BENTONVILLE, Ark., March 7 /PRNewswire-FirstCall/ -- America's
Car-Mart, Inc. (NASDAQ:CRMT) today announced its operating results
for the third fiscal quarter ended January 31, 2007. Highlights of
third quarter operating results: * Revenue growth of 1.8% *
Interest income growth of 17.5% * Loss of $50,000 (less than $.01
per diluted share) * Retail unit sales decrease of 11.7% * Same
store revenue decrease of 5.3% * Accounts over 30 days past due
down to 3.8% compared to 4.7% in prior year * Accounts receivable,
net, of $144 million as of January 31, 2007, as compared to $142
million as of January 31, 2006. Total provision for loan losses of
$16.3 million, or 30.6%, for the three months ended January 31,
2007, as compared to total provision for loan losses of $10.9
million, or 20.6%, for the three months ended January 31, 2006. For
the three months ended January 31, 2007, revenues increased 1.8% to
$59.3 million compared with $58.2 million in the same period of the
prior year. The $50,000 loss for the current quarter compares to
$4.5 million income ($.37 per diluted share) for the same period in
the prior year. Retail unit sales decreased 11.7% to 6,002 vehicles
in the current quarter, compared to 6,799 in the same period last
year. Accounts over 30 days past due decreased to 3.8% compared to
4.7% at January 31, 2006 and compared to 5.4% at October 31, 2006
(the end of the Company's second fiscal quarter). Highlights of
nine month operating results: * Revenue growth of 5.4% * Interest
income growth of 22.8% * Earnings of $.18 per diluted share
including a $.28 per diluted share charge to increase the allowance
for loan losses at October 31, 2006. * Retail unit sales decrease
of 5.1% * Same store revenue decrease of .5% * Total provision for
loan losses of $48.8 million, or 29.9%, for the nine months ended
January 31, 2007, as compared to total provision for loan losses of
$34.6 million, or 22%, for the nine months ended January 31, 2006.
For the nine months ended January 31, 2007, revenues increased 5.4%
to $181 million, compared with $171.8 million in the same period of
the prior fiscal year. Income for the first nine months of FY 2007
was $2.2 million ($.18 per diluted share) compared to $12.2 million
($1.01 per diluted share) for the same period in the prior year.
Excluding the effect of the non-cash increase in the allowance for
loan losses, the Company earned profits of $5.5 million ($.46 per
diluted share) during the nine month period. The Company's
Allowance for Loan Losses is 22% of Finance Receivables at January
31, 2007, compared to 19.2% at January 31, 2006. The increased
percentage equates to approximately $5.2 million in non-cash
additions to the allowance to cover future credit losses. Retail
unit sales decreased 5.1% to 19,282 vehicles in the current period,
compared to 20,319 vehicles in the same period last year. "As we
discussed after our second quarter, the Company has taken action to
enhance our long-term per share results," said T. J. ("Skip")
Falgout, III, Chairman and Chief Executive Officer of America's Car
Mart. "Our bottom line results for the third quarter were in line
with where we expected to be at this point. The goal of all our
efforts and operational initiatives continues to be to increase the
after-tax returns produced by the Company. Due to the nature of our
business it takes time for the initiatives to show up in bottom
line profits, but we are convinced we are moving in the right
direction and are very encouraged by our progress in the following
areas thus far: * Underwriting -- In an effort to help our
customers succeed, we have aggressively adjusted our payment terms
and underwriting practices to more closely match the economic life
of the vehicle and, at the same time, maintain affordability for
our customers. We have also placed tighter underwriting
restrictions on newer dealerships and those dealerships that have
experienced higher than expected credit losses. Additionally, we
are making progress in extracting and using our internal customer
data to develop predictive criteria to be used in the underwriting
process. This underwriting and credit analysis will be a
continuous, long-term process which should help our dealership
managers to make better credit decisions on the front end. Further,
we have set realistic sales goals for our dealerships in order to
strive for quality customers and not just sales numbers. Our goal
is to underwrite as much profitable business as we can, as opposed
to generating sales volume without regard for our ability to
collect. We have seen initial success with these efforts and are
encouraged by early results. * Collections -- We have completed the
training and retraining of substantially all of our collection
staff and, in the process, we are updating our collections training
and increasing the staffing for this critical function. Also, we
now have two collections specialists in place to assist lots that
may be having difficulties with collections, and these specialists
have been successful in improving collections at lots where they
have worked. The efforts on the collection side of our business are
showing up in the reduction in accounts over 30 days past due. Our
quarter-end accounts over 30 days past due were at 3.8%, and
February and March past due percentages continue the positive
trend. * Purchasing -- Although inventory supply tends to be
tighter and more costly at this time of year, we have been
successful in acquiring adequate inventory. The improvements we
have made in this area, both in terms of human resources and
information systems, as well as in our ability to get vehicles
where they need to be for sale, has allowed us to significantly
reduce the "extra" inventory we historically had on hand. This
efficiency will not only reduce our interest costs related to
inventory, but will also allow us to get the right vehicles where
they need to be sooner. In addition, we are more closely evaluating
our repossessed vehicles and including more of these units in our
retail inventory if they are mechanically sound and cosmetically
acceptable. We believe that over time we have an opportunity to
improve the way in which we buy cars. * Training -- We have
restructured our Associate Development department, increased its
staffing, and are in the process of updating and improving our
training courses and materials for all of our critical job
functions. We have especially bolstered our manager-in-training
staff and curriculum to better train and equip our future
management candidates for success. Training across all aspects of
the Company's business is critical to our future, and we have
invested, and will continue to invest, the appropriate resources in
this over time. * Sales -- Although our overall sales levels have
decreased slightly through tighter underwriting standards, we are
working to attract a better customer through our increased
advertising efforts and our focus on quality sales. During the
third quarter we aired newly produced television and radio
commercials focused on the "Car-Mart" brand, highlighting our long
term history of providing superior vehicles and great customer
service. We will continue to air similar commercials through the
rest of the fourth quarter. Additionally, our recently promoted
internal sales specialist is making a significant impact at those
stores that were underperforming on the sales side. We will
continue all of these efforts to focus on the "better customer",
even if in the near term this results in slower sales growth."
