America’s Car-Mart, Inc. (NASDAQ: CRMT) (“we,” “Car-Mart” or the
“Company”) today reported strong revenue growth in the first
quarter of fiscal year 2024, with net income negatively impacted by
credit results. Diluted earnings per share were $0.63 on revenue of
$368.0 million for the quarter.
Also today, the Company announced that current President Doug
Campbell will succeed Jeff Williams as Chief Executive Officer and
join the Board of Directors, effective October 1,
2023. Williams will remain a Board Member and serve as CEO
Emeritus and an advisor to the Company. See associated press
release America’s Car-Mart Names Doug Campbell CEO & Board
Member.
Highlights First Quarter 2024
The following are the key highlights from the first quarter. All
comparisons are based on the first quarter of fiscal year 2024 vs.
the first quarter of fiscal year 2023, unless otherwise noted.
- Revenues of $368.0 million, up 8.6%.
- Total retail unit sales increased 2.4%. Same store retail
revenue growth was 8.2%.
- Sales volume productivity per store per month was 34.2 vs.
33.6, an increase of 1.8%.
- Gross profit per car sold was $6,768 compared to $6,5241.
- Provision for credit losses as a percentage of sales was 30.9%
compared to 25.9%1. Net charge-offs as a percentage of average
finance receivables for the quarter were 5.8% compared to
5.1%1.
- Interest income was up 27.3% to $56.5 million, compared to
$44.3 million.
- SG&A as a percentage of sales was relatively flat at 14.9%
vs. 14.7%. SG&A was up $3.2 million and up $0.7 million,
sequentially. Excluding stock-based compensation, SG&A was down
$0.6 million sequentially. SG&A per average customer was $449
vs. $450.
- Interest expense was $14.3 million, compared to $7.3
million.
- Total debt to finance receivables was 49.3% up from 46.5% at
April 30, 2023 and total debt, net of cash, to finance receivables
(non-GAAP), was 42.9%2 at the end of the first quarter, up from
41.5%2 at April 30, 2023.
- Customer count increased 8.1% to 104,734 active customers.
Customers served per dealership was 680, compared to 629.
- Diluted EPS was $0.63 vs. $2.071.
CEO Commentary
“In the first quarter, improvements in many areas of the
business - unit sales, gross margin, repair costs, diminishing
wholesale losses, online credit application activity, working
capital management and closing underperforming stores were
overshadowed by the increase in the provision for loan losses
during the period. The major drivers behind higher loan losses
related to post-stimulus normalization of charge-offs, additional
provisioning resulting from increased contract term, and a higher
average interest rate for the portfolio. Said in a different way,
we are experiencing the same credit results on the portfolio as we
have historically, but the contract length has changed,” commented
CEO Jeff Williams. “We anticipate this dynamic will reverse in the
future leading to a more normalized reserve provision. In effect,
the current principal collected, as a percentage of finance
receivables, has been lower, creating a higher allowance for losses
rather than being reported in earnings and equity. We continue to
increase our allowance for credit losses, providing $14.8 million
more than charge-offs during the period. Our loan origination
system is now being utilized in all our stores for customer
pre-approvals, improving our ability to maximize deal structures
according to the risk each customer presents, and positioning us
well for long-term success. While our competition is struggling
with access to capital, we are not. Our healthy increase in sales
volumes and scale, not to mention our on-going business
investments, are giving us ever-increasing advantages in the
marketplace.”
Sales
Continued strength in the growth of online credit applications
drove a 2.4% increase in unit volumes versus the prior year’s first
quarter. We are converting approximately 13.0% of online credit
applications to sales and growth in applications remained robust at
19.0% for the quarter, increasing our market share. Our dealership
volume productivity averaged 34.2 sales per month, up from 33.6
last year in a challenging environment for used car sales.
