In This Article:
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Total Revenue Increase: 8.7% increase despite a 90 basis point decline in average selling prices.
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Sales Volume Increase: 13.2% increase for the quarter.
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Interest Income Increase: 5.1% increase driven by $31 million year-over-year receivables growth.
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Gross Margin: 35.7% compared to 34.2% in the prior year quarter.
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Net Charge-Offs: Improved to 6.1% from 6.8% in the prior year quarter.
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Allowance for Credit Losses: 24.31% at quarter end, improved from 25.74% in the prior year.
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Average Originating Term: 44.6 months, up from 43.3 months in the prior year quarter.
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Collections Increase: 5.2% increase over last year.
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Delinquencies: Increased 40 basis points to 3.7% at quarter end.
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SG&A Expense Increase: $2.9 million or 6.7% increase, driven by acquisitions and higher stock compensation.
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Interest Expense: Increased by $192,000 or 1.1%.
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Unrestricted Cash: $8.5 million at January 31, 2025.
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ABL Facility: $75 million drawn with a new facility extended to $350 million.
Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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America's Car-Mart Inc (NASDAQ:CRMT) reported an 8.7% increase in total revenue, driven by higher sales volume.
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The company successfully completed an extension and upsizing of its ABL facility to $350 million, maturing in March 2027.
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The sixth ABS transaction was completed, raising $200 million and was more than 10 times oversubscribed, indicating strong market confidence.
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Gross margin improved to 35.7% from 34.2%, aided by better vehicle procurement and disposal strategies.
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Net charge-offs as a percentage of average finance receivables improved to 6.1% from 6.8% in the prior year quarter.
Negative Points
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Persistent inflationary trends, higher used car prices, and elevated interest rates continue to challenge the customer environment.
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Average selling prices declined by 90 basis points, despite the increase in total revenue.
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Delinquencies increased by 40 basis points to 3.7% at quarter end, partly due to weather impacts.
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SG&A expenses rose by 6.7%, driven by acquisitions and higher stock compensation, creating short-term headwinds.
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The allowance for credit losses remains high at 24.31% of finance receivables, despite improvements.
Q & A Highlights
Q: Can you provide an update on the unit recovery and underwriting trends over the past year? A: Douglas Campbell, CEO, explained that last year they were too tight with underwriting after rolling out the LOS, resulting in a 19.9% decline in the third quarter. They have since relaxed some controls, focusing on risk-based pricing rather than overall relaxing of core controls. Current run rates imply a 6% to 8% decline compared to fiscal year '23, which was a high watermark.