America’s Car-Mart, Inc. (NASDAQ: CRMT) (“we,” “Car-Mart” or the
“Company”) today announced its operating results for the fourth
quarter and fiscal year ended April 30, 2023.
Highlights
- Revenues of $388.3 million, up 12.2%
vs. the prior year’s fourth quarter.
- Total retail unit sales increased
7.5% vs. the prior year’s fourth quarter. Same store retail unit
sales increased 5.6% vs. the prior year’s fourth quarter.
- Sales volume productivity per store
per month was 37.7 vs. 35.6 for the prior year’s fourth
quarter.
- Gross profit per car sold was $6,354
compared to $6,5451 for the prior year’s fourth quarter.
- Inventory decreased $22.3 million
during the fourth quarter and decreased $35.9 million (over 24.7%)
from the end of the first quarter of fiscal 2023.
- Provision for credit losses as a
percentage of sales was 30.4% compared to 23.1%1 for the prior
year’s fourth quarter. Net charge-offs as a percent of average
finance receivables for the quarter were 6.3% compared to 5.1%1 for
the prior year’s fourth quarter. The current quarter provision
includes a 0.26%, or $3.3 million, increase in the allowance for
credit losses.
- Interest income was $52.5 million,
compared to $42.3 million for the prior year’s fourth quarter.
- SG&A expense was up $4.8 million
vs. the prior year’s fourth quarter and up $1.1 million,
sequentially. SG&A per customer, calculated based on average
active customers, was $448 vs. $431 for the prior year’s fourth
quarter.
- Interest expense was $12.9 million,
compared to $3.5 million in the prior year’s fourth quarter.
- In April, Kroll Bond Rating Agency
(KBRA) upgraded ratings on three classes of notes from the April
2022 securitization.
- Customer count increased 7.6% to
102,305 active customers, compared to 95,107 in the prior year’s
fourth quarter. Customers served per dealership was 656, compared
to 617 for the prior year’s fourth quarter.
- Diluted earnings per share was $0.32
vs. $3.971 for the prior year’s fourth quarter.
CEO Commentary
“We are currently at a unique time with an unprecedented number
of factors impacting both our industry and our company. While we
face certain challenges - which we feel are primarily short-term -
the opportunities in front of us have never been greater. Ongoing
disruption in the used car market challenges us to purchase quality
vehicles at affordable prices. Our customers face higher living
costs due to persistent inflation, higher interest rates, and
higher fuel and rent expenses. In response to these challenges, we
have had to extend our contract terms to keep payments affordable,
however we still face less favorable customer payment behavior and
lower gross profit margin. On the other hand, major competitors are
shutting their doors. Our industry is an essential one, and we
ultimately benefit from our scale by continuing to serve our
customers and expanding our market share. We are in the strong
position of having access to the securitization market while others
are unable to operate. Although currently earning a lower return,
we are doing so with an eye to growing our business over the long
term at far higher margins. In the improbable event that the
overall market becomes more extreme, we have the ability to choose
short-term profitability over long-term gains. Lastly, and perhaps
most excitingly, we have nearly completed the extensive long-term
investments we have made over the past several years. These include
the loan origination system (LOS), enterprise resource planning
(ERP) and customer relationship management (CRM) software
implementations, wholesale efforts, facility improvement and
refurbishment projects. We believe these investments will enable us
to operate efficiently and at scale, ultimately leading to higher
long-term returns for our shareholders,” said Jeff Williams,
CEO.
“Given low industry inventories, vehicle wholesale prices had a
sharp seasonal uptick of 6-7% during the quarter. Since the bulk of
our procurement activity was completed early in the period, our
retail prices did not increase to the same extent. Wholesale prices
have begun to soften but remain high by historical standards. We
expect affordability to improve gradually over the next couple of
years with continuing strong wage increases for our customers.
Automobile credit terms and conditions are tightening, and we
expect to attract higher credit rated customers,” added Mr.
Williams. “Operational improvements within inventory management
have resulted in a significant decrease in our inventory when
compared to the same time last year. We expect to see material
gross profit margin improvement resulting from structural
improvements we are making to our procurement, inventory and
wholesale processes."
