I what a color things in other term around in far a XX% around there on we environment because terms X down those still been with we getting results that customers, customers. off of really, portfolio, -- difference that unchanged. step And out. lower say it it's down, rank it's positive. change can you that's would part, We've of really take of big rank are the when most PTI term money especially lengths. around I'd for living in bunch getting

we're the there. like of we results So seeing what

it. yes, Got And then, season. tax refund mentioned you

years, anything I traditional of between think are your us can X and inflation, call what but year's it, a season the Kind this for refund tax tax season? over the your expectations for stimulus been sense last has refund you give traditional.

Yes.

in better of the year. the making all market in prepared propped it. We've expected. up setting sure can which summer here what market and for the noise the we We somewhat would on capitalized pricing a we software would than a of wholesale the tax I we're been nonsense, But The call position of are where really sort sort created standpoint, good half and up and in pricing pricing kept bunch back season. turmoil from a of being certainly of a advantage has be through then has and that. volatile, come little obviously, softer of given one in of So that have storms just them took top staying the

of right In and fact, like that now. all we're starting ad campaigns

has couple last the because we most probably in in anything but earlier normal than cases your point, season of have in to So it we'll years. been be the

to Jamie So an long She we things ensure from set wanted way. certainly having an inventory we differently. going is go to standpoint. Fisher Obviously, perspective on just up a and we're on some team the could advertising do added

excited up. tax So this coming season we're year's about

last then one And Great. me. one for

competitive then Just tied M&A And just environment. an on well. update the to that, as the environment

of, There a I on past much these competition terms to we've for There's are M&A activity. tough Sure. is building rate having floor The the small talked that would a still And of in that we in opportunity team. lot would learning, to about talk so higher the the small And call, terms to interest I is owners. acquisitions, of out the folks and is lot or almost. the still of environment M&A side a nonexistent navigate plan say, costs. the in

that. looking it's help. we And what on properly to very need but can so we're funding there, really we but out These really, we for they looking we being have do really resume at, been selective set get are conversations, what before up the fruitful

will the because excited we so so And or that clear care quarter get we're about. back over be and that several of line fight on next we have of something some take on to of opportunities those then sight the here in

the next line Vincent from Our of comes question Caintic with BTIG.

It's continue to great performance trend. the good credit see that

question credit. on my actually So is first

underwriting I compare I'm kind nice could if trend, to of view where your you LOS of wondering evolution you was once is the things you're about book portfolio to. shrinking. And guess, the it benefit, the just is what So having now back talk versus portfolio complete. if your can we how see sort that

be credit once back should and book to say, allowance the LOS XXX% we losses and of portfolio, So become that your the of X expecting originations environment? sort rate in goes reserve what let's

Yes.

the LOS a -- If the showing we've first chart improvement. to you time go included supplemental

that X was of that, time were into first -- we in. it the remember X shared we If or months you I sort buy right,

when or of that coming $XX Now story business you're we the still in didn't upper we're we to retain spectrum that still that We I And come I do the X holding customers. give customers losing start credit writing looks talking to want at we anything and off the month that before about latitude sure and XX we that. million for million here what couldn't on new customers opportunity those of like. years, it And to conquest the but the to in we're make loss, I XX% do it's today's ourselves in want things end certainly of is last believe averaging on the XX like to customers, we some in would maybe $XXX a change our go more cycle hold terms decisions if pricing appropriate return a pricing, credit that, on could imply we the and were better. that environment that of make When we customer think amount to serve improvement. years risk-based continue very have terms risky

so of new And have to don't I this where we'll hold think lever we question line I sort obviously exactly pull we the a going think mark. begin are that's to still because here. that we're

the handful and And stores live end going couple outcome. quite the We're year. over a next will by bit to shape now help a live, the of our really of the learn have Vincent, of that months. XX% we're of I to We here going think organization take

a a on to you So I'd give quarters that better that. ask you of answer couple me give

Great. Okay.

a in of your sounds sales of you're like credit having good. it couple opportunity. volume you that versus ask But yes, quarters. nicer Sounds control your We'll a

appreciate And that. question. then So I last

then I adding dealerships So and there. a been X the dealerships couple and this you've quarter. sold also here here -- saw dealerships couple there And you of selling of a and

thought you that. about your If talk can process with

earlier, you at funding looking Car-Mart adding up, you in what are or assuming and looking for when shaping are shutting the you company? pruning the down the for of you're dealerships, point where get you're maybe selling overall what then to lined business? And your add, looking what you're your you can business when So

Yes.

have, the, older that we say, of some a So while. businesses they've for been I quite would Vincent, around

given want certainly of -- mind with whether oversight, this to investments. some call performance need to of ability seeing of manage of our those of cetera. our an we has facilities, of originations volume to need improvements, and can revisit there opportunity sales level a the we LOS and make do I it -- sort they're our to control and still et at look I them that performance. and But on of lack rooftop underwriting thinking now really what the Some some what bearing. is It's of at changed of frame there if part, thinking we we're sort to still markets what the would a central

