Car-Mart Q3 loss exceeds $8M; vehicle sales skid 19%

Rogers-based America’s Car-Mart Inc. posted a loss and revenue decrease in the third quarter of fiscal 2024 amid lower sales and higher vehicle prices.

Before the markets opened Friday (March 8), the buy here, pay here used car dealer reported a loss of $8.55 million, or $1.34 per share, in the quarter that ended Jan. 31 from earnings of $1.49 million, or 23 cents per share, in the same period last year. Revenue declined by 7.9% to $299.61 million from $325.33 million.

Car-Mart missed estimates of a loss of 65 cents per share and revenue estimates of $350.95 million, based on a consensus of two analysts.

In an earnings report, equity analysts Kyle Joseph and John Hecht and equity associate Derek Sommers, all of Jefferies LLC, attributed the miss to “softer than expected retail sales.” The analysts noted that credit was stabilizing, but the vehicle sales decline more than offset increases in gross margins and retail sales price. The analysts maintained a hold on Car-Mart stock.

Third-quarter vehicle sales declined by 19.6% to 11,664 from 14,508 in the same period last year. Car-Mart attributed the decrease in vehicle sales to an 8.3% decline in credit applications, fewer selling days and January winter weather, which accounted for 3% to 4% of the decrease.

The average vehicle sales price rose by 7.5% to $19,455 in the third quarter from $18,091 in the same period last year. Gross profit margin rose by 0.5 percentage points to 34.2%. Same-store revenue growth was -9.3% from 12.3%. Net charge-offs increased by 0.9 percentage points to 6.8%.

“We continue to navigate a challenging macro environment facing our customers and remain focused on their success,” said Car-Mart President and CEO Doug Campbell. “While sales volumes fell short of our expectations during the quarter, they are not reflective of the efforts put forth by the team. I am encouraged by our continued progress during the quarter in gross profit, credit losses and initial results generated by our loan origination system. We have implemented several initiatives to improve sales during the fourth quarter. Our priority is to be agile with our cost structure and investments to deliver long-term profitability and shareholder value.”

According to the earnings report, Car-Mart in February entered into a strategic partnership with Cox Automotive that “is expected to drive better outcomes regarding vehicle acquisition, reconditioning, transportation and remarketing services. Cox Automotive is recognized as the world’s largest automotive services and technology provider.”

In the third quarter, Car-Mart completed the acquisition of Central Auto Sales in Hot Springs and the installation of an updated loan origination system. A majority of the company’s third-quarter sales were completed through the new system. Average third-quarter loan terms were 43.3 months, up more than one month from the same period last year but down nearly a month from the second quarter of fiscal 2024.

Following are other metrics at the end of the third quarter compared to the same time last year:

• Stores open declined by three to 154.
• Accounts over 30 days past due fell by 0.4 percentage points to 3.3%.
• Vehicle loans increased by 2.6% to 102,175.
• Net finance receivables increased by 7.2% to $1.08 billion.

Through three quarters, Car-Mart reported a loss of $31.84 million, or $4.99 per share, from earnings of $18.31 million, or $2.79 per share, in the same period last year. Revenue increased by 1.6% to $1.02 billion.

Shares of Car-Mart (NASDAQ: CRMT) closed Thursday (March 7) at $62.30, up $1.55 or 2.55%. In the past 52 weeks, the stock has ranged between $57.61 and $127.96.