Sales
The 7.5% increase in unit volumes compared to the prior year’s
fourth quarter reflects market share gains driven by the ongoing
increase in application volumes resulting from digital investments.
We achieved record monthly store productivity of 37.7 units per
month while our average retail sales price rose by 3.5% over the
prior year quarter to $18,133. Our active customer base increased
by 7.6% to 102,305 and we now serve an average of 656 customers per
dealership, up from 617 last year. Within the next three years we
expect our dealerships to sell 40-50 vehicles per month, eventually
each supporting an average of 1,000 or more active customers. More
than 50% of our sales are to repeat customers, and we are very
optimistic about the prospects for long-term customer account
growth.
Gross profits
Total gross profit dollars during the quarter were $112.2
million vs. $107.5 million in the prior year’s fourth quarter. Unit
gross profits for the quarter were $6,354 vs. $6,5451 last year and
vs. $6,373 sequentially. Inventory was $109.3 million vs $115.3
million in the prior year's fourth quarter and vs. $131.6 million
at the end of the third quarter, a sequential improvement of $22.3
million. Annualized inventory turns were 7.4 vs. 6.7 in the prior
year's fourth quarter; 7.2 vs. 6.7 for the full year. The quality
and quantity of our inventory continue to improve. We expect to
recover 260 bps of gross margin to 36% because of improved
wholesale operations and cost controls.
Credit and Interest Income
Net charge-offs as a percent of average finance receivables were
6.3% compared to 5.1%1 during the prior year quarter and 5.9%
during the sequential quarter. The prior 5-year and 10-year
averages for fourth quarters, which include the recent benefits of
stimulus payments to consumers, were 5.7%1 and 6.8%1, respectively.
The provision for credit losses was 30.4% compared to 23.1%1 during
the prior year’s fourth quarter. Our provision exceeded charge-offs
during the quarter by $16.8 million. Each quarter, we provide
initial reserves for new finance receivables as well as re-evaluate
reserves related to the portfolio. Approximately $57 million of the
$115 million increase in provision for the fiscal year relates to
the increase in finance receivables, net of deferred revenue. This
growth 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. During the quarter we
increased our allowance for credit losses to 23.91% from
23.65%.
Interest income was $52.5 million in the quarter vs. $42.3
million during the prior year’s fourth quarter. Interest income
continues to benefit from higher average finance receivables,
longer contract terms, 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%). The interest rate for sales in Arkansas, which account
for approximately 28% of our revenues, is subject to a usury cap of
17%.
SG&A
SG&A expense during the fourth quarter was $45.8 million,
compared to $44.7 million during the sequential quarter.
Approximately 25% of our SG&A expense is corporate, and the
rest is attributable to our stores. We are focused on becoming a
more productive, accountable organization by eliminating manual
processes, rationalizing headcount, leveraging technology and
aggressively working to attract talented leaders and team members.
Although SG&A as a percentage of sales is a conventional
measure for retailers, progress in leveraging our scale should also
be measured by SG&A per unit sold, SG&A per account, and
headcount. Importantly, a significant percentage of our current
SG&A is related to internal resources dedicated to our
long-term business investments.
Leverage and liquidity
Interest expense was $12.9 million, compared to $3.5 million
during the prior year fourth quarter, due to higher borrowing
levels and increased interest rates. The Company completed its
second asset-backed non-recourse term securitization on January 31,
2023, issuing $400 million in bonds with a weighted average fixed
coupon rate of 8.64% and an advance rate of 66.7%. The average
borrowing coupon rate is 7.48%, excluding the lowest rated tranche
of the securitization, which we expect to pay off early. Net
proceeds were used to pay down outstanding amounts under our
revolving line of credit and make initial deposits to the
securitization collection and reserve accounts. In addition to the
securitization market, the Company has a $600 million revolving
line of credit with a group of commercial banks, which matures in
September 2024.
