Earnings call transcript: Americas Car-Mart Q1 2026 misses EPS forecast

Americas Car-Mart Inc. (CRMT) reported its fiscal first-quarter 2026 results, revealing a significant miss in earnings expectations. The company posted an earnings per share (EPS) of -$0.69, far below the forecasted $0.83, marking a surprise of -183.13%. Revenue also fell short at $341.3 million compared to the expected $359.21 million, a 4.99% shortfall. Following the earnings announcement, the stock plummeted 20.88% in pre-market trading, reflecting investor disappointment. According to InvestingPro data, the company maintains a market capitalization of $289.88 million, with two analysts recently revising their earnings estimates upward for the upcoming period.

Key Takeaways

• EPS of -$0.69 missed expectations by a wide margin.
• Revenue decreased by 1.9% year-over-year to $341.3 million.
• Stock dropped 20.88% in pre-market trading.
• Gross margin improved to 36.6%.
• Retail units sold declined by 5.7%.

Company Performance

Americas Car-Mart’s performance in the first quarter of fiscal 2026 was marked by a decline in both revenue and retail units sold. Despite a challenging market environment, the company managed to expand its gross margin to 36.6%, a 160 basis point increase. However, the decrease in revenue and sales volume indicates potential challenges in maintaining market share amid rising procurement costs and competitive pressures.

Financial Highlights

• Revenue: $341.3 million, down 1.9% year-over-year.
• Earnings per share: -$0.69, a significant miss from the forecasted $0.83.
• Gross margin: 36.6%, up 160 basis points.
• Interest income: Increased by 7.5%.
• Operating expenses: Rose by 10.1% to $51.4 million.

Earnings vs. Forecast

The company reported an EPS of -$0.69 against a forecast of $0.83, resulting in a negative surprise of 183.13%. Revenue also missed expectations, coming in at $341.3 million compared to the forecast of $359.21 million. This significant miss highlights the challenges Americas Car-Mart faces in aligning its financial performance with market expectations.

Market Reaction

Following the earnings release, Americas Car-Mart’s stock experienced a sharp decline, falling 20.88% in pre-market trading. The stock price dropped to $37.25 from its last close of $44.65, approaching its 52-week low of $34.02. This reaction reflects investor concerns over the company’s ability to meet financial targets amid a challenging economic landscape. InvestingPro analysis suggests the stock is currently undervalued, with a beta of 1.32 indicating higher volatility than the broader market. For deeper insights into valuation opportunities, investors can access comprehensive Pro Research Reports covering over 1,400 US stocks through InvestingPro.

Outlook & Guidance

Looking ahead, Americas Car-Mart is focusing on quality growth and affordability. The company is exploring alternative financing solutions to enhance capacity and address consumer demand. Despite the current challenges, the company maintains a positive long-term outlook, with projected EPS growth in the coming quarters and years. InvestingPro data reveals the company operates with a significant debt burden, showing a debt-to-equity ratio of 1.48, though its liquid assets exceed short-term obligations. The platform offers additional valuable insights through its ProTips, with 5 more exclusive tips available to subscribers.

Executive Commentary

CEO Doug Campbell stated, "When things tighten and other people tighten, consumers come to us from the top," highlighting the company’s resilience in attracting customers during economic downturns. COO Jamie Fisher noted, "Our consumer base is always in a spot of being challenged with what’s happening in the macro environment," emphasizing the ongoing challenges faced by their customer demographic. CFO Jonathan Collins added, "We are actively exploring alternative financing solutions to address these constraints and unlock additional capacity to serve our qualified customer demand."

Risks and Challenges

• Rising procurement costs due to tariffs, increasing $500 per unit.
• Declining retail units sold, down 5.7%.
• Increased operating expenses by 10.1%.
• Potential seasonality and pricing decline in the second half of the year.
• Macroeconomic pressures impacting consumer purchasing power.

Q&A

During the earnings call, analysts inquired about the stabilization of procurement costs and improvements in credit quality. Executives addressed concerns regarding consumer health and delinquency rates, as well as potential constraints in capital structure and inventory financing. These discussions highlighted the company’s strategic focus on managing costs and enhancing customer credit profiles.

