America's Car-Mart Reports Diluted Earnings per Share of $1.53 on Revenues of $164 Million
August 16 2018 - 5:02PM
America’s Car-Mart, Inc. (NASDAQ: CRMT) today announced its
operating results for the first quarter of fiscal year 2019.
Highlights of first quarter operating
results:
- Net earnings of $10.9 million – $1.53 per diluted share vs. net
earnings of $7.0 million – $.90 per diluted share for prior year
quarter
- Income tax benefit related to share-based compensation of
$943,000 ($.13 per diluted share) compared to $172,000 ($.02 per
diluted share) for the prior year quarter
- Revenues of $164 million compared to $146 million for the prior
year quarter, current quarter includes a $1.8 million increase in
interest income and same store revenue increase of 12.1%
- Increased sales volume productivity with 29.8 retail units sold
per store per month, up from 28.2 for the prior year quarter
- Average retail sales price increased $629 to $11,015 or 6.1%
from the prior year quarter
- Gross profit margin percentage increased to 41.6% from 41.4%
for the prior year quarter
- Collections as a percentage of average finance receivables
increased to 13.1% from 12.4% for the prior year quarter. The
weighted average contract term decreased to 32.4 months from 32.6
from the prior year quarter and remained essentially flat from the
fourth quarter of fiscal 2018
- Net Charge-offs as a percent of average finance receivables
remained consistent at 6.4% compared to the prior year quarter
- Accounts over 30 days past due decreased to 3.5% from 4.6% at
July 31, 2017
- Average percentage of finance receivables current increased to
81.9% from 80.9% at July 31, 2017
- Provision for credit losses of 26.1% of sales vs. 26.6% for
prior year quarter
- Selling, general and administrative expenses at 18.3% of sales
vs. 18.6% for prior year quarter
- Active accounts base approximately 72,800
- Debt to equity of 65.2% and debt to finance receivables of
29.8%
- Strong cash flows supporting the increase in revenues, the
$19.4 million increase in finance receivables, $3.9 million
increase in inventory, $685,000 in net capital expenditures and
$7.4 million in common stock repurchases (115,999 shares) with a
$2.8 million increase in total debt
“We are happy with the progress we are making
and it is nice to see the hard work, dedication and commitment of
our associates translate into good, solid top and bottom line
results for the quarter. We believe that by focusing on basic
blocking and tackling, together with a firm commitment to
continuous improvement in our daily operations, we will move the
business forward in a positive manner. The market will be what it
is. Our job is to get better every day regardless of the
ever-changing competitive environment,” said Jeff Williams,
President and Chief Executive Officer. “While there is
tremendous demand for the service we provide our communities, we
know we have to continue to step up our game and improve customer
relationships with better service. Our associates in the
field are skilled at helping our customers succeed and we are
well-equipped to serve at the very highest levels.”
“The investments we have made and continue to
make in the General Manager Recruitment, Training and Advancement
Program are beginning to show up in our results. Our future manager
bench is getting stronger, and we are excited to see many
passionate people take advantage of the unique career opportunities
that Car-Mart provides,” added Mr. Williams. “Within the
training efforts, a significant amount of attention is being
directed toward being ‘world-class’ in our inventory management
practices. We are focused on having good cars for competitive
prices out front, on display and available for sale and being
efficient in managing the entire inventory cycle. We will always
prioritize inventory management as this business starts and ends
with providing a quality car to our valued customers.”
“We opened one new dealership during the quarter
in Pryor, Oklahoma and one just after quarter-end in Fayetteville,
Arkansas. Additionally, we have three new lot openings in
process. These dealerships will be in Bixby, Oklahoma, Montgomery,
Alabama and Conway, Arkansas. These dealerships will be managed by
some of our top-performing General Managers as we look to expand
the number of customers served by these managers to leverage the
talents of our proven leaders,” said Mr. Williams. “We are
excited to now be serving nearly 73,000 customers, an increase of
over 4,000 compared to this time last year.”
“Our efficiencies are showing up in our sales
volume productivity, which was up 5.7% for the quarter, and we were
especially pleased with the same store revenue growth of
12.1%. The average sales price increased 6.1% due to more
sales of SUV’s and trucks coupled with an increase in vehicle
purchase costs which in turn results in higher selling prices,”
said Vickie Judy, Chief Financial Officer. “Charge-offs as a
percentage of average receivables remained flat and our collections
as a percentage of average receivables increased to over 13% for
the quarter. We were also pleased to see some slight
leveraging on our selling, general, and administrative (‘SG&A’)
expenses as a percentage of sales based on the increased sales and
productivity in the quarter. Most of our increased spending
in SG&A relates to our payroll expenditures as we continue to
invest in our associates as we train, develop and recruit to
provide excellent customer service. We are also refocusing
some of our marketing spend to increase our digital presence and
advertising.”