Total debt to finance receivables was 46.5% vs. 40.0% at the end
of the prior year’s fourth quarter. Total debt, net of cash, to
finance receivable (non-GAAP) was 41.5%2 vs. 36.1%2 at the end of
the prior year fourth quarter (sequentially 42.2%2). The year over
year increase relates to higher vehicle prices and longer contract
terms as well as changes in consumer payment behavior. During the
current fiscal year, net finance receivables increased by $210.1
million, inventory decreased by $6.0 million, and capital
expenditures of $22 million were made, with a $172.5 million
increase in debt, net of cash. For the three-year period ending
April 30, 2023, we have grown net finance receivables by $601.4
million and inventory by $72.9 million, funded $46.1 million in
long term capital expenditures and repurchased $50.5 million of our
common stock (a total of $770.9 million), with a $414.6 million
increase in debt, net of cash.
Acquisitions
Significant disruptions in the competitive landscape are
providing unique opportunities to acquire productive stores in good
markets managed by experienced owners and their staff. Given the
potential for value creation through acquisitions, we are
increasing our people investment in this area to more quickly
capitalize on the current environment. We provide good operators
with an exit strategy, their communities with employment, and
customers with alternatives. We historically do not acquire credit
risk in these transactions, rather we structure them with
multi-year earnouts based on building successful books of business
measured from our acquisition date.
Business Investments, Capital Expenditures and Technology
With the introduction of the LOS and the expansion of our CRM
capabilities, we are laying the foundation for speed and
personalized service before, during, and after the sale. Today,
Car-Mart customers can get pre-approved online in just a few
minutes from anywhere through their mobile device, or in-store with
one of our iPads. Once the customer selects a vehicle, our sales
associates quickly help to maximize their buying potential. Powered
by an integrated sales and decisioning platform, the LOS
dynamically assists our sales associates with downpayment options,
trade valuations, and the addition of any co-applicants. All the
sales documents are then electronically generated, and the customer
digitally signs and drives. We estimate that we are reducing the
time it takes to complete the sale by as much as 50%, which
provides us with more time to dedicate to personalized service. Our
goal is to make it easy for our customers to stay on the road. As
we continue to build out our digital capabilities, having an online
customer account center to make payments, request service and
report an accident is the next big step to stay connected with
customers and provide better vehicle service.
While all dealerships will be on the LOS during the first
quarter of fiscal 2024, our ERP software will not be fully
completed until December 2023. During the fiscal year we spent
approximately $22 million on capital expenditures, of which
approximately $20 million was for new locations, relocations and
finalizing our rebranding project. We also invested approximately
$5 million during the year relating to information technology;
these amounts are reflected in prepaid expenses as required for
cloud computing arrangements. We expect capital expenditures
to be approximately $12 million for the fiscal year 2024 as we
complete facility updates and general fixed asset requirements.
Conference Call
Management will be holding a conference call on
