America's Car-Mart Reports Diluted Earnings per Share of $.61 on Revenue Increase of 10.2% to $121 Million
November 19 2013 - 8:05PM
America's Car-Mart, Inc. (Nasdaq:CRMT) today announced its
operating results for the second quarter of fiscal 2014.
Highlights of second quarter operating
results:
- Net income of $5.8 million - $.61 per diluted share vs. $.76
per diluted share for prior year quarter
- Revenues of $121 million compared to $110 million for the prior
year quarter with same store revenue increase of 3.8%
- Retail unit sales increase of 8.1% to 10,608 from 9,814 for the
prior year quarter with 27.6 retail units sold per dealership per
month down from 28.2 for prior year quarter
- Average retail sales price increased $195 to $9,710 or 2.0%
from the prior year quarter and decreased $126 or 1.3%
sequentially
- Net charge-offs as a percent of average finance receivables of
6.9%, up from 6.5% for prior year quarter
- Provision for credit losses of 26.3% of sales vs. 24.1% for
prior year quarter
- Selling, General and Administrative Expenses at 18.2% of sales
vs. 17.7% for prior year quarter
- Opened three new dealerships during the quarter - dealership
count now at 129
- Active accounts base now over 60,000
- Debt to equity of 47.0% and debt to finance receivables of
26.1%
- Allowance for credit losses at 21.5% of finance receivables at
October 31, 2013
Highlights of six month operating results:
- Net income of $13.3 million or $1.40 per diluted share vs.
$1.59 per diluted share for prior year period
- Revenue increase of 10.8% to $244 million from $220 million for
the prior year period with same store revenue growth of 4.6%
- Retail unit sales increase of 8.6% to 21,251 from 19,567 for
the prior year period
- Net Charge-offs as a percentage of average finance receivables
of 13.1% compared to 12.4% for the prior year
- Provision for credit losses of 25.3% of sales vs. 23.1% for
prior year period
- Strong cash flows supporting the significant increase in
revenues, the $25.4 million increase in finance receivables, $4.0
million in net capital expenditures and the $531,000 in common
stock repurchases (12,620 shares) with only a $2.1 million increase
in total debt
"We are pleased with our top line growth in this presently
challenging competitive environment. We are excited about our
future and proud of the great work of our associates as they take
care of our customers. We are highly focused on increasing customer
success and tightening expenses while ensuring that our
infrastructure remains solid to support the business," said William
H. ("Hank") Henderson, President and Chief Executive Officer of
America's Car-Mart. "I would like to note the tireless efforts of
our Area Operations Managers and our General Managers as they work
hand-in-hand to move our Company forward. They are dedicated to
ensuring we are doing everything possible to accomplish our mission
of earning the repeat business of our customers by providing
quality vehicles, affordable payment terms and excellent service.
The roles of Area Operations Manager and General Manager are
critical to our future and we are fortunate to have such high
quality individuals serving in these capacities."
"We are convinced that our past and future success can and will
be directly attributed to the fact that our General Managers truly
'own' their individual dealerships and make the key decisions
around purchasing, underwriting, sales and collections," added Mr.
Henderson. "Our infrastructure exists to support our General
Managers as they run their businesses at the local level. We
believe that many companies that are competing for our customers on
the funding side are not focused on earning repeat business tied to
customer success. This is a reality that is having a negative
effect on our business especially on the provision for credit loss
line. We remain committed to the belief that the only way to run
this business for the long-term is to do everything possible to
help customers successfully complete the terms of their contracts.
By focusing on customer success, we will continue to fulfill our
vision of being the most respected buy-here-pay-here organization
in the country."
"We finished the quarter with 129 dealerships, an increase of 12
from this time last year. We have several new openings planned for
the next few months and we continue to expect to open a total of 12
for the fiscal year," added Mr. Henderson. "We sold 10,608 retail
units during the quarter, an 8.1% increase. Same store revenues
were up 3.8% although the average retail units sold per dealership
per month decreased for the quarter to 27.6 which is related to the
intense competitive environment that we are facing. We remain
convinced that the business model will continue to support
significant unit volume expansion. We are excited about our future
and we will continue to fight to retain our better customers."
"A 10.2% increase in revenues in this environment is significant
and something we are very proud of. We will continue to add new
dealerships in great new towns but at the same time remain
disciplined on our underwriting and deal structures, something that
has negatively affected productivity especially in our older more
mature dealerships. Even in the face of increased competition, our
down-payment percentage was down only slightly from last year.
Also, we are pleased that the overall contract term during the
quarter was flat sequentially at 29.5 months (28.3 at this time
last year). For competitive reasons, we may have to continue to
consider offering slightly longer terms and somewhat lower down
payments into the future. We will continue to work hard to
structure our contracts to maximize customer success in order to
earn repeat business," said Jeff Williams, Chief Financial Officer
of America's Car-Mart. "Our provision for credit losses is
certainly higher than we would like, but our expected cash-on-cash
returns are very attractive even with the higher credit loss
amounts. We will continue to ensure that we maximize efficiencies
on the operating expense side of the business in light of the
competition. We remain committed to always being a very low cost
operator in a tough business."
