Executive Summary

CRMT printed a soft Q1 FY26: total revenue $341.3M (-1.9% YoY) and diluted EPS of -$0.69 as unit volumes fell 5.7% amid inventory capacity constraints and a ~$500/unit procurement cost headwind tied to tariffs; gross margin expanded 160 bps to 36.6% on pricing, ancillary attachment, lower repair severity, and wholesale retention .
Versus S&P Global consensus, CRMT posted a large miss: EPS -$0.69 vs +$0.83 estimate, revenue $339.6M vs $359.2M estimate, and EBITDA $11.8M vs $28.2M estimate; shortfall was driven by lower units, elevated provision for credit losses (+8% YoY), and higher SG&A from accelerated tech investments, partly offset by lower interest expense and margin gains [functions.GetEstimates]*.
Strategic execution advanced: LOS V2 (risk-based pricing) went live chainwide and “Pay Your Way” collections upgrade nearly doubled recurring payment enrollments, improving cash flow predictability; securitization costs continued to decline (Aug ABS coupon 5.46%, -81 bps vs May), supporting lower financing costs over time .
Key near-term watch items: unlocking inventory capacity (30% advance rate, $30M cap on inventory borrowing base), wholesale price/tariff normalization (management expects back-half seasonal relief), and SG&A cadence (about half of Q1 increase to unwind in 2H; ~5% annual savings from collections modernization longer-term) .

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded to 36.6% (+160 bps YoY; +20 bps QoQ) on pricing discipline, ancillary attachment, fewer repairs, and better wholesale retention .
- Collections healthy: total collections +6.2% YoY to $183.6M; average collection per active customer rose to $585/month (from $562) .
- Tech and capital progress: LOS V2 deployed (more predictive scorecard and embedded risk-based pricing); Pay Your Way upgrade nearly doubled recurring enrollment; ABS coupon improved to 5.46% with strong oversubscription, indicating growing capital efficiency .
- Management quote: “The new scorecard is delivering exactly what we designed it to do… shifting mix towards our highest ranked customers… [driving] lower loss frequency and severity, faster breakeven, [and] stronger returns” .
What Went Wrong
- Volume decline: retail units fell 5.7% to 13,568, as higher procurement costs (~+$500/unit) and a tight ABL inventory advance/cap constrained inventory and sales despite strong application growth .
- Credit costs/provision: Provision for credit losses increased 8% YoY; NCOs ticked to 6.6% (from 6.4%) as softer sales reduced the denominator and legacy pools saw higher frequency/severity; 30+ DQ was 3.8% (+30 bps YoY), albeit trending lower post-quarter .
- Expense pressure: SG&A rose 10.1% YoY to $51.4M on payroll and accelerated tech rollouts (LOS V2 and Pay Your Way); management expects ~50% of the increase to unwind after Q2 completion, but Q1 burden weighed on EPS .

Financial Results

Headline financials – trend (oldest → newest)

Metric	Q3 FY25	Q4 FY25	Q1 FY26
Total Revenue ($USD Millions)	$325.7	$370.2	$341.3
Diluted EPS ($)	$0.37	$1.26	-$0.69
Gross Margin %	35.7%	36.4%	36.6%
SG&A ($USD Millions)	$46.5	$48.3	$51.4
Provision for Credit Losses ($USD Millions)	$86.7	$93.0	$103.0
Interest Expense ($USD Millions)	$16.9	$17.4	$17.0

Q1 FY26 vs prior year and vs estimates (S&P Global)

Metric	Q1 FY25 Actual	Q1 FY26 Actual	S&P Consensus	Surprise
Revenue ($USD Millions)	$347.8	$339.6*	$359.2*	-$19.6M (miss)*
Diluted EPS ($)	-$0.15	-$0.69	$0.83*	-$1.52 (miss)*
EBITDA ($USD Millions)	N/A	$11.8*	$28.2*	-$16.4M (miss)*

Note: Reported Q1 FY26 total revenue was $341.3M, while S&P’s “Revenue” actual for estimate comparison is $339.6M due to definitional differences; we anchor beats/misses to S&P [functions.GetEstimates].
Values retrieved from S&P Global.

