Car-Mart’s Q4 earnings plummet nearly 80% amid declining sales and rising prices

Rogers-based America’s Car-Mart Inc. posted declines in revenue and earnings in the fourth quarter of fiscal 2024 as vehicle sales declined and sales prices rose.

Before the markets opened Tuesday (June 18), the buy here, pay here used car dealer reported earnings fell by 79.9% to $416,000, or 6 cents per share, in the quarter that ended April 30 from $2.07 million, or 32 cents per share, in the same period last year. Revenue fell by 5.8% to $364.67 million from $386.95 million.

Car-Mart missed expectations of 89 cents per share in the fourth quarter, based on a consensus of three analysts. The company beat revenue expectations of $361.47 million.

For fiscal year 2024, Car-Mart reported a loss of $31.43 million, or $4.92 per share, compared to a net income of $20.39 million, or $3.11 per share, in the previous year. Revenue declined by 0.5% to $1.39 billion from $1.4 billion.

Car-Mart missed expectations of a loss of $4.31 per share for fiscal 2024, based on a consensus of four analysts. The company beat revenue expectations of $1.36 billion.

“Our sales results improved sequentially but fell short of our internal expectations for the quarter,” said Doug Campbell, president and CEO of Car-Mart. “I am encouraged by our disciplined management on several fronts, including (selling, general and administrative expenses), total cash collected from customers, improved down payments and stronger gross margins – all of which were improved over the prior-year quarter. The (loan origination system) and its improved underwriting capability continues to deliver superior results when compared to our legacy system and aided in a reduction in our provision for credit loss.

“We are also thrilled about our most recent acquisition and welcome our new associates from Texas Auto Center to the Car-Mart family,” Campbell added. “This transaction closed June 3, 2024, and is the largest acquisition to date for our company. Despite these positives, the persistent inflationary environment driven by macro trends disproportionately impacted our customer base. In the upcoming year, we are confident in our multi-pronged approach to lower overall vehicle costs and improve affordability for our consumers.”

In the fourth-quarter earnings call, Campbell noted the company recently hired a chief credit and risk officer to help optimize its growing portfolio. He said the new employee has more than 20 years of experience in auto lending and has managed portfolios ranging from $100 million to $70 billion.

The company has 156 dealerships after adding the two Texas dealerships in the recent deal. At the end of the fourth quarter of fiscal 2024, Car-Mart had 154 dealerships, down two from the same time in the previous year. Three dealerships were closed in fiscal 2024. Car-Mart also acquired a dealership in Hot Springs in the third quarter of fiscal 2024.

Following are other results in the fourth quarter of fiscal 2024 compared to the same period last year:

• Vehicle sales declined by 13.6% to 15,251 from 17,655.
• Average retail sales price rose by 6.2% to $19,256 from $18,133.
• Gross profit rose to 35.5% from 33.5%.
• Net charge-offs rose to 7.3% from 6.3%.

Following are some results for fiscal 2024 compared to last year:

• Vehicle sales decreased by 8.8% to 57,989 from 63,854.
• Accounts over 30 days past due decreased to 3.1% from 3.6%.
• Active loans fell by 0.1% to 102,252 from 102,305.
• Average contract term rose to 47.9 months from 46.3 months.
• Net finance receivables rose to $1.09 billion from $1.06 billion.

Shares of Car-Mart (NASDAQ: CRMT) were trading Tuesday morning at $58.22, down $3.56 or 5.76%. In the past 52 weeks, the stock has ranged between $55 and $127.96.