Q2 2026 America's Car-Mart Inc Earnings Call

December 4, 2025

Jonathan Collins: Good morning. I'm Jonathan Collins, the company's Chief Financial Officer. Welcome to America's Car-Mart's Second Quarter Fiscal Year 2026 Earnings Call for the period ending 31 October 2025. Joining me on the call today is Doug Campbell, our President and CEO, and Jamie Fischer, our COO. We issued our earnings release earlier this morning, and a supplemental presentation is on our website. We will post the transcript of our prepared remarks following this call, and the Q&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.

We will post the transcript of our prepared remarks following this call, and the Q&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.

Jonathan Collins: 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 1 of the company's annual report on Form 10-K for the fiscal year ended 30 April 2025, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. As a note, the comparisons that we will make today will be Q2 of fiscal 2026 versus Q2 of fiscal 2025, unless otherwise stated, and we will make several references to our supplemental materials posted on our website. Doug, I'll turn it over to you now.

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 1 of the company's annual report on Form 10-K for the fiscal year ended 30 April 2025, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q.

As a note, the comparisons that we will make today will be Q2 of fiscal 2026 versus Q2 of fiscal 2025, unless otherwise stated, and we will make several references to our supplemental materials posted on our website. Doug, I'll turn it over to you now.

Doug Campbell: Thank you, Jonathan, and thank you, everyone, for your interest in America's Car-Mart and for joining to hear more about our quarterly results. Let me start by addressing what's in the numbers and what the numbers don't fully capture. Our reported results reflect a net loss of $22.5 million, which includes approximately $20 million in non-cash reserve adjustments and one-time charges related to the strategic actions we're taking to reposition this business. More details are on page four in the supplemental presentation on this. These are deliberate investments in our future, and the underlying trends in our business are moving in the right direction. Let me highlight several developments from the quarter that are notable. First, consumer demand remains strong. Credit applications grew substantially year over year, clear evidence that despite economic uncertainty, the need for affordable, reliable transportation is robust, and Car-Mart remains a trusted solution for working families.

More details are on page four in the supplemental presentation on this. These are deliberate investments in our future, and the underlying trends in our business are moving in the right direction. Let me highlight several developments from the quarter that are notable. First, consumer demand remains strong. Credit applications grew substantially year over year, clear evidence that despite economic uncertainty, the need for affordable, reliable transportation is robust, and Car-Mart remains a trusted solution for working families.

Doug Campbell: The effects in the broader wholesale market have subsided since the update in Q1, and while elevated relative to prior year, continue to decline in alignment with what we would see seasonally. In October, we closed a transformative $300 million term loan that removes the capital constraints that have limited our flexibility we referenced last quarter. For example, under our legacy structure, certain covenants limited actions tied to optimizing our store footprint and organizational structure. Now, with more flexibility, we're moving more decisively on a multi-phase plan to optimize our footprint, cost structure, and strengthen capital efficiency. These aren't hypothetical savings. We've already executed on phase one in early November, which included the consolidation of five underperforming stores and the elimination of approximately 10% of our headcount as a company.

The effects in the broader wholesale market have subsided since the update in Q1, and while elevated relative to prior year, continue to decline in alignment with what we would see seasonally. In October, we closed a transformative $300 million term loan that removes the capital constraints that have limited our flexibility we referenced last quarter. For example, under our legacy structure, certain covenants limited actions tied to optimizing our store footprint and organizational structure.

Now, with more flexibility, we're moving more decisively on a multi-phase plan to optimize our footprint, cost structure, and strengthen capital efficiency. These aren't hypothetical savings. We've already executed on phase one in early November, which included the consolidation of five underperforming stores and the elimination of approximately 10% of our headcount as a company.

Doug Campbell: The second phase will be completed in Q3, and when combined, the results generate more than $20 million in annualized SG&A savings. Between these two initial phases, we estimate a 10% reduction in our store footprint. More details here can be found on page seven in the presentation. I'll let Jonathan elaborate on additional efforts of the term loan and additional actions which will enhance our capital structure. But at a high level, this represents a fundamental step in removing constraints, unlocking flexibility, and aligning our funding model with the needs of a more modern, scalable platform. Our enhanced underwriting platform, LOS V2, which launched in May, continues to deliver measurably better results. During the quarter, we continue to see a shift of our mix towards booking higher-quality customers. We're prioritizing value over volume to build a portfolio that delivers stronger returns.

The second phase will be completed in Q3, and when combined, the results generate more than $20 million in annualized SG&A savings. Between these two initial phases, we estimate a 10% reduction in our store footprint. More details here can be found on page seven in the presentation. I'll let Jonathan elaborate on additional efforts of the term loan and additional actions which will enhance our capital structure, but at a high level, this represents a fundamental step in removing constraints, unlocking flexibility, and aligning our funding model with the needs of a more modern, scalable platform.

Our enhanced underwriting platform, LOS V2, which launched in May, continues to deliver measurably better results. During the quarter, we continue to see a shift of our mix towards booking higher-quality customers. We're prioritizing value over volume to build a portfolio that delivers stronger returns. More importantly, this higher-quality underwriting is needed to navigate uncertain environments.

Doug Campbell: More importantly, this higher-quality underwriting is needed to navigate uncertain environments. As we continue to see customer behavior shift with our Pay-Your-Way platform, which we relaunched late last quarter, customers continue to migrate from making payments in-store to online, which is an important trend as we look to leverage our new collection CRM. We're also seeing an increase in the accounts with auto-recurring payments, which reduces the effort needed to collect. Lastly, customers are utilizing new payment channels like Apple Pay and PayPal. While these do add a level of convenience for our customers, it's also driving more consistent payment behavior, reducing in-store payment-related traffic and associated costs while improving the overall collection efficiency. As adoption continues to grow, we expect these benefits to compound when combined with our collection CRM powered by Salesforce. Jamie will expand more on this in a minute.

As we continue to see customer behavior shift with our Pay-Your-Way platform, which we relaunched late last quarter, customers continue to migrate from making payments in-store to online, which is an important trend as we look to leverage our new collection CRM. We're also seeing an increase in the accounts with auto-recurring payments, which reduces the effort needed to collect.

Lastly, customers are utilizing new payment channels like Apple Pay and PayPal. While these do add a level of convenience for our customers, it's also driving more consistent payment behavior, reducing in-store payment-related traffic and associated costs while improving the overall collection efficiency. As adoption continues to grow, we expect these benefits to compound when combined with our collection CRM powered by Salesforce. Jamie will expand more on this in a minute.

We're also seeing an increase in the accounts with auto-recurring payments, which reduces the effort needed to collect.

Lastly, customers are utilizing new payment channels, like Apple, pay and PayPal.

While these do add a level of convenience for our customers, it's also driving more consistent payment behavior, reducing in-store payment-related traffic and associated costs, while improving the overall collection efficiency.

As adoption continues to grow, we expect these benefits to compound when combined with our collection CRM, powered by Salesforce.

Jamie will expand more on this in a minute.

Doug Campbell: With this infrastructure now in place or nearing completion, it's creating competitive advantages that will translate into better unit economics and stronger returns. The work we've done positions us to execute from a position of strength, clarity, and discipline. And while there's more to do, the building blocks are in place. These efforts are creating a platform that will enable higher-quality growth and improve our financial performance. And with that context, I'd like to turn the call over to Jamie to review our operational performance for the quarter. Jamie.

With this infrastructure now in place or nearing completion, it's creating competitive advantages that will translate into better unit economics and stronger returns. The work we've done positions us to execute from a position of strength, clarity, and discipline and while there's more to do, the building blocks are in place. These efforts are creating a platform that will enable higher-quality growth and improve our financial performance. With that context, I'd like to turn the call over to Jamie to review our operational performance for the quarter. Jamie.

With this infrastructure now in place or nearing completion.

Is creating competitive advantages that will translate into better unique, economics and stronger returns.

The work we've done positions us to execute from a position of strength Clarity and discipline. And while there's more to do the building blocks are in place,

Jamie Fischer: Thanks, Doug. Good morning, everyone. Historically, when the macro environment softens on consumers, our business gets more robust. This quarter was another proof point of that, with credit application volume up 14.6% from prior year. This is notable for two reasons, the first of which is that the company continued to navigate lower-than-normal inventory levels throughout the quarter. This is particularly evident and reflected on the balance sheet when observing the 6.8% variance between the periods. The second is the fact that this has a knock-on effect of reducing website traffic when less vehicles are advertised. Despite those headwinds, the team was able to deliver a sales volume result within approximately 1% of prior year. This performance reflects the resilience of the team and a vote of confidence from consumers in our offering.

These efforts are creating a platform that will enable higher quality growth, and improve our financial performance. And with that context, I'd like to turn the call over to Jamie to review, our operational performance for the quarter. Jamie

Thanks Doug. Good morning, everyone.

Historically, when the macro environment, softens on consumers, our business gets more robust.

This quarter was another proof point of that, with credit application volume up 14.6% from the prior year.

This is notable for 2 Reasons.

This is particularly evident and reflected on the balance sheet when observing the 6.8% variance between the periods. The second is the fact that this has a knock-on effect of reducing website traffic when less vehicles are advertised. Despite those headwinds, the team was able to deliver a sales volume result within approximately 1% of prior year. This performance reflects the resilience of the team and a vote of confidence from consumers in our offering.

The first of which is that the company continued to navigate lower than normal inventory levels throughout the quarter.

This is particularly evident and reflected on the balance sheet when observing the 6.8% variance between the periods.

The second is the fact that this has a knock-on effect of reducing website traffic when last vehicles are advertised.

Despite those headwinds, the team was able to deliver a sales volume result within approximately 1% of Prior year.

This performance reflects the resilience of the team and a vote of confidence from consumers in our offering.

Jamie Fischer: The launch of LOS V2 at the start of Q1 gave our store teams the ability to take advantage of the increased customer applications by prioritizing the highest-ranked customers more effectively. Customers in these higher ranks demonstrate lower loss frequency and severity, faster time to break even, and stronger returns on invested capital. In fact, as highlighted in our supplemental presentation on page 10, you can see that 76.5% of our volume came from our highest-ranked customers, ranks four through seven, a 12% improvement in higher-quality bookings compared to prior year since the system went live in May. Revenue increased 0.8% year over year, primarily driven by higher interest income and a nominal increase in the average retail sales price. It's important to note that the company had a one-time benefit of $13.2 million related to a change in service contract revenue recognition in the prior year.

The launch of LOS V2 at the start of Q1 gave our store teams the ability to take advantage of the increased customer applications by prioritizing the highest-ranked customers more effectively. Customers in these higher ranks demonstrate lower loss frequency and severity, faster time to break even, and stronger returns on invested capital. In fact, as highlighted in our supplemental presentation on page 10, you can see that 76.5% of our volume came from our highest-ranked customers, ranks four through seven, a 12% improvement in higher-quality bookings compared to prior year since the system went live in May.

The launch of Los V2 at the start of Q1 gave our store teams the ability to take advantage of the increased customer applications by prioritizing the highest-ranked customers more effectively.

Customers in these higher ranks demonstrate lower loss frequency and severity, faster time to break even, and stronger returns on invested capital.

