AMERICAS CARMART INC

Previous wording

•general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels;

Current wording

•general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels and inflationary pressure on operating costs;

Previous wording

America’s Car-Mart, Inc., a Texas corporation initially formed in 1981 (the “Company”), is one of the largest publicly held automotive retailers in the United States focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market. The Company’s operations are principally conducted through its two operating subsidiaries, America’s Car Mart, Inc., an Arkansas corporation (“Car-Mart of Arkansas”), and Colonial Auto Finance, Inc., an Arkansas corporation (“Colonial”). References to the Company include the Company’s consolidated subsidiaries. The Company primarily sells older model used vehicles and provides financing for substantially all of its customers. Many of the Company’s customers have limited financial resources and would not qualify for conventional financing as a result of limited credit histories or past credit difficulties. As of July 31, 2025, the Company operated 154 dealerships located primarily in small cities throughout the South-Central United States.

Current wording

America’s Car-Mart, Inc., a Texas corporation initially formed in 1981 (the “Company”), is one of the largest publicly held automotive retailers in the United States focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market. The Company’s operations are principally conducted through its two operating subsidiaries, America’s Car Mart, Inc., an Arkansas corporation (“Car-Mart of Arkansas”), and Colonial Auto Finance, Inc., an Arkansas corporation (“Colonial”). References to the Company include the Company’s consolidated subsidiaries. The Company primarily sells older model used vehicles and provides financing for substantially all of its customers. Many of the Company’s customers have limited financial resources and would not qualify for conventional financing as a result of limited credit histories or past credit difficulties. As of October 31, 2025, the Company operated 154 dealerships located primarily in small cities throughout the South-Central United States. Subsequent to the quarter end, the Company closed five dealership locations as part of its ongoing footprint optimization initiatives.

Previous wording

Over the last ten fiscal years, the Company’s revenue growth averaged 10.6%. Revenue for the first three months of fiscal 2026 declined 1.9% compared to the same period of fiscal 2025, primarily due to a 5.7% decrease in retail units sold. The decrease was partially offset by a 7.5% increase in interest income.

Current wording

Over the past ten fiscal years, the Company’s revenue has grown at an average annual rate of 10.6%. For the first six months of fiscal 2026, sales decreased by 1.8% compared to the prior-year period, driven primarily by a 3.4% decline in retail units sold, partially offset by a 0.9% increase in the average retail sales price. Interest income also rose by 5.5%.

Previous wording

The Company has been focused on improving vehicle quality by procuring lower-mileage vehicles, while balancing affordability for customers. 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. When combined with inventory procurement efficiencies, these changes are expected to drive improved customer experience and contribute to better gross margins.

Current wording

The Company has been focused on improving vehicle quality by procuring lower-mileage vehicles, while balancing affordability for customers. 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. When combined with inventory procurement efficiencies, these changes are expected to drive improved customer experience and contribute to better gross margins. The six months ended October 31, 2025 have begun to reflect those improvements in repair expenses and wholesale retention, reflected in the gross margin improvements.

Previous wording

Over the last five fiscal years, the Company’s provision for credit losses as a percentage of sales averaged 30.2%. During fiscal 2025, credit losses well exceeded the pre-pandemic rate of 23.71% in fiscal 2019, partially due to the inflationary pressure on customers and increasing interest rates from federal monetary policy. For the first three months of fiscal 2026, the provision for credit losses as a percentage of sales increased to 37.3%, compared to 33.2% for the same period of fiscal 2025, resulting from an increased frequency and severity of losses coupled with the effect of lower sales revenues. Based on the Company’s current analysis of credit losses, the allowance for credit losses at July 31, 2025 was 23.35% of finance receivables, net of deferred revenue and pending accident protection plan (“APP”) claims, an improvement from 25.00% at July 31, 2024 and a decline from 23.25% at April 30, 2025, resulting in a $3.0 million increase to the provision for credit losses from the fourth quarter of fiscal 2025.

