Car-Mart earnings fall 38%; revenue up 26% in fourth quarter

by Jeff Della Rosa ([email protected]) 597 views 

Rogers-based America’s Car-Mart beat expectations for earnings and revenue in the fourth quarter of fiscal 2022 and for the year as it faces supply and demand imbalances, inflation and decreasing consumer confidence.

After the markets closed Monday (May 23), the buy here, pay here used car dealer reported earnings for the period ending April 30 declined by 38.7% to $26.66 million, or $4.01 per share, from $43.48 million, or $6.19 per share, in the same period last year. Revenue rose by 26.1% to $351.83 million, from $279.07 million.

Car-Mart beat earnings expectations of $3.10 per share, based on a consensus of four analysts. It also beat revenue expectations of $297.23 million.

For fiscal 2022, earnings decreased by 10.4% to $93.26 million, or $13.67 per share, from $104.09 million, or $14.95 per share, in the past fiscal year. Revenue rose by 32% to $1.21 billion, from $918.61 million.

Car-Mart beat earnings expectations of $12.78 per share and revenue expectations of $1.01 billion.

In the fourth quarter, vehicle sales declined by 0.8% to 16,426, from 16,555 in the same period last year, while the average retail sales price rose by 24.1% to $17,860, from $14,387. Same-store revenue growth declined to 24.2%, from 37.6%. Net charge-offs rose to 5.6%, from 4.8%. Active loans rose by 8% to 95,107, from 88,092. Accounts over 30 days past due rose to 3%, from 2.6%. Net finance receivables rose to $854.29 million, from $625.11 million.

Car-Mart had 154 stores open at the end of the fourth quarter, up from 151 at the same time in 2021.

“Our sales volume productivity of 35.6 units sold per dealership per month for the quarter was strong, and in the last 20-plus years, second only to the prior year’s fourth quarter of 36.5,” said President and CEO Jeff Williams. “We are increasing market share while facing challenges stemming from ongoing supply and demand imbalances in the used car market, inflation and declining consumer confidence. We expect to see additional productivity improvements as we leverage our investments and competitive strengths.

“When considering the effects of prior year stimulus payments and the current year term increase, our collections were up significantly during the quarter,” Williams added. “While credit results will likely continue to normalize, we believe that net charge-off levels in the future will be closer to the lower end of our historical ranges. We anticipate that even with longer-term contracts, our cash-on-cash returns will be attractive when measured by our historical results.”

Williams noted pay increases for lower-wage earners have partially offset the headwind of inflation.

“Our best weapon against inflationary operating cost pressures is a combination of higher volumes and greater efficiency,” he said. “We believe that we would be selling a significantly greater number of vehicles if we had sufficient availability at lower price points.”

Williams said Car-Mart used the net proceeds of the recent $400 million note offering to pay on its existing $600 million revolving line of credit.

Shares of Car-Mart (NASDAQ: CRMT) closed Monday at $76.46, down $1.71 or 2.19%. In the past 52 weeks, the stock has ranged between $72.50 and $177.45.