Wednesday, May 24, 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 twelve 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 anyone, 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 events, 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 margin
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.
____________________________Contacts: Jeff
Williams, CEO or Vickie Judy, CFO at (479) 464-9944
Investor_relations@car-mart.com
1 Subsequent to the issuance of our financial statements for the
period ended April 30, 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, 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 twelve months ended April 30,
2022, of $0.25. 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) |
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
% Change |
|
As a % of Sales |
|
|
|
|
|
|
Three Months
Ended |
|
2023 |
|
Three Months
Ended |
|
|
|
|
|
|
April 30, |
|
vs. |
|
April 30, |
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
2022 |
|
2023 |
|
2022 |
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail units sold |
|
|
17,655 |
|
|
|
16,426 |
|
|
7.5 |
|
% |
|
|
|
|
|
|
|
Average number of stores in operation |
|
156 |
|
|
|
154 |
|
|
1.3 |
|
|
|
|
|
|
|
|
|
Average retail units sold per store per month |
|
37.7 |
|
|
|
35.6 |
|
|
5.9 |
|
|
|
|
|
|
|
|
|
Average retail sales price(1) |
|
$ |
18,133 |
|
|
$ |
17,519 |
|
|
3.5 |
|
|
|
|
|
|
|
|
|
Total gross profit per retail unit sold(1) |
$ |
6,354 |
|
|
$ |
6,545 |
|
|
(2.9 |
) |
|
|
|
|
|
|
|
|
Total gross profit percentage |
|
|
33.4 |
% |
|
|
35.4 |
% |
|
(5.5 |
) |
|
|
|
|
|
|
|
|
Same store revenue growth |
|
|
12.0 |
% |
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
Net charge-offs as a percent of average finance receivables(1) |
|
6.3 |
% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
Total collected (principal, interest and late fees) |
$ |
178,316 |
|
|
$ |
166,604 |
|
|
7.0 |
|
|
|
|
|
|
|
|
|
Average total collected per active customer per month |
$ |
586 |
|
|
$ |
586 |
|
|
- |
|
|
|
|
|
|
|
|
|
Average percentage of finance receivables-current (excl. 1-2
day) |
|
80.6 |
% |
|
|
82.7 |
% |
|
|
|
|
|
|
|
|
|
|
Average down-payment percentage |
|
6.1 |
% |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open |
|
|
156 |
|
|
|
154 |
|
|
1.3 |
|
% |
|
|
|
|
|
|
|
Accounts over 30 days past due |
|
3.6 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
Active customer count |
|
|
102,305 |
|
|
|
95,107 |
|
|
7.6 |
|
|
|
|
|
|
|
|
|
Finance receivables, gross |
|
$ |
1,373,372 |
|
|
$ |
1,101,497 |
|
|
24.7 |
|
|
|
|
|
|
|
|
|
Weighted average total contract term |
|
46.3 |
|
|
|
42.9 |
|
|
7.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Operations: |
|
|
|
|
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|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales(1) |
|
$ |
335,782 |
|
|
$ |
303,964 |
|
|
10.5 |
|
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
Interest income |
|
|
52,528 |
|
|
|
42,267 |
|
|
24.3 |
|
|
|
15.6 |
|
|
13.9 |
|
|
|
|
|
Total |
|
|
388,310 |
|
|
|
346,231 |
|
|
12.2 |
|
|
|
115.6 |
|
|
113.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
223,602 |
|
|
|
196,452 |
|
|
13.8 |
|
|
|
66.6 |
|
|
64.6 |
|
|
|
Selling, general and administrative |
|
45,814 |
|
|
|
40,990 |
|
|
11.8 |
|
|
|
13.6 |
|
|
13.5 |
|
|
|
Provision for credit losses(1) |
|
102,141 |
|
|
|
70,067 |
|
|
45.8 |
|
|
|
30.4 |
|
|
23.1 |
|
|
|
Interest expense |
|
|
12,852 |
|
|
|
3,480 |
|
|
269.3 |
|
|
|
3.8 |
|
|
1.1 |
|
|
|
Depreciation and amortization |
|
1,605 |
|
|
|
1,210 |
|
|
32.6 |
|
|
|
0.5 |
|
|
0.4 |
|
|
|
Loss on disposal of property and equipment |
|
43 |
|
|
|