Full transcript - Americas Car-Mart Inc (CRMT) Q1 2026:

Conference Operator: Good morning, and welcome to America’s Car Mart’s First Quarter Fiscal Year twenty twenty six Earnings Conference Call for the period ending 07/31/2025. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Jonathan Collins, Chief Financial Officer.

Jonathan, please go ahead.

Jonathan Collins, Chief Financial Officer, America’s Car Mart: Good morning. I’m Jonathan Collins, the company’s Chief Financial Officer. Welcome to America’s Car Mart’s first quarter fiscal year twenty twenty six earnings call for the period ending 07/31/2025. Joining me on the call today is Doug Campbell, our company’s President and CEO and Jamie Fisher, our COO. We issued our earnings release earlier this morning, and the supplemental materials are on our website.

We will post the transcript of our prepared remarks following this call, and the Q and A session will be available through the webcast. During today’s call, certain statements we make may be considered forward looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management’s present view. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate nor does it undertake any obligation to update such forward looking statements. For more information, including important cautionary notes, please see Part one of the company’s annual report on Form 10 ks for the fiscal year ended 04/30/2025, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms eight ks and 10 Q.

As a note, the comparisons that we will cover will be for the 2026 versus the 2025, unless otherwise noted. Doug, I’ll turn it over to you now.

Doug Campbell, President and CEO, America’s Car Mart: Thanks, Jonathan, and good morning, everyone. As outlined in our release this morning, the quarter reflects steady progress on the fundamentals we control. Gross margin expanded to 36.6%, interest income increased 7.5%, and total collections rose by 6.2%, while we stayed disciplined on volume to protect returns and affordability. Demand remained solid. Credit applications were up about 10% year over year.

The website traffic was flat year over year, but we are seeing a higher conversion rate from consumers completing applications, indicating there’s a higher level of intent. This dynamic really started to play out in July and has continued since. I’ll allow Jamie to provide more color on this in a moment. Although demand was solid, we paced volume as tariffs and wholesale pricing created temporary constraints. We saw a knock on effect from tariffs, which drove a $500 per unit increase in the procurement costs during the quarter.

This is incremental to the $300 I called out last quarter, but the increases we are seeing have since smoothed out. This has ultimately put downward pressure on the inventory capacity under our current capital facility. We’re actively evaluating actions to expand that capacity, so it’s not a limiting factor to sales going forward. There are a few themes driving the momentum we’re seeing on some of the aforementioned items. First, underwriting and pricing quality.

With LOS V2 now live across our entire footprint, embedded risk based pricing is now better aligning expected returns with customer profiles. The new scorecard is delivering exactly what we designed it to do, shifting mix towards our highest ranked customers and away from the lowest tiers. During the quarter, 15% more of our volume came from ranks five through seven, while bookings in some of our lowest ranks were reduced by nearly 50%. This higher quality mix historically drives lower loss frequency and severity, faster breakeven, stronger returns on invested capital, and lower downstream costs, all of which improve expected unit economics over the life of the loan. As a result, we expect originations from the quarter to generate stronger returns even on lower overall volumes, given the concentration of customers with stronger credit profiles and better unit economics.

Second, payment experience and portfolio health. Our upgraded Pay Your Way platform is resonating with our consumers. Since the late June launch, we’ve already seen a shift from in store to online payments, and recurring payment enrollments have nearly doubled, enhancing the convenience for our customers and supporting a more consistent payment behavior and collections efficiency. Both LOS V2 and Pay Your Way were originally scheduled to be implemented throughout the fiscal year. We pulled these initiatives forward, which will enable us to unlock SG and A savings.

I’ll have Jonathan expand upon in a minute. Third, capital efficiency and funding. We continue to strengthen our securitization platform. On August 29, we closed our twenty twenty five-three seconduritization, dollars 172,000,000 issuance at an overall weighted average coupon of 5.46%, an 81 basis point improvement when compared to our May 2025 deal and our fourth consecutive improvement in the overall weighted average coupon. Since our twenty twenty four-one issuance, the team has improved on the overall coupon by over 400 basis points, 75% of which is related to tightening the spreads.