"While we have a high degree of confidence in the various
initiatives we have not only put into place, but also continue to
enhance, the nature of our business is such that success can only
be proven over time. To be certain, the dramatic reduction in the
accounts over 30 days past due, and the continuation of this trend
into February, is encouraging. Having said that, we will err on the
side of caution from a sales perspective until we have produced
more evidence that our collection and underwriting efforts are
producing the results that we expect," said Mr. Falgout. "As we
have previously stated, our primary focus is to improve the long-
term profitability at the store level for our Company by employing
capital appropriately," said Mr. Falgout. "By addressing the basics
of our business, we believe we have the ability to significantly
increase our overall profitability by improving the operational
effectiveness of our existing store base. In addition to our over
35 or so "newer" stores that are building their core of repeat
customers, we see tremendous upside for profit growth in our more
mature stores by virtue of the initiatives we have underway. Once
we feel comfortable with the success of these initiatives, we would
expect to resume our new store growth." "We are extremely
encouraged by the initial progress on all of our operational
initiatives. We expect to continue to gain traction in our fourth
quarter and we have seen positive results in February and into
March, over and above what we would normally expect during the tax
refund season. Down- payments for retail sales in February were up
and delinquencies were down even further, which are indications of
the progress of the efforts underway." said Hank Henderson,
President of America's Car Mart. "As we have said, we will continue
to focus on customer service and on cultivating our repeat customer
base. This will be accomplished both formally, via the operational
initiatives, and informally as we capitalize on the great spirit
and culture created over the past 25 years at Car-Mart. We are
going back to the basics and focusing all of our day-to-day efforts
on attracting the best customers and providing them the best
service. By doing the right things to earn the repeat business of
our customers, we are confident solid financial results will
follow," added Mr. Henderson. As previously announced, the Company
expects to be profitable for the fourth quarter which ends on April
30, 2007. However, the Company will not provide earnings guidance
for the remainder of fiscal 2007 due to the preliminary nature of
the operational initiatives underway. The Company's primary goal is
to maximize long-term per share results, and management has
determined that issuing guidance is inconsistent with this goal.
Conference Call Management will be holding a conference call on
Wednesday, March 7, 2007 at 4:00 p.m. Eastern time to discuss third
quarter results. To participate, please dial (800) 309-9490.
International callers dial (706) 634-0104. Callers should dial in
approximately 10 minutes before the call begins. A conference call
replay will be available one hour following the call for seven days
and can be accessed by calling: (800) 642-1687 (U.S. Callers) or
(706) 645-9291 (International Callers), conference ID 9927407.
About America's Car-Mart America's Car-Mart operates 91 automotive
dealerships in nine states and is the largest publicly held
automotive retailer in the United States focused exclusively on the
"Buy Here/Pay Here" segment of the used car market. 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 on America's Car-Mart, please visit our website at
http://www.car-mart.com/ . Included herein are forward-looking
statements, including statements with respect to projected revenues
and earnings per share amounts. Such forward- looking statements
are based upon management's current knowledge and assumptions.