“We repurchased 115,999 shares of our common
stock (1.7% of our outstanding shares at April 30, 2018) during the
quarter at an average price of approximately $63.59 for a total of
$7.4 million. Since February 2010 we have repurchased 5.9 million
shares (51% of out outstanding shares at January 31, 2010) at an
average price of approximately $35. We plan to continue to
repurchase shares opportunistically as we move forward.
During the quarter, we have added over $19 million in receivables,
repurchased $7.4 million of our common stock, funded $685,000 in
net capital expenditures, and increased inventory by $3.9 million
to support higher sales levels with only a $2.8 million increase in
debt. Our balance sheet is still very strong with debt to finance
receivables ratio of 29.8%,” added Ms. Judy. “We will continue to
focus on strong cash-on-cash returns while being mindful of the
continuing infrastructure investment needs in the key areas of the
business.”
Conference Call
Management will be holding a conference call on
Friday, August 17, 2018 at 11:00 a.m. Eastern Time to discuss first
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
#2499977.
About America's Car-Mart
America’s Car-Mart, Inc. (the “Company”)
operates 141 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;
- 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.
____________________________Contacts:
Jeffrey A. Williams, President and CEO (479) 418-8021 or Vickie D.
Judy, CFO (479) 418-8081
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America's Car-Mart, Inc. |
Consolidated Results of Operations |
(Operating Statement Dollars in Thousands) |
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% Change |
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As a % of Sales |
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Three Months Ended |
|
2018 |
|
Three Months Ended |
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July 31, |
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vs. |
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July 31, |
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2018 |
|
2017 |
|
2017 |
|
2018 |
|
2017 |
Operating
Data: |
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Retail units sold |
|
|
12,533 |
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|
11,837 |
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5.9 |
|
% |
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Average number of stores in operation |
|
|
140 |
|
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|
140 |
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|
- |
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Average retail units sold per store per month |
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29.8 |
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28.2 |
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5.7 |
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Average retail sales price |
|
$ |
11,015 |
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$ |
10,386 |
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|
6.1 |
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Same store revenue growth |
|
|
12.1 |
% |
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|
2.1 |
% |
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Net charge-offs as a percent of average finance
receivables |
|
6.4 |
% |
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6.4 |
% |
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|
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Collections as a percent of average finance receivables |
|
|
13.1 |
% |
|
|
12.4 |
% |
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|
Average percentage of finance receivables-current (excl. 1-2
day) |
|
81.9 |
% |
|
|
80.9 |
% |
|
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|
Average down-payment percentage |
|
|
6.1 |
% |
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|
6.2 |
% |
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Period End
Data: |
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Stores open |
|
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140 |
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|
140 |
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|
- |
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% |
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Accounts over 30 days past due |
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|
3.5 |
% |
|
|
4.6 |
% |
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Finance receivables, gross |
|
$ |
520,820 |
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|
$ |
483,719 |
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|
7.7 |
|
% |
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Operating
Statement: |
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Revenues: |
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Sales |
|
|
$ |
144,101 |
|
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$ |
128,274 |
|
|
12.3 |
|
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
Interest income |
|
|
19,914 |
|
|
|
18,144 |
|
|
9.8 |
|
|
|
13.8 |
|
|
14.1 |
