The following excerpt is from the company's SEC filing.
BENTONVILLE, Ark., Feb. 20, 2017 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (NASDAQ:CRMT) today announced its operating results for the third quarter of fiscal 2017.
Highlights of third quarter operating results:
Net income of $2.8 million – $.35 per diluted share vs. $.47 per diluted share for prior year quarter
Revenues of $139 million compared to $137 million for the prior year quarter (a 1.0% increase)
Retail unit sales decrease of 1.3% to 10,866 from 11,013 for the prior year quarter with increased productivity at 25.3 retail units sold per store per month, up from 25 for the pr ior year quarter
Average retail sales price increased $30 to $10,629 or 0.3% from the prior year quarter (increased $138 or 1.3% sequentially)
Gross profit margin percentage increased to 40.8% from 40.3% for the prior year quarter
Collections as a percentage of average finance receivables of 12.4% compared to 12.9% for the prior year quarter. The weighted average contract term increased to 31.9 months from 30.9.
Net Charge-offs as a percent of average finance receivables of 7.8%, up from 6.6% for prior year quarter
Accounts over 30 days past due decreased to 4.7% from 5.0% at January 31, 2016
Average percentage of finance receivables current of 79.5% compared to 81.4% at January 31, 2016
Provision for credit losses of 31.0% of sales vs. 26.9% for prior year quarter
Selling, general and administrative expenses at 18.7% of sales vs. 19.4% for prior year quarter
Active accounts base approximately 67,300, an increase of approximately 2,300 from April 30, 2016
Debt to equity of 49.6% and debt to finance receivables of 25.0%
Allowance for credit losses at 25% of finance receivables, net of deferred revenue at January 31, 2017
Highlights of nine month operating results:
Net income of $15.0 million - $1.83 per diluted share vs. $.93 per diluted share ($1.28 per diluted share excluding a $3 million non-cash after-tax charge resulting from an increase to the allowance for credit losses) for prior year period
Revenues of $435 million compared to $413 million for the prior year period with same store revenue increase of 4.2%
Retail unit sales increase of 2.5% to 34,990 from 34,138 for the prior year period with productivity at 27.2 retail units sold per store per month, up from 26.4 for the prior year period
Net Charge-offs as a percent of average finance receivables of 21.8%, down from 22.2% for prior year period
Provision for credit losses of 28.8% of sales vs. 28.9% of sales (27.6% excluding increase to allowance for credit losses) for prior year period
Strong cash flows supporting the increase in revenues, the $38.1 million increase in finance receivables, $1.4 million in net capital expenditures and $8.2 million in common stock repurchases (300,838 shares) with a $10.9 million increase in total debt.
“Even though we did see a small top line increase with same store revenue increasing 1.1%, we were a little disappointed with our top line for the quarter. Our expectations were higher going into the quarter and some of the shortfall was most likely related to delays with income tax refunds this year. At the same time, we are certainly seeing some overall softness in the market after so many years of excess lending with significantly extended contract terms. Our customer base has been stuffed with offerings for several years now and we are feeling the negative effects of market conditions,” said William H. (“Hank”) Henderson, Chief Executive Officer of America’s Car-Mart, Inc. (the “Company”). “However, we are addressing our revenue challenges head-on and have made significant recent improvements with lot-level productivity tools to assist our managers with efforts to attract quality customers and improve our closure rates. Additionally, we are in the middle of a top to bottom review of our overall sales and marketing efforts and we are working with an outside firm to assist us in this process. We are optimistic that we will see good solid top line improvements over time as we move forward.”
“Our credit losses were elevated for the quarter, as for the most part we saw increased losses broadly across the Company. Even though we came into the quarter with higher delinquencies, we did expect better credit results for the quarter,” added Mr. Henderson. “While the competitive landscape is still very intense, we continue to work to improve our collection efforts, particularly with our ground level face-to-face interaction with our customers which is so important to our customers’ success. We have recently added a key position, with support staff, to work with field operators to improve credit results. This team has been instrumental in developing tools to give management better visibility toward efficiencies and the effectiveness of our account representatives as they work to improve customer success rates. We expect these efforts to result in improvements to our credit losses as we move forward.”
“As we have said many times in the past, we have significant opportunities for improvement within our existing network and we will prioritize our efforts in that direction first,” added Mr. Henderson. “We have recently created our General Manager Recruitment and Advancement team and we are seeing some positive benefits in this area. We continue to believe that we can add new dealerships again at some point in the future when we begin to see the anticipated improvements within our current dealership base. However, we are in the process of winding down three additional dealerships, which began this quarter, and we anticipate a few more closings as we rationalize our individual locations.”
“As Hank mentioned, we certainly have some challenges, but we are addressing them head-on and are committed to improving our Company’s financial performance as we help our customers succeed. In addition to the efforts mentioned above, there are several other very positive initiatives that are helping to improve our results. Our overall improvement with inventory management is allowing us to see solid gross margin percentages with increased turns. Additionally, our continued commitment to leveraging our cost structure is allowing us to drive down our Selling, General and Administrative costs. We are especially proud of this leveraging considering the significant infrastructure investments that we have made over the last few years,” said Jeff Williams, President of America’s Car-Mart, Inc. “Also, the increase in our contract interest rates, effective in May of 2016, has had the intended effect of offsetting some of our higher credit loss results. We know that we can do much better in this critical area of the business, and we are committed to significant improvement as we look to the future.”
“In the last twelve months, we have added $32 million in receivables, re-purchased almost $12 million of our common stock, and funded $1.7 million in net capital expenditures, all while paying down $3.7 million in debt. Our debt to Finance Receivables ratio is 25% compared to 27.6% at this time last year,” added Mr. Williams. “Our cash-on-cash returns continue to be very strong, and we will always strive to be the very lowest cost operator in the industry while being mindful of the continuing infrastructure investment needs in the key areas of the business. We will continue to re-purchase common stock opportunistically as we move forward.”
Management will be holding a conference call on Tuesday, February 21, 2017 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 #65955735.
About America's Car-Mart
America’s Car-Mart, Inc. (the “Company”) operates 143 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 and plans.
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;
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)
As a % of Sales
Three Months Ended
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:
Finance receivables, gross
Costs and expenses:
Cost of sales
Depreciation and amortization
Loss on disposal of property and equipment
Income before taxes
Provision for income taxes
Dividends on subsidiary preferred stock
Net income attributable to common shareholders
Earnings per share:
Weighted average number of shares used in calculation:
Nine Months Ended
Weighted average number of shares outstanding:
Consolidated Balance Sheet and Other Data
(Dollars in Thousands)
Cash and cash equivalents
Finance receivables, net
Deferred revenue - payment protection plan
Deferred revenue - service contract
Finance receivables, net of allowance and deferred revenue
Allowance as % of principal balance net of deferred revenue
Changes in allowance for credit losses:
ended January 31,
Balance at beginning of period
Charge-offs, net of collateral recovered
Balance at end of period
William H. (“Hank”) Henderson, CEO or Jeffrey A. Williams, President and CFO at (479) 464-9944
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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