AMERICAS CARMART INC
For the period ended Jan 31, 2026. Filed Mar 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 31, 2026 · Filed Mar 12, 2026
CRMT$1.44-5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-10-31; filed 2025-12-09.
0001628280-25-056054
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-01-31; filed 2026-03-12.
0001628280-26-017369
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 116 current paragraphs.
60 unchanged; 29 reworded; 26 added; 28 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
•the Company's collection results;
Current report
•the availability of capital, including through income from operations, warehouse facilities, term securitization transactions, and other debt or equity financing;
Current report
•the consummation of future financing transactions, including the Company's ability to consummate such transactions;
Current report
•the Company's ability to execute its business plan;
Current report
•remediation of the identified material weakness in internal control over financial reporting; and
Current report
•the Company's ability to consummate debt or equity financing transactions on terms acceptable to the Company;
Current report
•the Company's compliance with financial covenants and other terms of its senior secured term loan, non-recourse notes payable, and any future debt facilities;
Current report
•the Company's ability to successfully remediate the material weakness in internal control over financial reporting and to design, implement, and maintain effective disclosure controls and procedures;
Current report
•the potential dilutive impact of outstanding warrants to purchase the Company's common stock, if exercised, and of any other future issuances of the Company's equity securities; and
Current report
Total revenues decreased $38.9 million, or 12%, for the three months ended January 31, 2026 compared to the same period in the prior year. The decrease was driven primarily by lower retail sales volumes, reflecting management's deliberate decision to operate with more disciplined inventory levels and moderate originations to align sales activity with available funding capacity as part of broader initiatives to reposition and strengthen the Company's capital structure. This deliberate reduction in sales volume, combined with continued affordability pressures impacting customers, resulted in lower sales revenue during the quarter. The decline in total revenues was partially offset by an increase in interest income, and an increase in the weighted average interest rate on outstanding finance receivables to 17.66% compared to 17.51% in the prior year period. In addition, the average retail sales price increased to $20,634 compared to $19,275 in the prior year quarter, providing a modest offset to the reduction in unit volumes.
Current report
Cost of sales as a percentage of sales remained relatively consistent at 64.2% for the three months ended January 31, 2026 compared to 64.3% for the same period of the prior fiscal year, resulting in a gross margin as a percentage of sales of 35.8% for the current year period compared to 35.7% in the prior year period. The stability in gross margin percentage year-over-year reflects disciplined pricing strategies and improved gross profit per retail unit sold, which increased to $7,762 compared to $7,131 in the prior year period. These improvements were partially offset by lower overall sales volumes during the quarter. Overall, margin performance reflects continued focus on inventory management, vehicle sourcing discipline, and retail pricing optimization.
Current report
Selling, general and administrative (“SG&A”) expenses increased to 23.1% of sales for the three months ended January 31, 2026 compared to 17.6% of sales for the same period in the prior fiscal year. In absolute terms, SG&A expenses increased $5.0 million, to $51.5 million from $46.5 million in the prior year quarter. The increase in SG&A as a percentage of sales was primarily driven by lower overall sales volumes during the current quarter, resulting in reduced operating leverage. The year-over-year increase in SG&A expense dollars reflects continued investments in technology and infrastructure, higher compensation and benefit expense associated with strengthening the leadership team, and costs associated with dealership optimization activities. During the quarter, as part of a dealership optimization strategy, the Company closed and consolidated 18 dealership locations with nearby higher performing dealerships, resulting in certain one time impairment and other charges related to these closures.
Current report
Provision for credit losses as a percentage of sales was 47.3% for the three months ended January 31, 2026 compared to 32.9% for the same period in the prior fiscal year. In absolute terms, the provision for credit losses increased $18.5 million, to $105.2 million in the third quarter of fiscal 2026 compared to $86.7 million in the prior-year quarter. The year-over-year increase was primarily driven by higher net charge-offs as a percentage of average finance receivables, which increased to 6.5% compared to 6.1% in the prior-year period, as well as higher reserve requirements which reflect updated expectations of lifetime credit losses based on recent portfolio performance and forward‑looking economic assumptions. The increase also reflects the continued seasoning and maturation of receivables, including those originated from acquired dealerships, as those accounts build loss history. Additionally, macroeconomic factors, including persistent inflationary pressures and continued affordability constraints impacting the Company’s customer base, contributed to elevated credit loss expectations relative to the prior-year quarter.