In fact, as highlighted in our supplemental presentation on page 10, you can see that 76.5% of our volume came from our highest rank customers, ranks 4 through 7.

Revenue increased 0.8% year over year, primarily driven by higher interest income and a nominal increase in the average retail sales price. It's important to note that the company had a one-time benefit of $13.2 million related to a change in service contract revenue recognition in the prior year.

a 12% Improvement in higher quality, bookings compared to Prior year since the system went live in May

Revenue increased 0.8% year-over-year, primarily driven by higher interest income and a nominal increase in the average retail sales price.

Jamie Fischer: Absent that benefit, revenues would have been up 4.8%, primarily driven by an increase in vehicle price due to increased procurement costs related to tariffs outlined in the prior quarter. Gross profit margin was 37.5% compared to 39.4% in the prior year. Adjusting for the aforementioned one-time benefit, margins improved by approximately 100 basis points year over year and 90 basis points sequentially, driven by reduced repair frequency and severity and improved wholesale retention values. Turning to the operational progress from our enhanced payment infrastructure, the benefits of the Pay-Your-Way program are becoming increasingly clear. We're seeing measurable improvements in both the customer experience and payment behavior across the portfolio. Over the past four months, we've shown significant momentum in customers enrolled in and utilizing our updated digital payment options. These trends are driving improved collections efficiency, reducing in-store payment traffic, and increasing overall payment consistency.

Absent that benefit, revenues would have been up 4.8%, primarily driven by an increase in vehicle price due to increased procurement costs related to tariffs outlined in the prior quarter. Gross profit margin was 37.5% compared to 39.4% in the prior year. Adjusting for the aforementioned one-time benefit, margins improved by approximately 100 basis points year over year and 90 basis points sequentially, driven by reduced repair frequency and severity and improved wholesale retention values.

It's important to note that the company had a one-time benefit of $13.2 million related to a change in service contract revenue recognition in the prior year.

Absent that benefit revenues would have been up 4.8% primarily driven by an increase in vehicle price due to increased procurement costs related to tariffs, outlined in the prior quarter.

The growth profit margin was 37.5% compared to 39.4% in the prior year.

Adjusting for the aforementioned one-time benefit, margins improved by approximately 100 basis points year-over-year and 90 basis points sequentially, driven by reduced repair frequency and severity, as well as improved wholesale retention values.

Turning to the operational progress from our enhanced payment infrastructure, the benefits of the Pay-Your-Way program are becoming increasingly clear. We're seeing measurable improvements in both the customer experience and payment behavior across the portfolio. Over the past four months, we've shown significant momentum in customers enrolled in and utilizing our updated digital payment options. These trends are driving improved collections efficiency, reducing in-store payment traffic, and increasing overall payment consistency.

Becoming increasingly clear.

We're seeing measurable improvements in both the customer experience and payment Behavior across the portfolio.

Over the past four months, we've shown significant momentum in customers enrolled in and utilizing our updated digital payment options.

These trends are driving improved collections, increasing efficiency, reducing in-store payment traffic, and enhancing overall payment consistency.

Jamie Fischer: During Q2, we also exceeded 5% of our portfolio on auto-pay recurring payments, which represents a 3x improvement to when compared to our legacy platform. This is partially driven by our customers opting to utilize our incremental payment types for recurring payments, like debit card, Venmo, and PayPal, as compared to our previous offering of only ACH. We are encouraged by the early success of the Pay-Your-Way strategy and expect adoption and efficiency gains to continue as the program matures. As Doug mentioned, we're advancing efforts to enhance collections performance through the rollout of a new Salesforce-based Collection CRM. Development is complete, and the tool has begun testing in a live environment in one of our stores. We expect to begin piloting in the second half of the fiscal year.

During Q2, we also exceeded 5% of our portfolio on auto-pay recurring payments, which represents a 3x improvement to when compared to our legacy platform. This is partially driven by our customers opting to utilize our incremental payment types for recurring payments, like debit card, Venmo, and PayPal, as compared to our previous offering of only ACH. We are encouraged by the early success of the Pay-Your-Way strategy and expect adoption and efficiency gains to continue as the program matures.

During the second quarter, we also exceeded 5% of our portfolio on auto pay, recurring payments.

Which represents a 3X Improvement to when compared to our Legacy platform.

this partially driven by our customers opting to utilize our incremental payment types for recurring payments like debit card venmo and PayPal as compared to our previous offering of only AC

As Doug mentioned, we're advancing efforts to enhance collections performance through the rollout of a new Salesforce-based Collection CRM. Development is complete, and the tool has begun testing in a live environment in one of our stores. We expect to begin piloting in the second half of the fiscal year.

We are encouraged by the early success of the "Pay Your Way" strategy and expect adoption and efficiency gains to continue as the program matures.

as Doug mentioned, we're advancing efforts to enhance collection performance through the rollout of a new Salesforce bass collection CRM.

Development is complete, and the tool has begun testing in a live environment in 1 of our stores.

We expect to begin piloting on the second half of the fiscal year.

Jamie Fischer: This next-generation platform will deliver immediate benefits, including streamlined workflows, improved account management tools, enhanced data collection, virtual payment modification capabilities, and a better customer contact experience. Looking ahead, we plan to introduce additional features such as advanced account routing, AI-driven customer engagement strategies, and self-service options. These enhancements will create a scalable solution capable of supporting a larger portfolio without a proportional increase in headcount. With the investments we are making to support our Pay-Your-Way program and the upgrade of our collections CRM, we believe this data-driven collections platform will generate meaningful results. In Doug's remarks, he mentioned a multi-phase plan to optimize operations and reduce SG&A. The process for this plan included an exhaustive review of our footprint and talent to ensure our resources are generating the appropriate returns. We evaluated underperforming stores, mapped customer concentrations and geographical overlapping, and assessed market coverage and service levels.

This next-generation platform will deliver immediate benefits, including streamlined workflows, improved account management tools, enhanced data collection, virtual payment modification capabilities, and a better customer contact experience. Looking ahead, we plan to introduce additional features such as advanced account routing, AI-driven customer engagement strategies, and self-service options. These enhancements will create a scalable solution capable of supporting a larger portfolio without a proportional increase in headcount.

This next Generation platform will deliver immediate benefits, including streamline workflows, improved account management tools.

Enhance data collection virtual payment, modification capabilities and a better customer contact experience.

Looking ahead, we plan to introduce additional features such as advanced account routing.

AI driven customer engagement strategies and self-service options.

With the investments we are making to support our Pay-Your-Way program and the upgrade of our collections CRM, we believe this data-driven collections platform will generate meaningful results. In Doug's remarks, he mentioned a multi-phase plan to optimize operations and reduce SG&A. The process for this plan included an exhaustive review of our footprint and talent to ensure our resources are generating the appropriate returns. We evaluated underperforming stores, mapped customer concentrations and geographical overlapping, and assessed market coverage and service levels.

These enhancements will create a scalable solution capable of supporting a larger portfolio without a proportional increase in headcount.

With the Investments, we are making to support our pay your way program and the upgrade of our collection CRM.

We believe this data-driven collections platform will generate meaningful results.

In duct remarks, he mentioned a multi-phase plan to optimize operations, and reduce sgna.

The process for this plan, included an exhaustive review of our footprint and talent to ensure our resources are generating the appropriate returns.

Jamie Fischer: From this, we established a phased approach to improve operational efficiency and performance. In November, we executed on phase one by consolidating five locations into nearby better-performing stores. The intention with this first phase of consolidations was to specifically solve for underperforming locations that were sharing the same geographical footprint as that of a better-performing store. Early results confirmed that this approach was sound. Our existing and new customers continue to be served seamlessly from one location in the same geographical area with a larger staff, more inventory selection, and the same great service they have become accustomed to at Car-Mart. We also conducted a comprehensive review of both field and corporate headcount. Where technology, automation, and process improvements have eliminated manual tasks, we made targeted reductions. These changes were implemented smoothly, and operational continuity has been fully maintained.

From this, we established a phased approach to improve operational efficiency and performance. In November, we executed on phase one by consolidating five locations into nearby better-performing stores. The intention with this first phase of consolidations was to specifically solve for underperforming locations that were sharing the same geographical footprint as that of a better-performing store.

We evaluated underperforming stores mapped, customer concentrations and geographical overlapping and assess Market coverage and service levels.

From this, we established a phased approach to improve operational, efficiency and performance.

In November we executed on Phase 1 by consolidating 5 locations into nearby better performing stores.

Early results confirmed that this approach was sound. Our existing and new customers continue to be served seamlessly from one location in the same geographical area with a larger staff, more inventory selection, and the same great service they have become accustomed to at Car-Mart. We also conducted a comprehensive review of both field and corporate headcount. Where technology, automation, and process improvements have eliminated manual tasks, we made targeted reductions. These changes were implemented smoothly, and operational continuity has been fully maintained.

The intention with this first phase of consolidations was to specifically solve for underperforming locations that were sharing the same geographical footprint as that of a better-performing store.

Early results confirmed that this approach was sound.

Our existing and new customers. Continue to be served seamlessly from 1 location in the same geographical area, with a larger staff, more inventory selection, and the same great service they have become accustomed to at Carmart.

We also conducted a comprehensive review of both field and corporate headcount.

Where technology automation and process improvements have eliminated manual tasks, we made targeted reductions.

Jamie Fischer: Importantly, these initiatives provide valuable insights that will inform decisions for future phases as we continue to optimize our footprint, cost structure, and enhance scalability over the next several phases. As you can see, we are taking meaningful steps to improve the efficiency of our operations with urgency. With this overview, I'll now turn it to Jonathan to cover our financial results.

Importantly, these initiatives provide valuable insights that will inform decisions for future phases as we continue to optimize our footprint, cost structure, and enhance scalability over the next several phases. As you can see, we are taking meaningful steps to improve the efficiency of our operations with urgency. With this overview, I'll now turn it to Jonathan to cover our financial results.

These changes were implemented, smoothly and operational continuity has been fully maintained.

As you can see, we are taking meaningful steps to improve the efficiency of our operations with urgency.

Jonathan Collins: Thank you, Jamie. For the quarter, SG&A totaled $57.2 million, including $3.5 million in one-time expenses primarily related to store impairment costs from the five closures Jamie discussed. On a reported basis, SG&A as a percentage of sales was 20.0% and 18.8% excluding the one-time charges. Last quarter, I shared that the growth in our SG&A was driven by investments in our people and technology. At that time, I said our goal was to reverse about half of this growth in the second half of the year. I also mentioned that a modernized collections infrastructure would eventually deliver around 5% annualized cost savings, and I outlined that our target to reduce SG&A was to 16.5% of sales. The structured multi-phase plan we're announcing today clearly demonstrates that we're making strong and urgent progress toward these commitments.

With this overview, I'll now turn it to Jonathan to cover our financial results.

Thank you, Jamie.

For the quarter sgna. Total 57.2 million including 3.5 million and 1 time, expenses primarily related to store impairment cost from the 5 closest Jamie discussed

On a reported basis sgna as a percentage of sales was 20.0% and 18.8%. Excluding the 1-time charges

Last quarter, I shared that the growth in our SG&A was driven by investments in our people and technology.