Our average retail sales price rose by 4.1% to $18,799 versus
the prior year’s first quarter. Approximately half of the price
increase was related to the vehicle and half was related to
ancillary product pricing. We strongly believe that affordability
will improve and that many potential customers will come off the
sidelines. Publicly traded dealership groups continue to report
double-digit decreases in overall used unit volumes, citing
affordability as the main reason. In addition, recent wholesale
market price decreases are expected to result in lower retail
prices, and more affordable consumer prices in the future. As a
reminder, dealership and wholesale pricing are a reliable leading
indicator for our market. We are on target to reach our goal of
selling 40-50 vehicles per month per dealership and eventually
support an average of 1,000 or more active customers per store.
Gross profits
Last quarter we committed to recovering 260 bps of gross margin
to 36.0%. We are very pleased with our progress and now expect our
future gross margins to be higher than previously communicated. The
gross margin improvement is a direct result of Doug Campbell’s
expertise in improving purchasing and disposition business
practices and the hard work of our team, under his leadership. We
are excited about the investments we have been making and continue
to make, and believe we are in the early innings of realizing the
benefits. Total gross profit dollars were $107.7 million versus
$101.4 million in the prior year’s first quarter. Unit gross
profits were $6,768 versus $6,5241 last year and versus $6,354
sequentially. Inventory is 19.0% lower than the end of the first
quarter of fiscal 2023. Annualized inventory turns for the first
quarter were 7.2, an improvement compared to the prior year’s first
quarter turns of 5.9. Gross margin was up 120 basis points
sequentially and 20 basis points compared to the prior year’s first
quarter. The biggest driver of the sequential quarterly gross
margin improvement was an 11.0% reduction in the cost of repairing
vehicles. In addition, wholesale losses continue to diminish and
are now lower than they were in 2018 as a result of improvements to
both the purchasing and the disposition of vehicles.
Credit and Interest Income
Net charge-offs as a percentage of average finance receivables
were 5.8% compared to 5.1%1 during the prior year quarter and 6.3%
during the sequential quarter. The prior 5-year and 10-year
averages for first quarters were 5.0%1 and 5.6%1, respectively. The
provision for credit losses was 30.9% compared to 25.9%1 versus the
prior year’s first quarter and 30.4% sequentially. Our
reserve increased during the quarter by $14.8 million or 15.0%. Our
realized recoveries were constant at 27.0% of gross charge-offs.
Structural changes to our portfolio driven by higher vehicle costs
and longer term lengths continue to drive an increase in the
provision for credit losses. For example, had term lengths and
consumer payment behavior remained the same as the first quarter of
fiscal 2020 (pre-pandemic), principal collections as a percentage
of average Finance Receivables, would have exceeded 13.0% versus
the 8% that we realized. This would equate to approximately $80
million more in principal collected, resulting in credit losses
being approximately $19 million lower. Each quarter, we provide
initial reserves for new finance receivables as well as re-evaluate
reserves related to existing finance receivables. As vehicle prices
level off, and potentially decrease over time, credit losses are
expected to decline significantly. We do not believe that our
business fundamentals have changed: credit fundamentals will
normalize. Approximately 57.0% of the higher provision for the
fiscal year relates to the increase in finance receivables, net of
deferred revenue. The growth in the provision was driven by the
increase in vehicle sales prices resulting in a longer average
contract term, and changes in consumer payment behavior related to
both the absence of government stimulus payments and added
inflationary pressures.
Interest income was $56.5 million in the quarter compared to
$44.3 million during the prior year’s first quarter. The 27.3%
increase in interest income was driven by a combination of higher
average finance receivables and our decision in December 2022 to
increase our consumer contract interest rate to 18.0% from 16.5% in
all states except Arkansas (Illinois dealerships originate at 19.5%
to 21.5%). There is a usury cap of 17.0% in Arkansas, which
accounts for approximately 28.0% of our revenues.