Current report
Interest expense for the three months ended January 31, 2026 increased to 9.8% of sales compared to 6.4% of sales for the prior-year period. In dollar terms, interest expense increased $4.9 million, to $21.8 million from $16.9 million in the prior-year quarter. The increase in interest expense was primarily driven by higher average outstanding debt balances during the quarter, reflecting the Company’s revised capital structure and the addition of a new term loan facility during fiscal 2026. The increase in interest expense as a percentage of sales was further impacted by lower overall sales volumes.
Current report
Nine Months Ended January 31, 2026 vs. Nine Months Ended January 31, 2025
Current report
Total revenues decreased $42.1 million, or 4.1%, for the nine months ended January 31, 2026 compared to the same period in the prior fiscal year. Sales revenue declined $51.3 million, or 6.1%, primarily due to a 9.4% decrease in retail units sold (37,480 units versus 41,373 units in the prior-year period). The reduction in unit volume reflects management’s ongoing efforts to reposition and strengthen the Company’s capital structure during fiscal 2026 by moderating originations and operating with disciplined inventory levels to align sales activity with available funding capacity. Continued affordability pressures impacting the Company’s customer base also contributed to lower sales volumes during the period. Partially offsetting the decline in unit volumes, the average retail sales price increased to $20,041 compared to $19,531 in the prior-year period, an increase of $510, or 2.6%. In addition, interest income increased
Current report
$9.2 million, or 5.0%, driven by growth in the average finance receivable balance and an increase in the weighted average interest rate on outstanding finance receivables to 17.66% compared to 17.51% in the prior-year period.
Current report
Cost of sales totaled $496.9 million, or 63.3% of sales, compared to $529.2 million, or 63.3% of sales, in the prior-year period. The consistent cost of sales percentage reflects disciplined inventory sourcing and retail pricing strategies, as changes in vehicle acquisition costs were generally reflected in retail pricing. As a result, gross margin as a percentage of sales remained stable year-over-year at 36.7% for the nine months ended January 31, 2026, consistent with 36.7% in the prior-year period. The consistent margin percentage reflects disciplined pricing and inventory management, as changes in vehicle acquisition and related costs were generally reflected in retail pricing throughout the period.
Current report
SG&A expenses increased to 20.4% of sales for the nine months ended January 31, 2026 compared to 16.8% of sales for the same period in the prior fiscal year. In absolute terms, SG&A expenses increased $19.9 million, to $160.5 million from $140.6 million in the prior-year period. The increase in SG&A as a percentage of sales was primarily driven by lower overall sales volumes during fiscal 2026, The year-over-year increase in SG&A expense dollars reflects continued investments in technology and infrastructure, higher compensation and benefit expense associated with strengthening the leadership team in key functional areas, and costs associated with dealership optimization activities during the third quarter of fiscal year 2026.
Current report
Provision for credit losses as a percentage of sales was 41.7% for the nine months ended January 31, 2026 compared to 33.7% for the same period in the prior fiscal year. In absolute terms, the provision for credit losses increased $45.7 million, to $327.3 million compared to $281.6 million in the prior-year period. The increase was primarily driven by higher net charge-offs as a percentage of average finance receivables during fiscal 2026, reflecting portfolio performance trends and continued seasoning of receivables. As receivables mature, particularly those originated during periods of portfolio growth and from acquired dealerships, additional loss history is established, impacting reserve requirements. The increase in provision also reflects macroeconomic factors, including persistent inflationary pressures and continued affordability constraints impacting the Company’s customer base, which contributed to elevated credit loss expectations relative to the prior-year.
Current report
Interest expense for the nine months ended January 31, 2026 increased to 6.9% of sales compared to 6.4% of sales for the same period in the prior fiscal year. In dollar terms, interest expense increased $1.2 million, to $54.5 million from $53.3 million in the prior-year period. The increase in interest expense was primarily driven by higher average outstanding debt balances during fiscal 2026, reflecting the Company’s revised capital structure, including the addition of a term loan facility. The modest increase as a percentage of sales reflects the impact of this higher debt balance, partially offset by lower overall sales volumes during the period.