Current wording

Over the last five fiscal years, the Company’s provision for credit losses as a percentage of sales averaged 30.2%. During fiscal 2025, credit losses well exceeded the pre-pandemic rate of 23.71% in fiscal 2019, partially due to the inflationary pressure on customers and increasing interest rates from federal monetary policy. For the first six months of fiscal 2026, the provision for credit losses as a percentage of sales increased to 39.50%, compared to 34.00% for the same period of fiscal 2025, resulting from an increase in frequency of losses coupled with the effect of lower sales revenues. Based on the Company’s current analysis of credit losses, the allowance for credit losses at October 31, 2025 was 24.19% of finance receivables, net of deferred revenue and pending accident protection plan (“APP”) claims, an improvement from 24.72% at October 31, 2024 and an increase from 23.3% at July 31, 2025, resulting in a $11.8 million increase to the provision for credit losses in the second quarter of fiscal 2026.

Previous wording

However, the Company continues to believe that the proper execution of its business practices is the single most important determinant of its long-term credit loss experience. The Company continuously looks for ways to operate more efficiently, improve its business practices and adjust underwriting and collection procedures. During the quarter, the Company advanced its credit and collections infrastructure through upgrades to its loan origination system ("LOS"), which incorporate a new scorecard and embedded risk-based pricing. These enhancements are more closely aligning expected returns with customer risk profiles, with early results showing a shift in originations toward higher-ranked customers and away from lower-tier applicants, consistent with the system’s design. In parallel, the Company implemented updates to its payments platform, which are facilitating a shift from in-store to online payments and supporting more consistent customer payment behavior. Together, these initiatives are expected to further strengthen the Company’s underwriting discipline and enhance the effectiveness of its collection efforts, providing a more scalable framework to support long-term growth.

Current wording

However, the Company continues to believe that the proper execution of its business practices is the single most important determinant of its long-term credit loss experience. The Company continuously looks for ways to operate more efficiently, improve its business practices and adjust underwriting and collection procedures. During the first quarter of fiscal 2026, the Company advanced its credit and collections infrastructure through upgrades to its loan origination system (“LOS”), which incorporate a new scorecard and embedded risk-based pricing. These enhancements are more closely aligning expected returns with customer risk profiles, with early results showing a shift in originations toward higher-ranked customers and away from lower-tier applicants, consistent with the system’s design. Additionally, the Company implemented updates to its payments platform, which are facilitating a shift from in-store to online payments and supporting more consistent customer payment behavior. Together, these initiatives are expected to further strengthen the Company’s underwriting discipline and enhance the effectiveness of its collection efforts, providing a more scalable framework to support long-term growth.

Previous wording

The Company’s gross profit dollars per retail unit sold increased by $460, or 6.6%, during the first three months of fiscal 2026 compared to the first three months of fiscal 2025, and gross margin as a percentage of sales for the first three months of fiscal 2026 increased to 36.6% of sales from 35.0% in the prior year period. The increase in gross profit dollars per retail unit sold was related to a decrease in the aggregate cost of the vehicles sold during the respective periods related to the Company’s initiatives around pricing discipline, lower frequency and severity of vehicle repair costs, and improved retention of wholesale buyers for vehicles repossessed by the Company. The Company’s gross margin is based upon the cost of the vehicle purchased, with higher-priced vehicles typically having higher gross margin dollars but lower gross margin percentages. Gross margin is also affected by the percentage of wholesale sales to retail sales, which relates, for the most part, to repossessed vehicles sold at or near cost. The Company plans to continue to focus on managing gross margin dollars in the near term, as demonstrated by the increase during the first quarter of fiscal 2026, as well as continuing to focus on improving wholesale results, cost controls, and operational improvement around the acquisition and disposal of vehicles.

