CRMT
Americas Carmart INC
NASDAQ
8-K: America's Car-Mart Reports Mixed Results for Fiscal Year 2024, Cites Inflationary Pressures
Sentiment:
Quarterly Report
18 June 2024 7:30 AM
America's Car-Mart reported a slight revenue decrease for fiscal year 2024, alongside improved gross margins and strategic progress, but faced challenges from inflation and increased interest expenses.
Worse than expected
The company reported a loss per share for the full year, compared to a profit in the previous year.
Revenue decreased both for the quarter and the full year.
Net charge-offs as a percentage of average finance receivables increased.
Interest expense increased significantly.
Summary
- America's Car-Mart reported a 0.5% decrease in revenue for the full fiscal year 2024, totaling $1.4 billion, and a 5.8% decrease in revenue for the fourth quarter, reaching $364.7 million.
- The company's gross margin improved to 34.7% for the full year and 35.5% for the fourth quarter, up 120 and 200 basis points respectively.
- Total collections increased by 9.2% to $688.9 million for the full year and 5.0% to $187.2 million for the fourth quarter.
- Net charge-offs as a percentage of average finance receivables were 7.3% for the quarter, compared to 6.3% in the same quarter last year.
- The company experienced a significant increase in interest expense, up $27.0 million or 70.6% for the full year and $4.9 million or 38.2% for the fourth quarter.
- The company reported a loss per share of $4.92 for the full year, compared to a diluted earnings per share of $3.11 in the previous year, and diluted earnings per share of $0.06 for the fourth quarter, compared to $0.32 in the same quarter last year.
- The company made progress on strategic initiatives, including the implementation of a Loan Origination System (LOS) and the acquisition of Texas Auto Center.
- The company closed three dealerships during the fiscal year and is restricting capital to underperforming locations.
- The company's debt to finance receivable ratio was 52.6% and debt, net of cash to finance receivables was 46.0% at the end of the fourth quarter.
Sentiment
Score: 4
Explanation: The document presents mixed results with some positive developments like improved gross margins and strategic initiatives, but these are overshadowed by revenue declines, increased losses, and rising interest expenses. The overall tone is cautious, reflecting the challenges faced by the company.
Positives
- Gross margins improved both for the quarter and the full year.
- Total collections increased year-over-year.
- The allowance for credit loss decreased, providing a benefit to the provision for credit losses.
- Delinquencies improved, indicating better payment performance from customers.
- Average down payments improved, reducing the company's risk.
- SG&A per average account decreased, showing improved cost management.
- The company made progress on strategic initiatives, including the implementation of a new Loan Origination System (LOS).
- The company completed the acquisition of Texas Auto Center, which is expected to be beneficial.
- The new LOS system is showing improved cash-on-cash returns.
Negatives
- Revenue decreased both for the quarter and the full year.
- Net charge-offs as a percentage of average finance receivables increased.
- Interest expense increased significantly.
- The company reported a loss per share for the full year and a decrease in earnings per share for the quarter.
- The company closed three dealerships during the fiscal year.
- The company experienced a decrease in retail units sold.
Risks
- The persistent inflationary environment is disproportionately impacting the company's customer base.
- The company faces challenges in lowering overall vehicle costs and improving affordability for consumers.
- The company is exposed to fluctuations in gas prices, grocery prices, and employment levels.
- The availability of quality used vehicles at affordable prices is a risk.
- The company's ability to underwrite and collect contracts effectively is crucial.
- Changes in consumer finance laws or regulations could impact the business.
- The company is exposed to security breaches, cyber-attacks, or fraudulent activity.
- The company's ability to integrate new acquisitions successfully is a risk.
- Adverse weather events or other natural disasters could affect the company's dealerships or customers.
- Future public health crises could cause business and economic disruptions.
Future Outlook
The company is confident in its multi-pronged approach to lower overall vehicle costs and improve affordability for consumers in the upcoming year. They also expect the acquisition of Texas Auto Center to deliver exceptional outcomes for customers, associates, and shareholders.
Management Comments
- Our sales results improved sequentially but fell short of our internal expectations for the quarter.