I also mentioned that a modernized collections infrastructure would eventually deliver around 5% annualized cost savings, and I outlined that our target to reduce SG&A was to 16.5% of sales. The structured multi-phase plan we're announcing today clearly demonstrates that we're making strong and urgent progress toward these commitments.

At that time, I set our goal was to reverse about half of this growth in the second half of the year.

I also mentioned that a modernized collections infrastructure would eventually deliver around 5% annualized cost savings. And I outlined that our Target to reduce sgna was to 16.5% of sales.

Jonathan Collins: Our first phase covered four components: IT spend reduction through contractor and legacy software rationalization, consolidation of five underperforming stores, reorganization of headquarters and field roles, and optimizing marketing spend. Combined, these actions are expected to generate $4.9 million in savings this fiscal year and $10.1 million annualized. The store consolidations alone, moving customers in the nearby better-performing locations, as Jamie described, are expected to contribute approximately $1 million this fiscal year and $2 million annualized. We've also identified additional opportunities in subsequent phases, estimating to deliver another $3.5 million in this fiscal year and $21.3 million on an annualized basis. Upon completion of all phases, our cost reduction initiatives are expected to generate $31.4 million in annualized savings. This is outlined on page seven of our supplemental presentation.

Our first phase covered four components: IT spend reduction through contractor and legacy software rationalization, consolidation of five underperforming stores, reorganization of headquarters and field roles, and optimizing marketing spend. Combined, these actions are expected to generate $4.9 million in savings this fiscal year and $10.1 million annualized. The store consolidations alone, moving customers in the nearby better-performing locations, as Jamie described, are expected to contribute approximately $1 million this fiscal year and $2 million annualized.

The structured multi-phase plan. We're announcing today, clearly demonstrates that we're making strong and Urgent progress toward these commitments.

Software rationalization and consolidation of five underperforming stores.

reorganization of headquarters and field roles and optimizing marketing spend

Combined, these actions are expected to generate 4.9 million and savings, this fiscal year and 10.1 million annualized.

We've also identified additional opportunities in subsequent phases, estimating to deliver another $3.5 million in this fiscal year and $21.3 million on an annualized basis. Upon completion of all phases, our cost reduction initiatives are expected to generate $31.4 million in annualized savings. This is outlined on page seven of our supplemental presentation.

Historic consolidations, alone, moving customers in a nearby. Better performing locations, as Jamie described are expected to contribute approximately 1 million, this fiscal year and 2 million annualized.

We've also identified additional opportunities and subsequent phases estimating to deliver another $3.5 million in this fiscal year and $21.3 million on an annualized basis.

Upon completion of All Phases. Our cost reduction, initiatives are expected to generate 31.4 million in annualized savings.

Jonathan Collins: Building on Jamie's update on our Pay-Your-Way program, average collections per active customer increased to $582 this quarter compared to $561 in the same period last year. The strength in collections underscores the quality of the portfolio and the effectiveness of our Pay-Your-Way platform. I want to frame our credit results around a simple theme. Charge-offs were elevated due to normal seasoning and some macroeconomic pressures, but the leading indicators are improving. Net charge-offs increased to 7.0% from 6.6% in the prior year, reflecting the expected seasoning of loans originated over the past 18 months. This is not surprising. As new originations mature, they build loss history. What matters is whether the newer vintages are performing better than the older ones, and they are, as shown on page eight of our supplemental presentation. The leading indicators support this view. Delinquencies over 30 days improved 62 basis points to 3.14%.

Building on Jamie's update on our Pay-Your-Way program, average collections per active customer increased to $582 this quarter compared to $561 in the same period last year. The strength in collections underscores the quality of the portfolio and the effectiveness of our Pay-Your-Way platform. I want to frame our credit results around a simple theme. Charge-offs were elevated due to normal seasoning and some macroeconomic pressures, but the leading indicators are improving.

This is outlined on page 7 of our supplemental presentation.

Building on Jamie's update on our Pay Your Way program, average collections per active customer increased to 582 this quarter compared to 561 in the same period last year.

The strength and collections underscores, the quality of the portfolio and the effectiveness of the of our pay your way platform.

I want to frame our credit results around a simple theme.

Net charge-offs increased to 7.0% from 6.6% in the prior year, reflecting the expected seasoning of loans originated over the past 18 months. This is not surprising. As new originations mature, they build loss history. What matters is whether the newer vintages are performing better than the older ones, and they are, as shown on page eight of our supplemental presentation. The leading indicators support this view. Delinquencies over 30 days improved 62 basis points to 3.14%.

Charge offs were elevated due to normal seasoning and some macroeconomic pressures but the leading indicators are improving.

Net charge offs increased to 7.0% from 6.6% in the prior year. Reflecting the expected seasoning of loans originated over the past 18 months. This is not surprising as new originations mature. They build loss history. What matters is whether the newer vintages are performing better than the older ones, and they are

As shown on page, 8 of our supplemental presentation.

Jonathan Collins: Modification activity declined to 6.19% from 6.91%. Loss severity declined from $10,677 to $10,325 per unit sequentially, and collections grew 4.6%, outpacing portfolio growth of 2.8%. These metrics tell us the portfolio is getting healthier even as the seasoning math works its way through the P&L. Contracts originated under our enhanced LOS platform now represent over 76% of the portfolio, excluding the non-integrated acquisition lots, up from 72% last quarter. As legacy originations continue to run off, we expect portfolio quality to improve further. Our allowance increased to 24.19% of finance receivables up sequentially from 23.35%, but down from 24.72% a year ago. The CECL reserve reflects observed loss history and includes a prudent overlay for macroeconomic uncertainty. While underlying credit quality is improving, we believe it's appropriate to maintain this level of reserve until we see further stabilization.

Modification activity declined to 6.19% from 6.91%. Loss severity declined from $10,677 to $10,325 per unit sequentially, and collections grew 4.6%, outpacing portfolio growth of 2.8%. These metrics tell us the portfolio is getting healthier even as the seasoning math works its way through the P&L. Contracts originated under our enhanced LOS platform now represent over 76% of the portfolio, excluding the non-integrated acquisition lots, up from 72% last quarter.

The leading indicator support. This view delinquencies, over 30 days improved 62 basis points to 3.14% modification activity declined to 6.19% from 6.91% loss severity, decline from 10,677 to 10,325 per unit sequentially and collections grew 4.6%, outpacing, portfolio, growth of 2.8%.

These metrics tell us, the portfolio is getting healthier, even as the seasoning and math, Works its way through the pno.

Contracts originated under our enhanced LS platform. Now represent over 76% of the portfolio. Excluding the non-integrated acquisition Lots

As legacy originations continue to run off, we expect portfolio quality to improve further. Our allowance increased to 24.19% of finance receivables up sequentially from 23.35%, but down from 24.72% a year ago. The CECL reserve reflects observed loss history and includes a prudent overlay for macroeconomic uncertainty. While underlying credit quality is improving, we believe it's appropriate to maintain this level of reserve until we see further stabilization.

Up from 72%, last quarter.

As legacy originations continue to run off, we expect portfolio quality to improve further.

Our allowance increased to 24.19% of Finance receivables, subsequently from 23.35%, but down from 24.72% a year ago.

The Cecil Reserve, reflects observed loss, history. And includes a print overlay for microeconomic uncertainty.

Jonathan Collins: The provision for credit loss was $119.1 million compared to $99.5 million last year. The increase was driven by the 40 basis points rise in charge-offs, reserve builds for macro factors, and continued seasoning such as at our acquired locations. As Doug outlined, we made significant progress transforming our capital structure this quarter. On 30 October, we closed a new $300 million term loan facility with Silver Point Capital. The loan is five years, matures in October 2030, and bears interest at SOFR plus 750 basis points. Importantly, this transition allowed us to fully repay and retire our revolving line of credit. Additionally, we retired a $150 million uncommitted amortizing warehouse facility. As disclosed in our 8-K, the term loan included warrants issued to Silver Point Capital to purchase up to 10% of our fully diluted shares at the market price at closing with a six-year expiration.

The provision for credit loss was $119.1 million compared to $99.5 million last year. The increase was driven by the 40 basis points rise in charge-offs, reserve builds for macro factors, and continued seasoning such as at our acquired locations. As Doug outlined, we made significant progress transforming our capital structure this quarter. On 30 October, we closed a new $300 million term loan facility with Silver Point Capital. The loan is five years, matures in October 2030, and bears interest at SOFR plus 750 basis points.

While underlying credit qualities are improving, we believe it's appropriate to maintain this level of reserve until we see further stabilization.

The provision for credit loss was 119.1 Million compared to 99.5 Million last year. The increase was driven by the 40 basis, point rise and charge offs reserved bills for micro factors and continue seasoning such as that are acquired locations.

As Doug outlined we made significant progress Transforming Our capital structure this quarter.

On October 30th, we closed a new 300 million dollar Term Loan facility with several Point capital.

The loan is 5 years, matures in October 2030 and bears interest at

Importantly, this transition allowed us to fully repay and retire our revolving line of credit. Additionally, we retired a $150 million uncommitted amortizing warehouse facility. As disclosed in our 8-K, the term loan included warrants issued to Silver Point Capital to purchase up to 10% of our fully diluted shares at the market price at closing with a six-year expiration.

so far plus 750 basis points.

Importantly, this transition allowed us to fully repay and retire our revolving line of credit.

Additionally, we retired a 150 million uncommitted amortizing Warehouse facility.

Jonathan Collins: While dilutive, we believe this was the right path forward, striking a balance between deal economics and ensuring stakeholder alignment. Our securitization platform continues to perform well. Since the start of the fiscal year, we've completed two ABS transactions, 2025-2 and 2025-3, and called our 2023-1 deal in July. In our most recent securitization offering, our Class A Notes were almost eight times oversubscribed, and our Class B Notes nearly 16 times oversubscribed. In light of the turbulence in the bond market related to several subprime auto finance companies, we've proactively engaged with our current and prospective bondholders as well as ratings agencies to highlight our differentiated business model, the controls we have in place, and to maintain confidence in our financial position.

While dilutive, we believe this was the right path forward, striking a balance between deal economics and ensuring stakeholder alignment. Our securitization platform continues to perform well. Since the start of the fiscal year, we've completed two ABS transactions, 2025-2 and 2025-3, and called our 2023-1 deal in July. In our most recent securitization offering, our Class A Notes were almost eight times oversubscribed, and our Class B Notes nearly 16 times oversubscribed.

As disclosed in our AK, the term loan included, warrants issued to several points to purchase up to 10% of our fully diluted shares at the market price at closing with a 6-year expiration.

While dilutive, we believe this was the right path forward striking. A balance between deal economics and insurance stakeholder alignment.

Artist securitization platform continues to perform well since the start of the fiscal year, we've completed 2, ABS transactions 2025-26.

In light of the turbulence in the bond market related to several subprime auto finance companies, we've proactively engaged with our current and prospective bondholders as well as ratings agencies to highlight our differentiated business model, the controls we have in place, and to maintain confidence in our financial position.