Current wording

The Company’s gross profit margin as a percentage of sales for the first six months of fiscal 2026 marginally decreased to 37.1% of sales from 37.2% in the prior year period. The prior year period included a 150 basis points benefit from the impact of the service contract accounting change in estimate for revenue recognition. The gross margin improvement in the current year, after excluding the benefit in the prior year results from an increase in the aggregate cost of the vehicles sold during the respective periods related to the Company’s initiatives around pricing discipline, lower frequency and severity of vehicle repair costs, and improved retention of wholesale buyers for vehicles repossessed by the Company. The Company’s gross margin is based upon the cost of the vehicle purchased, with higher-priced vehicles typically having higher gross margin dollars but lower gross margin percentages. Gross margin is also affected by the percentage of wholesale sales to retail sales, which relates, for the most part, to repossessed vehicles sold at or near cost. The Company plans to continue to focus on managing gross margin dollars in the near term, as well as continuing to focus on improving wholesale results, cost controls, and operational improvement around the acquisition and disposal of vehicles.

Previous wording

The Company consistently focuses on collections. Each dealership is responsible for its own collections with supervisory involvement and oversight from the corporate office. Total collections of principal, interest, and late fees for the first three months of fiscal 2026 increased by $10.7 million, or 6.2%, over the prior year period. Principal collections, as a percentage of average finance receivables, increased slightly to 7.9%, compared to 7.8% for the same period in prior year.

Current wording

The Company consistently focuses on collections. Each dealership is responsible for its own collections with supervisory involvement and oversight from the corporate office. Total collections of principal, interest, and late fees for the first six months of fiscal 2026 increased by $18.6 million, or 5.4%, over the prior year period. Principal collections, as a percentage of average finance receivables, increased to 13.6%, compared to 13.0% for the same period in prior year. These results underscore the positive impact of our enhanced payments platform, which has streamlined processes and improved overall collection efficiency.

Previous wording

The Company continues to prioritize investments to improve its products and services and operate more efficiently over time. During the quarter, the Company deployed updates to its processes and technology for credit applications and decision-making through a new version of LOS. Since the implementation of the initial LOS, this online loan application system has allowed consumers to apply for credit faster in anticipation of their vehicle purchase, authorize a soft credit pull during the application process, receive status updates via text message, as well as have access to centralized appointment-setting. At the end of the first quarter, the Company had implemented LOS in 145 of its 154 dealerships, with centralized decision-making on approvals of applications submitted via the online platform. The remaining nine dealerships, which were acquired, are still in their earn-out period or have yet to be integrated. Through LOS, the Company has tightened its credit approval standards, primarily by requiring a higher down payment and shorter terms from certain customers. The updates to LOS implemented during the first quarter introduced an upgraded, more predictive scorecard and risk-based pricing capabilities, improving risk identification and customer rankings. The revised scorecard provides improved risk identification by assigning customer rankings with greater granularity. As a result, the Company made a higher proportion of its sales during the first quarter to customers ranked 5–7, rankings which have historically demonstrated a lower probability of loss and delivered stronger overall returns on their installment sale contracts compared to lower-ranked customers. In addition, the Company implemented upgrades to its payments platform in late June 2025, which are driving a shift from in-store to online payments, enhancing convenience for customers while supporting more consistent payment behavior and improved collections efficiency.

Current wording

The Company continues to prioritize investments to improve its products and services and operate more efficiently over time. One of the Company’s largest recent investments has been improving its processes and technology for credit applications and decision-making through its new LOS. This online loan application system allows the consumer to apply for credit faster in anticipation of their vehicle purchase, authorize a soft credit pull during the application process, and receive a response via text message on the status of their application, as well as have access to centralized appointment setting. At the end of the second quarter, the Company had implemented the LOS in 145 of its 154 dealerships (five of which dealerships were closed subsequent to quarter-end), with centralized decision-making on approvals of applications submitted via the online platform. The remaining nine dealerships, which were acquired, are still in their earn-out period or have yet to be integrated. Through the LOS, the Company has tightened its credit approval standards, primarily by requiring a higher down payment and shorter terms from certain customers.

Previous wording

Interest expense for three months ended July 31, 2025 as a percentage of sales decreased to 6.2%, from 6.4% for the prior year period. In dollar terms, interest expense decreased $1.3 million, reflecting improvements in our securitization platform and a more favorable interest rate environment.

Current wording

Interest expense for three months ended October 31, 2025 as a percentage of sales decreased to 5.5%, from 6.3% for the prior year period. In dollar terms, interest expense decreased $2.4 million, reflecting improvements in our securitization platform and a more favorable interest rate environment.

