America's Car-Mart, Inc. Q4 FY2026 earnings call

- Capital Structure and Liquidity Actions - FY26 was a transitional year focused on strengthening liquidity and capital structure. Tight origination capacity and lack of a revolving warehouse facility led to intentional reductions in originations and inventory to preserve liquidity, which drove the decline in top-line results, rather than weak underlying demand or credit quality issues. - A three-phase dealership footprint optimization was completed in FY26, resulting in 60 consolidated locations, reducing active store count from 154 to 94. Remaining stores are higher-performing, with historical average units per store ~30% higher than FY25 levels. - A centralized remote collections and servicing team was stood up to service ~8% of total receivables from closed locations without a nearby viable store to absorb accounts, supported by new customer self-service technology and AI-enabled claim processing for service contracts. - In June 2026, the company entered an amendment to its credit and guarantee agreement that provides temporary covenant relief, with a path to permanent relief upon completion of specified strategic milestones. - Total net debt was reduced by $61.5 million YoY, bringing the net debt to finance receivables ratio to 41.8%, its lowest level in three years.

- Portfolio and Credit Quality - The share of highest credit tier customers in the receivables book increased to 66.6% from 64.6% YoY, reflecting ongoing tightening of underwriting and improved portfolio mix. The higher share of quality borrowers explains the slight reduction in average down payment to 6.1% from 6.2% YoY. - The 7.5% Q4 net charge-off ratio (up from 6.9% YoY) is primarily a mechanical effect of a smaller receivables base, plus modest pressure from elevated gas prices and dealership consolidation disruption, not underwriting failure. Adjusting for the smaller base, charge-offs are only modestly higher than last year. - 30+ day delinquency was 4.1% at quarter end, up from 3.4% YoY but down sequentially from 4.4% at the end of Q3, with the sequential improvement reflecting stable underlying credit trends after temporary winter storm and consolidation impacts. - Collections performance remained resilient, with monthly average collections per active customer improving to $617 from $612 YoY, even amid higher fuel prices and cost of living pressure on the company's working household customer base.

- Governance and Leadership - A special committee of independent directors with restructuring experience is leading the ongoing strategic review of financing and strategic alternatives, to identify the option that maximizes stakeholder value. - CFO Jonathan Collins will depart on July 31, 2026, and current SVP of Capital Markets Marie Perchetti will assume the CFO role effective August 1, 2026, with a smooth transition planned given her deep involvement in recent financing work.

- Operational Technology Improvements - Investments were made in digital customer tools, including a company-wide self-service account center that supports remote payments, contract modifications, and self-service service contract claims. AI is used to automate claim review and approval, speeding up processing for customers.

As a used vehicle retailer focused on integrated sales and consumer auto financing, America's Car-Mart reports the following aggregate performance (no separate product segment breakdown provided in the transcript): - Q4 FY26 total revenue: $302.8 million, down 18.2% year-over-year (YoY) - Q4 FY26 unit sales: 11,411 units, down 27.1% YoY - Q4 FY26 gross profit margin: 31.2%, down from 36.4% YoY - Full year FY26 gross profit margin: 35.4%, with gross profit per unit up 1% YoY to $7,442 - Q4 FY26 SG&A: $47.6 million (19.6% of sales), compared to $48.3 million (15.6% of sales) YoY; adjusted SG&A (excluding restructuring charges) was $43.6 million (18% of sales) - Q4 FY26 $6.4 million non-cash impairment on closed locations; full year FY26 impairment totaled $11 million - Full year FY26 total collections: $730 million, up 2.2% YoY; cash collected as a percentage of average finance receivables improved 12 bps YoY - Q4 FY26 collections: $185.7 million, down only 2.8% YoY even as total finance receivables fell 6.4% YoY - As of April 30 2026, finance receivables balance: ~$1.31 billion (net); allowance for credit losses: $329.9 million (25.15% of net finance receivables, adjusted for deferred revenue and pending claims) - As of April 30 2026: 60% of total receivables are securitized; total unrestricted cash: $47 million; total net debt: $590.7 million, down 9.4% YoY

No specific quantitative financial guidance for future periods was provided in the call. Management confirmed the strategic review process is proceeding according to the timeline laid out in the June 2026 credit amendment, and will provide updates once a definitive strategic or financing outcome is finalized. Management reaffirmed the long-term attractiveness of the industry outlook, based on durable demand for affordable used vehicle financing among working households.

- The company faces ongoing material liquidity constraints due to a lack of available origination financing (no active revolving warehouse facility), which limits its ability to originate loans at the volume demanded by customers, and requires continued constrained originations and lean operations until a long-term financing solution is secured. - A going concern disclosure is included in the FY26 Form 10-K, due to the fact the company has not yet secured the additional financing or alternative transaction needed to resolve its liquidity constraint, not due to changes in customer payment behavior or underlying portfolio quality. - The company's working household customer base is sensitive to energy price and cost of living increases, which can create modest downward pressure on collection performance and charge-off rates. - The store consolidation process created temporary disruption to account servicing and collections, and the performance of the new centralized remote servicing model is still early stage and unproven over the long term. - Most securitized receivable collections are currently routed directly to securitization trusts to pay down non-recourse notes, rather than providing operating cash flow for the business, until residuals release back to the company over the next 15 months as the securitizations amortize.

No question and answer session was held during this call. Management noted the ongoing strategic review is incomplete, and directed all follow-up inquiries to the company's investor relations team via contact information posted on their investor relations website.