America'S Car-Mart Reports Diluted Earnings Per Share Of $.47 On Revenues Of $137 Million

The following excerpt is from the company's SEC filing.

BENTONVILLE, Ark., Feb. 18, 2016 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (NASDAQ:CRMT) today announced its operating results for the third quarter of fiscal 2016.

Highlights of third quarter operating results:

Net earnings of $4.1 million – $.47 per diluted share vs. $.82 per diluted share for prior year quarter

Revenues of $137 million compared to $132 million for the prior year quarter

Retail unit sales decrease of 4.2% to 11,013 from 11,495 for the prior year quarter with decreased productivity at 25 retail units sold per store per month, down from 28 for the prior year quarter  

Average retail sales price increased $835 to $10,599 or 8.6% from the prior year quarter (increased $352 or 3.4% sequentially)

Gross profit margin percentage decreased to 40.3% from 42.7% for the prior year quarter due primarily to higher wholesale volumes and losses, slightly higher repair costs, and the effect of a higher average selling price

Collections as a percentage of average finance receivables decreased to 12.9% from 13.8% for the prior year quarter as the weighted average contract term increased to 30.9 months

Net Charge-offs as a percent of average finance receivables of 6.6%, up from 6.5% for prior year quarter

Accounts over 30 days past due decreased to 5.0% from 5.2% at January 31, 2015

Average percentage of finance receivables current improved to 81.4% from 80.8% at January 31, 2015

Provision for credit losses of 26.9% of sales vs. 25.9% for prior year quarter  

Selling, general and administrative expenses at 19.4% of sales vs. 18.2% for prior year quarter

Opened two new dealerships during the quarter - dealership count now at 147

Active accounts base approximately 66,000

Debt to equity of 53.5% and debt to finance receivables of 27.6% (up from 24.6% at April 30, 2015)

Allowance for credit losses at 25% of finance receivables, net of deferred revenue at January 31, 2016 (up from 23.8%  at January 31, 2015)

Highlights of nine month operating results:

Net income of $8.2 million - $.93 per diluted share (earnings of $1.28 per diluted share excluding a $3 million non-cash after-tax charge resulting from an increase to the allowance for credit losses during the second quarter)  vs. $2.45 per diluted share for prior year period

Revenues of $413 million compared to $393 million for the prior year period with same store revenue increase of 1.3%

Retail unit sales decrease of 2.6% to 34,138 from 35,061 for the prior year period with productivity at 26.4 retail units sold per store per month, down from 28.6 for the prior year period

Net Charge-offs as a percent of average finance receivables of 22.2%, up from 19.9% for prior year period

Provision for credit losses of 28.9% of sales (27.6% excluding second quarter increase to allowance for credit losses) vs. 25.6% for prior year period 

Strong cash flows supporting the increase in revenues, the $25.9 million increase in finance receivables, $4.2 million in net capital expenditures, the $7.8 million increase in inventory and the $10.5 million in common stock repurchases (342,171 shares) with a $19.3 million increase in total revolving debt

“We are very proud of our Company and our 35 year history of expanding our footprint to new communities. With our growth and the changes we have seen in the industry, it is time to make a few management structure changes that we believe will allow us to continue our success out into the future,” said William H. (“Hank”) Henderson, Chief Executive Officer of America’s Car-Mart, Inc. (the “Company”).  “We have promoted Leon Walthall to the newly created position of Field Operations Officer where he will be leading our Regional Vice Presidents of Operations. Leon has been with the Company for over 27 years and has had tremendous success both as a General Manager and for the last six years as a Regional Vice President. Jeff Williams, our Chief Financial Officer for the last 10 years, will assume additional responsibilities as our President. We are very excited for Leon and Jeff and appreciate their hard-work and dedication to the Company.  I am confident that expanding their scope of influence will be very beneficial and a move in the right direction to realizing the true potential of our Company.” 