There are many factors that affect management's view about future
revenues and earnings. These factors involve risks and
uncertainties that could cause actual results to differ materially
from management's present view. These factors include, without
limitation, assumptions relating to unit sales, average selling
prices, credit losses, gross margins, operating expenses,
collection results, operational initiatives underway and economic
conditions, and other risk factors described under "Forward-Looking
Statements" of Item 1A of Part I of the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 2006 and its current
and quarterly reports filed with or furnished to the Securities and
Exchange Commission. All forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The Company does not undertake any
obligation to update forward-looking statements. America's
Car-Mart, Inc. Consolidated Balance Sheet and Other Data (Dollars
in Thousands) January 31, April 30, 2007 2006 Cash and cash
equivalents $304 $255 Finance receivables, net $144,034 $149,379
Total assets $175,494 $177,613 Total debt $43,324 $43,588
Stockholders' equity $121,572 $119,251 Shares outstanding
11,852,875 11,848,024 Finance receivables: Principal balance
$185,144 $185,243 Allowance for credit losses (41,110) (35,864)
Finance receivables, net $144,034 $149,379 Allowance as % of
principal balance 22.20% 19.36% (a) Represents the weighted average
for Finance Receivables generated by the Company (at 22.0% and
19.2%) and purchased Finance Receivables. Changes in allowance for
credit losses: Nine Months Ended January 31, 2007 2006 Balance at
beginning of year $35,864 $29,251 Provision for credit losses
48,846 34,596 Net charge-offs (43,804) (30,065) Allowance related
to purchased accounts 204 --- Balance at end of period $41,110
$33,782 America's Car-Mart, Inc. Consolidated Results of Operations
(Operating Statements Dollars in Thousands) % Change As a % of
Sales Three Months Ended 2007 Three Months Ended January 31, vs.
January 31, 2007 2006 2006 2007 2006 Operating Data: Retail units
sold 6,002 6,799 (11.7)% Average number of stores in operation 90.0
81.3 10.7 Average retail units sold per store per month 22.2 27.9
(20.3) Average retail sales price $8,293 $7,507 10.5 Same store
revenue growth -5.3% 16.7% Period End Data: Stores open 91 84 8.3%
Accounts over 30 days past due 3.8% 4.7% Finance Receivables, gross
$185,144 $175,979 5.2% Operating Statement: Revenues: Sales $53,376
$53,200 0.3% 100.0% 100.0% Interest income 5,932 5,048 17.5 11.1
9.5 Total 59,308 58,248 1.8 111.1 109.5 Costs and expenses: Cost of
sales 31,289 29,636 5.6 58.6 55.7 Selling, general and
administrative 10,489 9,769 7.4 19.7 18.4 Provision for credit
losses 16,342 10,936 49.4 30.6 20.6 Interest expense 1,027 691 48.6
1.9 1.3 Depreciation and amortization 254 151 68.2 0.5 0.3 Total
59,401 51,183 16.1 111.3 96.2 Income before taxes (93) 7,065 (0.2)
13.3 Provision for income taxes (43) 2,601 (0.1) 4.9 Net income
$(50) $4,464 (0.1) 8.4 Earnings per share: Basic $--- $0.38 Diluted
$--- $0.37 Weighted average number of shares outstanding: Basic
11,852,875 11,864,475 Diluted 11,852,875 12,011,480 America's
Car-Mart, Inc. Consolidated Results of Operations (Operating
Statements Dollars in Thousands) % Change As a % of Sales Nine
Months Ended 2007 Nine Months Ended January 31, vs. January 31,
2007 2006 2006 2007 2006 Operating Data: Retail units sold 19,282
20,319 (5.1)% Average number of stores in operation 88.7 79.8 11.2
Average retail units sold per store per month 24.2 28.3 (14.6)
Average retail sales price $8,046 $7,429 8.3 Same store revenue
growth -0.5% 10.7% Period End Data: Stores open 91 84 8.3% Accounts
over 30 days past due 3.8% 4.7% Finance Receivables, gross $185,144
$175,979 5.2% Operating Statement: Revenues: Sales $163,383
$157,377 3.8% 100.0% 100.0% Interest income 17,655 14,379 22.8 10.8
9.1 Total 181,038 171,756 5.4 110.8 109.1 Costs and expenses: Cost
of sales 93,765 87,011 7.8 57.4 55.3 Selling, general and
administrative 31,405 28,709 9.4 19.2 18.2 Provision for credit
losses 48,846 34,596 41.2 29.9 22.0 Interest expense 2,855 1,736
64.5 1.7 1.1 Depreciation and amortization 725 429 69.0 0.4 0.3
Total 177,596 152,481 16.5 108.7 96.9 Income before taxes 3,442
19,275 2.1 12.2 Provision for income taxes 1,265 7,123 0.8 4.5 Net
income $2,177 $12,152 1.3 7.7 Earnings per share: Basic $0.18 $1.03
Diluted $0.18 $1.01 Weighted average number of shares outstanding:
Basic 11,849,257 11,812,337 Diluted 11,958,615 11,984,883
DATASOURCE: America's Car-Mart, Inc. CONTACT: T.J. "Skip" Falgout,
III, CEO, +1-972-717-3423, or Jeffrey A. Williams, CFO,
+1-479-418-8021, both of America's Car-Mart, Inc. Web site:
http://www.car-mart.com/
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