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America's Car-Mart Reports Diluted Earnings per Share of $2.07 on Revenues of $177 Million

BENTONVILLE, Ark., May 21, 2019 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (CRMT) today announced its operating results for the fourth quarter of fiscal year 2019.

Highlights of fourth quarter operating results:

  • Income before taxes of $18.3 million vs. $13.7 million for prior year quarter
  • Net earnings of $14.6 million, or $2.07 per diluted share vs. net earnings of $10.2 million, or $1.43 per diluted share for prior year quarter
  • Additional income tax benefit of $434,000 ($0.06 per diluted share) related to share-based compensation, vs. $944,000 ($0.13 per diluted share) for prior year quarter
  • Revenues of $177 million compared to $169 million for the prior year quarter, current quarter includes a $1.9 million increase in interest income and same store revenue increase of 2.9%
  • Average retail sales price increased $383 to $11,305 or 3.5% from the prior year quarter (up 1.4% sequentially)
  • Gross profit margin percentage remained relatively flat at 40.7%
  • Collections as a percentage of average finance receivables increased to 16.0% from 15.8% for the prior year quarter
  • The weighted average contract term decreased to 32.1 from 32.5 for the prior year quarter
  • Net Charge-offs as a percentage of average finance receivables of 6.4%, down from 7.5% for prior year quarter
  • Accounts over 30 days past due decreased to 2.9% from 3.5% at April 30, 2018
  • Average percentage of finance receivables current was 80.9%, down from 82.2% at April 30, 2018
  • Provision for credit losses of 22.2% of sales vs. 25.4% for prior year quarter
  • Selling, general and administrative expenses at 18.0% of sales vs. 16.9% for prior year quarter (current period includes $823,000 of stock compensation for performance-based stock options that are expected to vest as a result of the improved net income performance) 
  • Active accounts base approximately 75,600, an increase of approximately 4,500 from April 30, 2018
  • Debt to equity of 58.7% and debt to finance receivables of 28.1% (66.1% and 30.4% at April 30, 2018)
  • Strong cash flows supporting the $435,000 increase in finance receivables, $987,000 in net capital expenditures, and $2.5 million in common stock repurchases (31,472 shares) with a $17.8 million decrease in total debt

Highlights of twelve-month operating results:

  • Income before taxes of $59.9 million vs $38.9 million for prior year
  • Net income of $47.6 million or $6.73 per diluted share vs. net income of $36.5 million or $4.90 per diluted share for prior year (diluted earnings per share for prior year includes $1.40 for the effect of the enactment of the Tax Act in December 2017 and $(0.10) for a one-time retirement bonus paid to retiring CEO)
  • Additional income tax benefit related to share-based compensation of $1,961,000 ($0.28 per diluted share) compared to $1,721,000 ($0.23 per diluted share) for the prior year period
  • Revenues of $669 million compared to $612 million for the prior year with same store revenue increase of 8.4%
  • Retail unit sales increase of 4.1% to 50,257 from 48,271 for the prior year with improved productivity at 29.5 retail units sold per store per month, up from 28.7 for the prior year period
  • Net Charge-offs as a percent of average finance receivables of 25.7%, down from 28.8% for prior year
  • Provision for credit losses of 25.0% of sales vs. 27.7% of sales for prior year 
  • Strong cash flows supporting the $41.9 million increase in finance receivables, $3.9 million increase in inventory, $4.0 million in net capital expenditures and $26.6 million in common stock repurchases (378,627 shares) with only a $0.6 million increase in total debt