“We feel good about the quality of the vehicles we are selling and the credit profiles of our customers. However, we continue to struggle with our sales volumes as we haven’t yet seen relief from the operating environment.  There is no doubt that competition is still very intense and January was particularly weak from a sales volume perspective. In addition to the high level of competition, we also attribute the volume challenges to us being more conservative with our underwriting and to a delay in income tax refunds this year compared to last,” added Mr. Henderson. “Even with the volume shortfall we were able to show good, solid growth at the top line for the quarter, something we are very proud of and something that we can build on as we move forward. We will continue to work hard on the expense side of the business as we move to improve productivity. We will adjust accordingly and as always continue to try to find just the right balance between risk and volume.” 

“As Hank mentioned, one of our biggest challenges right now is finding our footing on the volume side and making sure our infrastructure costs are in alignment. Our cash on cash returns for the deals we are writing are solid, but we are struggling with attracting enough good, solid deals in this environment. While we still believe we will grow into our cost structure, which was created with the view of supporting much higher volumes, that was certainly not the case this quarter and we are making adjustments, including pushing for higher volumes,” said Jeff Williams, Chief Financial Officer for America’s Car-Mart, Inc. “It has been a very difficult market to read, and competitive forces are intense. We will continue to pursue our mission of striving to earn the repeat business of our customers by providing quality vehicles, affordable payment terms and excellent service. We believe more firmly than ever that supporting our customers with a face-to-face relationship is the best way to serve our market.”   

“Our debt to equity ratio is 53.5% and our debt to receivables ratio is 27.6%, up from 24.6% at April 30, 2015. We re-purchased 252,513 shares for $6.5 million for an average cost of $25.73 per share during the quarter, and since February 10, 2010, we have repurchased 4 million shares, or 34% of our Company, for $131 million at an average cost of $32.76 per share.  To support our growth and any potential future repurchases, today we exercised an option under our existing credit agreement to increase our revolving credit facilities by $27.5 million from $145 million to $172.5 million,” added Mr. Williams. “As always, we are focused on cash flows and growing value over the long-term. Since January 31, 2015, we have repurchased almost $17 million in common stock, incurred $6 million in capital expenditures, grown finance receivables by $18 million and inventory by $4 million, which will decrease back down during the fourth quarter, with only a $10 million increase in debt.”

Conference Call

Management will be holding a conference call on Friday, February 19, 2016 at 11:00 a.m. Eastern Time to discuss third quarter results.  A live audio of the conference call will be accessible to the public by calling (877) 776-4031.  International callers dial (631) 291-4132.  Callers should dial in approximately 10 minutes before the call begins.  A conference call replay will be available two hours following the call for thirty days and can be accessed by calling (855) 859-2056 (domestic) or (404) 537-3406 (international), conference call ID #45157738.

About America's Car-Mart

America’s Car-Mart, Inc. (the “Company”) operates 147 automotive dealerships in eleven 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 emphasizes superior customer service and the building of strong personal relationships with its customers. The Company operates its dealerships primarily in small cities throughout the South-Central United States selling quality used vehicles and providing financing for substantially all of its customers.  For more information, including investor presentations, on America’s Car-Mart, please visit our website at www.car-mart.com.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements address the Company’s future objectives, plans and goals, as well as the Company’s intent, beliefs and current expectations regarding future operating performance and can generally be identified by words such as “may,” “will,” “should,” “could, “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” and other similar words or phrases.  Specific events addressed by these forward-looking statements include, but are not limited to:

new dealership openings;

performance of new dealerships;

same store revenue growth;

future overall revenue growth;

the Company’s collection results, including but not limited to collections during income tax refund periods;

repurchases of the Company’s common stock; and

the Company’s business and growth strategies.