Strong capital markets receptivity to our new collections platform is paving the way for more incremental reductions in the cost of our capital and lowering financing costs associated with our securitization platform. At this point, I’d like to turn the call over to Jamie to review our operational performance for the quarter. Jamie?

Jamie Fisher, Chief Operating Officer, America’s Car Mart: Thanks, Doug, and good morning, everyone. Total revenue for the quarter was $341,300,000 a decrease of 1.9% from the prior year, primarily resulting from fewer retail units sold. This was partially offset by a 7.5% increase in interest income, supported by a larger portfolio and more payments collected year over year. Growth in the receivables base reflects disciplined originations as well as the benefit of our expanding footprint from acquisition locations. As highlighted on our last call, wholesale pricing pressures began to emerge late in the prior quarter.

That trend continued into Q1 with procurement costs rising an incremental $500 per unit. At the same time, we were deliberately focused on quality vehicles and a stronger mix to better serve the needs of our higher rank customers. The combination of these two factors created additional strain on our ability to expand sales volumes. And as a result, volumes declined 5.7% to 13,568 units compared to 14,391 units a year ago. The average selling price of vehicles, excluding ancillary products, decreased by $144 year over year, reflecting that much of the inventory sold in the quarter had been acquired before the most recent procurement cost increases.

We also realized margin benefits from the ancillary product price increases taken in Q3 of last fiscal year, which continue to flow through as favorable year over year variance. Combined with strong attachment rates and disciplined vehicle pricing, these actions contributed to gross margin improvement to 36.6, a 160 basis point increase over the prior year quarter. Gross margin also benefited from improved wholesale retention as well as favorable trends in post sale vehicle repairs, both in frequency and severity. Looking ahead, we expect average selling prices, excluding ancillary products, to have a positive effect on revenue, and the company will remain disciplined on its approach to gross margin rate. Turning to demand, as Doug previously mentioned, credit applications were up 10% year over year for the quarter, underscoring the strength of customer need for our offering.

We saw a sharp uptick in July with a 26.5% increase in applications year over year. That growth spanned all customer ranks, from our strongest profiles to those with more challenged credit, with an overall average FICO score slightly up from prior year averages and was driven by strategic marketing and customer outreach strategies. The month of August maintained that same level of elevated application flow, and we are pleased to see September has started just as strong. As we’ve said before, when the macro environment tightens and traditional credit access becomes more constrained, our business is positioned to grow. The past sixty days have been a positive indication of that dynamic.

Because of the aforementioned surge in applications and constraints on inventory available for sale, our LOS V2 played a critical role in actively steering our field teams toward booking the best ranked customers. As a result, we ensured that the vehicles we did have were placed into the healthiest parts of the portfolio. I’ll now turn it over to Jonathan to cover the remainder of our results.

Jonathan Collins, Chief Financial Officer, America’s Car Mart: Thank you, Jamie. Operating expenses for SG and A totaled $51,400,000 a 10.1% increase from $46,700,000 in the prior year. Roughly two thirds of this increase was related to payroll growth, including strategic hires in areas like finance and accounting, and one third was driven by technology investments such as the rollout of LOS V2 and Pay Your Way. We expect to unwind approximately half of total SG and A growth in the back half of the year. Notably, the implementation of the upgraded Pay Your Way technology is expected to guide a shift towards a more modernized collections infrastructure, which will deliver approximately 5% annual cost savings over time.

These efforts are expected to drive SG and A efficiency, improve operational performance and move us closer to our target of mid-sixteen percent SG and A as a percentage of retail sales. On the collections side, performance remained robust with total collections rising 6.2% to $183,600,000 This improvement highlights the effectiveness of the PayYourWay platform and the expanding adoption of digital payment channels, resulting in a higher average collection per active customer, dollars $5.85 this quarter compared to $562 in the same period last year. The strength in collections underscores the quality of the portfolio and the success of recent operational enhancements. On the credit side, net charge offs as a percentage of average finance receivables rose slightly to 6.6% from 6.4% last year. Approximately 50% of this increase was due to softer sales, which muted the growth in the denominator and 50% due to higher loss frequency and some severity in legacy pools, which affected the numerator.