Previous wording

Total revenues decreased $6.5 million, or 1.9%, for the three months ended July 31, 2025 as compared to the same period in the prior fiscal year. The decrease was primarily as a result of declines in revenue at dealerships that operated a full three months in both the current and prior year quarter ($13.7 million decrease) and by a decline in revenue at dealerships that were closed during the prior year quarter ($3.0 million decrease), partially offset by revenue growth from dealerships opened or acquired during or after the prior year quarter ($10.2 million increase). The primary decrease in revenue was related to a 5.7% decrease in retail units sold, largely resulting from balancing affordability for the consumer, profit margins and portfolio quality. The purchase cost of vehicles rose during the quarter, consuming more of our borrowing capacity, which limited the amount of inventory we carried and had an impact on the sales volumes. The decrease in revenue was partially offset by a 7.5% increase in interest income. Interest income increased for the three months ended July 31, 2025, as compared to the same period in the prior fiscal year, due to the $35.4 million increase in average finance receivables and an increase in the weighted average interest rate on outstanding finance receivables to 17.6%, up from 17.4% during the prior year period.

Current wording

Total revenues decreased $3.8 million or 0.5%, for the six months ended October 31, 2025 compared to the same period in the prior fiscal year. Sales revenue declined $10.5 million or 1.8% driven primarily by a 3.4% decrease in units sold (27,205 units versus 28,175 units in the prior-year period), largely resulting from balancing affordability for the consumer, profit margins and portfolio quality. In addition, the purchase cost of vehicles rose during the quarter, consuming more of our borrowing capacity, which limited the amount of inventory we carried and had an impact on the sales volumes. The decline in sales revenue was partially offset by $6.7 million or 5.5% increase in interest income. The increase in interest income was driven by growth in average finance receivables and an increase in the weighted average interest rate on outstanding finance receivables to 17.6% up from 17.3% during the same prior year period.

Previous wording

The cost of sales as a percentage of sales decreased to 63.4% for the three months ended July 31, 2025 compared to 65.0% for the same period of the prior fiscal year, resulting in a gross margin as a percentage of sales of 36.6% for the current year period compared to 35.0% for the prior year period. The improvement in gross margin compared to the same period in the prior fiscal year resulted from continued efforts related to vehicle sales pricing improvements, reduced repairs in both frequency and severity and improved rates on wholesale retention.

Current wording

The cost of sales as a percentage of sales increased slightly to 62.9% for the six months ended October 31, 2025 compared to 62.8% for the same period of the prior fiscal year, resulting in a gross margin as a percentage of sales of 37.1% for the current year period compared to 37.2% for the prior year period. The prior year period included a 150 basis points benefit from the impact of the service contract accounting change in estimate for revenue recognition. The improvement in gross margin as a percentage of sales, excluding the benefit in the prior year, resulted from the Company’s initiatives around pricing discipline, lower frequency and severity of vehicle repair costs, and improved retention of wholesale buyers for vehicles repossessed by the Company.

Previous wording

Gross margin as a percentage of sales is significantly impacted by the average retail sales price of the vehicles the Company sells, which is largely a function of the Company’s purchase cost and includes the price of ancillary products sold with the vehicle, such as the APP and the vehicle service contract. As purchase costs increase, the margin between the purchase cost and the sales price of the vehicles the Company sells generally narrows on a percentage basis because the Company must offer affordable prices to its customers. The average retail sales price for the first quarter of fiscal 2026, including ancillary products, was $19,564, reflecting an increase of $278 over the prior year quarter. The improvement in gross margin for the quarter demonstrates the Company's continued focus on gross margin improvement through pricing discipline, reduced transportation costs and lower vehicle repair costs.

Current wording

Gross margin as a percentage of sales is significantly impacted by the average retail sales price of the vehicles the Company sells, which is largely a function of the Company’s purchase cost and includes the price of ancillary products sold with the vehicle, such as the accident protection plan (“APP”) and the vehicle service contract. As purchase costs increase, the margin between the purchase cost and the retail sales price generally narrows because the Company must continue to offer affordable prices to its customers. For the six months ended October 31, 2025, the average retail sales price, including ancillary products, was $19,820, an increase of $170 compared to the prior-year period.