SG&A
SG&A was $46.5 million, 14.9% of sales, compared to $45.8
million during the sequential quarter. Excluding stock-based
compensation expense, SG&A was down approximately $0.6 million
sequentially. Approximately 70.0% of our SG&A is people
related. Our full-time headcount at July 31, 2023 and 2022, was
2,200 and 2,100, respectively. SG&A per average account, a key
metric that is part of management’s short-term incentive plan, was
$449 compared to $451 during the prior year’s first quarter and
$454 sequentially. We expect our business investments, capital
expenditures and technology investments to provide SG&A cost
leveraging opportunities as we move forward.
Leverage and liquidity
Interest expense was $14.3 million, compared to $7.3 million
during the prior year’s first quarter, due to higher borrowing
levels and increased interest rates. Access to capital, with our
$600 million revolving credit facility and our successful
securitization program, gives us distinct advantages over many
competitors. Many competitors may experience even more pressure in
accessing capital in the future. Our non-recourse securitized
funding represents the bulk of our funding, and our cost of funds
fluctuates with the level of interest rates and credit spreads.
Debt to finance receivable and debt, net of cash to finance
receivables (non-GAAP) 2 were 49.3% and 42.9%, compared to 43.2%
and 39.7%, respectively, at the end of the prior year’s first
quarter (sequentially 46.5% and 41.5%, respectively). During the
current quarter, we grew net finance receivables by $53 million and
increased inventory by $8 million, with a $48 million increase in
debt, net of cash.
Acquisitions & Dispositions
As significant disruptions in the competitive landscape
continue, we are building a pipeline of acquisition prospects and
are entertaining several highly accretive opportunities. We have
recently hired a vice president to head our acquisitions effort and
will continue to develop and strengthen the team and processes to
capture the tremendous opportunities before us. We have a
competitive advantage in the industry and our opportunity for value
creation through acquisitions is quite large as an increasing
number of good operators look for an exit strategy.
We recently closed two stores and are in the process of
reviewing a handful of others that do not generate appropriate
returns. We will allocate the capital freed up by these
underperforming stores to acquisitions and more attractive
projects.
Business Investments, Capital Expenditures and Technology
We are actively rolling out a new Loan Origination System
(“LOS”) which we expect to complete within the next few months. As
we have discussed, the LOS will be transformational for our
company, increasing the funnel of potential customers and the
retention of existing customers that have high life-time value. We
are receiving more than 16,000 on-line credit applications each
month. Because of the high and increasing level of interest in our
offering, the LOS will provide data enabling us to be more
selective in choosing customers to finance and structure our deals
to improve success rates. Attracting and retaining higher credit
customers over time will drive down credit losses. We will have the
ability to continuously update our scoring system and apply
risk-based pricing to capture the desired market share. We are
excited about the enormous benefits from access to robust data. In
addition, the LOS will reduce the time it takes to complete a sale,
providing more time to focus on customer service. Lastly,
streamlining back-office functions will provide significant
efficiencies when compared to current processes.
Our implementation of Microsoft Dynamics 365 Enterprise Resource
Planning project (“ERP”), including our Customer Relationship
Management (“CRM”) module, is also progressing and, like the LOS,
our expectations are high. These platforms will significantly
improve our back-office accounting, inventory
management/procurement, information technology and other functions
while elevating our customer service levels. In addition to
achieving operational gains through improved utilization of data,
we expect to see cost savings as we eliminate manual processes and
improve efficiency. We expect the ERP to be completed by early
calendar year 2024.
We expect capital expenditures to be approximately $12 million
for the fiscal year 2024 and spending in our first quarter is in
line with that estimate. We completed most of our significant
facilities projects in 2023.
Conference Call
Management will hold a conference call on
Tuesday, September 5, 2023, at 11:00 a.m. Eastern Time to discuss
quarterly results. Participants may access the conference call via
webcast using this link: Webcast Link Here. To participate via
telephone, please register in advance using this Registration Link.
Upon registration, all telephone participants will receive a
one-time confirmation email detailing how to join the conference
call, including the dial-in number along with a unique PIN that can
be used to access the call. All participants are encouraged to dial
in 10 minutes prior to the start time.
