AMERICAS CARMART INC

America's Car-Mart, Inc. operates in the Integrated Auto Sales and Finance segment of the used car market, focusing exclusively on selling older model used vehicles and providing financing to customers who typically have limited financial resources, limited credit histories, or past credit problems and would not qualify for conventional financing. The Company's operations are conducted through two principal operating subsidiaries: America's Car Mart, Inc., an Arkansas corporation, and Colonial Auto Finance, Inc., an Arkansas corporation. As of April 30, 2026, the Company operated 94 dealerships located primarily in small cities throughout the South-Central United States, with approximately 64% of its dealerships located in communities with populations of 50,000 or fewer.

The used automotive retail industry is fragmented and highly competitive. The Company competes principally with other independent Integrated Auto Sales and Finance dealers, as well as with the used vehicle retail operations of franchised automobile dealerships, independent used vehicle dealers, and individuals who sell used vehicles in private transactions. Management believes the principal competitive factors include the availability of financing to consumers with limited credit histories or past credit problems, the breadth and quality of vehicle selection, pricing, the convenience of a dealership's location, the option to purchase a service contract and an accident protection plan, and customer service. The Company believes its business strengths include an experienced management team, proven business practices, a cost-efficient operating model, and significant expansion opportunities within the twelve states in which it currently operates and other contiguous states.

The Company generates revenue primarily through the sale of used vehicles and the financing of substantially all of those sales, earning interest income on the installment sales contracts it originates. Revenue is also derived from the sale of service contracts covering certain vehicle components and assemblies, which a substantial majority of customers elect to purchase at the time of sale, and from the Accident Protection Plan, which contractually obligates the Company to cancel the outstanding balance on the financing contract if the vehicle is declared a total loss or is stolen. The Company's customer base consists primarily of individuals with limited financial resources who would not qualify for conventional financing. The Company operates a single reportable segment representing its core business of offering integrated automotive sales and financing solutions.

The Company's primary product is the sale of used vehicles, with an average retail sales price of $20,064 per unit in fiscal 2026, compared to $19,398 in fiscal 2025. The Company acquires vehicles that are generally between five and twelve years old, with mileage ranging from approximately 70,000 to 140,000 miles, paying between $7,000 and $15,000 per vehicle, with an average purchase price of approximately $9,500. The vehicle inventory primarily consists of sport utility vehicles, trucks, and sedans. The Company provides financing to substantially all customers who purchase vehicles, with installment sales contracts typically including down payments ranging from 0% to 20%, an average down payment of 5.1%, contract terms ranging from 11 months to 70 months averaging 49.0 months, and a fixed annual interest rate ranging from 6.0% to 20.3% based primarily on the customer's credit score and applicable state usury limits, with a portfolio weighted average interest rate of 17.7%. Payment schedules are designed to align with customers' pay periods, with approximately 78% of payments due on a weekly or bi-weekly basis. The Company also offers a seven-day vehicle exchange policy and service contracts, and the Accident Protection Plan is elected by the vast majority of financed customers.

The Company's service contract and Accident Protection Plan products generate additional revenue. The Accident Protection Plan contractually obligates the Company to cancel the outstanding balance on the financing contract if the vehicle is declared a total loss or is stolen, as defined under the terms of the APP agreement, and is available in most states where the Company operates. The Company also offers contract modifications to customers experiencing financial difficulty, with approximately half of the Company's installment sale contracts on average requiring one or more modifications over the life of the contract. Modifications typically involve adjustments to payment terms, such as modest extensions to the overall contract term, with extension periods limited to twelve months beyond the initial payment term. A limited subset of installment sale contracts, representing approximately 1.3% of total finance receivables as of April 30, 2026, require modification due to customers entering bankruptcy protection.

During fiscal year 2026, the Company closed 60 dealerships as part of its footprint optimization evaluation and transitioned servicing and collection of the associated customer accounts to nearby dealerships or the Company's centralized collections department. On October 30, 2025, the Company closed a five-year, $300.0 million senior secured term loan with funds managed by Silver Point Capital, L.P., and used a portion of the proceeds to repay and retire its revolving line of credit. Subsequent to fiscal year-end, on June 19, 2026, the Company entered into an amendment to the Term Loan providing covenant relief for a limited period, subject to the Company's satisfaction of specified milestones and conditions. The Company did not complete any acquisitions during fiscal year 2026. The Company's near-term business strategy is focused on stabilizing operations and preserving financial flexibility, including curtailing vehicle inventory purchases, reducing finance receivable originations, tightening underwriting standards, limiting capital expenditures, and reducing staffing levels in connection with dealership closures.

The Company's financial performance in fiscal 2026 was materially affected by its liquidity constraints and operational actions. Credit losses increased to 40.8% of sales in fiscal 2026, resulting from a reduction in finance receivable originations during the year and changes in macroeconomic conditions affecting the Company's customer base. The Company's average retail sales price increased to $20,064 per unit in fiscal 2026 from $19,398 in fiscal 2025. The Company's annual provision for credit losses as a percentage of sales over the last five fiscal years has ranged from a low of 22.9% in fiscal 2022 to a high of 40.8% in fiscal 2026, with an average of 32.4% over the period. Due to capital constraints and limited inventory purchases, the Company experienced weaker sales volumes in the fourth quarter of fiscal 2026, which had a material adverse impact on total revenues for the fiscal year.

The Company's long-term growth strategy, upon stabilization of its financial condition, focuses on expanding its business using the same business model developed over 40 years with enhancements to technology and core products. The Company seeks to improve operating results primarily by enhancing the performance and productivity of its existing dealership locations, including through its footprint optimization strategy of consolidating underperforming dealerships into nearby, more productive locations, concentrating resources in its highest-performing markets, and investing in operational infrastructure. The Company has historically expanded its dealership footprint through selective acquisition opportunities and may continue to pursue such opportunities in the future where they are expected to strengthen the Company's brand and support long-term shareholder returns, though the Company did not complete any acquisitions during fiscal year 2026. The Company believes there are numerous suitable communities to expand its physical footprint within the twelve states in which it currently operates and other contiguous states.