Delinquencies greater than thirty days or 3.8% at the end of the quarter, representing a 30 basis point increase. Our allowance for credit losses improved to 23.35% compared to 25% at 07/31/2024. Sequentially, the allowance increased slightly from 23.25% at 04/30/2025, resulting in a $3,000,000 increase to the allowance, which was driven equally by portfolio growth as well as by the frequency and severity of loss. Our portfolio quality continues to strengthen with nearly 72% of the portfolio dollars originated under enhanced underwriting standards and our top three customer ranks increasing by seven ninety basis points during the quarter versus fiscal twenty twenty five average. The average originating term for new contracts was forty four point nine months, up zero point six months from last year.

And our weighted average total contract term for the portfolio stood at forty eight point three months, a modest increase of zero point two months compared to last year. The weighted average age was twelve point six months, a 5% improvement over the prior year’s quarter. Importantly, our active customer account grew by 1.4% to almost 104,700 customers, reflecting the resilience and ongoing strength of our portfolio. Debt to finance receivables and debt net of cash to finance receivables were 51.143.1%, respectively, both improved from last year. Interest expense decreased by 6.9% to $17,000,000 as we continue to benefit from the improvement in our securitization platform.

During the quarter, we successfully completed a $216,000,000 term securitization at a weighted average interest rate of 6.27%. After the quarter ended, we also finalized our twenty twenty five-three seconduritization, raising $172,000,000 at a weighted average interest rate of 5.46%. While there is still room for further improvement, we are encouraged by the progress our platform has made so far. Market interest in our securitizations remains high, with the Class A notes almost eight times oversubscribed and the Class B notes nearly 16 times oversubscribed on our most recent transaction. Strong demand, combined with favorable operating performance within our portfolio, has significantly improved the pricing of our notes.

Notably, our most recent transaction marks the fourth consecutive improvement in our overall weighted average coupon, and we have reduced our weighted average spread by three zero eight basis points since our twenty twenty four-one transaction. In our last transaction, 21 out of 26 investors who had previously participated in our securitization chose to invest again, which demonstrates the continued confidence they have in our platform. As Doug highlighted earlier, I’m also very encouraged by the impact that our upgraded Pay Your Way platform and our broader collections modernization will have on our ABS platform and future cost of capital, as enhanced payment consistency and less of a reliance on field operations should support a stronger outlook from our rating agencies and unlock more favorable terms on upcoming securitizations. I’d also like to address several important operational disclosures. First, as previously communicated, our annual report on Form 10 ks was filed after a brief delay.

The delay was related to the prior adoption of enhanced contract modification disclosures. These disclosures provide additional detail on the frequency and nature of modifications, their impact on our portfolio performance and our approach to managing risk in this area. We believe these enhanced disclosures will provide greater transparency and help investors better understand the dynamics of our receivables and credit performance. Further, we have taken significant steps to remediate the associated material weakness, including enhanced oversight, additional training and the implementation of new review procedures. We are committed to maintaining strong controls and transparency, and we will continue to update stakeholders on our progress.

Second, I want to highlight the capital constraint impacting our working capital and inventory management. Currently, we face both a low advance rate of 30% and a cap of $30,000,000 on our inventory advances under our revolving credit facility. While these limits have existed in the past, the significant rise in vehicle prices since COVID has amplified their impact, putting ongoing pressure on our ability to expand retail sales and manage working capital efficiently. We are actively exploring alternative financing solutions to address these constraints and unlock additional capacity to serve our qualified customer demand. Looking ahead, our focus remains on disciplined execution, portfolio quality and capital efficiency.

The successful rollout of LOS V2 and risk based pricing is already driving measurable improvements in deal quality and cash flow predictability. As we continue to diversify our funding sources and optimize our balance sheet, I’m confident that we are well positioned to support both near term performance and long term growth. Finally, I want to thank our finance and operations teams for their commitment and agility in a dynamic environment. Their dedication is critical to our success. With that, I’ll turn the call back over to Doug for closing remarks before we move to Q and A.