A replay of the conference call and webcast will
be available on-demand, which will be available for 12 months.
About America's Car-Mart
America’s Car-Mart, Inc. (the “Company”)
operates automotive dealerships in 12 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 smaller cities throughout the South-Central United States,
selling quality used vehicles and providing financing for
substantially all of its customers. For more information about
America’s Car-Mart, including investor presentations, please visit
our website at www.car-mart.com.
Non-GAAP Financial Measures
This press release contains financial
information determined by methods other than in accordance with
generally accepted accounting principles (GAAP). We present
total debt, net of total cash, to finance receivables, a non-GAAP
measure, as a supplemental measure of our performance. We believe
total debt, net of total cash, to finance receivables is a useful
measure to monitor leverage and evaluate balance sheet risk. This
measure should not be considered in isolation or as a substitute
for reported GAAP results because it may include or exclude certain
items as compared to similar GAAP-based measures, and such measures
may not be comparable to similarly-titled measures reported by
other companies. We strongly encourage investors to review our
consolidated financial statements included in publicly filed
reports in their entirety and not rely solely on any one, single
financial measure or communication. The most directly comparable
GAAP financial measure, as well as a reconciliation to the
comparable GAAP financial measure, for non-GAAP financial measures
are presented in the tables of this release.
Forward-Looking Statements
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,” “expect,” “anticipate,”
“intend,” “plan,” “foresee,” and other similar words or phrases.
Specific events addressed by these forward-looking statements may
include, but are not limited to:
- future returns on equity;
- operational infrastructure investments;
- same dealership sales and revenue growth;
- customer growth;
- gross profit percentages;
- gross profit per retail unit sold;
- business acquisitions;
- technological investments and initiatives;
- future revenue growth;
- receivables growth as related to revenue growth;
- new dealership openings;
- performance of new dealerships;
- interest rates;
- future credit losses;
- the Company’s collection results, including but not limited to
collections during income tax refund periods;
- seasonality; and
- the Company’s business, operating and growth strategies and
expectations.
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:
- 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;
- the availability of quality used
vehicles at prices that will be affordable to our customers,
including the impacts of changes in new vehicle production and
sales;
- the availability of credit
facilities and access to capital through securitization financings
or other sources on terms acceptable to us to support the Company’s
business;
- the Company’s ability to underwrite
and collect its contracts effectively;
- competition;
- dependence on existing
management;
- ability to attract, develop, and
retain qualified general managers;
- changes in consumer finance laws or
regulations, including but not limited to rules and regulations
that have recently been enacted or could be enacted by federal and
state governments;
- the ability to keep pace with
technological advances and changes in consumer behavior affecting
our business;
- security breaches, cyber-attacks,
or fraudulent activity;
- the ability to identify and obtain
favorable locations for new or relocated dealerships at reasonable
cost;
- the ability to successfully
identify, complete and integrate new acquisitions; and
- potential business and economic
disruptions and uncertainty that may result from any future public
health crises and any efforts to mitigate the financial impact and
health risks associated with such developments.
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.
Contact: Vickie Judy,
CFO at (479) 464-9944Investor_relations@car-mart.com
(1) Subsequent to the issuance of our interim financial
statements for the period ended July 31, 2022, certain immaterial
errors were identified and have been corrected in our historical
information related to the classification of deferred revenue of
ancillary products at the time an account is charged off and the
calculation for allowance for credit losses. As a result, certain
amounts for sales revenue, provision for credit losses,
charge-offs, net of collateral recovered, gross profit per vehicle
sold and the allowance for credit losses have been revised from the
amounts previously reported to correct these errors. The impact of
these adjustments resulted in an increase in diluted earnings per
share for the three months ended July 31, 2022, of $0.07.
Management has evaluated the materiality of these corrections to
its prior period financial statements from a quantitative and
qualitative perspective and has concluded that this change was not
material to any prior annual or interim period.
(2) Calculation of this non-GAAP financial measure and a
reconciliation to the most directly comparable GAAP measure are
included in the tables accompanying this release.