- I am encouraged by our disciplined management on several fronts, including SG&A, total cash collected from customers, improved down payments, and stronger gross margins -all of which were improved over the prior year quarter.
- The LOS 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.
- 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.
Industry Context
The results reflect the challenges faced by the used car market, including inflationary pressures and rising interest rates. The company's focus on improving underwriting and cost management aligns with industry trends to mitigate these challenges. The acquisition of Texas Auto Center is a strategic move to expand market presence and leverage operational synergies.
Comparison to Industry Standards
- While Car-Mart's gross margin improvement is a positive sign, the decrease in revenue and increase in net charge-offs are concerning when compared to industry leaders like CarMax, which has shown more resilience in sales volume.
- The increase in interest expense is a common challenge across the industry due to rising interest rates, but Car-Mart's increase of 70.6% for the full year is significantly higher than some competitors.
- The company's focus on a new loan origination system is similar to initiatives by other companies to improve underwriting and reduce credit losses, but the results are still mixed.
- Car-Mart's acquisition strategy is comparable to other companies seeking growth through expansion, but the success of the integration will be key.
- Compared to companies like AutoNation, which have a more diversified business model, Car-Mart's reliance on the used car market makes it more vulnerable to economic fluctuations.
Stakeholder Impact
- Shareholders will be concerned about the loss per share and revenue decline.
- Employees may be impacted by the closure of three dealerships.
- Customers may benefit from improved affordability initiatives.
- Suppliers may be affected by the company's efforts to lower vehicle costs.
- Creditors will be monitoring the company's debt levels and financial performance.
Next Steps
- The company will continue to implement its Loan Origination System (LOS).
- The company will focus on integrating the acquisition of Texas Auto Center.
- The company will work to lower overall vehicle costs and improve affordability for consumers.
- The company will continue to manage underperforming stores by restricting capital.
- The company will hold a conference call to discuss its quarterly results.
Key Dates
- April 30, 2024: End of the fiscal year and fourth quarter.
- June 3, 2024: Acquisition of Texas Auto Center closed.
- June 18, 2024: Press release announcing fourth quarter and full year results, and conference call held.
Keywords
used car sales, auto finance, loan origination, credit losses, gross margin, collections, interest expense, acquisitions, inflation, dealerships
CRMT
Americas Carmart INC
NASDAQ
Sector: TBD
Filings with Classifications
Better than expected
18 June 2025 6:34 PM
Beneficial Ownership Statement
- The purchase of company stock by a Chief Financial Officer is generally viewed as a positive signal, indicating management's belief that the stock is undervalued or that the company's future performance will be strong.
Capital raise
12 June 2025 7:30 AM
Quarterly and Annual Results
- On May 29, 2025, Car-Mart completed a term securitization transaction involving the issuance of $216 million of asset-backed notes.
- The securitization achieved an overall weighted average life adjusted coupon of 6.27%, which improved by 22 basis points compared to the Company's January 2025 issuance and by 117 basis points from the October 2024 securitization transaction.
- Net proceeds from the securitization were used to pay down the outstanding balance on the Company's revolving line of credit.
- The Company continues to explore options to diversify and expand its financing sources, such as potential warehouse lines of credit and the issuance of longer-term debt securities.
Better than expected
12 June 2025 7:30 AM
Quarterly and Annual Results
- Diluted EPS for FY25 turned profitable at $2.33, compared to a significant loss of $4.92 in FY24, indicating a strong financial recovery.
- Q4 FY25 diluted EPS significantly increased to $1.26 from $0.06 in Q4 FY24, demonstrating strong quarterly performance.
- Gross margin percentage improved by 200 basis points for the full year and 90 basis points for Q4, reflecting effective cost and pricing strategies.
- Net charge-offs as a percentage of average finance receivables improved for both Q4 and the full year, signaling better credit quality and risk management.
- The allowance for credit losses improved to 23.25% at April 30, 2025, from 25.32% a year prior, indicating a healthier loan portfolio.
Worse than expected
11 June 2025 7:14 PM
Insider Transaction Report
- The document details planned significant sales of common stock by a Director and 10% owner, Adam K. Peterson, and his affiliated entities.
