Car-Mart rolls to higher profits

Bentonville-based America's Car-Mart continues to outperform Wall Street expectations posting double-digit net income growth in its fourth quarter and fiscal 2012, which ended April 30.

The buy here, pay here auto retailer's profits totaled $9.6 million in the quarter and $32.947 million for the full year. Analysts predicted net income results of $8.65 million and $31.23 million, respectively.

Car-Mart's niche market is its return customers who helped the firm sell 37,722 vehicles last year and push top line revenue up 13% to $340 million.

"It goes without saying that we are very proud of our results for 2012," said CEO William "Hank" Henderson.

Higher revenue is attributed to the opening of nine new stores during the year and an average of 3.4% increase in the retail sales price over the prior year. The in-house financing department had gross receivables of $316.93 million, up from $282.47 million a year ago.

Henderson says the company's success is wrapped up in its constant focus on taking care of its customers through its growing network of dealerships throughout the southeast U.S.

Car-Mart has 114 dealerships and continues to grow at roughly 10% annually.

Henderson said several new locations have been identified as store sites, most recently the company branched into Mississippi with three dealerships. He said further expansion into Mississippi is on the agenda for fiscal 2013 which began May 1.

"The infrastructure investments made over the last several years to support our growth are allowing us to continue to expand in a controlled manner and benefit from leveraging opportunities," said Jeff Williams, chief financial officer of America's Car-Mart. "We are pleased with our credit results and the quality of the portfolio at April 30. Our credit results have been strong and have been very consistent over the past several years and our tax time collection efforts during the fourth quarter were acceptable."

Williams said the company reduced its allowance for credit losses to 21.5% from 22.0%, the first adjustment to the allowance percentage since October 2006.

One note of caution was an uptick in the number of accounts over 30 days late as of April 30. The past-due percentage was 4% of the total loans, up from 2.9% in the year-ago period.

Shares of Car-Mart (NASDAQ:CRMT) closed Thursday, May 24 at $45.02, up $1.77 or more than 4%. The earnings announcement came after market close, but the stock has been trending higher on expectations of a strong results. In the past 52 weeks the share price has ranged from a $23.99 low to a $48.24 high.

The company repurchased 210,428 shares of its common stock during the fourth quarter (2.2%). Since Feb.1, 2010, 2,493,537 shares, or 21.3% of the shares have been bought back.

Williams said there are 698,978 shares available under the existing repurchase plan and Car-Mart intends to repurchase shares in the future when conditions are favorable, subject to restrictions under its senior credit facility.

"Our balance sheet is very healthy and by staying focused on cash returns, our future is bright," he added.