“We are proud of the progress being made and we will push hard every day to continuously raise the bar on our own expectations. The enthusiasm around our purpose has never been stronger as we have an obligation to serve more customers by growing at a solid, healthy pace. We are committed to staying laser focused on our operational non-negotiables and bringing Customer Experience to a level that cannot be matched in the markets we serve. We are deeply passionate about customer and associate success and we believe that we can be the best company in America at providing transportation solutions to credit challenged customers. As the result of deep reflection on where we are as a company and where we want to go, key Car-Mart leaders have recently developed our new Vision Statement which captures our ‘Why’, the real purpose in our work. Our Vision- ‘To be America’s best auto sales and finance company in the eyes of our associates and customers while improving the communities we serve.’  I am honored to be part of such a great team and to play a role in this very special effort that we have committed our lives to,” said Jeff Williams, President and Chief Executive Officer. “Our diligence is showing up in the numbers as our return on average assets and return on average equity for the year were 10.0% and 19.4%, respectively. Additionally, as we think about value creation for the year, we grew net finance receivables by $31.9 million, re-purchased $26.6 million of our common stock, invested $3.9 million in additional inventory to support our top line growth and funded $4.0 million in long-term capital expenditures (a total of $66.4 million), all with basically no increase in debt. We will stay focused on cash flows and operational efficiencies within our model as these disciplines give us distinct advantages in our markets.”  

“We plan to open two new dealerships, in Conway, Arkansas and Bryant, Arkansas, within the next few weeks. Our Chattanooga, Tennessee project has run into some challenges and we don’t have enough clarity at this point to provide an update on when, or if, we will be able to move forward with the location we have been working on,” said Mr. Williams. “We do plan to open a few more new locations in fiscal 2020 and will provide more detail as we move forward. As we have discussed, our primary focus is to continue to grow customer count at existing dealerships, with emphasis on our top performing general managers to leverage their talents.  At the same time, we will grow our bench to allow us to add new dealerships in the future. Our growth will be at a pace that matches our ability to serve customers in our communities at the highest levels.”

“Same store revenues were up 2.9% for the quarter and up over 8% for the year and we were pleased with the continued improvement in our credit metrics for the quarter compared to the prior year quarter - net charge-offs were down 110 basis points, collections were up 20 basis points, and the quarter-end 30+ delinquency percentage was down significantly to 2.9%. These metrics contributed to a 320 basis point improvement in the provision for credit losses as a percentage of sales for the quarter over the prior year quarter. While we did not experience leveraging at the SG&A line for the fourth quarter, we did leverage these expenses for the full year. Selling, general and administrative expenses for the fourth quarter included approximately $823,000 of additional stock compensation for performance-based stock options that are expected to vest as a result of the improved net income performance. We will continue to invest in the key areas of the business, especially on the people side, and at the same time expect some leveraging over the long term," said Vickie Judy, Chief Financial Officer. “We are all working very hard to make this company great and to take advantage of the opportunities that are in front of us as we help customers and associates succeed.”

“We repurchased 31,472 shares of our common stock during the quarter at an average price of $79.12 for a total of $2.5 million. Since February 2010 we have repurchased 6.2 million shares at an average price of approximately $36.30. Our primary focus is to be positioned to grow the business and invest in our associates and key areas of the business by managing strong cash-on-cash returns, while continuing to purchase shares opportunistically” added Ms. Judy. “Our balance sheet is very strong with a debt to finance receivables ratio of 28.1%.”  

Conference Call

Management will be holding a conference call on Wednesday, May 22, 2019 at 11:00 a.m. Eastern Time to discuss quarterly results. A live audio of the conference call will be accessible to the public by calling (877) 776-4031. International callers dial (631) 291-4132. Callers should dial in approximately 10 minutes before the call begins. A conference call replay will be available two hours following the call for thirty days and can be accessed by calling (855) 859-2056 (domestic) or (404) 537-3406 (international), conference call ID # 4487469.

About America's Car-Mart

America’s Car-Mart, Inc. (the “Company”) operates 144 automotive dealerships in eleven states and is one of the largest publicly held automotive retailers in the United States focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market. The Company emphasizes superior customer service and the building of strong personal relationships with its customers. The Company operates its dealerships primarily in small cities throughout the South-Central United States selling quality used vehicles and providing financing for substantially all of its customers. For more information, including investor presentations, on America’s Car-Mart, please visit our website at www.car-mart.com.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address the Company’s future objectives, plans and goals, as well as the Company’s intent, beliefs and current expectations regarding future operating performance and can generally be identified by words such as “may,” “will,” “should,” “could," “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” and other similar words or phrases. Specific events addressed by these forward-looking statements include, but are not limited to:

  • new dealership openings;
  • performance of new dealerships;
  • same store revenue growth;
  • future overall revenue growth;
  • the Company’s collection results, including but not limited to collections during income tax refund periods;
  • leveraging selling, general and administrative expenses;
  • repurchases of the Company’s common stock; and
  • the Company’s business and growth strategies and plans.