Doug Campbell, President and CEO, America’s Car Mart: Thank you, Jonathan. To summarize, this quarter we kept our focus on the fundamentals we control. We expanded gross margin, increased interest income and improved collections while being disciplined on volume as tariffs and wholesale pricing temporary pressurized inventory capacity under our current facility. LOS V2 and the new scorecard are doing the work we intended, shifting mix towards our highest ranked customers under better pricing structures powered by risk based pricing. And Pay Your Way is an upgrade that’s laying the groundwork for more consistent payment behavior, operational efficiency and a lower cost of capital.

Looking ahead, our priorities are clear: quality, growth with affordability serving more customers and protecting returns payment and collections modernization continuing to scale digital adoption and third, our capital structure and capacity evaluating actions to expand inventory capacity so demand, not financing mechanics, determines our sales trajectory. I’m proud of the team’s execution and grateful to our associates who are keeping our customers on the road every day. Operator, let’s open the line for questions. Thank you.

Conference Operator: Thank you. Our first question is going to come from the line of Kyle Joseph with Stephens. Your line is open. Please go ahead.

Kyle Joseph, Analyst, Stephens: Hey, good morning guys. Thanks for taking my questions. Just on the unit volume decline, I know you guys talked about applications being really strong particularly in July. But Doug, I think you highlighted some increased procurement costs in the quarter. Just wondering what you’ve seen kind of subsequent to the quarter end in terms of procurement costs.

And I recognize that you guys are doing what you can in terms of financing solutions in order to manage working capital as well.

Doug Campbell, President and CEO, America’s Car Mart: Yes. Thanks for the question. Good morning. How are doing? So I think subsequent to the quarter, we’ve seen the pricing smooth out.

It’s been sort of in that same exact range. In fact, it’s come down a couple of bucks, but that’s nominal. And on a positive note, we’ve seen the same sort of demand we saw in July sort of flow through August. And as Jamie mentioned, September is off to a great start. I think this sort of goes towards we speak about our business where when things tighten and other people tighten, consumers come to us from the top.

And we’ve certainly seen that based on the overall volume of applications and the quality applications coming to us.

Kyle Joseph, Analyst, Stephens: Got it. And then shifting to credit, appreciate that the new loans under the new LOS are over 70% of the portfolio. But as that back book wanes, you kind of expect some credit tailwinds, but we’ve seen increases in DQs and NCOs. So appreciate the color you gave on charge offs in terms of frequency and severity and portfolio size. But just given DQs are up, give us your sense for how quickly you would expect that to stabilize with the new LOS systems?

Doug Campbell, President and CEO, America’s Car Mart: Yes. The portfolio is weighted with mostly this new underwriting in place. And so I would expect like now we sort of have like our normal cadence and normal seasonality as it relates to NCOs. And we would typically see a couple of basis points change as we sort of go in and through the year. So to me, this is just sort of more normal.

Over the last several quarters, we’ve obviously experienced the benefit of LOS sort of building the portfolio up. Now it represents a majority of the portfolio. And I think we should expect sort of the normal seasonal fluctuations within MCOs. And certainly, where we’re at today is well within our operating range.

Kyle Joseph, Analyst, Stephens: Got it. Last question probably Jonathan. But just on the G and A was up in the quarter. It sounds like there’s a pull forward of investments, but just kind of expectations for the cadence of G and A. It sounds like should the second quarter be kind of in line with the first quarter and then we really start to see some of the benefits of the investments you’ve been making?

Is that kind of the right cadence of expenses?

Jonathan Collins, Chief Financial Officer, America’s Car Mart: Yes. Hi, Kyle. Good morning. Yes, that’s right. I think in the second half, we’ll see roughly half of the increase from this quarter unwind, as we start to kind of finish the implementation of some of the technologies that we’ve pulled forward.

I think there’s also a broader story around some of the technologies that we’re rolling out, we’ll modernize, for example, Payer Way, that’ll modernize our collections infrastructure. That’ll generate an additional tailwind. And we put that about 5% of SG and A cost. And as we continue to roll out the system and test the system, we should start seeing that benefit in the next fiscal year. And then finally, all of those pieces combined will help us get towards our ultimate goal, which is about mid-sixteen percent SG and A as a percentage of sales.