- A total of 154,269 shares are planned to be sold, representing approximately 9.75% of their prior beneficial ownership.
- Such a substantial planned reduction in holdings by a key insider is generally perceived as a negative signal by the market.
Better than expected
4 June 2025 11:21 AM
Securitization Announcement
- The weighted average coupon of 6.27% is lower than previous issuances (22 basis points better than January 2025 and 107 basis points better than October 2024), indicating more favorable financing terms for the Company.
Capital raise
4 June 2025 11:21 AM
Securitization Announcement
- The Company completed a term securitization transaction, issuing $216 million in principal amount of asset-backed notes.
- Net proceeds of approximately $214.5 million were generated from the offering.
- The proceeds are being used to pay outstanding debt and make initial deposits into collection and reserve accounts.
Better than expected
13 March 2025 10:22 AM
Quarterly Report
- The company reported diluted earnings per share of $0.37 compared to a loss per share of $1.34 in the same quarter last year.
- Gross margin percentage improved by 150 basis points to 35.7%.
- Net charge-offs as a percentage of average finance receivables improved to 6.1% compared to 6.8%.
Capital raise
10 March 2025 4:08 PM
Quarterly Report
- On September 20, 2024, the Company completed an underwritten public offering of 1,700,000 shares of its common stock at a price per share of $43.00.
- The net proceeds of the public offering were approximately $68.2 million after deducting the underwriting discount and offering costs of approximately $4.9 million.
- On October 22, 2024, the Company completed the sale of an additional 138,272 shares of common stock at a price of $43.00 per share, in connection with a partial exercise by the underwriter of an option.
- The net proceeds to the Company of the underwriters partial exercise of the Over-Allotment Option were approximately $5.6 million after deducting the underwriting discount and offering costs of approximately $346,000.
- The Company used the net proceeds from this offering to pay down a portion of the Companys revolving line of credit.
Better than expected
10 March 2025 9:00 AM
Quarterly Report
- The company reported an 8.7% increase in total revenue, reaching $325.7 million for the third quarter of fiscal year 2025.
- Sales volumes rose by 13.2% to 13,198 units, indicating strong sales performance.
- The company's gross margin percentage improved by 150 basis points to 35.7%, driven by better vehicle procurement and disposal strategies.
- Diluted earnings per share were $0.37, a significant improvement compared to a loss of $1.34 per share in the same quarter of the previous year.
Better than expected
5 February 2025 1:46 PM
Securitization Announcement
- The weighted average coupon improved by 95 basis points compared to the October 2024 securitization.
Capital raise
9 December 2024 4:40 PM
Quarterly Report
- The company completed a public offering of 1,700,000 shares of its common stock at a price of $43.00 per share, raising net proceeds of $68.2 million.
- The company also sold an additional 138,272 shares through the partial exercise of an over-allotment option, raising an additional $5.6 million.
- The net proceeds from the offering were used to pay down a portion of the company's revolving line of credit.
Better than expected
9 December 2024 4:40 PM
Quarterly Report
- The company's net income of $5.1 million is a significant improvement compared to a net loss of $27.5 million in the same quarter of the previous year.
- The company's gross margin improved to 39.4% of sales, including a 2.9% benefit from a change in service contract revenue recognition.
- The provision for credit losses decreased by 26.5% to $99.5 million.
Capital raise
5 December 2024 7:30 AM
Quarterly Report
- The company completed an underwritten public equity offering, resulting in net proceeds of $73.8 million.
- The company also completed a private asset-backed securitization offering, resulting in net proceeds of $297.9 million.
- The proceeds from these offerings were primarily used to pay down existing debt.
Better than expected
5 December 2024 7:30 AM
Quarterly Report
- The company reported a significant improvement in diluted earnings per share, moving from a loss to a profit.
- Gross margin improved, both including and excluding the impact of the service contract accounting change.
- Net charge-offs as a percentage of average finance receivables decreased, indicating better loan performance.
Capital raise
22 October 2024 4:06 PM
Capital Raise Update
- The company initially sold 1,700,000 shares at $43.00 per share, generating $67.8 million in net proceeds.
