ROGERS, Ark. - America's Car-Mart, Inc. (NASDAQ:CRMT), a prominent automotive dealership chain, has successfully completed a securitization transaction, issuing $300 million in asset-backed notes. This marks the company's second such financial maneuver in 2024, with a notable decrease in the weighted average coupon rate since its previous issuance in January.
The transaction, named ACM Auto Trust 2024-2, involved two classes of notes: $228.2 million of Class A Notes with a coupon rate of 6.06%, and $71.8 million of Class B Notes with a coupon rate of 9.21%. The overall weighted average coupon rate was reported to be 7.44%, a 198 basis point improvement from the company's earlier securitization this year.
Vickie Judy, Chief Financial Officer of America's Car-Mart, expressed satisfaction with the transaction's execution, highlighting the improved benchmark rate and spread as indicators of success. The advance rate for this deal stood at 59.15%.
The issued notes are part of a term securitization transaction and are linked to an indirect subsidiary of America's Car-Mart. It's important to note that these securities have not been registered under the Securities Act of 1933 and, as such, are not available for sale in the United States except under specific exemptions from registration requirements.
America's Car-Mart is one of the largest publicly held automotive retailers in the U.S., specializing in the "Integrated Auto Sales and Finance" segment of the used car market. The company operates dealerships across twelve states, mainly in smaller cities in the South-Central region, providing quality used vehicles and financing for the majority of its customers.
This news article is based on a press release statement and is intended to inform readers about the factual events surrounding America's Car-Mart's recent financial activity. The information presented here does not constitute an offer to sell or a solicitation of an offer to buy the mentioned notes.
In other recent news, America's Car-Mart has announced several significant developments. The company appointed Jamie Fischer as its new Chief Operating Officer, a move that aims to strengthen dealership operations, inventory management, and marketing. On the financial front, Car-Mart reported a 5.2% decrease in revenues for the first quarter of fiscal year 2025, primarily due to a decline in retail unit sales. However, an increase in website traffic and a reduction in average retail price indicate strong consumer demand.
In a strategic partnership, America's Car-Mart joined forces with Cox Automotive to improve affordability and gross profit margins. The company also revised its credit facilities, introducing Colonial Underwriting as a new guarantor and reducing its total permitted borrowings to $320 million. Jefferies, a global investment banking firm, revised its price target for America's Car-Mart shares, lowering it to $45.00 from the previous $68.00, while retaining a Hold rating on the stock.
Lastly, America's Car-Mart launched a public offering of 1.7 million shares at $43 each to enhance the company's liquidity, reduce its leverage, and strengthen its balance sheet. These recent developments reflect America's Car-Mart's ongoing efforts to navigate the dynamic auto retail market effectively.
InvestingPro Insights
America's Car-Mart's recent $300 million securitization transaction comes at a critical time for the company, as reflected in the latest data from InvestingPro. The company's financial health presents a mixed picture, with some concerning indicators that may explain the need for this financial maneuver.
According to InvestingPro data, America's Car-Mart's market capitalization stands at $332.13 million, with a price-to-book ratio of 0.71 as of the last twelve months ending Q1 2025. This relatively low P/B ratio could suggest that the stock is undervalued, which aligns with an InvestingPro Tip indicating that the stock is trading near its 52-week low.
The company's revenue for the same period was $1.37 billion, but it's worth noting that there has been a revenue decline of 3.85% year-over-year. This downturn in revenue is compounded by the fact that the company was not profitable over the last twelve months, as highlighted by another InvestingPro Tip.
The successful completion of the securitization with improved rates could be seen as a strategic move to strengthen the company's financial position. However, an InvestingPro Tip warns that America's Car-Mart operates with a significant debt burden, which this transaction may be addressing.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for America's Car-Mart, providing a deeper understanding of the company's financial health and market position.
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