In our most recent securitization offering our class. A notes were almost 8 times over subscribed and our class B, notes, nearly 16 times over subscribed.

In light of the turbulence in the bond market related to several subprime auto finance companies. We have proactively engaged with our current and prospective Bond holders, as well as rating agencies.

Jonathan Collins: We believe this positive engagement reinforces the continued strength of our platform, as evidenced by the strong demand on our credit and our ability to attract capital in a challenging environment. The weighted average life of our ABS structures and the maturation of receivables are also important components of our strategy. As ABS notes are retired, the residual collateral becomes available to fund our business in a way that is distinct from our legacy revolving structure. Total cash, including restricted cash, increased to $251 million at 31 October from $125 million at 30 April. Debt net of total cash decreased from $652 million to $646 million, despite the increase in gross debt related to the term loan.

We believe this positive engagement reinforces the continued strength of our platform, as evidenced by the strong demand on our credit and our ability to attract capital in a challenging environment. The weighted average life of our ABS structures and the maturation of receivables are also important components of our strategy. As ABS notes are retired, the residual collateral becomes available to fund our business in a way that is distinct from our legacy revolving structure.

In our financial position. We believe this positive engagement reinforces. The continued strength of our platform as evidenced by the strong Demand on our credit and our ability to attract capital and a challenging environment.

The weighted average life of our ABS structures and the maturation of receivables are also important components of our strategy.

Total cash, including restricted cash, increased to $251 million at 31 October from $125 million at 30 April. Debt net of total cash decreased from $652 million to $646 million, despite the increase in gross debt related to the term loan.

As ABS notes are retired, the residual collateral becomes available to fund our business in a way that is distinct from our Legacy revolving structure.

Total cost, including restricted cash, increased to $251 million at October 31 from $125 million at April 30.

Jonathan Collins: Debt to finance receivables and debt net of cash to finance receivables were 59.2% and 42.6% at quarter end, compared to 51.8% and 43.0% a year ago and 51.5% and 43.2% at the start of the fiscal year. Loss per share for the quarter was $2.71. Our net income loss of $22.5 million included approximately $20 million of non-cash and one-time charges, $11.8 million from CECL reserve adjustments related to portfolio seasoning and macroeconomic factors, $4.5 million from the retirement of our revolving line of credit, and $3.5 million from store closures and impairment costs. Adjusted EPS loss, excluding these items, was $0.79 per share. With that, I'll turn it back over to Doug.

Debt to finance receivables and debt net of cash to finance receivables were 59.2% and 42.6% at quarter end, compared to 51.8% and 43.0% a year ago and 51.5% and 43.2% at the start of the fiscal year. Loss per share for the quarter was $2.71. Our net income loss of $22.5 million included approximately $20 million of non-cash and one-time charges, $11.8 million from CECL reserve adjustments related to portfolio seasoning and macroeconomic factors, $4.5 million from the retirement of our revolving line of credit, and $3.5 million from store closures and impairment costs. Adjusted EPS loss, excluding these items, was $0.79 per share. With that, I'll turn it back over to Doug.

Debt net of total cash decreased from $652 million to $646 million, despite the increase in gross debt related to the term loan.

Debt to finance receivables and debt. Net of cash to finance receivables, worth 59.2% and 42.6% at quarter, end compared to 51.8%, and 43.0% a year ago, and 51.5% and 43.2% the start of the fiscal year.

Loss per share for the quarter was $2.71. Our net income loss of 22.5 million included approximately 20 million of non-cash and 1-time charges 11.8 million, from Cecil Reserve adjustments related to portfolio, seasoning and macroeconomic factors 4.5 million from the retirement of our revolving line of credit.

And 3.5 million from store closers and impairment cost.

Adjusted EPS loss. Excluding these items.

Doug Campbell: Thank you, Jonathan. I want to address what I believe is a significant disconnect between how the market is valuing this business. Our stock is trading at roughly 1/3 of book value. The market sees challenges: our capital structure evolution, macroeconomic pressure on their customers, and broader sector concerns. Those are legitimate issues for the industry and for Car-Mart. But here's what I believe the market is missing. In the middle of all of this turbulence, there's been a validation point. Our term loan provider has provided and committed $300 million into this business. They conducted an extensive due diligence on our platform, our locations, and the quality of our assets and our path forward. It's not theoretical. That's sophisticated capital validators putting real money behind what we've been telling you. We have substantial residual equity in our ABS structures, improving credit performance, and strong operational fundamentals.

Was 79 cents per share with that. I'll turn it back over to Doug.

Thank you, Jonathan.

I want to address what I believe is a significant disconnect between how the market is valuing this business.

Our stock is trading at roughly 1/3 of Book value.

The market sees challenges.

Our capital structure Evolution macroeconomic pressure on your customers and broader sector concerns.

Those are legitimate issues for the industry and for commercial.

But here's what I believe the market is missing.

Our term loan provider has provided and committed $300 million into this business. They conducted an extensive due diligence on our platform, our locations, and the quality of our assets and our path forward. It's not theoretical. That's sophisticated capital validators putting real money behind what we've been telling you. We have substantial residual equity in our ABS structures, improving credit performance, and strong operational fundamentals.

In the middle of all this turbulence, there's been a validation point.

Our Term Loan provider is provided and committed million dollars into this business.

They conducted an extensive due diligence on our platform.

Our locations and the quality of our assets.

And our path forward.

It's not theoretical.

That sophisticated Capital validators, putting real money behind what we've been telling you.

We have substantial residual equity in our ABS structures.

Doug Campbell: At current valuations, I believe the market's significantly undervaluing what we're building here. Looking ahead, our priorities are straightforward: complete our capital structure transformation with another ABS transaction, and a revolving warehouse facility in H2, normalize inventory levels to meet strong demand we're seeing, and to set ourselves up for the tax season, execute phase two of our cost reduction initiatives here in Q3, and continue demonstrating improving credit performance as higher quality LOS originations mature. As these initiatives progress, we expect to return to positive GAAP earnings and demonstrate the earnings power of this improved model. We've built the foundation. The path is clear. The demand is there. Now it's about execution. We look forward to updating you on our progress in subsequent quarters. Thank you for your interest in America's Car-Mart, and we look forward to your questions.

At current valuations, I believe the market's significantly undervaluing what we're building here. Looking ahead, our priorities are straightforward: complete our capital structure transformation with another ABS transaction, and a revolving warehouse facility in H2, normalize inventory levels to meet strong demand we're seeing, and to set ourselves up for the tax season, execute phase two of our cost reduction initiatives here in Q3, and continue demonstrating improving credit performance as higher quality LOS originations mature.

Improving credit performance and strong operational fundamentals.

At current valuations, I believe the market is significantly undervaluing what we're building here.

Looking ahead, our priorities are straightforward.

Complete, our capital structure transformation with another ABS transaction and a revolving Warehouse facility in the second half of the year.

Normalize inventory levels to meet strong demand. We're seeing this to set ourselves up for the tax season.

Execute Phase 2 of our cost reduction initiatives here in the third quarter.

As these initiatives progress, we expect to return to positive GAAP earnings and demonstrate the earnings power of this improved model. We've built the foundation. The path is clear. The demand is there. Now it's about execution. We look forward to updating you on our progress in subsequent quarters. Thank you for your interest in America's Car-Mart, and we look forward to your questions. Operator, please provide instructions for the Q&A session.

And continue demonstrating improving credit performance as higher quality loss. Originations mature.

As these initiatives progress, we expect to return to positive Gap, earnings and demonstrate the earnings power of this improved model.

We've built the foundation; the path is clear. The demand is there now. It's about execution.

We look forward to updating you on our progress. In subsequent quarters,

Doug Campbell: Operator, please provide instructions for the Q&A session.

Thank you for your interest, in America's carart and we look forward to your questions.

Operator. Please provide instructions for the Q&A session.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Hecht with Jefferies. Your line is now open.

Thank you as a reminder to ask a question. Please press star 1 on your telephone and wait for your name to be announced.

To withdraw your question, please press star 1 again.

Please stand by while we compile the Q&A roster.

Our first question comes from the line of John, heck with Jeffrey's your line is now open.

John Hecht: Good morning, guys, and thanks for all the details. Definitely looks like you're positioning yourself to deal with the ongoing challenges, but also to be better positioned when things actually lighten up a little bit. I'm just wondering, so it looks like just looking at the loss curves, the newer vintages are performing pretty well. Maybe can you, is there a way to quantify that, like maybe expectations for Q losses in the newer vintages versus the COVID vintages versus pre-pandemic vintages, or any sort of directional way to quantify how the new book, I guess, is performing relative to the, you call it, the legacy stuff?

Uh, good morning guys. And thanks for all the details. Um, definitely looks like, uh, your your position of yourself to deal with the ongoing challenges but also, uh, to be better positioned when things actually lighten up a little bit. Um,

I'm I'm just wondering so the it looks like just looking at the loss curves the uh, the newer vintages or performing pretty well.

Um maybe can you is there a way to quantify that? Like, you know, like maybe qmee expectations for cube losses in the newer vintages versus

uh,

Jonathan Collins: Yeah, John, thank you for your question. Good to chat. If you recall, in prior quarters, we had a chart in there about a specific static pool. At the time we did the conversion over to LOS, we originated a set of loans, a significant set of loans under Alice, our old underwriting system, and LOS, and we tracked those over a period of time. And generally, those were in the 18% to 20% differential in terms of improvement. That continues to hold up for that particular pool. What makes the kind of comparison, if you go back, you mentioned a couple of periods like pre-COVID and etc., is the significant change in what's happening with customers, our offer, etc. The price of the car has almost doubled. Term loans have, term on the loans have extended. And so the curves look a little bit different from that perspective.

Jonathan Collins: Yeah, John, thank you for your question. Good to chat. If you recall, in prior quarters, we had a chart in there about a specific static pool. At the time we did the conversion over to LOS, we originated a set of loans, a significant set of loans under Alice, our old underwriting system, and LOS, and we tracked those over a period of time. Generally, those were in the 18% to 20% differential in terms of improvement. That continues to hold up for that particular pool. What makes the kind of comparison, if you go back, you mentioned a couple of periods like pre-COVID and etc., is the significant change in what's happening with customers, our offer, etc.

Yeah John uh, thank you for your question, good to chat. Um, if you recall in Prior quarters, we had a chart in there about a specific static pool. At the time we did the conversion over to Los. We originated a set of loans, a significant set of loans under Alice R old underwriting system and Los and we tracked those over a period of time and generally those were in the 18% uh differential.

The price of the car has almost doubled. Term loans have, term on the loans have extended. The curves look a little bit different from that perspective.Some of them in some years were influenced by government subsidies. Some of them were influenced by the dynamic of car prices, etc, and so how we're measuring ourselves is really against what we presented in the supplemental presentation, which is we feel like the best comparison is our FY24 vintages, which is most of that fiscal year, which is just before we converted over to LOS. Both of those pieces are sitting in there, but broadly holding up, broadly we're still seeing that good differential between specific vintages.