The Company's growth also depends on its ability to collect and service customer accounts, which management describes as perhaps the single most important aspect of operating an Integrated Auto Sales and Finance used car business. The Company measures and monitors collection results using internally developed standards for delinquency, cash collected, and account losses, and a significant portion of dealership management and account representatives' incentive compensation is tied to collection results. The Company offers contract modifications, primarily involving term extensions, to customers experiencing financial difficulty, with approximately half of installment sale contracts on average requiring one or more modifications. The Company expects the current conditions of reduced availability of used vehicle financing elsewhere in the market to continue for the foreseeable future and believes this will provide the Company an opportunity to gain market share and better serve an increasing customer base.

The filing does not contain explicit margin or cost outlook figures or targets.

The Company's near-term operational outlook is focused on preserving liquidity, including curtailing vehicle inventory purchases, reducing finance receivable originations, tightening underwriting standards, limiting capital expenditures, and reducing staffing levels in connection with dealership closures. The Company expects to continue evaluating its dealership footprint and may close or consolidate additional dealerships going forward. The centralized collections model is still in the early stages of implementation and its effectiveness over a full collections cycle has not yet been demonstrated, so the Company intends to pace any additional dealership closures and consolidations so as not to outrun the model's proven capacity to maximize collections dollars. The Company has invested in infrastructure improvements including a loan origination system and enterprise resource planning system to enhance operational productivity.

The filing does not contain explicit R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures.

The Company faces significant structural headwinds and constraints. The Company's constrained liquidity and its failure, or expected failure, to comply with certain financial covenants under the Term Loan subsequent to April 30, 2026 raise substantial doubt about the Company's ability to continue as a going concern. The Company has obtained covenant relief from its lenders only for a limited period and subject to the satisfaction of specified milestones and conditions. The Company's ability to procure vehicles is significantly impacted by both external market conditions and the Company's available liquidity; reduced volumes of new vehicle sales in recent years have limited the supply of quality used vehicles, while sustained demand for affordable transportation and tariffs imposed on the automotive industry have increased wholesale acquisition costs. The Company expects continued pressure on the supply and price of used vehicles for the near term. The Company expects the ongoing capital and inventory constraints to continue to adversely affect its revenues and operating results during the first quarter of fiscal 2027 and, unless and until the Company's liquidity position improves and inventory purchases and contract originations return to normalized levels, during subsequent periods as well.

Management has identified several macro and regulatory factors as constraints. The Company's customers are affected by general economic conditions including fluctuations in gas prices, grocery prices and employment levels and inflationary pressure on operating costs. The Company's financing activities are subject to federal laws such as truth-in-lending and equal credit opportunity laws and regulations as well as state and local motor vehicle finance laws, installment finance laws, usury laws and other installment sales laws. The Company's consumer financing and collection activities are also subject to oversight by the Consumer Financial Protection Bureau, and the Company's finance subsidiary Colonial is deemed a 'larger participant' in the automobile financing market and is therefore subject to examination and supervision by the CFPB. The states in which the Company operates impose limits on interest rates the Company can charge on its installment contracts.

There is substantial doubt about the Company's ability to continue as a going concern due to constrained liquidity and its failure, or expected failure, to comply with certain financial covenants under the Term Loan subsequent to April 30, 2026. The Company has obtained covenant relief only for a limited period subject to satisfaction of specified milestones and conditions, and if the Company is unable to obtain sufficient liquidity or new financing, it may be forced to seek relief under federal bankruptcy laws, and holders of common stock could experience a significant or complete loss of their investment. The Company has significantly reduced its purchases of vehicle inventory due to liquidity constraints, which has reduced and is expected to continue to reduce vehicle sales, finance receivable originations, and revenues. The Company's credit losses increased to 40.8% of sales in fiscal 2026, resulting from a reduction in finance receivable originations and changes in macroeconomic conditions affecting the Company's customer base. The Company's ability to procure vehicles is significantly impacted by reduced volumes of new vehicle sales limiting the supply of quality used vehicles, while tariffs imposed on the automotive industry have increased wholesale acquisition costs. The Company's substantial level of indebtedness, including the $300.0 million senior secured term loan, and its ability to service that indebtedness pose a material risk, and the Company's inability to establish a warehouse credit facility or continue to complete asset-backed securitization transactions could further constrain liquidity.

Management's message emphasizes that the Company's near-term business strategy is focused on stabilizing operations and preserving financial flexibility, with priorities including preserving liquidity, optimizing the dealership footprint, obtaining and managing financing, and addressing the going concern uncertainty. Management states that the Company's management and Board of Directors are committed to these near-term objectives, and once these objectives have been achieved and the Company's liquidity position has stabilized, the Company intends to return its focus to executing its long-term business strategy. Management's plans to address the going concern conditions include satisfying the milestones and conditions under the June 19, 2026 amendment to the Term Loan and extending the related covenant relief period; completing the Special Committee's review of strategic and financing alternatives; establishing a new revolving warehouse facility and continuing to complete asset-backed securitization transactions; and obtaining additional capital, which may include the issuance of equity or other securities, additional debt financing, or the sale of assets. Management cautions, however, that it cannot assure that it will be able to satisfy the milestones and conditions under the Term Loan amendment and extend its current covenant relief or obtain the additional financing needed to stabilize the Company's liquidity position and support the Company's long-term operations on terms favorable to the Company or at all.