"As we have said in the past, we believe it is prudent to
maintain a very conservative balance sheet, especially in the
current operating environment. Our debt to equity ratio was 47.0%
and our debt to finance receivables ratio was 26.1% at the end of
the quarter. We repurchased 3,600 shares of common stock during the
quarter and since February 1, 2010 we have repurchased 2.9 million
shares, or almost 25% of our Company. We believe in the long-term
value of our Company and plan to invest in the repurchase program
when favorable conditions are present. Our first priority for
capital allocation will continue to be to support the healthy
growth of the business," added Mr. Williams. "We will continue to
stay focused on cash returns and aggressive expense management, and
we believe our future is bright."
Conference Call
Management will be holding a conference call on Wednesday,
November 20, 2013 at 11:00 a.m. Eastern Time to discuss fourth
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 one hour following the call for thirty days and
can be accessed by calling (855) 859-2056 (domestic) or (404)
537-3406 (international), conference call ID # 10344857.
About America's Car-Mart
America's Car-Mart, Inc. (the "Company") operates 129 automotive
dealerships in ten 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 |
2013 |
Three Months Ended |
|
October 31, |
vs. |
October 31, |
|
2013 |
2012 |
2012 |
2013 |
2012 |
Operating Data: |
|
|
|
|
|
Retail units sold |
10,608 |
9,814 |
8.1% |
|
|
Average number of stores in
operation |
128 |
116 |
10.3 |
|
|
Average retail units sold per
store per month |
27.6 |
28.2 |
(2.1) |
|
|
Average retail sales price |
$ 9,710 |
$ 9,515 |
2.0 |
|
|
Same store revenue growth |
3.8% |
(4.8)% |
|
|
|
Net charge-offs as a percent
of average Finance Receivables |
6.9% |
6.5% |
|
|
|
Collections as a percent of
average Finance Receivables |
13.6% |
14.5% |
|
|
|
Average percentage of Finance
Receivables-Current (excl. 1-2 day) |
81.8% |
82.4% |
|
|
|
Average down-payment
percentage |
6.2% |
6.4% |
|
|
|
|
|
|
|
|
|
Period End Data: |
|
|
|
|
|
Stores open |
129 |
117 |
10.3% |
|
|
Accounts over 30 days past
due |
4.7% |
4.3% |
|
|
|
Finance Receivables, gross |
$ 388,799 |
$ 339,248 |
14.6% |
|
|
|
|
|
|
|
|
Operating Statement: |
|
|
|
|
|
Revenues: |
|
|
|
|
|
Sales |
$ 107,765 |
$ 98,194 |
9.7% |
100.0% |
100.0% |
Interest
income |
13,666 |
12,025 |
13.6 |
12.7 |
12.2 |
Total |
121,431 |
110,219 |
10.2 |
112.7 |
112.2 |
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Cost of
sales |
62,823 |
56,204 |
11.8 |
58.3 |
57.2 |
Selling, general
and administrative |
19,581 |
17,351 |
12.9 |
18.2 |
17.7 |
Provision for
credit losses |
28,296 |
23,647 |
19.7 |
26.3 |
24.1 |
Interest
expense |
722 |
708 |
2.0 |
0.7 |
0.7 |
Depreciation and
amortization |
795 |
696 |
14.2 |
0.7 |
0.7 |
Gain on Disposal
of Property and Equipment |
(2) |
-- |
-- |
-- |
-- |
Total |
112,215 |
98,606 |
13.8 |
104.1 |
100.4 |
|
|
|
|
|
|
Income before taxes |
9,216 |
11,613 |
|
8.6 |
11.8 |
|
|
|
|
|
|
Provision for income taxes |
3,411 |
4,335 |
|
3.2 |
4.4 |
|
|
|
|
|
|
Net income |
$ 5,805 |
$ 7,278 |
|
5.4 |
7.4 |
|
|
|
|
|
|
Dividends on subsidiary
preferred stock |
$ (10) |
$ (10) |
|
|
|
|
|
|
|
|
|
Net income attributable to
common shareholders |
$ 5,795 |
$ 7,268 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
Basic |
$ 0.64 |
$ 0.80 |
|
|
|
Diluted |
$ 0.61 |
$ 0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding: |
|
|
|
|
|
Basic |
9,016,820 |
9,105,921 |
|
|
|
Diluted |
9,484,654 |
9,579,409 |
|
|
|
|
|
|
|
|
|
|
America's
Car-Mart, Inc. |
Consolidated
Results of Operations |
(Operating Statement
Dollars in Thousands) |
|