61 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
|
|
Total |
|
|
386,057 |
|
|
|
312,260 |
|
|
23.6 |
|
|
|
115.0 |
|
|
102.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before taxes |
|
|
2,253 |
|
|
|
33,971 |
|
|
|
|
|
0.7 |
|
|
11.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes(1) |
|
|
165 |
|
|
|
7,575 |
|
|
|
|
|
0.0 |
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
2,088 |
|
|
$ |
26,396 |
|
|
|
|
|
0.6 |
|
|
8.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on subsidiary preferred stock |
$ |
(10 |
) |
|
$ |
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders |
$ |
2,078 |
|
|
$ |
26,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic(1) |
|
$ |
0.33 |
|
|
$ |
4.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted(1) |
|
$ |
0.32 |
|
|
$ |
3.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
6,372,770 |
|
|
|
6,414,229 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
6,580,995 |
|
|
|
6,649,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Subsequent to the
issuance of our financial statements for the period ended April 30,
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 decrease in diluted
earnings per share for the three months ended April 30, 2022 of
$0.04. 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. |
|
Consolidated Results
of Operations |
|
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
As a % of Sales |
|
|
|
|
|
|
Years Ended |
|
2023 |
|
Years Ended |
|
|
|
|
|
|
April 30, |
|
vs. |
|
April 30, |
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
2022 |
|
2023 |
|
2022 |
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail units sold |
|
|
63,584 |
|
|
|
60,595 |
|
|
4.9 |
|
% |
|
|
|
|
|
|
|
Average number of stores in operation |
|
155 |
|
|
|
152 |
|
|
2.0 |
|
|
|
|
|
|
|
|
|
Average retail units sold per store per month |
|
34.2 |
|
|
|
33.2 |
|
|
3.0 |
|
|
|
|
|
|
|
|
|
Average retail sales price(1) |
|
$ |
18,080 |
|
|
$ |
16,372 |
|
|
10.4 |
|
|
|
|
|
|
|
|
|
Total gross profit per retail unit sold(1) |
$ |
6,344 |
|
|
$ |
6,272 |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
Total gross profit percentage |
|
|
33.4 |
% |
|
|
36.4 |
% |
|
(8.4 |
) |
|
|
|
|
|
|
|
|
Same store revenue growth |
|
|
16.6 |
% |
|
|
30.0 |
% |
|
|
|
|
|
|
|
|
|
|
Net charge-offs as a percent of average finance receivables(1) |
|
23.3 |
% |
|
|
18.3 |
% |
|
|
|
|
|
|
|
|
|
|
Total collected (principal, interest and late fees) |
$ |
630,678 |
|
|
$ |
569,648 |
|
|
10.7 |
|
|
|
|
|
|
|
|
|
Average total collected per active customer per month |
$ |
534 |
|
|
$ |
513 |
|
|
4.1 |
|
|
|
|
|
|
|
|
|
Average percentage of finance receivables-current (excl. 1-2
day) |
|
80.3 |
% |
|
|
82.2 |
% |
|
|
|
|
|
|
|
|
|
|
Average down-payment percentage |
|
5.4 |
% |
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open |
|
|
156 |
|
|
|
154 |
|
|
1.3 |
|
% |
|
|
|
|
|
|
|
Accounts over 30 days past due |
|
3.6 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
Active customer count |
|
|
102,305 |
|
|
|
95,107 |
|
|
7.6 |
|
|
|
|
|
|
|
|
|
Finance receivables, gross |
|
$ |
1,373,372 |
|
|
$ |
1,101,497 |
|
|
24.7 |
|
|
|
|
|
|
|
|
|
Weighted average total contract term |
|
46.3 |
|
|
|
42.9 |
|
|
7.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales(1) |
|
$ |
1,209,279 |
|
|
$ |
1,043,698 |
|
|
15.9 |
|
% |
|
100.0 |
% |
|
100.0 |
% |
|
|
Interest income |
|
|
196,219 |
|
|
|
151,853 |
|
|
29.2 |
|
|
|
16.2 |
|
|
14.5 |
|
|
|
|
|
Total |
|
|
1,405,498 |
|
|
|
1,195,551 |
|
|
17.6 |
|
|
|
116.2 |
|
|
114.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
805,873 |
|
|
|
663,631 |
|
|
21.4 |
|
|
|
66.6 |
|