Revenue composition (oldest → newest)

Revenue Component	Q3 FY25 ($M)	Q4 FY25 ($M)	Q1 FY26 ($M)
Sales	$263.5	$309.7	$276.2
Interest Income	$62.2	$60.5	$65.1

Key operating KPIs (oldest → newest)

KPI	Q3 FY25	Q4 FY25	Q1 FY26
Retail Units Sold	13,198	15,649	13,568
Avg Retail Sales Price ($)	19,275	19,049	19,564
Total Gross Profit per Unit ($)	7,131	7,209	7,456
Gross Margin %	35.7%	36.4%	36.6%
Same-store Revenue Growth	3.1%	-3.9%	-4.1%
Total Collections ($000s)	176,338	191,114	183,571
Avg Collection per Active Cust./Mo ($)	568	612	585
Net Charge-offs (% Avg Fin. Rec.)	6.1%	6.9%	6.6%
30+ Day Delinquencies	3.7%	3.4%	3.8%
Active Customer Count	103,663	104,682	104,691
Avg Down Payment %	5.1%	6.2%	4.9%
Weighted Avg Total Contract Term (mo)	48.3	48.3	48.3

Guidance Changes

Metric/Topic	Period	Previous Guidance	Current Guidance / Commentary	Change
SG&A cadence	FY26 2H	Not specified	~50% of Q1 YoY SG&A increase expected to unwind after tech completion in Q2	New/update
SG&A structural savings (collections modernization)	LT	Not specified	“Pay Your Way” to drive ~5% annual SG&A cost reduction over time	New
SG&A % target	LT	Mid-16% of sales target	Target reiterated; path aided by tech and collections modernization	Maintained
Inventory financing capacity	Near-term	Not specified	ABL inventory advances constrained (30% advance rate; $30M cap); evaluating alternatives to expand capacity	New (risk/watch)
ABS funding costs	Near-term	May’25 ABS 6.27% coupon	Aug’25 ABS coupon 5.46% (-81 bps); 4th consecutive coupon improvement; spreads -308 bps since 2024-1	Lowered cost of capital
Used car pricing outlook	FY26 2H	Not specified	Expect seasonal price declines in back half as tariff effects normalize	New
Delinquency trend post-quarter	Aug’25	N/A	DQ ended Aug at 2.8% vs 3.8% at Q1 end; day-to-day normalized to ~3.4%-3.6%	Improved
ASP trajectory	Near-term	Not specified	Expect ASP (ex-ancillaries) to positively affect revenue; remain disciplined on margin	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25, Q4 FY25)	Current Period (Q1 FY26)	Trend
Underwriting/LOS	LOS tightened credit box; improved credit performance . Q4: LOS capabilities expanded .	LOS V2 live with risk-based pricing; mix shifted +15% to ranks 5–7; better expected unit economics .	Strengthening
Collections modernization	Limited prior disclosure	Pay Your Way upgrade; online shift and recurring payments nearly doubled; supports predictability and SG&A savings .	Improving
Procurement/used car pricing/tariffs	Q3: procurement/disposal improvements . Q4: ASP down YoY to aid affordability .	Tariffs/wholesale pricing +~$500/unit headwind; expects back-half seasonal relief .	Headwind easing later
Capital markets/cost of capital	Jan’25 ABS 6.49% (-95 bps vs Oct’24); ABL to $350M .	May’25 ABS 6.27%; Aug’25 ABS 5.46%; oversubscribed; spreads -308 bps since 2024-1 .	Improving
Credit performance	Q3 NCO 6.1%; DQ 3.7% (weather impact) . Q4 NCO 6.9%; DQ 3.4% .	NCO 6.6%; DQ 3.8% but improved to 2.8% by end Aug; allowance 23.35% (vs 25.00% YoY) .	Stable to improving
Demand/applications	Q3: units +13.2% YoY .	Applications +10% YoY for Q1; July +26.5%; higher intent; constrained by inventory capacity .	Rising demand
Reporting/controls	—	10-K delay tied to enhanced modification disclosures; remediation underway .	Remediating

Management Commentary

“With LOS V2 now live… embedded risk based pricing is now better aligning expected returns with customer profiles… 15% more of our volume came from ranks five through seven” .
“Since the upgrade of Pay Your Way… we have nearly doubled the number of customers enrolled in recurring payments, creating more predictable cash flows, and reducing collection costs” .
“We saw a knock on effect from tariffs, which drove a $500 per unit increase in the procurement costs during the quarter… pricing [has] since smoothed out” .
“We… completed a $172 million [ABS]… 5.46%… fourth consecutive improvement… reduced our weighted average spread by 308 basis points since our 2024-1 transaction” .
“Currently, we face both a low advance rate of 30% and a cap of $30 million on our inventory advances… putting ongoing pressure on our ability to expand retail sales… exploring alternative financing solutions” .