Jonathan Collins: Some of them in some years were influenced by government subsidies. Some of them were influenced by the dynamic of car prices, etc. And so how we're measuring ourselves is really against what we presented in the supplemental presentation, which is we feel like the best comparison is our FY24 vintages, which is most of that fiscal year, which is just before we converted over to LOS. And so both of those pieces are sitting in there. But broadly holding up, broadly we're still seeing that good differential between specific vintages.

Um, in terms of improvement, that continues to hold up for those that particular pool, what makes the kind of um, comparison? If you go back you mentioned a couple of periods, like preco and Etc is, you know, the significant change in what's happening with customers, our offer Etc. The price of the car is almost doubled. Uh, term loans have a term on the loans have extended. Um, and so the curves look, a little bit different from that perspective, some of them and some years were influenced by government subsidies. Some of them were influenced by the dynamic of car prices, Etc. And so um, how we're measuring ourselves is really against what we presented in the, uh, supplemental presentation, which is, we feel like the best comparison is um our fy24 uh vintages which is most of that fiscal year uh which is just before we converted over to Los. Um, and so both of those pieces are sitting in there. But broadly holding up, broadly

Um, we're still seeing that good differential between specific vintages.

John Hecht: Okay. That's helpful. And then, I mean, it feels like to some degree that, like you said, everybody's going through the same challenges, but you're spending time on improving your positioning relative to those environmental headwinds. Given that, I got to believe the competitors, particularly the smaller ones, are under intense pressure. Maybe can you give us an update on the competitive environment and how that affects your thinking about strategy going forward?

John Hecht: Okay. That's helpful. It feels like to some degree that, like you said, everybody's going through the same challenges, but you're spending time on improving your positioning relative to those environmental headwinds. Given that, I got to believe the competitors, particularly the smaller ones, are under intense pressure. Maybe can you give us an update on the competitive environment and how that affects your thinking about strategy going forward?

Okay. Um,

That's helpful. And then you I mean it feels like um to some degree that, you know, like you said everybody's going through the same challenges, but you're spending time on on, improving your positioning relative to those.

Environmental headwinds, you know, given that, you know, I, I gotta believe the competitors, particularly the small smaller ones are under intense pressure. Maybe, can you give us an update?

Um and competitive environment and you know, does that, you know how that affects your thinking about strategy going forward?

Doug Campbell: Sure. The sector, obviously, we play in. There are not a lot of public comps, John, as you know. What gives us insight and a little bit of confidence into keeping our pulse on the market is, obviously, we had built out and still have an acquisitions team. And so we field a lot of calls from operators who are interested in either selling their business or partnering, etc. And we get a lot of feedback as it relates to that. And the sector's under a lot of pressure. It is really, really difficult for operators to both procure capital, to find inventory. And so these are some of the things that are differentiating us from our peers. And then, obviously, in markets where there was prior competition, some of those have eased up for us.

Doug Campbell: Sure. The sector, obviously, we play in. There are not a lot of public comps, John, as you know. What gives us insight and a little bit of confidence into keeping our pulse on the market is, obviously, we had built out and still have an acquisitions team. We field a lot of calls from operators who are interested in either selling their business or partnering, etc., and we get a lot of feedback as it relates to that. The sector's under a lot of pressure. It is really, really difficult for operators to both procure capital, to find inventory, and so these are some of the things that are differentiating us from our peers. Obviously, in markets where there was prior competition, some of those have eased up for us.

Doug Campbell: And so there's this push and pull dynamic where we're seeing some benefits on supply. You have pricing that had been elevated, and so that's providing a tailwind on recoveries, which flowed through to gross margin, which is nice, but obviously showed itself as a headwind on the procurement. What's interesting about our business is that five short years ago, we used to sell a car for $10,000 or $11,000, and now the average retail sales price has doubled. And despite that, we're finding homes for these vehicles and customers. And so we don't believe that that dynamic is going to change, right? We're going to have to adjust. And what we're trying to do is set ourselves up for the future, set ourselves up in this model to be able to serve customers up and down the credit spectrum so that we can continue to grow through that.

Sure, it it the sector, obviously we plan there are not a lot of public coms. John as you know, um, what gives us insight and a little bit of confidence into keeping our pulse on the market is, obviously, we had built out and still have an Acquisitions team. And so we feel a lot of calls from operators who are interested in either selling their business or partnering Etc. And um, you know, we get a lot of feedback as it relates to that and the sectors under a lot of pressure, it is really, really difficult for operators to both procure Capital, uh, to find inventory. And so, these are some of the things that are differentiating us, uh, from our peers. And then obviously in markets where, um, you know, there was Prior competition. Some of those have eased up.

There's this push and pull dynamic where we're seeing some benefits on supply. You have pricing that had been elevated, and so that's providing a tailwind on recoveries, which flowed through to gross margin, which is nice, but obviously showed itself as a headwind on the procurement. What's interesting about our business is that five short years ago, we used to sell a car for $10,000 or $11,000, and now the average retail sales price has doubled.

Despite that, we're finding homes for these vehicles and customers and so we don't believe that that dynamic is going to change, right? We're going to have to adjust and what we're trying to do is set ourselves up for the future, set ourselves up in this model to be able to serve customers up and down the credit spectrum so that we can continue to grow through that.

Doug Campbell: That requires technology. We believe our foresight in trying to make sure that we get these things done and that we've been working on for the last 18 months are really important and differentiate us from our competitors, especially when you consider things like AI and how that will change our business, and trying to make sure we stay in front of that.

That requires technology. We believe our foresight in trying to make sure that we get these things done and that we've been working on for the last 18 months are really important and differentiate us from our competitors, especially when you consider things like AI and how that will change our business, and trying to make sure we stay in front of that.

For us. And so, there's this push and pull Dynamic where we're seeing some benefits on Supply, you know, you have pricing that had been elevated. And so that's providing a Tailwind on recoveries, which flowed through to gross margin, which is nice. But obviously, um, you know, showed itself as a headwind on the procurement. Uh, what's interesting about our business is that, you know, 5 short years ago, we used to sell a car for 10 or 11 thousand dollars and now average retail sales price is doubled and despite that we're finding uh, homes for these vehicles and customers. And so we don't believe that that Dynamic is going to change, right? We're going to have to adjust. And what we're trying to do is set ourselves up for the future, set ourselves up and this model to be able to serve customers up and down the credit Spectrum, so that we can continue to grow through that. And that requires technology, we believe our foresight and trying to make sure that we get these things done, um, and that we've been working on for the last 18 months are really important and differentiate us from our competitors, especially when you consider things like AI,

And how that will change our business and trying to make sure we stay in front of that.

John Hecht: Okay. That's super helpful. And then, I guess one more question, if that's okay, is you mentioned that the ongoing industry challenges, you guys have spent a lot of time managing what you can in terms of execution, the things you can control, expenses, and underwriting factors, and so forth. Doug, in your mind, though, I think affordability is probably one of the biggest constraints to improving industry. But Doug, maybe give us your thoughts on what other factors are you looking for that present, call it, good signals on the horizon? And how long does it take to get there? What are the, call it, junctures in the road that we're looking for to tell us that the environment is starting to become more constructive?

John Hecht: Okay. That's super helpful. One more question, if that's okay, is you mentioned that the ongoing industry challenges, you guys have spent a lot of time managing what you can in terms of execution, the things you can control, expenses, and underwriting factors, and so forth. Doug, in your mind, though, I think affordability is probably one of the biggest constraints to improving industry.

Okay that's super helpful. And then I guess my 1 more question if that's okay is you know you mentioned that the, you know, the ongoing industry, uh challenges. I you guys have spent a lot of time.

Managing what you can't. Yeah. What you can, in terms of execution—um, the things you can control: expenses and, you know, underwriting factors, and so forth. Um,

Doug, maybe give us your thoughts on what other factors are you looking for that present, call it, good signals on the horizon? How long does it take to get there? What are the, call it, junctures in the road that we're looking for to tell us that the environment is starting to become more constructive?

Tell us that the environment is starting to, you know, become more constructive.

Doug Campbell: Yeah. So a great question, John. For us, we have to sort of prepare ourselves to navigate any environment. And obviously, with these changes to our cost structure and optimizing our footprint with this new flexibility that we have, we're preparing to make sure we can weather anything. And I think that's important just given, as you look across the industry, sort of what's transpiring. To your point, we have to create our own green shoots in this business. And for us, that means going after higher quality customers. That means making sure we have optionality on the type of car we procure and not being so narrow as to the type of vehicle that we're going after. Things like that are going to create optionality within the business.

Doug Campbell: A great question, John. For us, we have to sort of prepare ourselves to navigate any environment. Obviously, with these changes to our cost structure and optimizing our footprint with this new flexibility that we have, we're preparing to make sure we can weather anything. I think that's important just given, as you look across the industry, sort of what's transpiring. To your point, we have to create our own green shoots in this business.

Yeah, I think. Uh, so a great question, John. Um, for us, we have to sort of prepare ourselves to navigate any environment. And obviously, with these changes to our cost structure and optimizing our footprint, with this new flexibility that we have, um, you know, we're preparing to make sure we can weather anything. And I think that's important just given, um, as you look across the industry, sort of what's transpiring.

For us, that means going after higher quality customers. That means making sure we have optionality on the type of car we procure and not being so narrow as to the type of vehicle that we're going after. Things like that are going to create optionality within the business.

Doug Campbell: In addition to that, how we collect from our customers, there's a lot of transformation going on given how we've collected historically. And so we're focused on those things that we can control. I don't know when the environment sort of abates and gets a little bit better for consumers, but I think this sort of new normal that we're operating in, in terms of the car price, that's sort of to be expected. And so for us, there are lots of creative ways in this business that we can position this business to generate value. And we're looking at all of them. And so I think as quarters progress, the most important thing for us is to make sure that we optimize our cost structure and that we start to have positive earnings. That's the most important thing.

In addition to that, how we collect from our customers, there's a lot of transformation going on given how we've collected historically. We're focused on those things that we can control. I don't know when the environment sort of abates and gets a little bit better for consumers, but I think this sort of new normal that we're operating in, in terms of the car price, that's sort of to be expected. For us, there are lots of creative ways in this business that we can position this business to generate value.

We're looking at all of them and so I think as quarters progress, the most important thing for us is to make sure that we optimize our cost structure and that we start to have positive earnings. That's the most important thing and then we can focus on the flexibility we have as it relates to rebuilding our inventory and trying to capture some of this demand that's out there. We've been in a really sort of positive credit cycle for many, many years.

Um to your point, we have to create our own green shoots in this business. And for us that means like going after higher quality customers, that means making sure we have optionality on the type of car. We procure and not being so narrow as to the type of vehicle that we're going after things like that are going to create optionality within the business. In addition to that how we collect from our customers. There's a lot of transformation going on given how we've collected historically. And so we're focused on those things that we can control. Uh, I don't know when the environment sort of, um, abates and gets a little bit better for consumers, but, um, I think this sort of new normal that we're operating in, uh, in terms of the car price, that's sort of to be expected. And so, for us, there are lots of creative ways in this business that we can position this business to generate value and we're looking at all of them. Um, and so I think, you know, as as quarters progressed, the most important thing for us is to make sure that we optimize

Doug Campbell: Then we can focus on the flexibility we have as it relates to rebuilding our inventory and trying to capture some of this demand that's out there. We've been in a really sort of positive credit cycle for many, many years. So it's just now turning the corner, and this pressure that's on the consumer is really unfortunate. But it is when our business thrives. Historically, there's been validation points along the way that we have really, really robust times in our business. What's important is to make sure you get to the other side and that you can enjoy the fruits of that. So we're just making sure that we're going to be set up and positioned for whatever transpires in the business.

