Car-Mart Seeks New Stores as Sales, Net Income and Revenue Climb
BENTONVILLE, Ark. — In addition to announcing a new dealership in Tennessee, America's Car-Mart recently shared fourth quarter and fiscal full-year results. In some positive news, net income, revenue and sales are all up over the prior year, which has led the company to a growth plan.
More specifically, retail unit sales were up 11.3 percent for the quarter, reaching 8,225 from 7,391 in the previous year.
Net income came in at $7.2 million, compared with $5.1 million in the same period a year ago.
As for revenue, it is up 14 percent to $88.8 million, compared with $77.9 million, and same-store revenue growth is up 11.8 percent.
Gross margin was 43.9 percent of sales, versus 42.7 percent in 2009.
Furthermore, the company revealed that it now has an active customer base of more than 47,000 and its debt to equity ratio is 22 percent and debt to finance receivables is 14.8 percent.
Discussing credit performance, Car-Mart officials said the provision for credit losses was 19.3 percent of sales, versus 20.8 percent in the previous year.
Accounts more than 30 days past due were 2.7 percent, compared with 2.8 percent.
Also, net charge-offs as a percentage of average finance receivables came in at 6 percent, down from 6.3 percent in the same quarter of 2009.
Principal collections, as a percentage of average finance receivables, were up to 18.4 percent from 17.7 percent in the previous year ($1.8 million).
Down payments increased to 9.2 percent from 8.6 percent in 2009 ($418,000).
Full-Year Results
Reviewing full-year results, the company indicated net income came in at $26.8 million, as opposed to $17.9 million in the previous year. Revenue, meanwhile, grew 13.4 percent to 339 million, with same-store revenue growth of 11.2 percent.
Retail unit sales were up 12.2 percent to 32,196, compared with 28,698.
"Strong cash flows supporting significant increase in revenues and resulting finance receivables growth of $29.7 million, net capital expenditures of $5.4 million, $10.9 million in common stock repurchase with only an $8.9 million increase in debt," officials explained.
The fiscal-year credit performance included a provision for credit losses of 20.2 percent of sales, compared with 21.5 percent in the previous year.
Net charge-offs as a percentage of average finance receivables were down to 22.2 percent, compared with 24.2 percent in 2009 ($5 million).
Principal collections, as a percentage of average finance receivables, were up to 67.3 percent from 66.7 percent ($1.5 million).
Also, down payments climbed to 6.9 percent, compared with 6.7 percent ($540,000).
CEO Discusses Results and Future Plans
According to William "Hank" Henderson, president and chief executive officer, "We are very pleased with our top and bottom line growth for the most recent quarter and our full-fiscal year. The five new dealerships opened in 2010 are performing very well, and with same-store revenue increases of 11.8 percent for the quarter and 11.2 percent for the year, we are realizing significant growth opportunities that we have been discussing for some time now.
"We expect to open new dealerships at an approximate 10 percent rate in fiscal 2011 and for the next several years and at the same time continue to emphasize same-store revenue expansion to maximize our returns," he continued.
Henderson went on to highlight the importance of the company's "Manager in Training Program" as critical to future growth, saying Car-Mart has been able to attract a strong group of associates for this program.
"We are very proud of the fact that our average retail sales price is basically flat with last year's fourth quarter, which helps keep the terms affordable to our customers," he pointed out.
He said this is due in large part to the company's purchasing team, which has been able to get quality vehicles at reasonable prices.
"Our general managers are focused on writing good deals and setting our customers up for success so that we can earn their repeat business over the long-term. Our collections efforts continue to focus on maintaining strong personal relationships with our customers on a decentralized local basis, supported by strong corporate guidance and oversight. Consistency in our operation practices has been a hallmark of our success for Car-Mart's 30-year history," Henderson said.
Jeff Williams, chief financial officer, noted, "Also, we are pleased to report that collections during our fourth quarter for our $0 Down Tax Promotion were strong, allowing our customers to have more equity in their individual loans. We expect this program to continue to grow in future years and to help increase our customers' success rates."
He went on to say, "Our board of directors has approved another increase in our share repurchase program, once again allowing for up to 1 million shares to be repurchased. We believe the long-term value of our company and will invest in the repurchase program when favorable conditions present themselves to us."
New Tennessee Store
Earlier this week, Car-Mart announced the addition of a new store in Clarksville, Tenn., bringing the company's number of dealerships to 98.
"This dealership represents the company's first new-store opening in fiscal 2011, which began May 1, 2010. The Clarksville dealership will be our second dealership in Tennessee and we are extremely excited to be expanding in the state," said Henderson.
"We expect to open between seven and nine additional dealerships during the remainder of this fiscal year, and then to open additional dealerships at an approximate 10 percent annual rate thereafter.
"We are committed to continuing to grow both sales and profits as we expand our footprint. New-store openings are a vital part of our future and are expected to significantly contribute to our growth. Increasing sales volumes at our existing stores is equally important to our future and will remain a priority for us," he continued. "Fiscal-year 2010, which ended on April 30, was the best year in the company's history."