Previous wording

Selling, general and administrative (SG&A) expenses as a percentage of sales increased to 18.6% for the three months ended July 31, 2025 compared to 16.3% the same period in the prior fiscal year. In absolute terms, SG&A expenses rose by $4.7 million from the same period in the prior fiscal year. The increase is primarily related to additions in technology and increases in compensation and benefit expense, related to additions to the leadership team in areas such as finance and accounting.

Current wording

Selling, general and administrative (SG&A) expenses as a percentage of sales increased to 19.3% for the six months ended October 31, 2025 compared to 16.4% the same period in the prior fiscal year. In absolute terms, SG&A expenses rose by $14.3 million from the same period in the prior fiscal year. The increase is primarily related to additions in technology and increases in compensation and benefit expense, related to additions to the leadership team in areas such as finance and accounting. Additionally, SG&A for the six months of fiscal 2026 includes $3.5 million in one-time expenses primarily related to impairment charges associated with management's decision to close five dealership locations.

Previous wording

Property and equipment, net, decreased by $1.7 million at July 31, 2025 as compared to April 30, 2025. The Company incurred $0.5 million in expenditures during the three months ended July 31, 2025 primarily related to remodeling existing locations. These expenditures were offset by $2.1 million in depreciation expense during the first three months ended July 31, 2025.

Current wording

Property and equipment, net, decreased by $4.4 million at October 31, 2025 as compared to April 30, 2025. The Company incurred $1.2 million in expenditures during the six months ended October 31, 2025 primarily related to remodeling existing locations. These expenditures were offset by $4.2 million in depreciation expense during the first six months ended October 31, 2025.

Previous wording

Accounts payable and accrued liabilities increased by $9.7 million at July 31, 2025 as compared to April 30, 2025, related primarily to timing of payments and check clearings.

Current wording

Accounts payable and accrued liabilities increased by $11.4 million at October 31, 2025 as compared to April 30, 2025, related primarily to timing of payments and check clearings.

Previous wording

Deferred revenue decreased $1.0 million at July 31, 2025 as compared to April 30, 2025, primarily resulting from the decrease in units sold.

Current wording

Deferred revenue decreased $3.7 million at October 31, 2025 as compared to April 30, 2025, primarily resulting from the decrease in units sold.

Previous wording

The purchase price the Company pays for a vehicle has a significant effect on liquidity and capital resources, as selling prices are directly tied to acquisition costs. Higher purchase costs generally require higher selling prices, which can make it more difficult to maintain gross margin percentages and contract terms in line with historical results, given customers’ limited incomes and the need to keep payments affordable. Several external factors influence vehicle acquisition costs. Reduced volumes of new car sales, particularly domestic brands, constrain supply in the used car market, while broader economic downturns may also affect auction and wholesaler activity. Recently imposed tariffs on the automotive industry have added approximately $500 per vehicle to procurement costs since the beginning of the year. Although procurement costs have stabilized in the near term, future tariffs, trade restrictions, or declines in new car sales could create uncertainty, which may exacerbate challenges related to sourcing inventory or increase the cost of vehicles.

Current wording

limited incomes and the need to keep payments affordable. Several external factors influence vehicle acquisition costs. Reduced volumes of new car sales, particularly domestic brands, constrain supply in the used car market, while broader economic downturns may also affect auction and wholesaler activity. Recently imposed tariffs on the automotive industry have added approximately $500 per vehicle to procurement costs since the beginning of the year. Although procurement costs have stabilized in the near term, future tariffs, trade restrictions, or declines in new car sales could create uncertainty, which may exacerbate challenges related to sourcing inventory or increase the cost of vehicles.

