Car-Mart earnings exceed expectations, up 26% in first quarter of fiscal 2021

Rogers-based America’s Car-Mart Inc. beat earnings and revenue expectations in the first quarter of fiscal 2021 as net income and revenue rose from the same quarter in 2019. Analysts had projected declines in earnings per share and revenue.

After the markets closed Monday (Aug. 17), the buy here, pay here used car dealer reported earnings for the period that ended July 31 rose 26.1% to $19.55 million, or $2.83 per share, from $15.5 million, or $2.21 per share, in the same period in 2019. Revenue rose 9.3% to $187.91 million.

Car-Mart beat expected earnings per share of $1.45, based on a consensus of four analysts. It also beat revenue projections of $167.67 million.

“Once again, results were strong, and our ‘scoreboard’ is solid,” said Jeff Williams, president and CEO. “We are certainly proud of the operating success; however, we do not celebrate the scoreboard. We look deeper at the quality of our daily work and how we can continue to improve and fulfill our obligation to serve significantly more customers into the future. While we are making good progress we maintain a sense of urgency to quickly improve in all areas.”

Vehicle sales fell 2.8% to 12,176, average sales price rose 12.2% to $12,800 and same-store revenue growth increased 220 basis points to 5.5%. Net charge-offs fell to 4.8%, from 5.4%, and accounts over 30 days past due declined to 2.6%, from 3.8%. Active customers increased by 5.9% to 81,738. Net finance receivables rose 11.8% to $482.53 million.

The overall revenue increase can be attributed to the 12.2% increase in the average retail sales price and a $3.3 million increase in interest income, said Vickie Judy, chief financial officer. Sales volume was impacted by reduced inventory levels, especially lower-priced vehicles, and customer traffic as a result of the pandemic. However, the volume rose throughout the first quarter, she said.

“We were able to take advantage of recent efforts by rental car companies to reduce their fleets, allowing us to acquire some newer model, lower mileage vehicles at affordable prices for our customers,” said Judy, noting that net charge-offs declined because of “the hard work of our associates to help customers through this pandemic and by the additional CARES Act enhanced unemployment payments.”

At the start of the pandemic, the company worked to reduce expenses, including cutting hours for some employees. But all employees have returned to work full time, Judy said.

“Our balance sheet is strong, and our vision is clear as we push for market share increases by providing a great customer experience and earning repeat business,” she added.

“How we conduct our business has a direct effect on the quality of life and the overall health of our communities, a responsibility we take to heart,” Williams said. “Through the continuing challenges related to the pandemic and social unrest, we continue to focus on the health, safety and growth of our associates and how we can add value in the communities we serve.”

Car-Mart has 150 dealerships or five more than at the end of the same period in 2019.

“We opened two new dealerships during the quarter and have two more in progress,” Williams said. “We continue to grow our customer base from our existing dealerships and believe we have significant growth opportunities in towns we already serve. Additionally, we believe that we will have acquisition opportunities as we move forward. As always, our goal is to continue to grow at a rate at which we can support our customers at the highest levels.”

Shares of Car-Mart (NASDAQ: CRMT) closed Monday at $105.31, up $6.56 or 6.64%. In the past 52 weeks, the stock has ranged between $129.70 and $35.18.