America's Car-Mart Inc (CRMT) Q4 2025 Earnings Call Highlights: A Remarkable Financial ...
Net Income: Improved from a net loss of $31.4 million in the prior year to $17.9 million in net income, an improvement of over $49 million.
Revenue Growth: Incremental revenue increased by 1.5% in the fourth quarter compared to the prior year's quarter.
Unit Sales Volume: Increased by 2.6% in the fourth quarter.
Interest Income: Increased by 4.2% in the fourth quarter.
Full Year Unit Sales: Sold 57,022 units, down 1.7% year over year.
Gross Margin: Fourth quarter gross margin was 36.4%, up from 35.5% a year ago; full fiscal year gross margin was 36.7%, a 200 basis point improvement.
Net Charge-Offs: Improved to 6.9% of average finance receivables for the quarter, compared to 7.3% in the prior year quarter.
Allowance for Credit Losses: Reduced by $10.3 million due to enhancements in the Cecil allowance methodology.
SG&A Expenses: Increased by $3.8 million or 8.6%, driven by investments in technology, talent, and strategic acquisitions.
Interest Expense: Decreased by $388,000 or 2.2%.
Warning! GuruFocus has detected 12 Warning Signs with CRMT.
Release Date: June 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
America's Car-Mart Inc (NASDAQ:CRMT) reported a significant financial turnaround, moving from a net loss of $31.4 million in the prior year to generating $17.9 million in net income this year, an improvement of more than $49 million.
The company successfully executed its 7th term securitization, issuing $216 million in asset-backed notes with a favorable weighted average coupon of 6.27%, reflecting growing investor confidence.
The introduction of a new 7 by 7 scorecard and risk-based pricing model is expected to improve credit performance and enable smarter growth.
The relaunch of the 'Pay Your Way' platform, which includes digital payment options like Apple Pay and Google Pay, aims to enhance customer convenience and satisfaction.
Gross margin improved to 36.4% in Q4, up from 35.5% a year ago, driven by stronger performance in the wholesale channel and strategic initiatives.
SGNA expenses increased by $3.8 million or 8.6%, primarily due to investments in technology, talent, and strategic acquisitions, impacting short-term cost efficiency.
The used car market remains dynamic with a tighter supply environment, posing challenges for procurement and inventory management.
Despite improvements, the allowance for credit losses remains high at 23.25% of finance receivables, indicating ongoing credit risk.
The company faces pressure from tariffs, which have led to a $300 increase in procurement costs per unit, affecting overall cost management.
Interest expense decreased only slightly by $388,000 or 2.2%, indicating limited immediate relief from improved securitization rates.
Q: How have tariffs and higher used car prices affected America's Car-Mart's business, and have there been any changes in consumer behavior? A: Douglas Campbell, President and CEO, explained that the impact of tariffs and higher used car prices began to manifest in April, towards the end of the quarter. The company has seen a $300 increase in procurement costs per unit, which is manageable. There hasn't been a significant pull forward of sales due to these factors. The company is focused on sustainable growth and has implemented risk-based pricing to navigate potential headwinds.
Q: Can you provide an update on the operational upgrades and partnerships, and how they might affect gross profit margins and sales per store? A: Douglas Campbell highlighted that gross profit margins have improved, with a 90 basis point increase in the quarter and a 200 basis point improvement year-over-year. The company is focused on optimizing products and leveraging partnerships to enhance profitability. The relaunch of the Pay Your Way campaign is expected to improve collections and reduce friction in customer payments.
Q: How will the rollout of risk-based pricing impact the company's financials, particularly yields and margins? A: Douglas Campbell noted that risk-based pricing has been implemented across all stores, with a focus on improving returns on lower-ranked customers and offering better terms to higher-quality customers. This approach is expected to enhance both credit performance and gross margins by attracting higher-quality customers and optimizing inventory.
Q: What is the condition of America's Car-Mart's low-end consumers, and how are they coping with higher rates? A: Douglas Campbell stated that the company's low-end consumers are accustomed to navigating challenging economic conditions. There are no significant signs of distress, and demand remains strong. The company's interest rates remain competitive, and there has been no breakage in conversion rates, indicating that consumers still find value in America's Car-Mart's offerings.
Q: How does the success in capital markets and ABS issuance impact America's Car-Mart's growth prospects? A: Jonathan Collins, CFO, explained that the company is pleased with its recent securitization efforts, which have tightened spreads and improved capital structure. The company is exploring additional capital market tools, such as warehouse loans, to further enhance its financial flexibility and support growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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