|
|
|
% Change |
As a % of
Sales |
|
Six Months Ended |
2013 |
Six Months Ended |
|
October 31, |
vs. |
October 31, |
|
2013 |
2012 |
2012 |
2013 |
2012 |
Operating Data: |
|
|
|
|
|
Retail units sold |
21,251 |
19,567 |
8.6% |
|
|
Average number of stores in
operation |
126 |
115 |
9.6 |
|
|
Average retail units sold per
store per month |
28.1 |
28.4 |
(1.1) |
|
|
Average retail sales price |
$ 9,773 |
$ 9,549 |
2.3 |
|
|
Same store revenue growth |
4.6% |
0.1% |
|
|
|
Net charge-offs as a percent of
average Finance Receivables |
13.1% |
12.4% |
|
|
|
Collections as a percent of
average Finance Receivables |
27.3% |
29.4% |
|
|
|
Average percentage of Finance
Receivables-Current (excl. 1-2 day) |
81.1% |
82.0% |
|
|
|
Average down-payment
percentage |
6.4% |
6.8% |
|
|
|
|
|
|
|
|
|
Period End Data: |
|
|
|
|
|
Stores open |
129 |
117 |
10.3% |
|
|
Accounts over 30 days past
due |
4.7% |
4.3% |
|
|
|
Finance Receivables, gross |
$ 388,799 |
$ 339,248 |
14.6% |
|
|
|
|
|
|
|
|
Operating Statement: |
|
|
|
|
|
Revenues: |
|
|
|
|
|
Sales |
$ 216,914 |
$ 196,491 |
10.4% |
100.0% |
100.0% |
Interest
income |
27,061 |
23,728 |
14.0 |
12.5 |
12.1 |
Total |
243,975 |
220,219 |
10.8 |
112.5 |
112.1 |
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Cost of
sales |
125,445 |
112,389 |
11.6 |
57.8 |
57.2 |
Selling, general
and administrative |
39,395 |
35,207 |
11.9 |
18.2 |
17.9 |
Provision for
credit losses |
54,826 |
45,310 |
21.0 |
25.3 |
23.1 |
Interest
expense |
1,512 |
1,361 |
11.1 |
0.7 |
0.7 |
Depreciation and
amortization |
1,572 |
1,358 |
15.8 |
0.7 |
0.7 |
Loss on Disposal
of Property and Equipment |
39 |
-- |
-- |
0.0 |
-- |
Total |
222,789 |
195,625 |
13.9 |
102.7 |
99.6 |
|
|
|
|
|
|
Income before taxes |
21,186 |
24,594 |
|
9.8 |
12.5 |
|
|
|
|
|
|
Provision for income taxes |
7,840 |
9,198 |
|
3.6 |
4.7 |
|
|
|
|
|
|
Net income |
$ 13,346 |
$ 15,396 |
|
6.2 |
7.8 |
|
|
|
|
|
|
Dividends on subsidiary
preferred stock |
$ (20) |
$ (20) |
|
|
|
|
|
|
|
|
|
Net income attributable to
common shareholders |
$ 13,326 |
$ 15,376 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
Basic |
$ 1.48 |
$ 1.67 |
|
|
|
Diluted |
$ 1.40 |
$ 1.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding: |
|
|
|
|
|
Basic |
9,018,524 |
9,205,332 |
|
|
|
Diluted |
9,488,753 |
9,665,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
America's
Car-Mart, Inc. |
Consolidated
Balance Sheet and Other Data |
(Dollar in
Thousands) |
|
|
October 31, |
April 30, |
|
2013 |
2013 |
|
|
|
Cash and cash equivalents |
$ 341 |
$ 272 |
Finance receivables, net |
$ 308,100 |
$ 288,049 |
Inventory |
$ 30,217 |
$ 32,827 |
Total assets |
$ 376,465 |
$ 358,265 |
Total debt |
$ 101,650 |
$ 99,563 |
Treasury stock |
$ 95,078 |
$ 94,547 |
Stockholders' equity |
$ 216,151 |
$ 202,268 |
Shares outstanding |
9,017,329 |
9,023,290 |
|
|
|
|
|
|
|
|
|
Finance receivables: |
|
|
Principal balance |
$ 388,799 |
$ 363,394 |
Deferred revenue - payment
protection plan |
(13,454) |
(12,910) |
Allowance for credit
losses |
(80,699) |
(75,345) |
|
|
|
Finance receivables, net of
allowance and deferred revenue |
$ 294,646 |
$ 275,139 |
|
|
|
|
|
|
Allowance as % of principal
balance |
21.50% |
21.50% |
|
|
|
|
|
|
|
|
|
Changes in allowance for credit losses: |
|
|
|
Six Months |
|
Ended October 31, |
|
2013 |
2012 |
Balance at beginning of
period |
$ 75,345 |
$ 65,831 |
Provision for credit
losses |
54,826 |
45,310 |
Charge-offs, net of collateral
recovered |
(49,472) |
(40,704) |
Balance at end of
period |
$ 80,699 |
$ 70,437 |
CONTACT: William H. ("Hank") Henderson, CEO
at (479) 464-9944
or
Jeffrey A. Williams, CFO
at (479) 418-8021
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