|
63.6 |
|
|
|
Selling, general and administrative |
|
176,696 |
|
|
|
156,130 |
|
|
13.2 |
|
|
|
14.6 |
|
|
15.0 |
|
|
|
Provision for credit losses(1) |
|
352,860 |
|
|
|
238,054 |
|
|
48.2 |
|
|
|
29.2 |
|
|
22.8 |
|
|
|
Interest expense |
|
|
38,312 |
|
|
|
10,919 |
|
|
250.9 |
|
|
|
3.2 |
|
|
1.0 |
|
|
|
Depreciation and amortization |
|
5,602 |
|
|
|
4,033 |
|
|
38.9 |
|
|
|
0.5 |
|
|
0.4 |
|
|
|
Loss on disposal of property and equipment |
|
361 |
|
|
|
149 |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
|
|
Total |
|
|
1,379,704 |
|
|
|
1,072,916 |
|
|
28.6 |
|
|
|
114.1 |
|
|
102.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before taxes |
|
|
25,794 |
|
|
|
122,635 |
|
|
|
|
|
2.1 |
|
|
11.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes(1) |
|
|
5,362 |
|
|
|
27,621 |
|
|
|
|
|
0.4 |
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
20,432 |
|
|
$ |
95,014 |
|
|
|
|
|
1.7 |
|
|
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on subsidiary preferred stock |
$ |
(40 |
) |
|
$ |
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders |
$ |
20,392 |
|
|
$ |
94,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic(1) |
|
$ |
3.20 |
|
|
$ |
14.59 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted(1) |
|
$ |
3.11 |
|
|
$ |
13.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
6,371,229 |
|
|
|
6,509,673 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
6,566,896 |
|
|
|
6,823,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Subsequent to the
issuance of our financial statements for the period ended April 30,
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 twelve months ended April 30, 2022 of
$0.25. 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, |
|
April 30, |
|
April 30, |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,796 |
|
|
$ |
6,916 |
|
|
$ |
2,893 |
|
Restricted cash from collections on auto finance receivables |
$ |
58,238 |
|
|
$ |
35,671 |
|
|
$ |
- |
|
Finance receivables, net(1) |
|
$ |
1,073,764 |
|
|
$ |
863,674 |
|
|
$ |
632,270 |
|
Inventory |
|
$ |
109,290 |
|
|
$ |
115,302 |
|
|
$ |
82,263 |
|
Total assets(1) |
|
$ |
1,420,431 |
|
|
$ |
1,154,696 |
|
|
$ |
829,310 |
|
Revolving lines of credit, net |
|
$ |
167,231 |
|
|
$ |
44,670 |
|
|
$ |
225,924 |
|
Non-recourse notes payable, net |
$ |
471,367 |
|
|
$ |
395,986 |
|
|
$ |
- |
|
Treasury stock |
|
$ |
297,421 |
|
|
$ |
292,225 |
|
|
$ |
257,527 |
|
Total equity(1) |
|
$ |
498,547 |
|
|
$ |
476,603 |
|
|
$ |
412,026 |
|
Shares outstanding |
|
|
6,373,404 |
|
|
|
6,371,977 |
|
|
|
6,625,885 |
|
Book value per outstanding share(1) |
$ |
78.56 |
|
|
$ |
74.85 |
|
|
$ |
62.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables: |
|
|
|
|
|
|
|
Principal balance |
|
$ |
1,373,372 |
|
|
$ |
1,101,497 |
|
|
$ |
809,537 |
|
|
Deferred revenue - accident protection plan |
|
(53,065 |
) |
|
|
(43,936 |
) |
|
|
(32,704 |
) |
|
Deferred revenue - service contract |
|
(67,404 |
) |
|
|
(48,555 |
) |
|
|
(24,106 |
) |
|
Allowance for credit losses(1) |
|
(299,608 |
) |
|
|
(237,823 |
) |
|
|
(177,267 |
) |
|
|
|
|
|
|
|
|
|
|
Finance receivables, net of allowance and deferred revenue |
$ |
953,295 |
|
|
$ |
771,183 |
|
|
$ |
575,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance as % of principal balance net of deferred revenue |
|
23.91 |
% |
|
|
23.57 |
% |
|
|
23.55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in allowance for credit losses: |
|
|
|
|
|
|
|
|
|
Years Ended |
|
|
|
|
|
|
April 30, |
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
Balance at beginning of period(1) |
$ |
237,823 |
|
|
$ |
177,267 |
|
|
|
|
Provision for credit losses(1) |