These forward-looking statements are based on the Company’s current estimates and assumptions and involve various risks and uncertainties. As a result, you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements. Factors that may cause actual results to differ materially from the Company’s projections include, but are not limited to:

  • the availability of credit facilities to support the Company’s business;
  • the Company’s ability to underwrite and collect its accounts effectively, including but not limited to collections during income tax refund periods;
  • competition;
  • dependence on existing management;
  • ability to attract, develop and retain qualified general managers;
  • availability of quality vehicles at prices that will be affordable to customers;
  • changes in financing laws or regulations; and
  • general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels.

Additionally, risks and uncertainties that may affect future results include those described from time to time in the Company’s SEC filings. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Contacts:             
Jeffrey A. Williams, President and CEO or Vickie D. Judy, CFO at (479) 464-9944

                    % Change    As a % of Sales 
             Three Months Ended
April 30, 
  2019    Three Months Ended
April 30, 
              vs.  
              2019       2018     2018   2019   2018
Operating Data:                          
  Retail units sold       13,094          13,082        0.1              
  Average number of stores in operation       144          140        2.9                
  Average retail units sold per store per month       30.3          31.1        (2.6 )              
  Average retail sales price   $   11,305      $   10,922        3.5                
  Same store revenue growth     2.9%       10.5%                    
  Net charge-offs as a percent of  average finance receivables   6.4%       7.5%                    
  Collections as a percent of average finance receivables     16.0%       15.8%                    
  Average percentage of finance receivables-current (excl. 1-2 day)   80.9%       82.2%                    
  Average down-payment percentage     8.2%       8.0%                    
                                   
Period End Data:                          
  Stores open       144          139        3.6              
  Accounts over 30 days past due     2.9%       3.5%                    
  Finance receivables, gross   $   543,328      $   501,438        8.4              
                                   
Operating Statement:                          
  Revenues:                          
    Sales    $   156,193     $   150,661       3.7       100.0 %     100.0  
    Interest income       20,689         18,790       10.1         13.2       12.5    
        Total       176,882         169,451       4.4         113.2       112.5    
                                   
  Costs and expenses:                          
    Cost of sales       92,624         89,493       3.5         59.3       59.4    
    Selling, general and administrative       28,181         25,486       10.6         18.0       16.9    
    Provision for credit losses       34,744         38,281       (9.2 )       22.2       25.4    
    Interest expense       1,988         1,621       22.6         1.3       1.1    
    Depreciation and amortization       1,020         1,006       1.4         0.7       0.7    
    Gain on disposal of property and equipment       (3 )       (97 )     (96.9 )       -        (0.1 )  
        Total       158,554         155,790       1.8         101.5       103.4    
                                   
        Income before taxes       18,328         13,661             11.7       9.1    
                                   
  Provision for income taxes       3,763         3,492             2.4       2.3    
                                   
        Net income   $   14,565     $   10,169             9.3       6.7    
                                   
  Dividends on subsidiary preferred stock    $   (10 )   $   (10 )                  
                                   
        Net income attributable to common shareholders   $   14,555     $   10,159                    
                                   
Earnings per share:                          
  Basic    $   2.17     $   1.47                    
  Diluted    $   2.07     $   1.43                    
                                   
                                   
Weighted average number of shares used in calculation:                          
  Basic        6,699,772         6,907,409                    
  Diluted        7,021,160         7,086,084                    
                                   

 