America's Car-Mart, Inc. |
Consolidated Results of Operations |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
As a % of Sales |
|
|
|
Three Months Ended |
|
2023 |
|
|
Three Months Ended |
|
|
|
July 31, |
|
vs. |
|
|
July 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail units sold |
|
15,912 |
|
|
|
15,536 |
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
Average number of stores in operation |
|
155 |
|
|
|
154 |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
Average retail units sold per store per month |
|
34.2 |
|
|
|
33.6 |
|
|
1.8 |
|
|
|
|
|
|
|
|
|
Average retail sales price(1) |
$ |
18,799 |
|
|
$ |
18,065 |
|
|
4.1 |
|
|
|
|
|
|
|
|
|
Total gross profit per retail unit sold(1) |
$ |
6,768 |
|
|
$ |
6,524 |
|
|
3.7 |
|
|
|
|
|
|
|
|
|
Total gross profit percentage |
|
34.6 |
% |
|
|
34.4 |
% |
|
0.4 |
|
|
|
|
|
|
|
|
|
Same store revenue growth |
|
8.2 |
% |
|
|
21.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs as a percent of average finance receivables(1) |
|
5.8 |
% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total collected (principal, interest and late fees) |
$ |
165,747 |
|
|
$ |
148,221 |
|
|
11.8 |
|
|
|
|
|
|
|
|
|
Average total collected per active customer per month |
$ |
535 |
|
|
$ |
516 |
|
|
3.7 |
|
|
|
|
|
|
|
|
|
Average percentage of finance receivables-current (excl. 1-2
day) |
|
80.5 |
% |
|
|
80.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Average down-payment percentage |
|
5.0 |
% |
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open |
|
154 |
|
|
|
154 |
|
|
- |
% |
|
|
|
|
|
|
|
|
Accounts over 30 days past due |
|
4.4 |
% |
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Active customer count |
|
104,734 |
|
|
|
96,899 |
|
|
8.1 |
|
|
|
|
|
|
|
|
|
Principal balance of finance receivable |
$ |
1,440,707 |
|
|
$ |
1,185,276 |
|
|
21.6 |
|
|
|
|
|
|
|
|
|
Weighted average total contract term |
|
46.9 |
|
|
|
44.0 |
|
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales(1) |
$ |
311,569 |
|
|
$ |
294,476 |
|
|
5.8 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
Interest income |
|
56,456 |
|
|
|
44,342 |
|
|
27.3 |
|
|
18.1 |
|
|
15.1 |
|
|
|
Total |
|
368,025 |
|
|
|
338,818 |
|
|
8.6 |
|
|
118.1 |
|
|
115.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
203,879 |
|
|
|
193,115 |
|
|
5.6 |
|
|
65.4 |
|
|
65.6 |
|
|
|
Selling, general and administrative |
|
46,470 |
|
|
|
43,234 |
|
|
7.5 |
|
|
14.9 |
|
|
14.7 |
|
|
|
Provision for credit losses(1) |
|
96,323 |
|
|
|
76,241 |
|
|
26.3 |
|
|
30.9 |
|
|
25.9 |
|
|
|
Interest expense |
|
14,274 |
|
|
|
7,345 |
|
|
94.3 |
|
|
4.6 |
|
|
2.5 |
|
|
|
Depreciation and amortization |
|
1,693 |
|
|
|
1,151 |
|
|
47.1 |
|
|
0.5 |
|
|
0.4 |
|
|
|
Loss on disposal of property and equipment |
|
166 |
|
|
|
8 |
|
|
- |
|
|
0.1 |
|
|
- |
|
|
|
Total |
|
362,805 |
|
|
|
321,094 |
|
|
13.0 |
|
|
116.4 |
|
|
109.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
5,220 |
|
|
|
17,724 |
|
|
|
|
|
1.7 |
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes(1) |
|
1,034 |
|
|
|
4,027 |
|
|
|
|
|
0.3 |
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
4,186 |
|
|
$ |
13,697 |
|
|
|
|
|
1.3 |
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on subsidiary preferred stock |
$ |
(10 |
) |
|
$ |
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders |
$ |
4,176 |
|
|
$ |
13,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic(1) |
$ |
0.65 |
|
|
$ |
2.15 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted(1) |
$ |
0.63 |
|
|
$ |
2.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
6,381,704 |
|
|
|