These forward-looking statements are based on the Company’s current estimates and assumptions and involve various risks and uncertainties.  As a result, you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements.  Factors that may cause actual results to differ materially from the Company’s projections include, but are not limited to:

the availability of credit facilities to support the Company’s business;

the Company’s ability to underwrite and collect its accounts effectively, including but not limited to collections during income tax refund periods;

competition;

dependence on existing management;

availability of quality vehicles at prices that will be affordable to customers;

changes in financing laws or regulations; and

general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels.

Additionally, risks and uncertainties that may affect future results include those described from time to time in the Company’s SEC filings. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

America's Car-Mart, Inc.

Consolidated Results of Operations

(Operating Statement Dollars in Thousands)

% Change

As a % of Sales 

Three Months Ended  

Three Months Ended 

January 31, 

Operating Data:

Retail units sold

Average number of stores in operation

Average retail units sold per store per month

Same store revenue growth

Net charge-offs as a percent of  average finance receivables

Collections as a percent of average finance receivables

Average percentage of finance receivables-current (excl. 1-2 day)

Average down-payment percentage

Period End Data:

Stores open

Finance receivables, gross

443,296

425,076

Operating Statement:

Revenues:

121,791

116,406

Interest income

15,672

15,094

137,463

131,500

Costs and expenses:

Cost of sales

72,702

66,672

23,568

21,139

32,786

30,206

Interest expense

Depreciation and amortization

Loss on disposal of property and equipment

130,922

119,740

Income before taxes

11,760

Provision for income taxes

Dividends on subsidiary preferred stock

Net income attributable to common shareholders

Earnings per share:

Diluted

Weighted average number of shares used in calculation:

8,367,728

8,587,761

8,615,757

9,036,086

 As a % of Sales 

 Nine Months Ended 

 January 31, 

  34,138

  35,061

  (2.6

  26.4

  28.6

  (7.7

  10,259

  9,571

Net charge-offs as a percent of average finance receivables

  443,296

  425,076

  367,056

  349,300

  100.0

  46,101

  43,410

  12.6

  12.4

  413,157

  392,710

  112.6

  112.4

  219,385

  200,299

  59.8

  57.3

  68,932

  62,615

  10.1

  18.8

  17.9

  106,225

  89,453

  18.7

  28.9

  25.6

  2,383

  2,183

  3,056

  2,782

  130.0

  400,027

  357,352

  11.9

  109.0

  102.3

  13,130

  35,358

  4,897

  13,118

  8,233

  22,240

Dividends on subsidiary preferred stock 

  8,203

  22,210

  0.97

  2.57

  0.93

  2.45

Weighted average number of shares outstanding:

  8,451,029

  8,636,036

  8,774,334

  9,067,195

Consolidated Balance Sheet and Other Data

(Dollars in Thousands)

Cash and cash equivalents

  1,564

Finance receivables, net

  339,069

  324,144

  329,803

Inventory

  42,094

  34,267

  38,248

Total assets

  424,283

  400,361

  409,696

Total debt

  122,490

  102,685

  112,560

Treasury stock

  137,806

  127,321

  120,929

Stockholders' equity

  228,868

  229,132

  226,222

Shares outstanding

  8,222,763

  8,529,223

  8,571,248

Finance receivables:

Principal balance

  417,368

Deferred revenue - payment protection plan

  (16,714

  (15,652

  (15,188

Deferred revenue - service contract

  (9,673

  (9,584

  (9,582

  (104,228

  (93,224

  (95,273

Finance receivables, net of allowance and deferred revenue

  312,681

  298,908

  305,033

Allowance as % of principal balance net of deferred revenue

Changes in allowance for credit losses:

 Nine Months 

Ended January 31, 

Balance at beginning of period

  93,224

  86,033

Charge-offs, net of collateral recovered

  (95,221

  (80,213

Balance at end of period

  104,228

  95,273

Contacts: William H. (“Hank”) Henderson, CEO at (479) 464-9944 or Jeffrey A. Williams, CFO at (479) 418-8021

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

America's Car-Mart director just disposed of 27,370 shares - Sept. 6, 2017
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