- The underwriters partially exercised their over-allotment option, purchasing 138,272 additional shares at $43.00 per share, resulting in an additional $5.6 million in net proceeds.
Better than expected
11 October 2024 8:30 AM
Securitization Announcement
- The weighted average coupon rate of 7.44% is a 198 basis point improvement compared to the January 2024 transaction, indicating better terms for the company.
Capital raise
20 September 2024 4:05 PM
Public Offering Announcement
- The company is raising capital through a public offering of 1,700,000 shares of common stock.
- The underwriters have an option to purchase an additional 255,000 shares.
- The company expects to receive approximately $67.8 million in net proceeds from the offering.
Capital raise
18 September 2024 2:22 PM
Loan Agreement Amendment
- The company is required to complete a junior capital raise of $50 million or more.
- The net proceeds of the capital raise must be used to pay down the outstanding principal balance of the line of credit.
- A fee of 0.10% of the total permitted borrowings will be charged if the capital raise is not completed by October 31, 2024.
Worse than expected
18 September 2024 2:22 PM
Loan Agreement Amendment
- The reduction in the credit line and the imposition of minimum availability requirements suggest a tightening of financial conditions for the company.
- The requirement to complete a capital raise by a specific date to avoid a fee indicates potential financial pressure.
Worse than expected
16 September 2024 12:11 PM
Quarterly Report
- The company's net loss of $964,000 is worse than the net income of $4.2 million in the same period last year.
- The decrease in revenue by 5.2% is worse than the prior year period.
- The increase in the provision for credit losses as a percentage of sales to 33.2% is worse than the 31.0% in the prior year period.
Capital raise
16 September 2024 12:11 PM
Quarterly Report
- The amendment to the revolving credit agreement requires the company to use the net proceeds of any junior capital raise of $50 million or more to pay down the outstanding principal balance of the line of credit.
- The company will pay a fee to the lenders of 0.10% of the total permitted borrowings under the line of credit if the company has not completed such a capital raise by October 31, 2024.
Worse than expected
4 September 2024 7:30 AM
Quarterly Report
- The company reported a net loss per share of $0.15 compared to a diluted earnings per share of $0.63 in the same quarter last year.
- Revenue decreased by 5.2% year-over-year.
- Net charge-offs as a percentage of average finance receivables increased to 6.4% from 5.8%.
Worse than expected
16 July 2024 4:29 PM
Proxy Statement
- The company reported a net loss of $31.4 million compared to the prior year's net income.
- Revenues decreased 0.5% over fiscal 2023, driven by a 8.8% retail unit volume decrease and a 0.1% decrease in customer count.
Worse than expected
15 July 2024 4:01 PM
Annual Results
- The company's net income decreased from a profit of $20.4 million to a loss of $31.4 million.
- The provision for credit losses increased significantly to 36.5% of sales.
- Retail unit sales decreased by 8.8%.
Worse than expected
18 June 2024 7:30 AM
Quarterly Report
- The company reported a loss per share for the full year, compared to a profit in the previous year.
- Revenue decreased both for the quarter and the full year.
- Net charge-offs as a percentage of average finance receivables increased.
- Interest expense increased significantly.
Worse than expected
11 March 2024 9:00 AM
Quarterly Report
- The company reported a net loss of $8.5 million for the quarter, compared to a net income of $1.5 million in the same period last year.
- Total revenue decreased by 7.9% year-over-year, driven by a decline in retail unit sales.
- The provision for credit losses increased to 37.3% of sales, up from 31.2% in the prior year's quarter.
Worse than expected
8 March 2024 8:00 AM
Quarterly Report
- The company reported a loss per share of $1.34 compared to earnings per share of $0.23 in the same quarter last year.
- Total revenue decreased by 7.9% year-over-year.
- Retail units sold decreased by 19.6% compared to the prior year quarter.
Worse than expected
5 March 2024 4:04 PM
Loan Agreement Amendment
- The reduction in the total borrowing capacity from $600 million to $340 million is a negative development.
- The increase in the unused line fee rate to 0.50% for low utilization is a negative development.
- The removal of pricing tiers for interest rates may result in higher borrowing costs.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.