6,373,326 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
6,635,002 |
|
|
|
6,601,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Subsequent to the issuance of our financial statements for
the period ended July 31, 2022, certain immaterial errors were
identified and have been corrected in our historical information
related to the classification of deferred revenue of ancillary
products at the time an account is charged off and the calculation
for allowance for credit losses. The amount of deferred revenue
related to ancillary products for a customer account that is
charged off has historically been recognized as sales revenue at
the time of charge-off because the earnings stream for the deferred
revenue is completed at the time of charge-off. It was determined
that this amount should more appropriately be recorded as a
reduction to customer accounts receivable at the time of
charge-off, thus reducing the amounts historically reported in
sales revenue, net charge-offs, the provision for credit losses and
the allowance for credit losses. As a result, certain amounts for
sales revenue, provision for credit losses, charge-offs, net of
collateral recovered, and the allowance for credit losses have been
revised from the amounts previously reported to correct these
errors. The impact of these adjustments resulted in an increase in
diluted earnings per share for the three months ended July 31, 2022
of $0.07. Management has evaluated the materiality of these
corrections to its prior period financial statements from a
quantitative and qualitative perspective and has concluded that
this change was not material to any prior annual or interim
period.
America's Car-Mart, Inc. |
Condensed Consolidated Balance Sheet and Other Data |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, |
|
April 30, |
|
July 31, |
|
|
|
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,314 |
|
|
$ |
9,796 |
|
|
$ |
4,362 |
|
Restricted cash from collections on auto finance receivables |
$ |
85,887 |
|
|
$ |
58,238 |
|
|
$ |
37,521 |
|
Finance receivables, net(1) |
|
$ |
1,126,992 |
|
|
$ |
1,074,464 |
|
|
$ |
930,149 |
|
Inventory |
|
$ |
117,186 |
|
|
$ |
109,290 |
|
|
$ |
145,181 |
|
Total assets(1) |
|
$ |
1,504,721 |
|
|
$ |
1,420,431 |
|
|
$ |
1,258,255 |
|
Revolving lines of credit, net (2) |
|
$ |
(1,035 |
) |
|
$ |
167,231 |
|
|
$ |
188,921 |
|
Non-recourse notes payable, net |
$ |
711,789 |
|
|
$ |
471,367 |
|
|
$ |
323,105 |
|
Treasury stock |
|
$ |
297,489 |
|
|
$ |
297,421 |
|
|
$ |
297,421 |
|
Total equity(1) |
|
$ |
504,729 |
|
|
$ |
498,547 |
|
|
$ |
488,304 |
|
Shares outstanding |
|
|
6,381,954 |
|
|
|
6,371,404 |
|
|
|
6,367,605 |
|
Book value per outstanding share(1) |
$ |
79.15 |
|
|
$ |
78.56 |
|
|
$ |
76.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables: |
|
|
|
|
|
|
|
Principal balance |
|
$ |
1,440,707 |
|
|
$ |
1,373,372 |
|
|
$ |
1,185,276 |
|
|
Deferred revenue - accident protection plan |
|
(54,716 |
) |
|
|
(53,065 |
) |
|
|
(46,896 |
) |
|
Deferred revenue - service contract |
|
(70,883 |
) |
|
|
(67,404 |
) |
|
|
(53,459 |
) |
|
Allowance for credit losses(1) |
|
(314,442 |
) |
|
|
(299,608 |
) |
|
|
(255,836 |
) |
|
|
|
|
|
|
|
|
|
|
Finance receivables, net of allowance and deferred revenue |
$ |
1,000,666 |
|
|
$ |
953,295 |
|
|
$ |
829,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance as % of principal balance net of deferred revenue |
|
23.91 |
% |
|
|
23.91 |
% |
|
|
23.58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in allowance for credit losses: |
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
|
July 31, |