Kyle Joseph, Analyst, Stephens: Got it. That’s it for me. Thanks for taking my questions.

Conference Operator: Thank you. Our next question is going to come from the line of John Hecht with Jefferies. Your line is open. Please go ahead.

John Hecht, Analyst, Jefferies: Hey, guys. Thanks very much for taking my questions. Some of it’s related to what Kyle was just asking. But the temporary impacts from tariffs, do we look at this as just sort of a onetime step function change in inventory pricing? Or will this just be a spike up and then the costs will go down?

I guess the just question is what are your are you guys anticipating in terms of used car pricing? I mean, and like the call it the duration of how long that will affect the system?

Doug Campbell, President and CEO, America’s Car Mart: Sure. Good morning. How are you? I would say that the wholesale pricing, obviously, post tax season, we should have had some sort of normal seasonality fall in pricing. We didn’t experience that.

I think the industry is contending with what is today represents a 5% or 6% increase relative to the prior year. I would expect that through the balance of the year, now that the effects of tariffs are sort of known, that we get some seasonality and pricing decline in the back half, all other things being equal, if we procure the same asset, etcetera. So this is really just a period of sort of managing through what that is today. But it does sort of lend itself to this other question around our capital structure with, which we highlighted there. And really, I’ll let Jonathan sort of unpack a little bit about how we think about that and how we can leverage and create opportunity there.

Jonathan Collins, Chief Financial Officer, America’s Car Mart: Yes. If I just unpack, we currently as you’re aware, John, we have a revolving line of credit. We manage that we leverage that to manage our working capital. But really the way we think about it is from a seasoning of AR and timing of entering into the ABS market. And if I just unpack that logic a little bit, we have two components within our ABL, one is an inventory borrowing base, the other one is an AR borrowing base.

And I shared some metrics in the prepared remarks, 30% advance rate and $30,000,000 cap. That doesn’t cover our full inventory. And to the degree that we see continued pressure on pricing, that chews up the desired cushion that we would want to have in the ABL that allows us to season our receivables, which in turn allows us to go into the ABS market, achieve better rates, achieve better structures, etcetera. So, what we’re trying to do during the quarter is really just navigate that and what we’re laser focused on is a financial solution to unlock capacity there.

John Hecht, Analyst, Jefferies: Okay. And then follow-up question, it’s very helpful by the way. Thank you very much. Follow-up question is the excuse me, the sorry, my phone was cutting out. You guys there’s still very high demand from the consumer, but I guess it’s tough to complete the transactions given supply constraints and macro factors and so forth.

I guess you guys are positioning yourself to be very like resourced and strong during a recovery period. So what factors should we look for in terms of like seeing green shoots maybe for the dissipation of some of these headwinds?

Doug Campbell, President and CEO, America’s Car Mart: Sure. I think with the release of LOS V2, which went live on May 8, that’s like our second iteration for the LOS. So if you go back in time, you remember when we first launched LOS, it was around deal structures on our customer ranks one through four and tightening the credit box. The second iteration is more about identifying and properly identifying risk, more accurately identifying risk and with more granularity than we’ve had in the past. LOS V2 has a new scorecard embedded.

And so I would expect us to continue to sort of continue to get favorability. My hope would be that similar to what we had in terms of a step change in the credit quality that we’ve had over the last year and a half, that it’s another step in that right direction. As an example, if you look year over year from Q1 twenty twenty five to Q1 twenty twenty six, the average FICO score change was about 20 points in origination quarter over quarter. And you can see that distribution, There was a new chart we included in the presentation in our supplemental slide pack that shows us more heavily weighting these five to seven rank customers. And typically, we talked about the volume of applications that Jamie mentioned earlier.

We’re really pleased with what we’re seeing there. It’s really important given that we’re seeing more growth at the top of the funnel and equal growth at the bottom, but more growth with these better qualified customers that we maintain the asset quality. Not going to be able to capitalize on that opportunity unless we have the right asset to match what the consumers’ needs are.