Previous wording

Sustained macro-economic pressures affecting our customers have helped keep demand high in recent years for the types of vehicles we purchase. This strong demand for used vehicles, coupled with modest levels of new vehicle sales in recent years, have led to a generally ongoing tight supply of used vehicles available to the Company in both quality and quantity. Wholesale prices continued to soften in calendar year 2024 and into 2025 but began to increase late in fiscal year 2025. The Company expects that the tight supply of used vehicles, strong demand for the types of vehicles we purchase, and market reactions to ongoing tariff uncertainty will continue to keep purchase costs and resulting sales prices elevated in the short term. However, an increase in marketplace wages for our customers could enhance affordability.

Current wording

Sustained macro-economic pressures affecting our customers have helped keep demand high in recent years for the types of vehicles we purchase. This strong demand for used vehicles, coupled with modest levels of new vehicle sales in recent years, has led to a generally ongoing tight supply of used vehicles available to the Company in both quality and quantity. Wholesale prices continued to soften in calendar year 2024 and into 2025 but began to increase late in fiscal year 2025. The Company expects that the tight supply of used vehicles, strong demand for the types of vehicles we purchase, and market reactions to ongoing tariff uncertainty will continue to keep purchase costs and resulting sales prices elevated in the short term. However, an increase in marketplace wages for our customers could enhance affordability.

Previous wording

The Company’s liquidity is also influenced by its credit losses. Macro-economic factors, such as unemployment rates and general inflation affecting both core and discretionary items, can significantly impact collection results and, consequently, credit losses. At present, as customers face rising costs for non-discretionary items like childcare, insurance, groceries, and gasoline, their ability to meet vehicle payment obligations may be strained. To mitigate these risks, the Company has implemented several process improvements, including the introduction of LOS over the past two years, which strengthens controls and provides a more robust infrastructure to support collections. The Company also launched an upgraded payments platform, which has begun facilitating a shift from in-store to online payments and should support more consistent payment behavior. Management remains focused on enhancing execution at the dealership level, particularly in terms of individualized customer engagement related to collection matters.

Current wording

The Company’s liquidity is also influenced by its credit losses. Macro-economic factors, such as unemployment rates and general inflation affecting both core and discretionary items, can significantly impact collection results and, consequently, credit losses. At present, as customers face rising costs for non-discretionary items like childcare, insurance, groceries, and gasoline, their ability to meet vehicle payment obligations may be strained. To mitigate these risks, the Company has implemented several process improvements, including the introduction of the LOS over the past two years, which strengthens controls and provides a more robust infrastructure to support collections. The Company also launched an upgraded payments platform, which has begun facilitating a shift from in-store to online payments and should support more consistent payment behavior. Management remains focused on enhancing execution at the dealership level, particularly in terms of individualized customer engagement related to collection matters.

Previous wording

The Company’s business model relies on leasing the majority of the properties where its dealerships are located. As of July 31, 2025, the Company leased approximately 87% of its dealership properties. The $86.1 million of operating lease commitments includes $28.5 million of non-cancelable lease commitments under the lease terms and $57.6 million of lease commitments for renewal periods at the Company’s option that are reasonably assured. The Company expects to continue to lease the majority of the properties where its dealerships are located.

Current wording

The Company’s business model relies on leasing the majority of the properties where its dealerships are located. As of October 31, 2025, the Company leased approximately 87% of its dealership properties. The $82.4 million of operating lease commitments includes $53.8 million of non-cancelable lease commitments under the lease terms and $28.6 million of lease commitments for renewal periods at the Company’s option that are reasonably assured. The Company expects to continue to lease the majority of the properties where its dealerships are located.

Previous wording

The Company’s principal sources of liquidity include income from operations, proceeds from non-recourse notes payable issued under asset-back securitization transactions, warehouse facilities, borrowings under its revolving credit facilities, and other potential debt or equity financing sources. At July 31, 2025, the Company had approximately $9.7 million of cash on hand and approximately an additional $20.8 million of availability under its revolving credit facilities (see Note F to the Consolidated Financial Statements). The revolving credit facility has a scheduled maturity date of March 31, 2027, with total permitted borrowings of $350.0 million at July 31, 2025.

Current wording

The Company’s principal sources of liquidity include income from operations, proceeds from non-recourse notes payable issued under asset-back securitization transactions, warehouse facilities, and other potential debt or equity financing sources. At October 31, 2025, the Company had approximately $122.4 million of cash on hand.

