Car-Mart Q3 revenue up 8%, earnings exceed $3 million and beat estimates

Rogers-based America’s Car-Mart Inc. posted net income and a revenue increase in the third quarter of fiscal 2025 as vehicle sales rose and prices fell. Revenue and earnings beat analyst expectations, and Car-Mart shares rose double digits.

Before the markets opened Thursday (March 6), the buy here, pay here used car dealer reported net income of $3.15 million, or 37 cents per share, in the quarter that ended Jan. 31 from a loss of $8.55 million, or a loss of $1.34 per share, in the same period last year. Revenue rose by 8.7% to $325.72 million from $299.61 million.

Earnings beat Wall Street’s expectations of 10 cents per share and revenue of $312 million, based on a consensus of analysts.

In an earnings report, equity analysts John Hecht and Derek Sommers, and equity associates Alexander Villalobos, Ibrahim Kargbo and Yuna Sohn, all of Jefferies, said the quarter “looks strong,” and the company had “good results amid strong sales growth.” The metrics were “good broadly.”

Vehicle sales rose by 13.2% to 13,198 in the third quarter from 11,664 in the same period last year. This was partially offset by the average retail sales price decreasing 0.9% to $19,275 from $19,455. The analysts said sales beat analyst expectations by about 1,000 vehicles, and the company’s new loan origination system comprises 58% of its loan portfolio.

“We continue to strengthen our business by enhancing our financial flexibility, improving our operational and technology capabilities, and adding proven leaders to our team, which allowed us to grow volumes, gross margin, and minimize losses during the quarter,” said President and CEO Doug Campbell. “Our (loan origination system) has transformed our underwriting with meaningfully improved credit performance, which gives us tremendous confidence in our ability to support both current and future customers. I would also like to thank our associates who are helping our customers navigate the current environment.”

According to Car-Mart’s third-quarter report, the company on Feb. 28 entered into an agreement to increase its asset-based lending revolving credit facility to $350 million and extend the maturity to March 2027. Car-Mart also recently completed a $200 million securities transaction that resulted in a 0.95 percentage point improvement in the weighted average coupon compared to the October 2024 transaction.

The report also shows Car-Mart ended the third quarter with more inventory “to support positive seasonal trends associated with spring selling and tax refund season.”

In the earnings call, Campbell discussed the challenges customers face and the uncertainty of the impact of tariffs, Car-Mart’s new employees, and income tax refunds.

“Used car affordability is a major concern for both our customers and our industry and has been for some time,” Campbell said. “In addition, recent developments out of Washington as it relates to tariffs and other potential impacts has created further uncertainties for how consumers might navigate a new environment.”

Jamie Fischer, chief operating officer, said Car-Mart started its annual tax season promotion in December instead of January, leading to a 3.6% increase in “prequalified leads coupled with stronger conversion year over year.”

Campbell said the tax season has started slower, with overall refunds flat to last year and still down from pre-COVID levels.

“We’re still waiting on I feel like a good chunk of that money,” he said. “We should hope to realize those sales here in the month of March. Refunds were up on a per customer basis just slightly. We saw stronger demand than we saw last year from consumers. I think that’s part and parcel with our advertising campaign, so last quarter I mentioned that we were going to go market earlier … When consumers are coming to you with their last paycheck in December instead of waiting on their 1099, that’s usually a good indication that there’s strong demand from the consumer side that they need to get ahold of that money. And we’re trying to make sure that we capitalize on that if there’s a sale opportunity.”

Campbell said the company hired Sam Smith as vice president of capital markets and treasury in January. He’s expected to support the company’s asset-backed securities platform and capital market strategy. He has more than 20 years of experience in investment banking and the securities markets.

Also in the third quarter, Josh Smith joined the company as chief technology officer. He has more than 27 years of experience in technology leadership roles.

Vickie Judy, chief financial officer, said the winter weather in late January contributed to customer account delinquencies, but this has since improved. Delinquencies, or accounts over 30 days past due, rose by 0.4 percentage points to 3.7% in the third quarter from the same period last year.

Through the first three quarters of fiscal 2025, Car-Mart’s net income was $7.26 million, or 94 cents per share, from a loss of $31.84 million, or a loss of $4.99 per share, in the same period last year. Revenue decreased by 0.8% to $1.02 billion from $1.029 billion.

Following are metrics in the third quarter of fiscal 2025 compared to the same period last year.
• Net finance receivables rose by 5.56% to $1.14 billion from $1.08 billion.
• Vehicle loan terms rose to an average of 44.6 months from 43.3 months.
• Net charge-offs improved to 6.1% from 6.8%.
• Gross profit margin improved by 1.5 percentage points to 35.7%.
• Dealerships open were flat at 154.
• Same-store revenue growth improved to 3.1% from -9.3%.
• Active loans rose by 1.5% to 103,663 from 102,175.

Shares of Car-Mart (NASDAQ: CRMT) were trading Thursday at $44.45, up $6.09 or 15.88%. In the past 52 weeks, the stock has ranged between $36.40 and $74.10.