America’s Car-Mart, Inc. Completes $200 Million Term Securitization

Rhea-AI Summary

America's Car-Mart (NASDAQ: CRMT) has successfully completed a $200 million term securitization transaction through ACM Auto Trust 2025-1. The transaction includes $150.77 million of Class A Notes with a 5.38% coupon rate and $49.23 million of Class B Notes with a 7.87% coupon rate, resulting in an overall weighted average coupon of 6.49%.

The transaction was over 10 times oversubscribed and showed a 95 basis point improvement in weighted average coupon compared to the October 2024 securitization. According to CFO Vickie Judy, this strong demand reflects confidence in the company's asset quality, particularly as their portfolio benefits from the migration to a new loan origination system (LOS).

Positive

• Secured $200 million in term securitization financing
• Transaction was over 10 times oversubscribed, indicating strong investor demand
• Weighted average coupon improved by 95 basis points from previous securitization
• Portfolio showing improved asset quality with new loan origination system

Negative

• None.

Insights

Financial Analyst

The successful completion of America's Car-Mart's $200 million securitization marks a significant financial milestone, with the 95% basis point improvement in weighted average coupon rate signaling substantial cost savings and enhanced market confidence. The transaction's 10x oversubscription is particularly noteworthy in the current challenging auto financing environment.

The improved pricing structure, featuring Class A Notes at 5.38% and Class B Notes at 7.87%, could potentially translate to annual interest savings of approximately $1.9 million compared to the October 2024 securitization. This optimization of capital structure should positively impact the company's cost of funds and overall profitability.

Key strategic implications include:

• Enhanced financial flexibility through diversified funding sources
• Validation of the new loan origination system's effectiveness in improving asset quality
• Strengthened market positioning in the used car financing sector
• Improved ability to compete with larger players through reduced funding costs

The strong investor demand, reflected in the oversubscription rate, suggests that institutional investors are increasingly confident in Car-Mart's underwriting practices and asset performance. This could potentially lead to even more favorable terms in future securitizations, creating a positive feedback loop for the company's funding strategy.

Weighted average coupon improved 95 basis points from prior October 2024 securitization
Transaction over 10 times oversubscribed

ROGERS, Ark., Feb. 03, 2025 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (NASDAQ: CRMT) (“we,” “Car-Mart” or the “Company”), announced today that it has completed a term securitization transaction involving the issuance of $200 million in principal amount of asset-backed notes with an overall weighted average coupon of 6.49%.

ACM Auto Trust 2025-1 issued $150.77 million of Class A Notes and $49.23 million of Class B Notes. The Class A Notes have a coupon rate of 5.38% and the Class B Notes have a coupon rate of 7.87%.

“We are encouraged by the strong demand for our 2025-1 securitization. Compared to our October 2024 securitization, the weighted average coupon improved by 95 basis points. We believe this reflects confidence in our asset quality, particularly as the portfolio continues to benefit from the migration to our new loan origination system (LOS),” said Vickie Judy, Chief Financial Officer.

ACM Auto Trust 2025-1 is an indirect subsidiary of the Company. The notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This news release does not and will not constitute an offer to sell or the solicitation of an offer to buy the notes. This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About America’s Car-Mart, Inc.

America’s Car-Mart, Inc. (the “Company”) operates automotive dealerships in 12 states and is one of the largest publicly held automotive retailers in the United States focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market. The Company emphasizes superior customer service and the building of strong personal relationships with its customers. The Company operates its dealerships primarily in smaller cities throughout the South-Central United States, selling quality used vehicles and providing financing for substantially all of its customers. For more information about America’s Car-Mart, including investor presentations, please visit our website at www.car-mart.com.

Contact:

Vickie Judy, CFO
479-464-9944
Investor_relations@car-mart.com

FAQ

What is the size and structure of CRMT's 2025-1 securitization transaction?

CRMT's 2025-1 securitization totals $200 million, consisting of $150.77 million Class A Notes (5.38% coupon) and $49.23 million Class B Notes (7.87% coupon), with an overall weighted average coupon of 6.49%.

How does CRMT's 2025-1 securitization compare to their October 2024 transaction?

The 2025-1 securitization showed a 95 basis point improvement in weighted average coupon compared to the October 2024 securitization.

What was the investor demand for CRMT's 2025-1 securitization?

The securitization was over 10 times oversubscribed, indicating very strong investor demand.

How is CRMT's new loan origination system (LOS) affecting their portfolio?

According to management, the portfolio is benefiting from the migration to the new LOS, which is contributing to improved asset quality.