It's just now turning the corner, and this pressure that's on the consumer is really unfortunate, but it is when our business thrives. Historically, there's been validation points along the way that we have really, really robust times in our business. What's important is to make sure you get to the other side and that you can enjoy the fruits of that. We're just making sure that we're going to be set up and positioned for whatever transpires in the business.

Our cost structure and that we start to have positive earnings. That's the most important thing. And then we can focus on, um, the flexibility we have as it relates to rebuilding our inventory and trying to capture some of this demand that's out there. We've been in a really sort of positive credit cycle for for many, many years. And so, it's just now turning the corner. Um, and this pressure that's on the consumer is really unfortunate.

But it is, when our business thrives historically, there's been validation points along the way that we have really, really robust times in our business. What's important is to make sure you get to the other side and that you can enjoy the fruits of that. And so, um, you know, we're just making sure that we're going to be set up and positioned for whatever transpires in the business.

John Hecht: Great. Thank you very much.

Doug Campbell: You're very welcome. Thanks, John.

Great, thank you very much.

You're very welcome. Thanks John.

Operator: Thank you. Our next question comes from the line of Kyle Joseph with Stephens. Your line is now open.

Thank you.

Our next question comes from the line of Kyle Joseph with Stevens. Your line is now open.

Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions. With the new debt in place, and you guys talked about application flow is really strong, give us a sense for the timing in terms of being able to meet that strong demand.

Good morning, guys. Thank you for taking my questions.

Um, you know, with the, uh, with the new debt in place and you guys talked about, you know, application flow is really strong, you know, give us a sense for the, the timing in terms of being able to to meet that that strong demand.

Doug Campbell: Morning, Kyle. Thanks for the question. So Jamie referenced the deviation in sort of inventory position through the two periods declining about 7% in terms of total inventory on the balance sheet. We're in that phase of sort of rebuilding inventory, and I think that takes us to work through the quarter. And it's more important as we set up for tax time. So in my mind, Q3 is that time to sort of rebuild inventory. And so Q3, just given sort of what's on the slate, we're going to be working on an ABS transaction, rebuilding inventories, and then making sure we set up for a tax time, and obviously executing phase two on our SG&A plan.

Doug Campbell: Morning, Kyle. Thanks for the question. Jamie referenced the deviation in sort of inventory position through the two periods declining about 7% in terms of total inventory on the balance sheet. We're in that phase of sort of rebuilding inventory, and I think that takes us to work through the quarter and it's more important as we set up for tax time. In my mind, Q3 is that time to sort of rebuild inventory. Q3, just given sort of what's on the slate, we're going to be working on an ABS transaction, rebuilding inventories, and then making sure we set up for a tax time, and obviously executing phase two on our SG&A plan.

Doug Campbell: So I think we will be set up nicely here for the fourth quarter to make sure that we can get after it in tax time, especially considering that tax refunds are supposed to be elevated here going into this season. So we're excited to take advantage of that.

I think we will be set up nicely here for the fourth quarter to make sure that we can get after it in tax time, especially considering that tax refunds are supposed to be elevated here going into this season. So we're excited to take advantage of that.

Morning Kyle. Um, thanks for the question. Um, so, you know, Jamie referenced, um, the the deviation and sort of inventory position through the 2 periods, declining about 7%. Um, in terms of total inventory on the balance sheet, uh, we're in that phase of sort of rebuilding inventory, um, and I think that takes us to work through the quarter, uh, and it's more important as we set up for tax time. So in my mind, uh, Q3 is that time to sort of rebuild inventory and so, um, you know, Q3 just given sort of what's on the Slate. Um, we're going to be working on an ABS transaction, uh, rebuilding inventories. Uh and then making sure we set up for a tax time and obviously executing Phase 2 on our sgna plan. So, um, I think we will be set up nicely here for the fourth quarter to make sure that we can get after it in tax time especially considering that tax. Refunds are supposed to be elevated here going into this season. So we're excited to take advantage of that.

Kyle Joseph: Got it. Thanks, Doug. And then, yeah, obviously, you guys were able to complete the term debt despite unfavorable market conditions, which is an understatement. And kind of walk us through. I know you talked about completing another ABS, but in terms of the next phase on the right side of the balance sheet, it sounds like a warehouse. Can you give us a sense for some of the discussions you've had and how you're thinking about structuring that, whether it's one or two facilities and where you are on that? Thanks.

Kyle Joseph: Got it. Thanks, Doug. Yeah, obviously, you guys were able to complete the term debt despite unfavorable market conditions, which is an understatement. Kind of walk us through. I know you talked about completing another ABS, but in terms of the next phase on the right side of the balance sheet, it sounds like a warehouse. Can you give us a sense for some of the discussions you've had and how you're thinking about structuring that, whether it's one or two facilities and where you are on that? Thanks.

Jonathan Collins: Yeah. Hi, Kyle. Good morning. Good to talk to you. Yeah. If you go back, for a long time as a company, we managed ourselves with a very simple capital structure and ABL. One of the things that this term loan provides us with is flexibility. One piece of that flexibility is to move to what we describe as our extended capital structure. So we do anticipate putting a couple of warehouses into our capital structure, and that'll provide us with some flexibility from that perspective. We'll continue to leverage the ABS market. That's an important platform that we've engaged with and built over time. Going back, we started this process probably about a year ago. So part of that process was engaging with various warehouse providers, but you needed to complete the term loan first to put cash on balance sheet.

Got it. Thanks Doug. And then, um, yeah. Obviously, uh, you guys were able to complete, uh, the term that despite, uh, unfavorable market conditions, um, which is an understatement, um, and, and, you know, kind of kind of walk us through. I know you talked about completing another ABS, but but in terms of, you know, the next, the next phase on the, on the right side of the balance sheet, it sounds like a warehouse. Can you give us a sense for, you know, some of the discussions you've had and how you're thinking about structuring that whether it's 1 or 2 facilities and where you are on that. Thanks.

Yeah. Uh, hi Kyle, good morning. It's good to talk to you. Um, yeah, if you go back um, for a long time as a company, we managed ourselves with a very simple capital.

uh, an abl

And 1 of the things that this um Term Loan provides us with is flexibility and 1 piece of that flexibility is to move to what we describe as our intended capital structure.

We'll continue to leverage the ABS market. That's an important platform that we've engaged with and built over time. Going back, we started this process probably about a year ago. Part of that process was engaging with various warehouse providers, but you needed to complete the term loan first to put cash on balance sheet and so we do believe that the warehouse structure will be a fast follow, and we're actively working on that from that perspective.

Leverage, the ABS Market, that's an important, you know, platform that we've engaged with and built over time.

Going back, um, we started this process probably about a year ago. Um, and so part of that process was engaging with various warehouse providers. Um, but you needed to complete the term loan first, um, to put cash on the balance sheet.

Jonathan Collins: And so we do believe that the warehouse structure will be a fast follow, and we're actively working on that from that perspective.

Um and so we we do believe that the the the warehouse um structure will be a fast follow. Um and we're actively working on that um from that perspective.

Kyle Joseph: Got it. Thanks, Jonathan. Last one for me, just in terms of credit performance, just a lot of moving parts out there, and it sounds like some are specific to Car-Mart and some are just kind of macro more broadly. But at least in terms of leading indicators, it seems like credit's getting better. You guys have rolled out LOS V2. Again, we can see the curves there look like there's overall improvement. And then you balance that with higher charge-offs, which I think you guys explained well, the higher reserve, and then broader macro uncertainty. Is that kind of a fair way to think about it? Just that what you're seeing at Car-Mart, you're seeing general improvement, but given what's going on macro, you're not really willing to call it at this point. Is that a fair way to assess how you're seeing credit?

Got it. Thanks Jeff. Jonathan uh, last 1 for me just in terms of credit performance um

You guys have rolled out LOS V2. Again, we can see the curves there look like there's overall improvement. Can you balance that with higher charge-offs, which I think you guys explained well, the higher reserve, and then broader macro uncertainty. Is that kind of a fair way to think about it?Just that what you're seeing at Car-Mart, you're seeing general improvement, but given what's going on macro, you're not really willing to call it at this point. Is that a fair way to assess how you're seeing credit?

Just a lot of moving Parts out there and it sounds like some are uh, specific to Carmart. And some are just kind of the macro more broadly. Um, you know, but at least in terms of leading indicators, it seems like credit is getting better. You guys have rolled out loo sv2 again. We can see the curves there, look like there's overall Improvement. Um, and then you balance that with, with higher charge offs, um, which I think you guys explained well, uh, the higher reserve and then broader broader macro uncertainty. Uh, you know, is that, is that kind of a fair way to think about it, just that, you know, what you're seeing at Kmart, you're seeing General Improvement, but given what's going on macro, you're not really willing to call it at this point. Is that, is that a fair way to assess how you're seeing credit?

Doug Campbell: That's correct. There's no doubt that this environment is putting a strain on all customers, our customers included. We've been peddling really, really hard to ensure that the type of customer that we're putting in the portfolio is more durable, and we've spoken about that a number of times. Through the quarter, the consumer has been navigating continued pressure seen on tariffs and the cost of goods, etc. And then, of course, all of the SNAP benefit speculation, etc., which we were getting in front of and messaging our fields to ensure that we could deal with that and use the levers within our toolbox to help consumers navigate that. And that was right at the period in closing the quarter. I think that's especially notable just given that we finished off delinquencies at 3.1%, and those continue to trend well.

Doug Campbell: That's correct. There's no doubt that this environment is putting a strain on all customers, our customers included. We've been peddling really, really hard to ensure that the type of customer that we're putting in the portfolio is more durable, and we've spoken about that a number of times. Through the quarter, the consumer has been navigating continued pressure seen on tariffs and the cost of goods, etc., and then of course, all of the SNAP benefit speculation, etc., which we were getting in front of and messaging our fields to ensure that we could deal with that and use the levers within our toolbox to help consumers navigate that.

That was right at the period in closing the quarter. I think that's especially notable just given that we finished off delinquencies at 3.1%, and those continue to trend well.Into November, that low delinquency rate has worked out sort of favorably in terms of the number of unit losses that we take. That's about down 10% in November when averaged across what we saw in the quarter. I don't know how that plays out through the rest of the third quarter, but it certainly is a good leading indicator, which is why we really focus on that as a key metric, a managerial metric for credit on how we manage our business. To your point, the dynamic is really fluid.

Doug Campbell: Into November, that low delinquency rate has worked out sort of favorably in terms of the number of unit losses that we take. That's about down 10% in November when averaged across what we saw in the quarter. I don't know how that plays out through the rest of the third quarter, but it certainly is a good leading indicator, which is why we really focus on that as a key metric, a managerial metric for credit on how we manage our business. To your point, the dynamic is really fluid.

