America’s Car-Mart second-quarter profit and revenue rose 89% and 12.1%, respectively, and beat analyst estimates as the company looks to open three dealerships, with two in central Arkansas.
After the markets closed Thursday (Nov. 15), the Bentonville-based buy, here pay here used car dealer reported earnings for the second quarter of fiscal 2019 were $11.281 million, or $1.58 per share, in the quarter that ended Oct. 31. That was up from $5.969 million, or 79 cents per share, in the same period in 2017. Revenue was $167.171 million.
Earnings beat the estimate of $1.16 per share, and revenue beat the estimate of $161.44 million, according to a consensus of analysts. In the past six months, earnings rose 71% to $22.164 million, or $3.11 per share, and revenue increased 12.1% to $331.186 million.
In the second quarter, vehicle sales rose 6.2% to 12,667, from the same period in 2017. Sales volume productivity, or average sales per store per month, rose 4.6% to 29.7 vehicles, average sales price rose 5.9% to $11,030, and same store sales increased to 11%, from 0.6%. The company has added about 4,500 accounts over the past year, up to 74,000 active loans as of the end of the second quarter.
Net charge-offs as a percentage of average receivables declined to 6.6%, from 7.5%. Collections as a percentage of average receivables rose to 13%, from 12.2%. Accounts over 30 days past due declined to 3.4%, from 4.1%. Net finance receivables rose 8.8% to $409.714 million. Gross profit margin fell to 41.7%, from 42%. Average contract terms fell to 32.1 months, from 32.5 months.
As of the end of the second quarter, Car-Mart had 143 dealerships throughout the South-Central United States, up from 140, at the same time in 2017. It will open dealerships in Conway, Bryant and Chattanooga, Tenn. In October, it opened dealerships in Montgomery, Ala., and Bixby, Okla., and so far in fiscal 2019, the company has opened four dealerships. Like the other recent dealerships that have opened, the three new ones will be managed by top-performing general managers.
We are pleased to report another solid quarter and are proud of the hard work, dedication and commitment of our associates as we help customers succeed,” President and CEO Jeff Williams said. “We have spent years building an infrastructure to support a much larger business, with more recent investment directed at the general manager recruitment, training and advancement program as well as significant efforts to improve our inventory management processes.”
“It is good to see some leveraging in our selling, general and administrative expenses as our investments are paying off in supporting our increased revenues,” said Vickie Judy, chief financial officer. “During the first six months of the fiscal year, we have added over $34.4 million in receivables, repurchased $13.9 million of our common stock, funded $1.5 million in net capital expenditures, and increased inventory by $5.6 million to support higher sales levels with only a $12.4 million increase in debt. Our balance sheet is very strong with a debt to finance receivables ratio of 30.8%.”
Shares of Car-Mart (NASDAQ: CRMT) closed Thursday at $72, down 17 cents or 0.24%. In the past 52 weeks, the stock has ranged between $100.75 and $42.20.
USED VEHICLE PRICES
Wholesale used vehicle prices rose 0.72% in October, from September, and the Manheim Used Vehicle Value Index increased 3.4% to a record high of 140.9 in October, from the same month in 2017, according to Manheim Consulting.
Price depreciation of used vehicles has continued to become more normal; however, 3-year-old vehicles at the end of October are worth 3.5% more than they would normally have been worth had typical price deprecation occurred instead of the abnormal price appreciation over the summer.
The price of most used vehicle types continued to rise, and prices for the more affordable vehicles increased the most in October. Compact and midsize vehicles had the biggest increase in price, while pickups and SUVs experienced lower price increases, according to Manheim.
Sales of used vehicles declined 0.3% in October, from the same month in 2017, but the annual pace of sales increased 1% and was driven by a 1% rise in franchised used vehicle sales and a 2% increase in private-party used vehicle sales. The seasonally adjusted annual rate of sales fell to 38.1 million in October, down from 38.2 million in the same month last year.