America’s Car-Mart, Inc. (NASDAQ: CRMT) Q4 2025 Earnings Call | 06/12/2025 | Inside Ticker

Key Leadership and Strategic Transitions

Vicki Judy transitioned from CFO to the newly created Chief Accounting Officer (CAO) role after 15 years, ensuring a smooth financial leadership transition and strengthening financial capabilities.
Jonathan Collins has been formally welcomed as the new Chief Financial Officer (CFO). He brings over two decades of global finance experience from Walmart, Flipkart Group, and KPMG, focusing on operational transformation, capital efficiency, and value creation.
Marie Perchetti has been hired as the new Senior Vice President of Capital Markets, bringing over 20 years of consumer auto finance leadership to diversify and improve funding platforms.

Q4 and Full Year Fiscal 2025 Financial Performance

Net Income: Significant improvement, moving from a net loss of $31.4 million in the prior year to generating $17.9 million in net income this fiscal year (an improvement of over $49 million).
Unit Sales: Increased by 2.6% in Q4 year-over-year. For the full year, units sold were 57,022, down just 1.7% year-over-year, showing a strong rebound in the second half with 7.2% unit growth.
Revenue: Incremental revenue of 1.5% in Q4, driven by unit sales volume and a 4.2% increase in interest income. Full-year revenue was relatively flat due to first-half headwinds.
Vehicle Sales Price: Decreased by $316 to $17,240 in Q4, benefiting customers due to strategic inventory building ahead of the tax season and tariff uncertainty.
Gross Margin: Came in at 36.4% in Q4 (up from 35.5% last year) and 36.7% for the full fiscal year (a 200 basis point improvement), driven by stronger wholesale channel performance. The long-term target remains 37%-38%.
Net Charge-offs: Improved to 6.9% of average finance receivables in Q4 (from 7.3% prior year) and 130 basis points for the full year, indicating overall improvements in frequency and severity of loss.
Allowance for Credit Losses (CECL): A $10.3 million net reduction in reserve balance due to enhanced methodology and outperformance of LOS-originated receivables (now 65.7% of receivables).
Collections: Up 2.1% over last year, with monthly average total collected per active customer improving to $612.
SG&A Expenses: Increased by $3.8 million (8.6%) due to investments in technology, talent, and acquisitions, but improved on a per-customer basis (up 6.1%, lower than overall dollar increase).
Interest Expense: Decreased by $388,000 (2.2%) benefiting from improved benchmark rates and securitization rates.
Capital Markets: Successfully closed seventh term securitization, issuing $216 million in asset-backed notes at a weighted average coupon of 6.27%, a significant improvement over prior issuances, reflecting growing investor confidence.

Key Strategic Initiatives and Operational Enhancements

"Pay Your Way" Relaunch: Expanded suite of payment options for customers, including Apple Pay, Google Pay, Venmo, PayPal, and an 80,000+ location cash payment network (Dollar General, CVS, Walmart). This aims to improve payment performance, customer satisfaction, and reduce store team burden. Pilot is live and scaling nationwide in the current quarter.
Advanced Underwriting and Pricing Model:
- Transitioned to a new 7x7 scorecard for greater granularity and accuracy in projecting loss ratios, expected to improve overall credit losses.
- Launched risk-based pricing nationwide as of May 8th. Initial tests showed no material drop in application conversion for the riskiest segments (rates increased) and meaningful sales volume improvement for highest-quality customers (rates modestly lowered).
- This shift is expected to influence inventory mix towards higher-rated customers, potentially lowering reconditioning and warranty costs, and ultimately leading to smarter growth and better risk-adjusted returns.
CRM Platform: Implemented last summer, meaningfully improving efficiency in customer engagement.
Inventory Management: Strategic increase in Q3 inventory levels (28% year-over-year) ahead of tax season and tariff uncertainty, which reduced procurement pressure and led to lower vehicle selling prices for customers.
Protection Plans: Q3 decision to raise service contract pricing contributed to incremental revenue growth with no negative impact on penetration.
Cox Partnership: Continued focus on leveraging technology, enhancing profitability within protection plans, and deepening the impact of the Cox partnership.

Fiscal Year 2026 Expectations and Macro Environment

Used Car Market: Expected to remain dynamic. The impact of tariffs on procurement has been muted (approx. $300 increase per unit), which is manageable given previous cost reductions.
Supply Environment: Tighter supply is a challenge, but diversifying underwriting allows for an expanded base of assets to procure.
Growth Opportunities: Focused on helping existing customers and creating competitive options for stronger applicants, driving receivable growth.
LOS and Risk-Based Pricing: Key initiatives expected to strengthen credit performance and grow portfolio size.
Capital Structure: Plans to mature the capital structure, including exploring warehouse loans and longer-tenure debt facilities to ultimately lower interest rates and serve customers better.
Subprime Focus: While exploring opportunities with higher-tier customers (Tier 7), the company remains committed to its core subprime customer base and expects continued inflow of these consumers. The expansion into higher tiers is aimed at growing the brand with new consumers and diversifying asset types.