Previous wording

The Company had $610.8 million of asset-backed non-recourse notes as of July 31, 2025 with a weighted average fixed coupon rate of 7.86%. The notes payable have scheduled maturities through June 20, 2028, June 20, 2030, January 21, 2031, August 20, 2031, November 20, 2031 and February 20, 2032, but may be repaid earlier, depending upon collections from the underlying auto finance receivables.

Current wording

The Company had $635.0 million of asset-backed non-recourse notes as of October 31, 2025 with a weighted average fixed coupon rate of 7.86%. The notes payable have scheduled maturities through June 20, 2028, June 20, 2030, January 21, 2031, August 20, 2031, November 20, 2031 and February 20, 2032 and January 22, 2030 and July 20, 2032, but may be repaid earlier, depending upon collections from the underlying auto finance receivables.

Previous wording

In July 2024, the Company also entered into a $150.0 million amortizing warehouse agreement backed by a portion of its finance receivables, which was amended in September 2024 and subsequently repaid with proceeds from the Company’s October 2024 asset-backed securitization. No debt was outstanding under the warehouse loan facility as of July 31, 2025.

Current wording

In July 2024, the Company also entered into a $150.0 million amortizing warehouse agreement backed by a portion of its finance receivables, which was amended in September 2024 and subsequently repaid with proceeds from the Company’s October 2024 asset-backed securitization. The warehouse loan facility was terminated subsequent to this quarter-end.

Previous wording

The Company expects to use cash from operations and other financing sources to (i) pay down the outstanding principal balance of the revolving line of credit as funds are available, (ii) grow its finance receivables portfolio, (iii) purchase fixed assets of approximately $9 million in the next 12 months as we complete facility updates and general fixed asset requirements, (iv) fund dealership acquisitions as opportunities arise on terms acceptable to the Company, and (v) reduce the Company’s remaining debt to the extent excess cash is available.

Current wording

The Company expects to use cash from operations and other financing sources to (i) grow its finance receivables portfolio, (ii) fund dealership acquisitions as opportunities arise on terms acceptable to the Company, and (iii) reduce the Company’s remaining debt to the extent excess cash is available.

Previous wording

The Company has three standby letters of credit relating to insurance policies totaling $4.7 million at July 31, 2025.

Current wording

The Company has three standby letters of credit relating to insurance policies totaling $4.6 million at October 31, 2025.

Previous wording

The Company maintains an allowance for credit losses on an aggregate basis at a level it considers sufficient to cover estimated losses expected to be incurred on the portfolio at the measurement date in the collection of its finance receivables currently outstanding. At July 31, 2025, the weighted average contract term was 48.3 months with 35.7 months remaining. At July 31, 2024, the weighted average total contract term was 48.1 months with 36.1 months remaining. The allowance for credit losses at July 31, 2025, $326.1 million, was 23.35% of the principal balance in finance receivables of $1.5 billion, less unearned accident protection plan revenue of $50.9 million, unearned service contract revenue of $61.3 million, and pending APP claims of $7.0 million. The Company decreased the allowance for credit losses as a percentage of finance receivables from 25.00% at July 31, 2024 to 23.35% at July 31, 2025 and increased it slightly from 23.25% at April 30, 2025.

Current wording

The Company maintains an allowance for credit losses on an aggregate basis at a level it considers sufficient to cover estimated losses expected to be incurred on the portfolio at the measurement date in the collection of its finance receivables currently outstanding. At October 31, 2025, the weighted average contract term was 48.5 months with 35.8 months remaining. At October 31, 2024, the weighted average total contract term was 48.2 months with 35.9 months remaining. The allowance for credit losses at October 31, 2025, $338.8 million, was 24.19% of the principal balance in finance receivables of $1.5 billion, less unearned accident protection plan revenue of $50.3 million, unearned service contract revenue of $59.3 million, and pending APP claims of $5.3 million. The Company decreased the allowance for credit losses as a percentage of finance receivables from 27.42% at October 31, 2024 to 24.19% at October 31, 2025 and increased it from 23.25% at April 30, 2025.