America’s Car-Mart, Inc. Completes $300 Million Term Securitization

Rhea-AI Summary

America's Car-Mart, Inc. (NASDAQ: CRMT) has successfully completed a $300 million term securitization transaction. The issuance involves asset-backed notes with an overall weighted average coupon of 7.44% and an advance rate of 59.15%. ACM Auto Trust 2024-2, an indirect subsidiary of the Company, issued $228.2 million of Class A Notes with a 6.06% coupon rate and $71.8 million of Class B Notes with a 9.21% coupon rate.

This marks the Company's second term securitization of 2024, with significant improvements in benchmark rate and spread, resulting in a 198 basis point improvement in the weighted average coupon compared to their January 2024 transaction. The notes have not been registered under the Securities Act and are subject to specific offering restrictions.

Positive

• Successful completion of a $300 million term securitization
• 198 basis point improvement in weighted average coupon compared to January 2024 transaction
• Advance rate of 59.15% for the securitization

Negative

• None.

Insights

Financial Analyst

This $300 million term securitization is a significant financial move for America's Car-Mart, demonstrating the company's ability to access capital markets effectively. The 59.15% advance rate indicates a relatively conservative structure, which could be viewed positively by investors concerned about risk.

The 7.44% overall weighted average coupon represents a substantial 198 basis point improvement from their January 2024 transaction. This reduction in borrowing costs could potentially boost profitability and cash flow. The split between Class A ($228.2 million at 6.06%) and Class B ($71.8 million at 9.21%) notes shows a tiered risk structure, likely appealing to different investor profiles.

For a company with a market cap of $335 million, this $300 million securitization is particularly noteworthy, potentially providing significant liquidity for operations or expansion. However, investors should consider how this additional debt might impact the company's balance sheet and future financial flexibility.

Market Research Analyst

America's Car-Mart's successful securitization reflects positively on the used car market and the company's business model. As a retailer focused on the "Integrated Auto Sales and Finance" segment, this financial maneuver could enhance their ability to offer competitive financing to customers, potentially driving sales growth.

The improved terms of this securitization, compared to the January 2024 transaction, suggest increasing investor confidence in the company's receivables and overall market conditions. This could indicate a stabilizing or improving outlook for the used car market, particularly in the South-Central United States where the company operates.

Investors should monitor how America's Car-Mart utilizes this capital. If invested in expanding their dealership network or enhancing their financing capabilities, it could lead to market share gains. However, the automotive retail sector faces challenges from online competitors and economic uncertainties, so the effective deployment of this capital will be important for long-term success.

ROGERS, Ark., Oct. 11, 2024 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (NASDAQ: CRMT) (the “Company”) announced today that it has completed a term securitization transaction involving the issuance of $300 million in principal amount of asset-backed notes with an overall weighted average coupon of 7.44%.   The advance rate for this transaction was 59.15%.   

ACM Auto Trust 2024-2 issued $228.2 million of Class A Notes and $71.8 million of Class B Notes. The Class A Notes have a coupon rate of 6.06% and the Class B Notes have a coupon rate of 9.21%.

“We are pleased with the successful completion of our second term securitization of 2024, with benchmark rate and spread improvements resulting in a 198 basis point improvement in the weighted average coupon compared to our January 2024 transaction,” said Vickie Judy, Chief Financial Officer.

ACM Auto Trust 2024-2 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

America’s Car-Mart operates automotive dealerships in twelve 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 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, please visit our website at www.car-mart.com.

Contacts:
		Investor_relations@car-mart.com Vickie D. Judy, CFO at (479) 464-9944

FAQ

What is the total amount of America's Car-Mart's (CRMT) recent term securitization?

America's Car-Mart (CRMT) completed a $300 million term securitization transaction.

What is the weighted average coupon for CRMT's October 2024 securitization?

The overall weighted average coupon for the securitization is 7.44%.

How does CRMT's October 2024 securitization compare to its January 2024 transaction?

The October 2024 securitization shows a 198 basis point improvement in the weighted average coupon compared to the January 2024 transaction.

What are the coupon rates for Class A and Class B Notes in CRMT's recent securitization?

The Class A Notes have a coupon rate of 6.06%, and the Class B Notes have a coupon rate of 9.21%.