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
Balance at beginning of period(1) |
$ |
299,608 |
|
|
$ |
237,823 |
|
|
|
|
Provision for credit losses(1) |
|
96,323 |
|
|
|
76,241 |
|
|
|
|
Charge-offs, net of collateral recovered(1) |
|
(81,489 |
) |
|
|
(58,228 |
) |
|
|
|
|
Balance at end of period |
$ |
314,442 |
|
|
$ |
255,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Subsequent to the issuance of our financial statements for
the period ended July 31, 2022, certain immaterial errors were
identified and have been corrected in our historical information
related to the classification of deferred revenue of ancillary
products at the time an account is charged off and the calculation
for allowance for credit losses. The amount of deferred revenue
related to ancillary products for a customer account that is
charged off has historically been recognized as sales revenue at
the time of charge-off because the earnings stream for the deferred
revenue is completed at the time of charge-off. It was determined
that this amount should more appropriately be recorded as a
reduction to customer accounts receivable at the time of
charge-off, thus reducing the amounts historically reported in
sales revenue, net charge-offs, the provision for credit losses and
the allowance for credit losses. As a result, certain amounts for
sales revenue, provision for credit losses, charge-offs, net of
collateral recovered, and the allowance for credit losses have been
revised from the amounts previously reported to correct these
errors. The impact of these adjustments resulted in a cumulative
decrease in the allowance for credit losses of $10.0 million at
July 31, 2022. Management has evaluated the materiality of these
corrections to its prior period financial statements from a
quantitative and qualitative perspective and has concluded that
this change was not material to any prior annual or interim
period.
(2) As of the period ended July 31, 2023, the
revolving line of credit balance was $0; however, $1.0 million of
amortized debt issuance costs is being reflected at the period end,
which would have normally been netted against the carrying
balance.
America's Car-Mart, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
July 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
Operating activities: |
|
|
|
|
Net income |
$ |
4,186 |
|
|
$ |
13,697 |
|
|
Provision for credit losses(1) |
|
96,323 |
|
|
|
76,241 |
|
|
Losses on claims for accident protection plan |
|
7,769 |
|
|
|
6,108 |
|
|
Depreciation and amortization |
|
1,693 |
|
|
|
1,151 |
|
|
Finance receivable originations |
|
(297,732 |
) |
|
|
(287,416 |
) |
|
Finance receivable collections |
|
109,291 |
|
|
|
103,879 |
|
|
Inventory |
|
23,953 |
|
|
|
(521 |
) |
|
Deferred accident protection plan revenue(1) |
|
1,651 |
|
|
|
6,570 |
|
|
Deferred service contract revenue(1) |
|
3,479 |
|
|
|
7,358 |
|
|
Income taxes, net(1) |
|
770 |
|
|
|
3,621 |
|
|
Other(2) |
|
3,218 |
|
|
|
8,910 |
|
|
|
Net cash used in operating activities |
|
(45,399 |
) |
|
|
(60,402 |
) |
|
|
|
|
|
|
Investing activities: |
|
|
|
|
Purchase of property and equipment and other(2) |
|
(850 |
) |
|
|
(6,920 |
) |
|
|
Net cash used in investing activities |
|
(850 |
) |
|
|
(6,920 |
) |
|
|
|
|
|
|
Financing activities: |
|
|
|
|
Change in revolving credit facility, net |
|
(168,516 |
) |
|
|
144,036 |
|
|
Payments on non-recourse notes payable |
|
(116,862 |
) |
|
|
(74,532 |
) |
|
Change in cash overdrafts |
|
- |
|
|
|
1,108 |
|
|
Issuances of non-recourse notes payable |
|
360,340 |
|
|
|
- |
|
|
Debt issuance costs |
|
(4,091 |
) |
|
|
(89 |
) |
|
