Car-Mart will have a new CFO, CEO in 2018

America’s Car-Mart President Jeff Williams will become CEO on Dec. 31, and he will also step away from his role as chief financial officer.

CEO Hank Henderson announced Aug. 12 he will retire Dec. 31, and Williams, who also serves as chief financial officer, will assume the role of CEO for the Bentonville-based buy here, pay here used car dealer.

On Monday (Aug. 21), Williams said he will not remain in the CFO position when he becomes CEO on Dec. 31, and the company is in the process to hire someone to fill the CFO position.

“We will let you know as soon as we have named my replacement, but it will be between now and (Dec. 31),” he said.

HENDERSON BACKGROUND
Henderson has been CEO for the past 10 years and has served as president since 2002.

“We’ve been through some great times,” he said adding it has also been through some tough times. He’s fought hard to preserve the company’s culture, and he’s grateful to the company’s founder Bill Fleeman for putting confidence and trust in him. In 1981, Fleeman began Car-Mart with one dealership in Rogers. In 1987, Henderson joined the company as district manager after graduating from the University of Central Arkansas. In 1992, he became general manager, and in 1999, Henderson became chief operating officer after Fleeman sold the company to Dallas, Texas-based Crown Group for $41 million. Fleeman died that same year.

In 2002, Crown divested the Car-Mart business, and Henderson became president of the new publicly-traded America’s Car-Mart. He was named CEO in October 2007 when Tillman “Skip” Falgout, general counsel who came on board with the Crown purchase, stepped away from the business.

While Henderson is set to retire at the end of the year, he won’t be stepping away from the business. He’ll shift into a CEO emeritus role and continue to serve on the board, advising Williams and senior management.

“I’m fully committed to do my part to keep the company going,” Henderson said.

‘HIGH TOUCH BUSINESS’
In the quarter that ended July 31, Car-Mart earned $6.982 million or 90 cents per share, compared to $7.099 million, or 87 cents per share, in the same period last year. Revenue was flat at $146.41 million. Henderson said he was pleased earnings per share rose 3 cents in the quarter, from the same period last year.

Interest income rose 12.3% to $18.14 million, and sales declined 1.1%. The decline was related to the eight dealerships that have been or are being closed, Williams said. The company has 140 dealerships, or three fewer in the first quarter than in the same period last year. The company opened a dealership in Siloam Springs in the first quarter. As of Jan. 31, 2016, the company had 147 dealerships.

When asked about the timing of opening more dealerships, Williams said the company has many dealerships with new managers, and it needs to do some seasoning. It has potential with existing dealerships and has no timeline in place for opening new dealerships. The company has been investing in its general manager recruitment program, and this contributed to a rise in expenses. The company’s selling, general and administrative expenses was 18.6% of sales, up from 17.9% in the same period last year.

“This is a high touch business,” Williams said.

While sales volumes were down, same store revenues rose 2.1%, Williams said. And productivity at the dealerships has improved, with 28.2 vehicles sold per month, from 27.9 vehicles in the same quarter in 2016, when same store revenue growth was 0.5%. Also, Henderson said the company has seen “solid improvements in inventory purchasing.” Compared to the same period last year, the mileage on the vehicles is “only slightly less” — maybe a few thousand miles, but vehicle quality has been better.

The company has been purchasing vehicles that need less work, and the reduced maintenance costs has helped the bottom line. The retail sales price of the vehicles fell $7 to $10,386.

“Decreasing car prices is actually a good thing for us,” Williams said, adding that it doesn’t mean sales go down.

The company has 68,800 active auto loans, with the average term rate of 32.6 months. It’s risen from 31.7 months in the same quarter in 2016, and Williams said he expects term lengths will rise some in the future. In May 2016, the company raised its interest rate to 16.5%, from 15%. At the end of fiscal 2016, Car-Mart was facing shrinking profit margins that had fallen to 38.7%, and the goal was to raise profit margins to more than 40%. In the first quarter, pofit margins fell slightly to 41.4%, from 41.8% in the same quarter last year.

Shares of Car-Mart (NASDAQ: CRMT) were trading at $38.10, up $1.20 or 3.25%, after hitting a 52-week high of $38.60 on Friday afternoon. In the past 52 weeks, the stock has traded between $38.60 and $33.05.