America's Car-Mart, Inc. (CRMT) delivered a mixed bag of results Thursday for its second quarter of fiscal 2026, posting a loss per share of $2.71. On an adjusted basis, the loss narrowed to $0.79 per share, but that still came in worse than the $0.49 loss analysts were expecting. Revenue, though, was a bright spot at $350.2 million, comfortably ahead of the $331.0 million estimate.
The revenue number deserves a bit of context. Total revenue increased just 0.8% year-over-year, but last year's quarter included a $13.2 million one-time accounting benefit from a change in how the company recognizes service contract revenue. Strip that out, and revenue actually grew a healthier 4.8% on an adjusted basis.
The operating metrics tell an interesting story about a company in transition. Sales volumes dipped 1.1% to 13,637 vehicles, but credit applications surged 14.6%, suggesting demand is there even if conversions are being managed more carefully. Delinquencies improved meaningfully, with accounts over 30 days past due falling to 3.14% at quarter-end from 3.76% the previous quarter. Total collections rose 4.6% to $181.7 million, another positive sign.
Gross margin came in at 37.5%, down 190 basis points year-over-year. But again, accounting quirks matter here—the prior-year quarter got a 290-basis-point boost from that one-time service contract change, so the underlying margin performance was actually better than the headline number suggests.
Operating expenses ran at 20.0% of sales, or 18.8% on an adjusted basis excluding one-time charges. Net charge-offs ticked up to 7.0% of average finance receivables from 6.6% a year earlier, while the allowance for credit losses stood at 24.19% of receivables at October 31, 2025.
The balance sheet got noticeably stronger. Total cash, including restricted cash, jumped to $251.0 million from $124.5 million at the end of April. Net debt declined to $646.0 million from $652.2 million.
President and CEO Doug Campbell emphasized the transformation underway: "Our second quarter financial results reflect the continued progress we are making to transform our business for the future, even as we navigate a fluid operating backdrop. We are proactively repositioning America's Car-Mart by investing in our infrastructure, optimizing our platform, and improving our capital structure."
A key part of that transformation is LOS V2, a new loan origination system deployed in May 2025 that provides predictive scoring and risk-based pricing. The company said it's seeing "a meaningful shift towards the higher ranked customers with over 12% more customers booked in ranks 4-7," meaning they're lending to better credit profiles.
But management isn't popping champagne just yet. The company flagged several external headwinds it's monitoring closely, including "persistent inflation," "potential government policy changes that could affect SNAP beneficiaries and other assistance programs," and "uncertainty surrounding the recent government shutdown and potential impacts to government assistance programs in calendar year 2026." For a lender focused on lower-income buyers, changes to food stamps and similar programs could meaningfully affect customers' ability to make car payments.