Current report
During the first nine months of fiscal 2026, inventory decreased by $11.0 million, or 9.8%, compared to April 30, 2025. The decline reflects disciplined inventory management and moderated purchasing activity as the Company aligned vehicle acquisitions with available funding capacity as part of its capital structure repositioning efforts. Annualized inventory turns were approximately 5.4 times for both the current year third quarter and the prior year third quarter. The decrease in inventory turns reflects lower sales volumes during the period as well as management’s deliberate reduction in originations and inventory levels in connection with capital allocation priorities.
Current report
Accounts payable and accrued liabilities decreased by $13.4 million at January 31, 2026 as compared to April 30, 2025, primarily due to payment timing and program changes. The decrease reflects recognition and capitalization during the period of accruals related to enterprise software implementation expenses, a credit card program change resulting in earlier settlement of payables, and purchase accruals consistent with current inventory purchasing and payment activity.
Current report
Deferred revenue decreased by $13.0 million at January 31, 2026 compared to April 30, 2025. The decrease primarily reflects lower retail unit sales during the nine-month period, resulting in reduced amounts collected upfront related to ancillary products such as the accident protection plan and vehicle service contracts. The decline is consistent with moderated originations and lower overall sales activity during fiscal 2026.
Current report
Deferred tax liabilities, net increased $29.9 million to $37.0 million as of January 31, 2026 compared to $7.1 million as of April 30, 2025, driven by the establishment of a $47.0 million non-cash valuation allowance against Colonial's net deferred tax assets. The valuation allowance eliminated the offsetting benefit of Colonial's deferred tax assets against the Company's consolidated deferred tax liabilities, shifting the consolidated balance sheet position from a net deferred tax asset to a net deferred tax liability. This charge is non-cash in nature and has no impact on the Company's current cash tax obligations or its ability to utilize Colonial's net operating loss carryforwards in future periods should sufficient taxable income be generated.
Removed paragraphs (28)
Previous report
•same dealership sales and revenue growth;
Previous report
•customer growth;
Previous report
•business acquisitions;
Previous report
•the benefits of recent changes to the Company's capital structure;
Previous report
•receivables growth as related to revenue growth;
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•performance of new dealerships;
Previous report
•interest rates;
Previous report
•the Company’s collection results, including but not limited to collections during income tax refund periods;
Previous report
•availability of used vehicle financing;
Previous report
•seasonality; and
Previous report
The Company’s credit losses and charge-offs are impacted by market and economic factors, including macro-economic conditions such as inflation in the cost of vehicle insurance, rent, groceries, the price of gasoline, childcare, and other staple items, and overall unemployment levels, as well as the personal income levels of the Company’s customers.
Previous report
(1)Store count was 154 at October 31, 2025; five stores closed subsequent to quarter-end.
Previous report
Total revenues increased $2.9 million, or 0.8%, for the three months ended October 31, 2025 compared to the same period in the prior year. The modest increase reflects a shift in the mix of revenue drivers during the quarter. Sales revenue increased $0.5 million, or 0.2%, as a 1.1% decrease in retail units sold (13,637 units versus 13,784 units in the prior year quarter) was more than offset by a slightly higher average retail sales price of $20,075, compared to $20,031 in the prior year period. The decrease in unit volume was driven by the impacts of the macroeconomic environment, including elevated vehicle prices, as well as lower than normal inventory levels. In addition, management remains focused on balancing consumer affordability to support unit sales as these conditions persist. Higher vehicle acquisition costs also reduced available borrowing capacity during the quarter, resulting in lower inventory levels and modest pressure on sales volumes. Interest income increased $2.4 million, or 3.9%, driven by the growth in average finance receivables and an increase in the weighted average interest rate on outstanding finance receivable to 17.6% up from 17.4% during the same prior year period. This growth in interest income partially offset the impact of lower unit volumes.
