Car-Mart beats expectations, revenue up nearly 50% in first quarter

Rogers-based America’s Car-Mart Inc. saw revenue and earnings rise in the first quarter of fiscal 2022 as its average vehicle sales price and the number of vehicles sold increased. Meanwhile, the buy here, pay here used car dealer continues to establish new dealerships and expand the number of customers they serve.

After the markets closed Tuesday (Aug. 17), Car-Mart reported earnings rose by 27.6% to $24.95 million, or $3.57 per share, for the period ending July 31, from $19.55 million, or $2.83 per share, in the same period last year. Revenue increased by 49.1% to $280.32 million, from $187.91 million.

It beat earnings expectations of $3.49 per share, based on a consensus of four analysts. It also beat revenue expectations of $227.68 million.

In the first quarter, Car-Mart increased the number of customers by 3% to 91,100. Each dealership serves an average of 604 customers, up from 583 as of April 30.

CEO Jeff Williams previously said most dealerships can serve at least 1,000 customers.

“We continue to make foundational investments to our business model, and as expected, we are experiencing an increasing capacity to serve more customers at the highest levels,” Williams said. “We believe that the significant investments we are making in the areas of recruiting, training and retention, inventory procurement/management, customer experience and digital/information technology are already having positive effects and will allow us to continue to improve, grow and leverage our strengths.

“Our balance sheet has allowed us to take advantage of challenging market conditions and has allowed us to demonstrate how nimble we can be in this dynamic, quickly changing industry,” he added. “We continue to transition from a collections-focused company to a sales company that is very good at collections, and our associates have embraced this shift and are enthusiastic about the opportunities for our company and for them individually.”

Vickie Judy, chief financial officer, said the company made an additional investment in inventory to support the rise in vehicle sales. The sales increased by 25% to 15,219 vehicles, from 12,176 vehicles in the same period last year, while the average retail sales price rose by 20.4% to $15,405, from $12,800.

“The increase in the average retail sales price put pressure on the overall gross profit percentage as our gross profit percentage generally decreases as the retail sales price increases in our pricing model,” Judy said. “The total gross profit dollars per retail unit sold increased 10.7%. The increases in the average retail sales price have necessitated longer terms resulting in a reduction in collections as a percent of average finance receivables in line with the term increase.”

Earlier this month, Car-Mart agreed to purchase the retail finance operations of The Carman L.L.C. from Jake Haller in El Reno, Okla. Haller has operated his business for 20 years and has been a vehicle vendor for Car-Mart. The deal will provide Car-Mart with a new dealership and allow Haller to focus on supply the company with vehicles. Car-Mart also expects to open a new dealership in Norman, Okla., in the second quarter. As of July 31, Car-Mart had 151 dealerships, one more than at the same time in 2020.

Following are some other highlights from the first quarter of fiscal 2022, compared to the same period last year:

• Gross profit percentage fell to 38.1%, from 41.7%
• Same-store revenue growth was 46.7%, compared to 5.5%
• Net charge-offs fell to 4.3%, from 4.8%
• Accounts over 30 days past due rose to 3.3%, from 2.6%
• Net finance receivables increased 42.7% to $688.59 million, from $482.52 million.

Shares of Car-Mart (NASDAQ: CRMT) closed at $162.23, down $3.09, or 1.87%. In the past 52 weeks, the stock has ranged between $177.45 and $82.48.