Key Leadership and Strategic Transitions

Vicki Judy transitioned from CFO to the newly created Chief Accounting Officer (CAO) role after 15 years, ensuring a smooth financial leadership transition and strengthening financial capabilities.
Jonathan Collins has been formally welcomed as the new Chief Financial Officer (CFO). He brings over two decades of global finance experience from Walmart, Flipkart Group, and KPMG, focusing on operational transformation, capital efficiency, and value creation.
Marie Perchetti has been hired as the new Senior Vice President of Capital Markets, bringing over 20 years of consumer auto finance leadership to diversify and improve funding platforms.

Q4 and Full Year Fiscal 2025 Financial Performance

Net Income: Significant improvement, moving from a net loss of $31.4 million in the prior year to generating $17.9 million in net income this fiscal year (an improvement of over $49 million).
Unit Sales: Increased by 2.6% in Q4 year-over-year. For the full year, units sold were 57,022, down just 1.7% year-over-year, showing a strong rebound in the second half with 7.2% unit growth.
Revenue: Incremental revenue of 1.5% in Q4, driven by unit sales volume and a 4.2% increase in interest income. Full-year revenue was relatively flat due to first-half headwinds.
Vehicle Sales Price: Decreased by $316 to $17,240 in Q4, benefiting customers due to strategic inventory building ahead of the tax season and tariff uncertainty.
Gross Margin: Came in at 36.4% in Q4 (up from 35.5% last year) and 36.7% for the full fiscal year (a 200 basis point improvement), driven by stronger wholesale channel performance. The long-term target remains 37%-38%.
Net Charge-offs: Improved to 6.9% of average finance receivables in Q4 (from 7.3% prior year) and 130 basis points for the full year, indicating overall improvements in frequency and severity of loss.
Allowance for Credit Losses (CECL): A $10.3 million net reduction in reserve balance due to enhanced methodology and outperformance of LOS-originated receivables (now 65.7% of receivables).
Collections: Up 2.1% over last year, with monthly average total collected per active customer improving to $612.
SG&A Expenses: Increased by $3.8 million (8.6%) due to investments in technology, talent, and acquisitions, but improved on a per-customer basis (up 6.1%, lower than overall dollar increase).
Interest Expense: Decreased by $388,000 (2.2%) benefiting from improved benchmark rates and securitization rates.
Capital Markets: Successfully closed seventh term securitization, issuing $216 million in asset-backed notes at a weighted average coupon of 6.27%, a significant improvement over prior issuances, reflecting growing investor confidence.

Key Strategic Initiatives and Operational Enhancements

"Pay Your Way" Relaunch: Expanded suite of payment options for customers, including Apple Pay, Google Pay, Venmo, PayPal, and an 80,000+ location cash payment network (Dollar General, CVS, Walmart). This aims to improve payment performance, customer satisfaction, and reduce store team burden. Pilot is live and scaling nationwide in the current quarter.
Advanced Underwriting and Pricing Model:
- Transitioned to a new 7x7 scorecard for greater granularity and accuracy in projecting loss ratios, expected to improve overall credit losses.
- Launched risk-based pricing nationwide as of May 8th. Initial tests showed no material drop in application conversion for the riskiest segments (rates increased) and meaningful sales volume improvement for highest-quality customers (rates modestly lowered).
- This shift is expected to influence inventory mix towards higher-rated customers, potentially lowering reconditioning and warranty costs, and ultimately leading to smarter growth and better risk-adjusted returns.
CRM Platform: Implemented last summer, meaningfully improving efficiency in customer engagement.
Inventory Management: Strategic increase in Q3 inventory levels (28% year-over-year) ahead of tax season and tariff uncertainty, which reduced procurement pressure and led to lower vehicle selling prices for customers.
Protection Plans: Q3 decision to raise service contract pricing contributed to incremental revenue growth with no negative impact on penetration.
Cox Partnership: Continued focus on leveraging technology, enhancing profitability within protection plans, and deepening the impact of the Cox partnership.

Fiscal Year 2026 Expectations and Macro Environment

Used Car Market: Expected to remain dynamic. The impact of tariffs on procurement has been muted (approx. $300 increase per unit), which is manageable given previous cost reductions.
Supply Environment: Tighter supply is a challenge, but diversifying underwriting allows for an expanded base of assets to procure.
Growth Opportunities: Focused on helping existing customers and creating competitive options for stronger applicants, driving receivable growth.
LOS and Risk-Based Pricing: Key initiatives expected to strengthen credit performance and grow portfolio size.
Capital Structure: Plans to mature the capital structure, including exploring warehouse loans and longer-tenure debt facilities to ultimately lower interest rates and serve customers better.
Subprime Focus: While exploring opportunities with higher-tier customers (Tier 7), the company remains committed to its core subprime customer base and expects continued inflow of these consumers. The expansion into higher tiers is aimed at growing the brand with new consumers and diversifying asset types.