CRMT
Americas Carmart INC
NASDAQ
10-K: Americas Car-Mart Reports Fiscal Year 2024 Results Amidst Economic Headwinds
Sentiment:
Annual Results
15 July 2024 4:01 PM
Americas Car-Mart's fiscal year 2024 saw a slight revenue decrease due to lower unit sales, despite higher average prices and increased interest income, alongside a rise in credit losses.
Worse than expected
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%.
Summary
- Americas Car-Mart's fiscal year 2024 revenue decreased slightly by 0.5% to $1.39 billion, compared to $1.4 billion in fiscal 2023.
- The company sold 57,989 retail units, an 8.8% decrease from the 63,584 units sold in the previous year.
- The average retail sales price increased by 5.7% to $19,113 per unit.
- Interest and other income rose by 18.8% to $233.1 million, driven by an increase in average finance receivables.
- The provision for credit losses increased to 36.5% of sales, up from 29.3% in fiscal 2023, due to higher net charge-offs and a decrease in sales.
- The company's gross margin increased to 34.7% of sales, up from 33.5% in fiscal 2023.
- The average gross profit per retail unit sold increased to $6,937, up from $6,344 in the prior year.
- The company's net loss for the year was $31.4 million, compared to a net income of $20.4 million in fiscal 2023.
- The company operated 154 dealerships at the end of fiscal 2024, compared to 156 at the end of fiscal 2023.
Sentiment
Score: 4
Explanation: The document presents a mixed picture with some positive aspects like increased average sales price and gross profit per unit, but these are overshadowed by a net loss, increased credit losses, and decreased unit sales. The overall tone is cautious due to the challenging economic environment.
Positives
- The average retail sales price increased by 5.7% to $19,113 per unit.
- Interest and other income rose by 18.8% to $233.1 million.
- The company's gross margin increased to 34.7% of sales.
- The average gross profit per retail unit sold increased to $6,937.
- The company implemented a new loan origination system which has shown improved collection results.
- The company has a strong focus on customer relationships and repeat business.
Negatives
- Total revenue decreased by 0.5% to $1.39 billion.
- Retail units sold decreased by 8.8% to 57,989 units.
- The provision for credit losses increased to 36.5% of sales.
- The company experienced a net loss of $31.4 million for the year.
- Net charge-offs as a percentage of average finance receivables increased to 27.2%.
Risks
- The company faces risks related to economic conditions, including inflation and interest rate hikes, which could impact consumer demand and increase credit losses.
- The availability and cost of used vehicles could affect the company's profitability.
- The company operates in a highly competitive market, which could lead to increased costs and price competition.
- The company's business is subject to seasonal fluctuations, with the third fiscal quarter historically being the slowest.
- The company's reliance on financing to customers with impaired credit histories increases the risk of delinquency and default.
- The company's information systems are vulnerable to cyber-attacks and security breaches.
- The company's growth strategy is dependent on factors such as favorable operating performance, successful acquisitions, and the availability of suitable dealership sites.
Future Outlook
The company expects continued pressure on the supply and price of used vehicles for the near term. Management anticipates that the growth in finance receivables will generally be slightly higher than overall revenue growth on an annual basis due to overall term length increases in our installment sales contracts, partially offset by improvements in underwriting and collection procedures in an effort to reduce credit losses. The company believes it will have adequate liquidity to continue to grow its revenues and satisfy its capital needs for the foreseeable future.
Management Comments
- Management believes that developing and maintaining a relationship with its customers and earning their repeat business is critical to the success and growth of the Company.
- Management believes that the proper execution of its business practices is the single most important determinant of its long-term credit loss experience.
- Management continues to focus on improved execution at the dealership level, specifically as related to working individually with customers concerning collection issues.
Industry Context
The used car market is highly competitive and fragmented. The company operates in the Integrated Auto Sales and Finance segment, which caters to customers with limited credit histories. The industry is influenced by factors such as new car sales, availability of credit, and economic conditions. The company's performance is affected by the availability of funding to the sub-prime auto industry and the overall supply of used vehicles.
Comparison to Industry Standards
- The company's debt to finance receivables ratio of 52.6% is higher than some competitors, but the adjusted ratio of 46.0% is lower.
- The company's credit losses as a percentage of sales at 36.5% is higher than the industry average, reflecting the higher risk associated with subprime lending.
- The company's average retail sales price of $19,113 is competitive within the used car market, but may be higher than some smaller independent dealers.
- The company's focus on smaller communities and face-to-face customer interactions is a differentiator compared to larger national chains.
- The company's average contract term of 47.9 months is longer than some competitors, reflecting the need to keep payments affordable for its customer base.
Stakeholder Impact
- Shareholders experienced a net loss for the year, which may negatively impact their investment.
- Employees may be affected by the company's cost-cutting measures and operational improvements.
- Customers may experience changes in financing terms and vehicle availability due to market conditions.
- Creditors may be impacted by the company's debt levels and financial performance.
Next Steps
- The company plans to continue to focus on improving gross margin dollars.
- The company plans to continue to focus on improving wholesale results through its partnership with reconditioning companies, cost controls, and operational improvement around the acquisition and disposal of vehicles.
- The company expects to continue to invest in the development of its workforce.
- The company expects to use cash from operations and borrowings to grow its finance receivables portfolio, purchase fixed assets, repurchase shares of common stock when favorable conditions exist and reduce debt to the extent excess cash is available.
Legal Proceedings
- The company is involved in various legal proceedings in the ordinary course of business, but does not expect any material adverse effects from these proceedings.
Key Dates
- 2015-08-05: Shareholders approved the Amended and Restated Stock Option Plan.
- 2018-08-29: Shareholders approved an amendment to the Restated Option Plan increasing the number of shares reserved for issuance.
- 2020-08-26: Shareholders approved an amendment to the Restated Option Plan increasing the number of shares reserved for issuance.
- 2022-08-30: Shareholders approved an amendment to the Restated Option Plan increasing the number of shares reserved for issuance.
- 2023-10-31: The aggregate market value of the registrants voting and non-voting common equity held by non-affiliates was $390,091,664.
- 2024-04-30: End of fiscal year 2024.
- 2024-07-11: Shares of the registrants common stock outstanding as of this date were 6,396,757.
Keywords
used car sales, auto finance, credit losses, subprime lending, retail automotive, finance receivables, dealership, car sales, automotive retail
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.
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
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.
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.
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.
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
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.
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