And right? years, take in we're have sometimes, a things things plants Those and long trying place are for XX close. happened, XX or we're manufacturing action. close, different, Plants to

of sold haven't We ones we're any these. been have that These closing.

going times credit returns, the inbound, look range X potential. at the side, size appropriate some there's of it of a just new if opportunities to can that. and of part when deployment if things the of capital. then us healthy so question, very you not to locations about doesn't in even second the I've line spoken And not seeing of Xx sort similar have to sense, these that And make the but opportunities, couple prudent that from we and we're they have we're continue of look about manage to sight especially to volume your that

a as and margin in gross add-on nice to operationally certainly to of and we're well. complements manage we that continuing we the that where we those where our benefit continue terms do and to And so want That's exploit manage been can where of leverage get can Cox the footprint, partnership. it

next with question the Our Bank of Murphy of America. from comes line John

responsibly question end. curious spectrum I'm much of your credit higher volume I you're Doug, a gain how the sort and of box. how for sounds the scorecard at And think on had you end what very of that lost of to that just have and roughly? that rankings? percentage the or higher much loosen of finding think the like customers your may you is credit And adjustment just you you ways the tightening first the with kind it that at Elis may

Yes.

hear to you. good from So,

So over the sidelines on month, been X XX% we customer given we've end, about to the customer, last bit. of quarter, robust. the last rank have deeming X the seen sort sit year that the pretty the and what excited -- been about is our on What sort of little is those upper any a base. XX% opportunity. traffic customers has those But We're of over

of give incentivize about up customers stronger more, potentially yield some opportunity payments, exists or price, away side. on the If lower-ranked these these you sort certainly the to think down customers work to the get on us opportunity with volume

in density we have And especially stores we Arkansas that, terms the consider a you can and pilot so where we're excited where do there. user base, of large a of there's recap in home and

drive Texas, our other country have go certainly need that so and the are at Oklahoma. after the to these to looking returns. But ability of there areas there, certainly been And where highest in the haven't grow to serve, customers, but to we we which appropriate for gives incomes Missouri, opportunities us, those customers able some that an are customers opportunity volume. price us in volume We're in and as around just

the of serve excited environment, to we're we do it to the no had the sort couldn't we way appropriate now the really surgical through way what spectrum, didn't do And systematic on rate do. much, pass we rising We because our consumers board. across but to still can customers the end any, it, so we a of return have getting while all other of about on these if do to

John. about excited that, we're so And

there's in of question that you the some at a in like of with that's little a around customers? the seeing much big that end just your consumer low into part confidence in the help your and spurt plays recently of transaction. bit are seems traffic red mean then might how a more because going consumer more What states also could of your And that of coming I be it a a And obviously, a second readings. confidence in some the in be little getting bit them forward?

hear what hopeful. I from Obviously, consumer have about you're they're more -- bit spoken A the think they consumer, and index confidence want we and huge help little help. a standpoint, a I And they're saying. help. feeling Certainly, future, they that the maybe confident lower-end

us, be For environment. agnostic that's outside on to try we in to going all that

backdrop like toolbox every point to consumer it to find we And help on given these smartly. and customers have those of feel return that and to that's setting in where we very just but will tools be the bright to job of up earlier, be sort where not to want like risks focused a on. more your and maybe everything be of stand, And certainly Our I throttle them we're it's today, stay Today, higher, our to sure the norm do future that's make appropriately there help. is To take to bit, serve we more able day our want today. one. a we'll them little volume way the a going to we

motivated more bit maybe total. thing wouldn't little a to the do of for on the acquisitions right company just And to bit to maybe lastly, I Why have folks or that do more funding the little mentioned, right probably more be bit to on in company aggressive the sellers but little obviously, recently? the thing was that mean, bit equity a painful, thing, total then a get for the right recap the you get the you probably was it might done in a the ABS. for more raise and was the

possible. coming is as a we option. certainly least dilutive It's we're be what and wanted right, interest into to a We the an as But as convergence that considered rates, great question. things, falling of several banking this on place, initiatives Yes.

that. have all some as of drive line to around on this we ways don't line we can of and do but collection in sight and customers There of can those in sight through announce things the to to a clear that think that got And management that, do, benefits room we to terms equity quarters do we raise. certainly here gave side, are right, had which can upcoming so we'll breathing we some we doing have of to certainly us we some things we get team things it in our help when these those the

for no showing to back would remarks. now the turn the I'm I questions in gentlemen, and Doug queue. Ladies call further to closing like

talk operator. we'll Car-Mart, you, interest Thank America's you, you Thank your next in and guys, quarter. to for

today's concludes your Thank this conference gentlemen, call. for participation. you and Ladies

may now disconnect. You