Previous report
The cost of sales as a percentage of sales increased to 62.5% for the three months ended October 31, 2025 compared to 60.6% for the same period of the prior fiscal year, resulting in a gross margin as a percentage of sales of 37.5% for the current year period compared to 39.4% for the prior year period. The prior year period included a 290 basis points benefit from the impact of a service contract accounting change in estimate for revenue recognition. Sequentially, gross profit margin as a percentage of sales improved by 90 basis points on similar sales volume. The sequential and year-over-year improvement in gross margin percentage, absent the one-time benefit in the prior year quarter, resulted from stronger wholesale retention, and a reduction in both frequency and severity of repair costs.
Previous report
Selling, general and administrative (SG&A) expenses as a percentage of sales increased to 20.0% for the three months ended October 31, 2025 compared to 16.6% the same period in the prior fiscal year. In absolute terms, SG&A expenses increased by $9.8 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 quarter also includes $3.5 million in one-time expenses primarily related to impairment charges associated with management's decision to close five dealership locations during the current quarter.
Previous report
Provision for credit losses as a percentage of sales was 41.6% for the three months ended October 31, 2025 compared to 34.8% for the same period in the prior fiscal year. In overall dollars, the provision for credit losses increased $19.6 million in the second quarter of fiscal 2026 compared to the same period of the prior fiscal year. The provision for credit loss was $119.1 million compared to $99.5 million in the prior year quarter. The $19.6 million year-over-year increase was primarily driven by the 40-basis point increase in net charge-offs, reserve adjustments reflecting continued maturation of customer receivables originated from acquired dealerships as those receivables build loss history, macroeconomic factors including persistent inflation and uncertainty surrounding the recent government shutdown and potential impacts to government assistance programs in calendar year 2026.
Previous report
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 report
Six Months Ended October 31, 2025 vs. Six Months Ended October 31, 2024
Previous report
(1)Store count was 154 at October 31, 2025; five stores closed subsequent to quarter-end.
Previous report
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 report
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 report
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 report
Provision for credit losses as a percentage of sales was 39.5% for the six months ended October 31, 2025, compared to 34.0% for the same period in the prior fiscal year. In absolute terms, the provision for credit losses increased $27.2 million compared to the prior-year period. The $27.2 million increase is primarily due to continued maturation of customer receivables originated from acquired dealerships as those receivables build loss history, as well as macroeconomic factors including persistent inflation and uncertainty surrounding the recent government shutdown and potential impacts to government assistance programs in calendar year 2026.
Previous report
Interest expense for six months ended October 31, 2025 as a percentage of sales decreased to 5.8% from 6.3% for the prior year period. In dollar terms, interest expense decreased $0.4 million, reflecting improvements in our securitization platform and a more favorable interest rate environment.
Previous report
During the first six months of fiscal 2026, inventory decreased by $7.5 million, or 6.7%, compared to April 30, 2025. Annualized inventory turns increased for the current year quarter at 6.5 versus the prior year second quarter at 6.0. The level of inventory was impacted by capital constraints.
Previous report
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 report
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 report
Deferred income tax liabilities, net, increased approximately $0.6 million at October 31, 2025 as compared to April 30, 2025, primarily because of re-measurement of previously recorded temporary differences.
Reworded paragraphs (29)
Previous wording
•the closing of existing dealerships and new dealership openings;
Current wording
•dealership optimization initiatives and the closing of existing dealerships;
Previous wording
•the availability of credit facilities and access to capital through securitization financings or other sources on terms acceptable to us, and any increase in the cost of capital, to support the Company’s business;
Current wording
•the availability of and access to capital through asset-backed securitization financings, warehouse credit facilities, or other debt or equity financing sources on terms acceptable to the Company, and any increase in the cost of capital, to support the Company’s business;
Previous wording
•the ability to successfully transition customers and inventory from underperforming dealerships to nearby more productive dealerships;
Current wording
•the ability to successfully transition customers and inventory from underperforming dealerships to nearby more productive dealerships as part of the Company's footprint optimization strategy;
Previous wording
•the occurrence and impact of any adverse weather events or other natural disasters affecting the Company’s dealerships or customers; and
Current wording
•the occurrence and impact of any adverse weather events or other natural disasters affecting the Company’s dealerships or customers;
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 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.
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 January 31, 2026, the Company operated 136 dealerships located primarily in small cities throughout the South-Central United States. During the third quarter of fiscal 2026, the Company began implementation of a footprint optimization strategy through which it consolidated eighteen of its dealership locations with nearby higher performing dealerships.