|
|
|
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Total |
|
|
164,015 |
|
|
|
146,418 |
|
|
12.0 |
|
|
|
113.8 |
|
|
114.1 |
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Costs and
expenses: |
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Cost of sales |
|
|
84,168 |
|
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|
75,206 |
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|
11.9 |
|
|
|
58.4 |
|
|
58.6 |
|
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|
Selling, general and administrative |
|
|
26,382 |
|
|
|
23,865 |
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|
10.5 |
|
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|
18.3 |
|
|
18.6 |
|
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|
Provision for credit losses |
|
|
37,543 |
|
|
|
34,160 |
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|
9.9 |
|
|
|
26.1 |
|
|
26.6 |
|
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Interest expense |
|
|
1,804 |
|
|
|
1,172 |
|
|
53.9 |
|
|
|
1.3 |
|
|
0.9 |
|
|
|
Depreciation and amortization |
|
|
985 |
|
|
|
1,079 |
|
|
(8.7 |
) |
|
|
0.7 |
|
|
0.8 |
|
|
|
Loss on disposal of property and equipment |
|
|
- |
|
|
|
47 |
|
|
(100.0 |
) |
|
|
- |
|
|
- |
|
|
|
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|
Total |
|
|
150,882 |
|
|
|
135,529 |
|
|
11.3 |
|
|
|
104.7 |
|
|
105.7 |
|
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Income before
taxes |
|
|
13,133 |
|
|
|
10,889 |
|
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|
9.1 |
|
|
8.5 |
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Provision for income taxes |
|
|
2,249 |
|
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|
3,897 |
|
|
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|
1.6 |
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|
3.0 |
|
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Net income |
|
$ |
10,884 |
|
|
$ |
6,992 |
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|
7.6 |
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|
5.5 |
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Dividends
on subsidiary preferred stock |
|
$ |
(10 |
) |
|
$ |
(10 |
) |
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Net income attributable
to common shareholders |
|
$ |
10,874 |
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|
$ |
6,982 |
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Earnings per share: |
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Basic |
|
|
$ |
1.57 |
|
|
$ |
0.92 |
|
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|
Diluted |
|
|
$ |
1.53 |
|
|
$ |
0.90 |
|
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|
Weighted average number of shares used in calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
6,924,035 |
|
|
|
7,548,846 |
|
|
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|
|
|
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|
Diluted |
|
|
|
7,126,685 |
|
|
|
7,768,310 |
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America's Car-Mart, Inc. |
Consolidated Balance Sheet and Other
Data |
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, |
|
April 30, |
|
July 31, |
|
|
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
841 |
|
|
$ |
1,022 |
|
|
$ |
501 |
|
Finance
receivables, net |
|
$ |
398,373 |
|
|
$ |
383,617 |
|
|
$ |
369,986 |
|
Inventory |
|
|
$ |
37,512 |
|
|
$ |
33,610 |
|
|
$ |
30,738 |
|
Total
assets |
|
$ |
472,502 |
|
|
$ |
455,584 |
|
|
$ |
437,763 |
|
Total
debt |
|
$ |
155,135 |
|
|
$ |
152,367 |
|
|
$ |
117,646 |
|
Treasury
stock |
|
$ |
211,702 |
|
|
$ |
204,325 |
|
|
$ |
165,769 |
|
Total
equity |
|
$ |
237,867 |
|
|
$ |
230,535 |
|
|
$ |
237,442 |
|
Shares
outstanding |
|
|
6,865,063 |
|
|
|
6,849,161 |
|
|
|
7,541,688 |
|
|
|
|
|
|
|
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|
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|
|
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|
|
Finance
receivables: |
|
|
|
|
|
|
|
Principal
balance |
|
$ |
520,820 |
|
|
$ |
501,438 |
|
|
$ |
483,719 |
|
|
Deferred
revenue - payment protection plan |
|
(20,429 |
) |
|
|
(19,823 |
) |
|
|
(18,888 |
) |
|
Deferred
revenue - service contract |
|
(10,605 |
) |
|
|
(10,332 |
) |
|
|
(9,901 |
) |
|
Allowance
for credit losses |
|
(122,447 |
) |
|
|
(117,821 |
) |
|
|
(113,733 |
) |
|
|
|
|
|
|
|
|
|
|
Finance
receivables, net of allowance and deferred revenue |
$ |
367,339 |
|
|
$ |
353,462 |
|
|
$ |
341,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
as % of principal balance net of deferred revenue |
|
25.0 |
% |
|
|
25.0 |
% |
|
|
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in
allowance for credit losses: |
|
|
|
|
|
|
|
|
|
Three months Ended |
|
|
|
|
|
|
July 31, |
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
Balance at
beginning of period |
$ |
117,821 |
|
|
$ |
109,693 |
|
|
|
|
Provision
for credit losses |
|
37,543 |
|
|
|
34,160 |
|
|
|
|
Charge-offs, net of collateral recovered |
|
(32,917 |
) |
|
|
(30,120 |
) |
|
|
|
|
Balance at
end of period |
$ |
122,447 |
|
|
$ |
113,733 |
|
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|
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