John Hecht, Analyst, Jefferies: All right, great. I’ll get back in queue. Thank you, guys.

Doug Campbell, President and CEO, America’s Car Mart: Thank you.

Conference Operator: Thank you. And I’m showing no further questions on the phone lines and you guys can move to your Q and A queue from the web questions.

Doug Campbell, President and CEO, America’s Car Mart: Thank you. We do have a couple of questions. One is related to the deal structures that rolled out with LOS V2. So what we did on deal structures with LOS V2, we took our seven rank consumers, they’re getting a slight rate break and a slight down payment break. So you can see overall average down payments came down a little bit during the quarter in the aggregate.

That is because we gave the most flexibility to these customers who present the least amount of risk. If I look at sort of the bottom two or three ranks of customers, they actually put 13% more down on average. They had $2,000 less financed. They had overall higher average originating rates because our one and two rent customers saw two hundred and one hundred basis point increases in the originating rates. And those terms that we originated for those consumers were four months shorter.

So the return profile on those consumers are going to be much stronger. That does not show up in the distribution of how those consumers appeared in the chart. That’s the risk based pricing factor on top of that. And so that’s obviously going to drive more positive returns. There’s another question here on consumer health.

How would you characterize the existing health of the consumer? Jamie, if you want to take that one.

Jamie Fisher, Chief Operating Officer, America’s Car Mart: Yes, I’ll take that one. I’d certainly say when credit tightens, people come to us, and we are the place where credit challenge is the landing spot for our credit challenged customers. And as we’ve seen that demand increase, I think it’s an indication that our consumer base is strained. However, it’s generally our mission, keeping our customers on the road. I think our customer base is always in a spot of being challenged with what’s happening in the macro environment.

And so that’s part of the reason why we pulled our LOS V2 forward, was our ability to not only tighten

Doug Campbell, President and CEO, America’s Car Mart: on

Jamie Fisher, Chief Operating Officer, America’s Car Mart: the bottom end, but be able to attract more of those higher customers with a stronger credit profile in the tightened environment externally. What also gives us comfort is that although they are probably more constrained today than they were a year ago, our structures with the rollout of LOS, our structures are much better today than they were a year ago. With, as Jonathan mentioned, 72 of the portfolio now made up of LOS, tighter underwritten customers.

Doug Campbell, President and CEO, America’s Car Mart: Cool. There’s another one here. The thirty day delinquencies were up 30 basis points. Is that a sign that the consumer is strained? Listen, I think, as Jamie mentioned, our consumer base is always strained.

That’s sort of our specialty. But it is a leading indicator on how we think about delinquencies. When I think about maybe the impact that happened during the quarter, take first a moment and consider the fact that we did roll out our new payment system. And so that did a couple of things. Like any technology, it sort of had its first bumps over the first couple of weeks.

But more importantly, there were a certain subset of customers who had automatic recurring payments structured and set up. To the extent that like they need to reenroll in our new system, that obviously would cause some timing delays there. And so we certainly had our challenges getting them reenrolled, but that happened in very, very short order. And we highlighted in the release there that not only did we get that cured, we actually now have doubled the amount of customers enrolled in recurring payments. And so that is going to be a key unlock for how we manage and how much work it takes to manage the portfolio.

I’d add sort of since then, delinquencies have come back into sort of a more daily normalized range of between three point four percent and three point six percent. We actually ended August at 2.8%. So we feel really good about where that sits both from a recency and thirty day delinquency standpoint. And that thirty day delinquency measurement is a point in time. So there is a little bit of to unpack there.

So I appreciate the question. I don’t think we have anything more in the queue. Yes. Don’t think we have anything more in the queue. Anything else?

Conference Operator: No. All

Doug Campbell, President and CEO, America’s Car Mart: right. Again, I want to thank all of our associates for their hard work during the quarter. Thank you to our shareholders and Board for their support and to the field. Our customers are always counting on you. Let’s get after it in the quarter.

Thank you very much, and thank you for joining the call and believing in America’s Car Mart.

Conference Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

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