Previous 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%.
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 nine months of fiscal 2026, sales decreased by 6.1% compared to the prior-year period, driven primarily by a 9.4% decline in retail units sold (37,480 units versus 41,373 units), partially offset by a 2.6% increase in the average retail sales price to $20,041. Interest income also rose by 5.0%.
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. 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.
Current wording
The Company has been focused on strengthening its underwriting and 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 nine months ended January 31, 2026 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 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.
Current wording
Over the last five fiscal years, the Company's provision for credit losses as a percentage of sales averaged 28.14%. During fiscal 2025, credit losses were 32.68% as a percentage of sales. For the first nine months of fiscal 2026, the provision for credit losses as a percentage of sales increased to 41.7%, compared to 33.7% 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 January 31, 2026 was 25.53% of finance receivables, net of deferred revenue and pending accident protection plan claims, an increase from 24.31% at January 31, 2025 and an increase from 23.25% at April 30, 2025, resulting in a $24.5 million increase to the allowance for credit losses in the first nine months 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 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.
Current wording
The Company’s credit losses and charge-offs continue to be influenced by broader market and economic conditions, including inflationary pressures on essential consumer expenditures such as vehicle insurance, rent, groceries, gasoline, childcare, and other staple items, as well as overall unemployment levels and the income profiles of its customer base. Notwithstanding these external factors, the Company believes that consistent execution of its established business practices remains the most significant determinant of its long-term credit loss performance. During the first quarter of fiscal 2026, the Company advanced its credit and collections infrastructure through enhancements to its loan origination system (“LOS”), including the deployment of an updated scorecard and embedded risk-based pricing, which are designed to more closely align expected returns with customer risk characteristics. Early indicators reflect a shift in originations toward higher-ranked customers, consistent with the system's intended functionality. The Company also implemented enhancements to its payments platform to facilitate increased utilization of online payment channels and promote more consistent customer payment behavior. Management believes these initiatives will strengthen underwriting discipline, support improved collection effectiveness, and provide a more scalable framework for future growth.
Previous 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.
Current wording
The Company's gross profit margin as a percentage of sales for the first nine months of fiscal 2026 was 36.7% of sales, consistent with 36.7% in the prior year period. The prior year period included a 150-basis point 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 a decrease in the aggregate cost of the vehicles sold 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 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.
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 nine months of fiscal 2026 increased by $21.4 million, or 4.1%, to $544.4 million over the prior year period. The average total collected per active customer per month increased to $582, compared to $563 for the same period in the 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. 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.
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 the 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 third quarter, the Company had implemented the LOS in 127 of its 136 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 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
Gross margin as a percentage of sales is significantly influenced by the average retail sales price of the vehicles the Company sells, which is largely driven by purchase costs and includes the price of ancillary products such as the accident protection plan (“APP”) and 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 pricing to its customers. For the second quarter of fiscal 2026, the average retail sales price, inclusive of ancillary products, was $20,075, an increase of $44.0 compared to the prior-year quarter.
Current wording
Gross margin as a percentage of sales is significantly influenced by the average retail sales price of the vehicles the Company sells, which is largely driven by vehicle acquisition costs and includes the price of ancillary products such as the accident protection plan and vehicle service contract. As vehicle purchase costs increase or decrease, retail pricing typically adjusts accordingly in order to maintain appropriate per-unit profitability while continuing to offer affordable pricing to customers. For the third quarter of fiscal 2026, the average retail sales price, inclusive of ancillary products, was $20,634, an increase of $1,359, or 7.1%, compared to $19,275 in the prior-year quarter. Cost of sales increased proportionally on a per-unit basis, resulting in gross margin as a percentage of sales of 35.8%, compared to 35.7% in the prior-year quarter. The relatively consistent margin percentage reflects disciplined pricing and inventory management, as increases in retail pricing largely corresponded with higher vehicle acquisition and related costs.
Previous wording
Finance receivables, net have decreased by 0.7% compared to April 30, 2025. The modest decline reflects the interaction of lower originations and normal portfolio amortization as well as a higher allowance resulting from the increase in the provision amount. Retail unit sales for six month period decreased 3.4% which reduced new loan originations and resulted in a smaller volume of receivables added to the portfolio. The effects of the lower originations were partially offset by overall term length of loans increases in our installment sale contracts, and improvements made to the underwriting and collections procedures in an effort to improve the quality of the portfolio.