Q&A Highlights

Inventory/procurement costs and demand: Management cited tariff-driven ~$500/unit procurement increase and noted strong application growth sustained into August/September; procurement pricing has “smoothed out,” but inventory capacity constrained sales .
Credit normalization: With LOS-originated contracts now ~72% of portfolio, management expects more “normal” seasonal NCO cadence; Q1 DQ uptick partly tied to Pay Your Way transition, with DQ later normalized and August ending at 2.8% .
SG&A cadence: Q2 similar to Q1, then ~half of the increase to unwind in 2H; longer-term ~5% SG&A savings from collections modernization, targeting mid-16% SG&A of sales .
Used car pricing outlook: Expect typical back-half seasonal decline as tariff effects normalize; affordability remains focus alongside margin discipline .
Capital structure details: ABL constraints (30% advance, $30M cap on inventory) reduce flexibility to season receivables for ABS execution; company evaluating financing alternatives to unlock capacity .

Estimates Context

Q1 FY26 vs S&P Global consensus: EPS -$0.69 vs $0.83; Revenue $339.6M vs $359.2M; EBITDA $11.8M vs $28.2M — a broad-based miss led by lower unit volume (-5.7% YoY), elevated provision (+8% YoY), and higher SG&A from accelerated tech investments, partly offset by lower interest expense and 160 bps gross margin expansion [functions.GetEstimates].
Values retrieved from S&P Global.

Key Takeaways for Investors

Execution improving but capacity-constrained: Strong application trends and better-risk mix from LOS V2 are positives, yet ABL inventory constraints currently limit unit growth; financing solutions are a key near-term catalyst .
Cost of capital continues to fall: Another ABS coupon step-down to 5.46% with heavy oversubscription signals structural funding improvements (spreads -308 bps since 2024-1) .
Margin durability: Gross margin gains (36.6%) reflect pricing, ancillary attachment, and lower repair intensity; management intends to remain disciplined even as ASPs rise .
Credit stable with improved portfolio quality: NCOs at 6.6% and allowance at 23.35% (vs 25.00% YoY) with LOS-originated contracts ~72% of the portfolio; DQ normalized post-quarter .
SG&A inflection setup: Q2 similar to Q1, then ~50% unwind of the increase in 2H; longer-term ~5% SG&A savings from collections modernization; target mid-16% SG&A/sales .
Watch tariff/wholesale normalization and ASP trajectory: Management expects seasonal relief and ASP to positively impact revenue, but will prioritize affordability and portfolio quality .
Stock-reaction catalyst: The quarter’s significant EPS/revenue/EBITDA miss vs Street sets up estimate cuts near-term; unlocking inventory capacity and continued ABS improvement are the narrative shifts to watch for multiple support [functions.GetEstimates] .
Values retrieved from S&P Global.

Additional Detail and Cross-References

Q1 FY26 headline figures: Total revenue $341.3M (-1.9% YoY), units 13,568 (-5.7%), interest income +7.5%, gross margin 36.6% (+160 bps YoY), EPS -$0.69; collections $183.6M (+6.2%) .
YoY drivers: Fewer retail units due to fewer units available for sale and higher procurement costs; partial offset from margin improvement and higher interest income .
Balance sheet/leverage: Debt/finance receivables 51.1%; debt net of cash/finance receivables 43.1% (vs 53.4% and 46.7% YoY); finance receivables principal $1.516B; inventory $112.5M .
Financing actions: Aug 28 ABS $172M, 5.46% coupon (-81 bps vs May); May 29 ABS $216M, 6.27% coupon; strong investor demand .
Controls/Disclosure: 10-K filed Aug 8 with enhanced contract modification disclosures; remediation of related material weakness underway .

Footnote: Values retrieved from S&P Global.*

AMERICAS CARMART INC (CRMT)·Q1 2026 Earnings Summary