America's Car-Mart Stock

America’s Car-Mart, Inc. operates as an automotive retailer in the United States.

The company’s operations are principally conducted through its two operating subsidiaries, America’s Car Mart, Inc., an Arkansas corporation (Car-Mart of Arkansas), and Colonial Auto Finance, Inc., an Arkansas corporation (Colonial).

The company primarily sells older model used vehicles and provides financing for substantially all of its customers. Many of the company’s customers have limited financial resources.

The company operates in the Integrated Auto Sales and Finance segment of the used car market. In this industry, the nature of the sale and the financing of the transaction, financing processes, the type of customer and the methods used to distribute the company’s products and services, including the actual servicing of the contracts, as well as the regulatory environment in which the company operates, all have similar characteristics. Each individual dealership is similar in nature and only engages in the selling and financing of used vehicles. All individual dealerships have similar operating characteristics.

The company focuses on providing basic transportation to its customers. The company sells a variety of vehicles that include primarily sport utility vehicles, trucks, and sedans. The company typically does not purchase sports cars or luxury cars. A member of dealership management inspects and test-drives vehicles prior to a sale.

For covered components and assemblies, the company coordinates service with third-party service centers with which it typically has previously negotiated labor rates. The vast majority of the company’s customers elect to purchase a service contract when purchasing a vehicle. Additionally, the company offers its customers to whom financing is extended an accident protection plan (APP) product. The APP product contractually obligates the company to cancel the remaining amount owed on a contract where the vehicle has been totaled, as defined in the plan, or the vehicle has been stolen. APP is available in most of the states in which the company operates and the vast majority of financed customers elect to purchase this product when purchasing a vehicle in those states.

The company primarily advertises using television, radio, digital and social media. In addition, the company periodically conducts promotional sales campaigns in an effort to increase sales or promote the brand. The company uses an outside marketing firm and recently hired a chief digital officer to oversee the company’s marketing efforts, enhance its brand strategy and broaden its usage of digital and social media channels.

The company provides financing to substantially all of its customers who purchase a vehicle at one of its dealerships. The company only provides financing to its customers for the purchase of its vehicles and related ancillary products, and the company does not provide any type of financing to non-customers.

The company provides centralized support to the dealership manager in the form of a proprietary credit scoring system used for monitoring and other supervisory assistance to assist with credit decisions.

All of the company’s retail installment contracts are serviced by oyd personnel at the dealership level. Approximately half of the company’s customers make their payments in person at the dealership where they purchased their vehicle; however, in an effort to make paying convenient for its customers, the company offers a variety of payment options. Customers can send their payments through the mail, set up ACH auto draft, make mobile and online payments, and make payments at certain money service centers. Each dealership closely monitors its customer accounts using the company’s proprietary receivables and collections software that stratifies past due accounts by the number of days past due. The company’s dealership managers meet monthly on an area, regional or company-wide basis.

Business Strategy

The key elements of the company’s strategy include collecting customer accounts; maintaining a decentralized operation; expanding through controlled organic growth and strategic acquisitions; selling basic transportation; and operating in smaller communities.

Seasonality

Historically, the company’s third fiscal quarter (November through January) has been the slowest period for vehicle sales. Conversely, the company’s first and fourth fiscal quarters (May through July and February through April) have historically been the busiest times for vehicle sales. Therefore, the company generally realizes a higher proportion of its revenue and operating profit during the first and fourth fiscal quarters (year ended April 30, 2023).

History

America's Car-Mart, Inc., a Texas corporation, was founded in 1981.