|
352,860 |
|
|
|
238,054 |
|
|
|
|
Charge-offs, net of collateral recovered(1) |
|
(291,075 |
) |
|
|
(177,498 |
) |
|
|
|
Balance at end of period |
|
$ |
299,608 |
|
|
$ |
237,823 |
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Subsequent to the
issuance of our financial statements for the period ended April 30,
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 $9.4 million at April 30, 2022,
respectively. 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 Statements of Cash Flows |
(Dollars in
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Years Ended |
|
|
|
|
April 30, |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
Operating activities: |
|
|
|
|
|
Net income |
|
$ |
20,432 |
|
|
$ |
95,014 |
|
|
Provision for credit losses(1) |
|
352,860 |
|
|
|
238,054 |
|
|
Losses on claims for accident protection plan |
|
25,107 |
|
|
|
21,871 |
|
|
Depreciation and amortization |
|
5,602 |
|
|
|
4,033 |
|
|
Finance receivable originations |
|
(1,161,132 |
) |
|
|
(1,009,858 |
) |
|
Finance receivable collections |
|
434,458 |
|
|
|
417,796 |
|
|
Inventory |
|
|
130,915 |
|
|
|
50,881 |
|
|
Deferred accident protection plan revenue(1) |
|
17,150 |
|
|
|
21,850 |
|
|
Deferred service contract revenue(1) |
|
24,542 |
|
|
|
30,645 |
|
|
Income taxes, net(1) |
|
|
(676 |
) |
|
|
6,971 |
|
|
Other(2) |
|
|
12,768 |
|
|
|
3,366 |
|
|
Net cash used in operating activities |
|
(137,974 |
) |
|
|
(119,377 |
) |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
Purchase of investments |
|
|
(3,092 |
) |
|
|
(1,343 |
) |
|
Purchase of property and equipment and other(2) |
|
(22,234 |
) |
|
|
(15,808 |
) |
|
Net cash used in investing activities |
|
(25,326 |
) |
|
|
(17,151 |
) |
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
Change in revolving credit facility, net |
|
121,843 |
|
|
|
(179,929 |
) |
|
Change in non-recourse notes payable |
|
72,900 |
|
|
|
399,994 |
|
|
Change in cash overdrafts |
|
|
- |
|
|
|
(1,802 |
) |
|
Debt issuance costs |
|
|
(2,263 |
) |
|
|
(6,108 |
) |
|
Purchase of common stock |
|
(5,196 |
) |
|
|
(34,698 |
) |
|
Dividend payments |
|
|
(40 |
) |
|
|
(40 |
) |
|
Exercise of stock options and issuance of common stock |
|
1,502 |
|
|
|
(1,195 |
) |
|
Net cash provided by financing activities |
|
188,746 |
|
|
|
176,222 |
|
|
|
|
|
|
|
|
Increase in cash, cash equivalents, and restricted cash |
$ |
25,446 |
|
|
$ |
39,694 |
|
|
|
|
|
|
|
|
(1 |
) |
Subsequent to the
issuance of our financial statements for the period ended April 30,
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 April 30, 2022, reflects an immaterial
reclassification of approximately $6.0 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: |
|
|
|
|
|
April 30, 2023 |
|
April 30, 2022 |
|
Debt: |
|
|
|
|
|
Revolving lines of credit, net |
$ |
167,231 |
|
|
$ |
44,670 |
|
|
Non-recourse notes payable, net |
|
471,367 |
|
|
|
395,986 |
|
|
Total debt |
|
$ |
638,598 |
|
|
$ |
440,656 |
|
|
|
|
|
|
|
|
|
Cash: |
|
|
|
|
|
Cash and cash equivalents |
$ |
9,796 |
|
|
$ |
6,916 |
|
|
Restricted cash from collections on auto finance receivables |
|
58,238 |
|
|
|
35,671 |
|
|
Total cash, cash equivalents, and restricted cash |
$ |
68,034 |
|
|
$ |
42,587 |
|
|
|
|
|
|
|
|
|
Debt, net of total cash |
|
$ |
570,564 |
|
|
$ |
398,069 |
|
|
|
|
|
|
|
|
|
Principal balance of finance receivables |
$ |
1,373,372 |
|
|
$ |
1,101,497 |
|
|
|
|
|
|
|
|
|
Ratio of debt to finance receivables |
|
46.5 |
% |
|
|
40.0 |
% |
|
Ratio of debt, net of total cash, to finance receivables |
|
41.5 |
% |
|
|
36.1 |
% |
|
|
|
|
|
|
|
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