Current wording
Finance receivables, net decreased 5.6% compared to April 30, 2025. The decline reflects lower originations resulting from reduced retail unit sales during the nine-month period, as management aligned sales activity with available funding capacity as part of the Company’s capital structure repositioning efforts, as well as normal portfolio amortization and net charge-offs. Retail unit sales for the nine-month period decreased 9.4%, which reduced new loan originations and resulted in a smaller volume of receivables added to the portfolio. The effects of the lower originations were partially offset by increase in the average overall term length of the Company's installment sale contracts, and improvements made to the underwriting and collections procedures in an effort to improve the quality of the portfolio.
Previous 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.
Current wording
Property and equipment, net, decreased by $7.7 million at January 31, 2026 as compared to April 30, 2025. The Company incurred $1.5 million in expenditures during the nine months ended January 31, 2026 primarily related to remodeling existing locations. These expenditures were offset by $6.3 million in depreciation expense and $2.8 million in impairment expense due to the dealership closures during the nine months ended January 31, 2026.
Previous wording
The Company has non-recourse notes payables (net) in the amount of $635 million and $572 million, for October 31, 2025 and April 30, 2025, respectively for non-recourse notes. The Company borrowed $262 million, net, under a new term loan facility on October 30, 2025. The proceeds from the senior secured term loan were utilized to payoff the outstanding balance of the Company's revolving credit facility, with the remainder of the funds utilized for corporate expenditures. The Company also completed the issuance of asset-backed term funding, on August 28, 2025 for $172 million. See Note F to the Consolidated Financial Statements for further details on the debt facilities.
Current wording
The Company had non-recourse notes payable, net in the amount of $628.3 million and $572.0 million as of January 31, 2026 and April 30, 2025, respectively. During fiscal 2026, the Company completed the issuance of asset-backed term funding in August 2025 for $172.0 million and in December 2025 for $161.3 million. The Company borrowed $261.9 million, net, under a new senior secured term loan facility on October 30, 2025. Approximately $162.9 million of the proceeds from the term loan were utilized to pay off the outstanding balance of the Company’s revolving credit facility, with the remainder of the funds utilized for general corporate purposes. As of January 31, 2026, the outstanding principal balance under the senior secured term loan facility was $300.0 million. See Note F to the Consolidated Financial Statements for further details on the Company's debt facilities.
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, and other potential debt or equity financing sources. At October 31, 2025, the Company had approximately $122.4 million of cash on hand.
Current wording
The Company’s ability to execute its business plan is dependent upon maintaining adequate liquidity and capital resources. The Company’s principal sources of liquidity and capital 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 January 31, 2026, the Company had approximately $117.9 million of cash on hand. The Company has been in negotiations with various financing sources with respect to new asset-back securitizations, warehouse facilities, and other potential debt facilities that would enable the Company to continue to execute on its current business plan. While the Company expects to consummate one or more such financing transactions in 2026, there can be no assurance as to when or if the Company will obtain such financing. Any adverse changes in the Company’s ability to consummate any such potential transactions on terms favorable to the Company would likely have a negative impact on the Company’s liquidity and ability to execute its business plan.
Previous 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.
Current wording
The Company had $628.3 million of asset-backed non-recourse notes as of January 31, 2026 with a weighted average fixed coupon rate of 7.18%. The notes payable have scheduled maturities at various dates from June 20, 2028, through August 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. The warehouse loan facility was terminated subsequent to this quarter-end.
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. This warehouse loan facility was terminated subsequent to the current quarter-end.
Previous wording
The primary drivers of operating profits and cash flows include (i) top line sales (ii) interest income on finance receivables, (iii) gross margin percentages on vehicle sales, and (iv) credit losses, a significant portion of which relates to the collection of principal on finance receivables. Historically, most or all of the cash generated from operations has been used to fund finance receivables growth, capital expenditures, and as applicable, common stock repurchases. To the extent finance receivables growth, capital expenditures and common stock repurchases have exceeded income from operations, the Company has increased borrowings under its revolving credit facilities and secured additional funding through the issuance of asset-backed non-recourse notes.