Purchase of common stock |
|
(68 |
) |
|
|
(5,196 |
) |
|
Dividend payments |
|
(10 |
) |
|
|
(10 |
) |
|
Exercise of stock options and issuance of common stock |
|
(377 |
) |
|
|
1,301 |
|
|
|
Net cash provided by financing activities |
|
70,416 |
|
|
|
66,618 |
|
|
|
|
|
|
|
Increase (decrease) in cash, cash equivalents, and restricted
cash |
$ |
24,167 |
|
|
$ |
(704 |
) |
|
|
|
|
|
|
|
|
|
|
|
(1) Subsequent to the issuance of our financial statements
for the period ended July 31, 2022, certain immaterial errors were
identified and have been corrected in our historical information
related to the classification of deferred revenue of ancillary
products at the time an account is charged off and the calculation
for allowance for credit losses. The amount of deferred revenue
related to ancillary products for a customer account that is
charged off has historically been recognized as sales revenue at
the time of charge-off because the earnings stream for the deferred
revenue is completed at the time of charge-off. It was determined
that this amount should more appropriately be recorded as a
reduction to customer accounts receivable at the time of
charge-off, thus reducing the amounts historically reported in
sales revenue, net charge-offs, the provision for credit losses and
the allowance for credit losses. As a result, certain amounts for
sales revenue, provision for credit losses, charge-offs, net of
collateral recovered, and the allowance for credit losses have been
revised from the amounts previously reported to correct these
errors. Management has evaluated the materiality of these
corrections to its prior period financial statements from a
quantitative and qualitative perspective and has concluded that
this change was not material to any prior annual or interim
period.
(2) Prepaid expenses and other assets at July 31, 2022,
reflects an immaterial reclassification of approximately $7.4
million of capitalized implementation costs related to a
cloud-computing arrangement previously recorded in Property and
equipment, net, and did not impact operating income.
America's Car-Mart, Inc. |
|
Reconciliation of Non-GAAP Financial Measures |
|
(Dollars in thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Calculation of Debt, Net of Total Cash, to Finance
Receivables: |
|
|
|
|
|
July 31, 2023 |
|
April 30, 2023 |
|
|
Debt: |
|
|
|
|
|
|
Revolving lines of credit, net (1) |
$ |
(1,035 |
) |
|
$ |
167,231 |
|
|
|
|
Non-recourse notes payable, net |
|
711,789 |
|
|
|
471,367 |
|
|
|
Total debt |
$ |
710,754 |
|
|
$ |
638,598 |
|
|
|
|
|
|
|
|
|
|
Cash: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
6,314 |
|
|
$ |
9,796 |
|
|
|
|
Restricted cash from collections on auto finance receivables |
|
85,887 |
|
|
|
58,238 |
|
|
|
Total cash, cash equivalents, and restricted cash |
$ |
92,201 |
|
|
$ |
68,034 |
|
|
|
|
|
|
|
|
|
|
Debt, net of total cash |
$ |
618,553 |
|
|
$ |
570,564 |
|
|
|
|
|
|
|
|
|
|
Principal balance of finance receivables |
$ |
1,440,707 |
|
|
$ |
1,373,372 |
|
|
|
|
|
|
|
|
|
|
Ratio of debt to finance receivables |
|
49.3 |
% |
|
|
46.5 |
% |
|
|
Ratio of debt, net of total cash, to finance receivables |
|
42.9 |
% |
|
|
41.5 |
% |
|
|
|
|
|
|
|
(1) As of the period ended July 31, 2023, the
revolving line of credit balance was $0; however, $1.0 million of
amortized debt issuance costs is being reflected at the period end,
which would have normally been netted against the carrying
balance.
Americas Car Mart (NASDAQ:CRMT)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Americas Car Mart (NASDAQ:CRMT)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024