                    % Change    As a % of Sales 
             Years Ended
April 30, 
  2019    Years Ended
April 30, 
              vs.  
              2019       2018     2018   2019   2018
Operating Data:                          
  Retail units sold       50,257          48,271        4.1              
  Average number of stores in operation       142          140        1.4                
  Average retail units sold per store per month       29.5          28.7        2.8                
  Average retail sales price   $   11,125      $   10,604        4.9                
  Same store revenue growth     8.4%       5.2%                    
  Net charge-offs as a percent of average finance receivables     25.7%       28.8%                    
  Collections as a percent of average finance receivables     55.3%       53.1%                    
  Average percentage of finance receivables-current (excl. 1-2 day)   81.7%       80.9%                    
  Average down-payment percentage     6.5%       6.4%                    
                                   
Period End Data:                          
  Stores open       144         139        3.6              
  Accounts over 30 days past due     2.9%       3.5%                    
  Finance receivables, gross   $   543,328      $   501,438        8.4              
                                   
Operating Statement:                          
  Revenues:                          
    Sales    $   586,508     $   537,528       9.1       100.0 %     100.0 %
    Interest income       82,614         74,673       10.6         14.1       13.9  
        Total       669,122         612,201       9.3         114.1       113.9  
                                   
  Costs and expenses:                          
    Cost of sales       343,898         315,273       9.1         58.6       58.7  
    Selling, general and administrative       107,249         99,023       8.3         18.3       18.4  
    Provision for credit losses       146,363         149,059       (1.8 )       25.0       27.7  
    Interest expense       7,883         5,599       40.8         1.3       1.0  
    Depreciation and amortization       3,969         4,250       (6.6 )       0.7       0.8  
    Loss (gain) on disposal of property and equipment       (91 )       91       (200.0 )       -        -   
        Total       609,271         573,295       6.3         103.9       106.7  
                                   
        Income before taxes       59,851         38,906             10.2       7.2  
                                   
  Provision for income taxes       12,226         2,397             2.1       0.4  
                                   
        Net income   $   47,625     $   36,509             8.1       6.8  
                                   
  Dividends on subsidiary preferred stock    $   (40 )   $   (40 )                  
                                   
        Net income attributable to common shareholders   $   47,585     $   36,469                    
                                   
Earnings per share:                          
  Basic    $   6.99     $   5.04                    
  Diluted    $   6.73     $   4.90                    
                                   
                                   
Weighted average number of shares outstanding:                          
  Basic        6,810,879         7,232,014                    
  Diluted        7,071,768         7,441,358                    
                                   

 

                     
        April 30,   April 30,   April 30,    
          2019       2018       2017      
                     
Cash and cash equivalents   $   1,752     $   1,022     $   434      
Finance receivables, net   $   415,486     $   383,617     $   357,161      
Inventory    $   37,483     $   33,610     $   30,129      
Total assets   $   492,542     $   455,584     $   424,258      
Total debt   $   152,918     $   152,367     $   117,944      
Treasury stock   $   230,902     $   204,325     $   162,024      
Stockholders' equity   $   260,510     $   230,535     $   233,008      
Shares outstanding       6,699,421         6,849,161         7,608,471      
                     
                     
                     
Finance receivables:                
  Principal balance   $   543,328     $   501,438     $   466,854      
  Deferred revenue - payment protection plan     (21,367 )       (19,823 )       (18,472 )    
  Deferred revenue - service contract     (10,592 )       (10,332 )       (9,611 )    
  Allowance for credit losses     (127,842 )       (117,821 )       (109,693 )    
                     
  Finance receivables, net of allowance              
    and deferred revenue $   383,527     $   353,462     $   329,078      
                     
  Allowance as % of principal balance,              
    net of deferred revenue   25.0 %     25.0 %     25.0 %    
                     
                     
                     
Changes in allowance for credit losses:              
         Three Months Ended
 April 30, 
   Years Ended 
April 30, 
         
          2019       2018       2019       2018  
  Balance at beginning of period $   127,980     $   117,268     $   117,821     $   109,693  
  Provision for credit losses     34,744         38,281         146,363         149,059  
  Charge-offs, net of collateral recovered     (34,882 )       (37,728 )       (136,342 )       (140,931 )
    Balance at end of period $   127,842     $   117,821     $   127,842     $   117,821