Current wording
The primary drivers of operating profits and cash flows include (i) top line sales (ii) interest income on finance receivables, (iii) gross margin percentages on vehicle sales, and (iv) credit losses, a significant portion of which relates to the collection of principal on finance receivables. Historically, most or all of the cash generated from operations has been used to fund finance receivables growth, capital expenditures, and as applicable, common stock repurchases. To the extent finance receivables growth, capital expenditures and common stock repurchases have exceeded income from operations, the Company has increased borrowing under its debt facilities and secured additional funding through the issuance of asset-backed non-recourse notes.
Previous wording
Cash flows used in operating activities for the six months ended October 31, 2025 compared to the six months ended October 31, 2024 increased primarily as a result of funding the senior secured note payable.
Current wording
Cash flows used in operating activities for the nine months ended January 31, 2026, decreased compared to the nine months ended January 31, 2025, primarily as a result of improved finance receivable activity and inventory management, partially offset by the net loss for the period.
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’
Current 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. Sustained macro-economic pressures affecting our customers have helped keep demand high in recent years for the types of vehicles the Company purchases. 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. In addition, recently imposed tariffs on the automotive industry have added approximately $560 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. The Company expects that the tight supply of used vehicles, strong used vehicle demand, and market reactions to ongoing tariff uncertainty will continue to keep purchase costs and resulting sales prices elevated in the short term.
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 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.
Current wording
The Company’s liquidity and operating capital 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 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.
Current wording
The Company's cash from operations and liquidity are further impacted by the Company's operating lease commitments. The Company’s business model relies on leasing the majority of the properties where its dealerships are located. As of January 31, 2026, the Company leased approximately 84% of its dealership properties. The $75.1 million of operating lease commitments includes $49.7 million of non-cancelable lease commitments under the lease terms and $25.3 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 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.
Current wording
The Company currently expects to use cash from operations and other financing sources to (i) prioritize the maintenance of efficient operations, (ii) selectively grow its finance receivables portfolio, and (iii) reduce outstanding debt as excess cash permits.
Previous wording
The Company believes it will have adequate liquidity to continue to grow its revenues and to satisfy its capital needs for the foreseeable future through expected financing sources such as additional securitized borrowings, warehouse loan facilities or other debt or equity financing arrangements.
Current wording
The Company believes but cannot assure it will have adequate liquidity to satisfy its capital needs for the foreseeable future through expected financing sources such as additional securitized borrowings, warehouse loan facilities or other debt or equity financing arrangements.
Previous wording
The Company has three standby letters of credit relating to insurance policies totaling $4.6 million at October 31, 2025.
Current wording
The Company has three standby letters of credit relating to insurance policies totaling $8.8 million at January 31, 2026.
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 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.
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 January 31, 2026, the weighted average contract term was 48.8 months with 35.4 months remaining. At January 31, 2025, the weighted average total contract term was 48.3 months with 35.7 months remaining. The allowance for credit losses at January 31, 2026, $347.6 million, was 25.53% of the principal balance in finance receivables of $1.5 billion, less unearned accident protection plan ("APP") revenue of $47.1 million, unearned service contract revenue of $53.1 million, and pending APP claims of $5.4 million. The Company increased the allowance for credit losses as a percentage of finance receivables from 24.31% at January 31, 2025 to 25.53% at January 31, 2026 and increased it from 23.25% at April 30, 2025.
Previous wording
Historically, the Company’s third fiscal quarter (November through January) has been the slowest period for vehicle sales. Conversely, the Company’s first and fourth fiscal quarters (May through July and February through April) have historically been the busiest times for vehicle sales. Therefore, the Company generally realizes a higher proportion of its revenue and operating profit during the first and fourth fiscal quarters. The Company expects this pattern to continue in future years.
Current wording
have historically been the busiest times for vehicle sales. Therefore, the Company generally realizes a higher proportion of its revenue and operating profit during the first and fourth fiscal quarters. The Company expects this pattern to continue in future years.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Historically, the Company’s third fiscal quarter (November through January) has been the slowest period for vehicle sales. Conversely, the Company’s first and fourth fiscal quarters (May through July and February through April)
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
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.