That's correct. There's no doubt that this environment is putting a strain on all customers, our customers included. Uh, we've been pedaling really, really hard to ensure that the type of customer that we're putting in the portfolio is more durable, and we've spoken about that a number of times through the quarter. Um, you know, the consumer has been navigating continued pressure, uh, you know, seen on tariffs and the cost of goods, Etc. And then of course, um, all of the SNAP benefits. Speculation, Etc, which we were getting in front of, and messaging our fields to ensure that we could deal with that and, and use the levers within our toolbox to help consumers navigate that. And that was right at the period. Uh, in closing the quarter, uh, I think that's especially noted notable just given that we finished off delinquencies. Uh, you know, at at 3.1% and those continue to Trend, well, uh, into November, uh, that low delinquency rate, uh, has worked out sort of favorably in terms of, um,

Doug Campbell: But what's been important to us and this consumer, given our million-plus cars sold in the space, is to ensure that we stick to the playbook on helping customers navigate this environment where we can, and that if it is not going to be successful to call it and get the asset back and ensure that there's quality in the asset and we can recover that and provide good returns to our shareholders. I think that playbook is working well. Obviously, we're continuing to look at that as we navigate new headwinds like the SNAP thing as an example, but we continue to do that. Booking larger amounts of stronger consumers in our portfolio is an important piece of that.

What's been important to us and this consumer, given our million-plus cars sold in the space, is to ensure that we stick to the playbook on helping customers navigate this environment where we can, and that if it is not going to be successful to call it and get the asset back and ensure that there's quality in the asset and we can recover that and provide good returns to our shareholders. I think that playbook is working well. Obviously, we're continuing to look at that as we navigate new headwinds like the SNAP thing as an example, but we continue to do that. Booking larger amounts of stronger consumers in our portfolio is an important piece of that.

The number of unit losses that we take um and that's about down 10% in November when averaged across what we saw in the quarter, I don't know how that plays out through the rest of the third quarter. But it certainly is a good leading indicator which is why we really focus on that as a key metric, a managerial metric for credit on how we manage our business. Um, and to your point that the dynamic is really fluid. But um, what's been important to us? And this consumer given our million plus cars sold in the space is to ensure that we stick to the Playbook on helping customers navigate this environment where we can and that if it

Is not going to be successful to call it and get the asset back, uh, and ensure that there's quality in the asset and we can recover that and, and provide good returns to our shareholders. Um, and I think that Playbook is is working. Well, obviously, we we're, we're continue to look at that as we navigate new new, uh, headwinds. Like you know, the snapping as an example. But um, um, we continue to do that and booking larger, uh, amounts of stronger. Uh, consumers in our portfolio is an important piece of that.

Kyle Joseph: Great. Doug, Jonathan, Jamie, thanks for taking my questions. Really appreciate the color.

Doug Campbell: Appreciate it, Kyle. Thank you.

Great Doug Jonathan Jamie thanks for taking my question. It's really appreciate the color.

Jonathan Collins: Thanks, Kyle.

Operator: Thank you. As a reminder to ask a question at this time, please press star 11 on your touch-tone telephone. Our next question comes from the line of Vincent Cantic with BTIG. Your line is now open.

Appreciate it cop. Thank you. Thanks Kyle.

Thank you as a reminder to ask a question at this time. Please press star, 1 1 1 on your touchtone. Telephone, our next question comes from the line of Vincent campy with btig your line is now open.

Doug Campbell: Hey, good morning. Thanks for taking my questions. I appreciate all the detail that you provided on the call and on the presentation. You did a particularly good job highlighting the SG&A improvements that we are going to generate, as well as what to expect annualized. I did want to focus on revenues and sales expectations going forward, thinking about all the operational improvements that you've already made and are underway, as well as the changes and the flexibility from the new capital structure, and then also your underwriting changes. Kind of putting all that all together, should we be expecting sales volume, sales per store per month sort of to accelerate from here?

Vincent Caintic: Hey, good morning. Thanks for taking my questions. I appreciate all the detail that you provided on the call and on the presentation. You did a particularly good job highlighting the SG&A improvements that we are going to generate, as well as what to expect annualized. I did want to focus on revenues and sales expectations going forward, thinking about all the operational improvements that you've already made and are underway, as well as the changes and the flexibility from the new capital structure, and then also your underwriting changes. Kind of putting all that all together, should we be expecting sales volume, sales per store per month sort of to accelerate from here?

Hey, good morning. Thanks for taking my questions on that. I appreciate all the details, um, that you provided on the, on the call and on the presentation, um, did particularly good job, highlighting to sgna improvements, uh, that we are going to generate, as well as what to expect, uh, annualized. I did want to focus on, um, revenues and sales expectations going forward. I know thinking about all the operational improvements that that you've already made and are underway as well as the, um, the changes and the flexibility from the new capital structure. Um, and then also your underwriting changes. So kind of putting that all together. Um, should be be expecting, uh, sales volume.

Doug Campbell: If you could maybe talk about your confidence, or are there some changes like you talked about some of the store closures and something that where maybe there's a bump in the near term, but that results in some strength in the long term? So if you could maybe give us some thoughts on how we should think about revenues, we'd appreciate it. Thank you.

If you could maybe talk about your confidence, or are there some changes like you talked about some of the store closures and something that where maybe there's a bump in the near term, but that results in some strength in the long term? So if you could maybe give us some thoughts on how we should think about revenues, we'd appreciate it. Thank you.

Volume sales for store for months in order to accelerate from here. Um, if you could maybe talk about your confidence or are there some changes? Like I know you talked some about some of the store closures and something that where maybe there's a bump in the near term uh but you know that that results in some strength uh in the long term. So if you could maybe um give us some thoughts on how we should think about revenues, we appreciate it. Thank you.

Doug Campbell: You got it, Vincent. Good morning to you. That's a really good question. I'm going to try and unpack it here as best as I can. We mentioned that the total impact on store closures here between the first two phases is going to be about 10% of the company's store footprint, which is going to be in and around that 15-store range here for the first two phases. If you just sort of put a pen to what our average productivity per rooftop is, it would imply that we'd have some reduction. You can do the math there. However, what we've tried to do is really focus on the geographical overlay between the stores that we're closing and really focus on consolidating. I use that word carefully because what we want to do is be able to serve the same customer base.

Best, as I can.

You can do the math there. However, what we've tried to do is really focus on the geographical overlay between the stores that we're closing and really focus on consolidating. I use that word carefully because what we want to do is be able to serve the same customer base. What we've done, and Jamie sort of alluded to some of that work, is overlay all the accounts geographically by ZIP. And in many cases where we have some underperforming stores, there's a fair bit of density there.

Doug Campbell: And what we've done, and Jamie sort of alluded to some of that work, is overlay all the accounts geographically by ZIP. And in many cases where we have some underperforming stores, there's a fair bit of density there. And there's a belief that we can recapture some of those sales through those new locations that we're moving and transitioning customers into. And so it's a little bit unknown in terms of how much retention we'll be able to keep. But if the five closures that we executed here in early November are an indicator, it's somewhere greater than 80% of those sales. And so that's been encouraging. And so it makes it difficult to quantify, well, how much should I sort of pencil in in terms of complete takeout? And I don't think it's fair to sort of deduct those sales from the closures like on a one-to-one basis.

There's a belief that we can recapture some of those sales through those new locations that we're moving and transitioning customers into and so it's a little bit unknown in terms of how much retention we'll be able to keep. If the five closures that we executed here in early November are an indicator, it's somewhere greater than 80% of those sales and so that's been encouraging. It makes it difficult to quantify, well, how much should I sort of pencil in in terms of complete takeout? I don't think it's fair to sort of deduct those sales from the closures like on a one-to-one basis.

Um, we mentioned uh, that the total impact on store closures here, between the first 2 phases is going to be about 10% of the company's uh store footprint, which is going to be in and around that 15 store uh range here. Uh for the first 2 phases. If you just sort of put a pen to what our average productivity per rooftop is, it would imply that we'd have some reduction. You can do the math there. Uh, however, what we've tried to do is really focus on the geographical overlay between the stores that we're closing and really focus on consolidating. And I use that word carefully because what we want to do is be able to serve the same customer base. Um, and what we've done and Jamie sort of alluded to some of that work is overlay, all the accounts geographically by zip and in many cases where we have some underperforming stores. There's, there's a fair bit of density there and there's a belief that we can recapture some of those sales through those new locations that we're moving in transitioning customers into, and so it's a little bit unknown.

in terms of how much retention will be able to keep,

Doug Campbell: We'll be able to retain some of that given our approach on how we're doing that through these first two phases. To your question on the near-term sales expectations, inventory is a function of that. And so we're going to work quickly here on rebuilding our inventories on Q3. So I'd expect Q3 to have what I would call the noise in terms of sales results, but that will be sort of largely done building that back through January. I think that we can get that done in the third quarter, and more importantly, to capitalize on the tax season. How that affects the tax season will really just be a function of how much we can retain on those stores.

We'll be able to retain some of that given our approach on how we're doing that through these first two phases. To your question on the near-term sales expectations, inventory is a function of that. We're going to work quickly here on rebuilding our inventories on Q3. So I'd expect Q3 to have what I would call the noise in terms of sales results, but that will be sort of largely done building that back through January. I think that we can get that done in the third quarter, and more importantly, to capitalize on the tax season. How that affects the tax season will really just be a function of how much we can retain on those stores.

But if the five closest that we executed here in early November are an indicator, it's somewhere greater than 80% of those sales. And so that's been encouraging. And so, it makes it difficult to quantify, well, how much should I sort of pencil in, in terms of complete takeout. I don't think it's fair to sort of deduct those sales from the closures on a one-to-one basis. We'll be able to retain some of that, given our.

Our approach on how we're doing that. Through these first 2 phases,

Doug Campbell: I think the driving distance, Jamie, correct me if I'm wrong, through the first five stores we closed, the driving distance for any consumer is about 15 minutes from store to store. And so in this next round, it's in that 20- to 30-minute range driving distance. That's been a big component of how we think it'll affect the impact on sales is. And so that leads us some confidence to think that we'll have a high retention on the sales, but we'd have to prove that out.

I think the driving distance, Jamie, correct me if I'm wrong, through the first five stores we closed, the driving distance for any consumer is about 15 minutes from store to store. In this next round, it's in that 20- to 30-minute range driving distance. That's been a big component of how we think it'll affect the impact on sales is. And so that leads us some confidence to think that we'll have a high retention on the sales, but we'd have to prove that out.

To your question on the near-term sales expectations inventories of function of that. And so we're going to work quickly here on rebuilding our inventories on Q3. So I'd expect Q3 to have what I would call the noise in terms of sales results. But that will, that will be sort of largely done building that thing building that back through January. I think that we can get that done in the third quarter and more importantly to capitalize, uh, on the tax season, how that affect affects the tax season really, just be a function of how much we can retain on those stores. Um, and the um, I think uh, the driving distance, Jamie correct me if I'm wrong through the first um uh 5 stores. We closed the driving distance for any consumer is about 15 minutes from store to store. And so, in this next round, it's in that 20 to 30 minute range driving distance. That's been a big component of how we think. Uh, it'll affect the impact on sales is and so that leads us some confidence to think that we'll have a high retention on the sales, but we'd have to prove that out.

Doug Campbell: Okay. That's super helpful. Thank you for that. And I appreciate, and I thought it was great that you highlighted kind of the valuation of Car-Mart stock versus, well, it's trading 1/3 of book value. With that, I'm wondering if there are any actions you can take to kind of force that issue to close that valuation gap. Normally, we would think about share repurchases, but I know there's a lot of capital structure changes upcoming. But you also talked on the press release about the ability to access a substantial amount of the residual equity in the ABS deals. So just kind of throwing that out there, if there's anything you can do, any thoughts from a structure level to be able to realize some of that value. Thank you.

Vincent Caintic: Okay. That's super helpful. Thank you for that. I appreciate, and I thought it was great that you highlighted kind of the valuation of Car-Mart stock versus, well, it's trading 1/3 of book value. With that, I'm wondering if there are any actions you can take to kind of force that issue to close that valuation gap. Normally, we would think about share repurchases, but I know there's a lot of capital structure changes upcoming.

Thank you for being helpful. Thank you.

For that. Um, and I I appreciate and and I thought it was great that you highlighted um, kind of the valuation of Carmart soft versus, uh, well, its training at 1 third of Book value. Um,

you also talked on the press release about the ability to access a substantial amount of the residual equity in the ABS deals. So just kind of throwing that out there, if there's anything you can do, any thoughts from a structure level to be able to realize some of that value. Thank you.

Doug Campbell: Yeah, Vincent, thanks. I think an important piece of closing that gap is information. And in the absence of information, fear sits there. And so, as noted in both the press release and the supplemental presentation, we're trying to provide our investor base and the guys who cover us here more information so they understand. And I think actions like articulating out exactly with a level of precision the SG&A actions that we're taking and what the quantifiable benefit that you can expect both in the fiscal year and annualized are really important components of that. And I believe that will help people sort of understand how they can sort of close that gap. That would be my expectation. In addition to that, behind that, it's results. And that's really what we're focused on.

Doug Campbell: Yeah, Vincent, thanks. I think an important piece of closing that gap is information. In the absence of information, fear sits there. As noted in both the press release and the supplemental presentation, we're trying to provide our investor base and the guys who cover us here more information so they understand. I think actions like articulating out exactly with a level of precision the SG&A actions that we're taking and what the quantifiable benefit that you can expect both in the fiscal year and annualized are really important components of that. I believe that will help people sort of understand how they can sort of close that gap. That would be my expectation. In addition to that, behind that, it's results and that's really what we're focused on.

With that, I'm wondering if there are any actions, you can take to kind of force that that issue to, um, you know, to close that valuation Gap. You know, normally, we think about share repurchases, but, um, you know, I know there's, there's a lot of capital structure changes. Um, um, upcoming. Um, but you also talked on the, the press release about the ability to access a substantial amount of the residual equity in the ABS deals. So just kind of throwing that out there. If there's anything you can do, um, any thoughts from from a, uh, structure level to be able to realize some of that value. Thank you.

Yeah, Vincent. Thanks the um, you know, I think an important piece of closing that Gap is information. Uh, and in the absence of information, uh, fear sits there. And so, as noted in both, the press release and the supplemental presentation, we are trying to provide um our investor base and the the guys who cover us here more information. So they understand and I think actions like articulating out exactly where the level of precision SG and actions that we're taking and what the quantifiable benefits that you can expect built in the fiscal year and annualized are really important components of that, and I believe that will help people sort of understand, um, how they can sort of close that Gap. That would be my expectation, in addition to that behind this results. And, uh, that's really what we're focused on.

Doug Campbell: Okay, great. Thank you for that. And last one for me, and I think this one's for Jonathan. Just wanted to maybe talk about the credit allowance percentage. So on that slide that we moved or that talked about the adjusted EPS and removing the one-time impact of the allowance percentage adjustment, I'm wondering then if that implies that I think the 24% where it currently stands, if that's the right percentage we should be thinking about going forward. So I just wanted to be sure I understood that we're now making a one-time adjustment, and so 24% is the right place to be. Thank you.

Vincent Caintic: Okay, great. Thank you for that. Last one for me, and I think this one's for Jonathan. Just wanted to maybe talk about the credit allowance percentage. On that slide that we moved or that talked about the adjusted EPS and removing the one-time impact of the allowance percentage adjustment, I'm wondering then if that implies that I think the 24% where it currently stands, if that's the right percentage we should be thinking about going forward. I just wanted to be sure I understood that we're now making a one-time adjustment, and so 24% is the right place to be. Thank you.

Okay, great. Um, thank you for that. And last 1 for me and I think this 1's for Jonathan. Um, just wanted to uh maybe talk about the credit allowance percentage. Um, so you know, on that slide that uh we moved or or that, that talked about the adjusted EPS. Uh, and removing the, uh, 1-time impact of the the, uh, the allowance percentage adjustment. And I'm wondering, then if that implies that, the, I think the 24% were currently stands. If that's the right percentage, we should be thinking about going forward. So I just wanted to be sure, I understood that that's, um, you know, we're we're now making a 1 time adjustment and so 24% is the the right place to be. Thank you.

Jonathan Collins: Yeah, thanks. Hi, Vincent. How are you this morning? Yeah, I mean, if you go back in history, the allowance moves around within a range, right? And there's a piece of it where we're looking at the portfolio itself and how is it performing. But there's also a piece of it where you're looking at the macroeconomic factors. And so we just came out of a period with government shutdown. We kind of came dangerously close to kind of SNAP benefits not happening and etc. If you look forward, the consumer, as Doug mentioned, is under stress. I don't know that we can say with confidence that six months from now, a year from now, the macroeconomic environment, there's a path to 100% goodness. It doesn't necessarily mean that it's going to be bad or good or whatever, but there's some uncertainty there.

Jonathan Collins: Yeah, thanks. Hi, Vincent. How are you this morning? Yeah if you go back in history, the allowance moves around within a range, right? There's a piece of it where we're looking at the portfolio itself and how is it performing. There's also a piece of it where you're looking at the macroeconomic factors, and so we just came out of a period with government shutdown. We kind of came dangerously close to kind of SNAP benefits not happening and etc.

Thanks. Hi Vincent. How are you this morning? Um,

If you look forward, the consumer, as Doug mentioned, is under stress. I don't know that we can say with confidence that six months from now, a year from now, the macroeconomic environment, there's a path to 100% goodness. It doesn't necessarily mean that it's going to be bad or good or whatever, but there's some uncertainty there.

Yeah. I I mean if you go back in in history the allowance moves around, you know, within a range. Right? And it there's a piece of it where we're looking at the portfolio itself and how is it performing? But there's also a piece of it where you're looking at the macroeconomic factors. And so we just came out of a period with government shutdown. You know, we kind of came dangerously close to kind of SNAP benefits not happening and Etc. If you look forward um you know this the consumer as Doug mentioned is under stress um I don't know that we can say with confidence that you know

Jonathan Collins: I think we could all agree to that. Some of that uncertainty is built into kind of our allowance. I would expect it to be within this historical range. Is it going to be exactly 24%? I don't know that I would commit to that. I also wouldn't commit to it growing significantly higher than what it is today. I think it'll sit within a range. I think we're currently in our kind of historical range as a percentage of receivables. Time will tell with what happens with the macroeconomic environment.

I think we could all agree to that. Some of that uncertainty is built into kind of our allowance. I would expect it to be within this historical range. Is it going to be exactly 24%? I don't know that I would commit to that. I also wouldn't commit to it growing significantly higher than what it is today. I think it'll sit within a range. I think we're currently in our kind of historical range as a percentage of receivables. Time will tell with what happens with the macroeconomic environment.

6 months from now, a year from now like, uh, the macroeconomic environment, there's like a path to like 100% goodness. It doesn't necessarily mean that it's going to be bad or good or whatever, but there's some uncertainty there. I think we could all agree to that. And so, some of that uncertainty is built into kind of our allowance. I would expect it to be, you know, within this historical range. Is it going to be exactly 24%, you know, um, you know, I don't know that it that it, that I would, I would commit to that. Um, but I also wouldn't commit to like it, uh, growing significantly higher than what it is today. So I think it'll sit within a range. Um, I think we're currently in our kind of historical range, uh, as a percentage of receivables.

um,

And then, uh, time will tell with what happens with uh, the macroeconomic environment.

Doug Campbell: I'd only add there, on top of that, Jonathan. It is a bit of a tug-of-war on that front where you have this deteriorating environment with the consumer. They're navigating, and COs are ticking up a bit. There's no doubt that that's happening. You also have, as every month and every quarter that goes by, improving quality of customer in entering the portfolio. And then there's this qualitative overlay that Jonathan alluded to. And as an example, one of those is a forward-looking outlook on interest rates and inflation. And last quarter, there was certainty we were going to get cuts, and now maybe not so much, and maybe they're pushed into 2026. And those things have an impact on what the provision and the allowance is going to stand at. And so it's tough to really quantify that.

I'd only add there, on top of that. Jonathan, um, you know it is a bit of a tug-of-war on that front where, um, you know, you have this deteriorating environment with the consumer.

They're navigating. Mcos are ticking up a bit? There's no doubt that that's happening.

As an example, one of those is a forward-looking outlook on interest rates and inflation. Last quarter, there was certainty we were going to get cuts, and now maybe not so much, and maybe they're pushed into 2026, and those things have an impact on what the provision and the allowance is going to stand at and so it's tough to really quantify that. given that it's still under where it was a year ago and it's ticked up a bit, I think it's moving in a range, in the range that it should be, but it's really difficult to tell and understand what the outside environment's going to do to that as well.

Doug Campbell: But given that it's still under where it was a year ago and it's ticked up a bit, I think it's moving in a range, in the range that it should be, but it's really difficult to tell and understand what the outside environment's going to do to that as well.

You also have uh, as every month and every uh quarter that goes by uh, improving quality of customer in entering the portfolio. And then there's this qualitative overlay that Jonathan alluded to. And like as an example, 1 of those is a forward-looking at uh, outlook on interest rates and inflation and you know last quarter, there were certain we were going to get cuts and now maybe not so much and maybe they're pushed into 26. And those things have uh an impact on what the uh provision and the allowance is going to stand at. And so we we, you know, it's, it's tough to really quantify that but, uh, given that it's still under where it was a year ago and it picked up a bit. Like, I think it's moving in and moving it around in the ring that it that it should be. But uh, it's really difficult to tell and understand what the what the outside environment is going to do to that as well.

Doug Campbell: Okay. Very helpful. Really appreciate the detail. Thank you.

Very helpful, really. Appreciate the detail. Thank you.

Doug Campbell: You got it. Thank you very much.

Operator: Thank you. I'm currently showing no further questions at this time. This does conclude today's conference call. Thank you all for your participation. You may now disconnect.

You got it. Thank you very much.

Thank you. And I'm currently showing no further questions at this time. This does conclude today's conference call. Thank you all for your participation. You may now disconnect

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