BENTONVILLE, Ark. — In addition to announcing a new credit facility, America's Car-Mart revealed this week that second quarter net income, revenue and retail sales climbed thanks in large part to its customer base growing above 49,000 in the second quarter.

The company reported that net income per diluted share climbed from 53 cents to 56 cents in the second-fiscal quarter, a rise of 5.7 percent from the prior year.

Fueling the jump was Car-Mart's 11.2-percent increase in revenue. Management calculated this figure settled at $91.8 million, up from $82.6 million a year ago thanks to same-store revenue growth of 8.1 percent.

Furthermore, executives shared that retail sales climbed in the second quarter, too. The move from 7,965 units to 8,431 units was a 5.9-percent uptick from the prior-year quarter

As of Oct. 31, Car-Mart reported that strong cash flows supported the increase in revenues as well as other areas, including a $4.5 million increase in finance receivables, $1.1 million in net capital expenditures, $7.4 million in income tax payments and $3.8 million in common stock repurchases. The company said it made these moves with only a $6.9-million debt increase.

The company also mentioned a couple of other elements of its financial standing. Car-Mart indicated its debt-to-equity ratio is 28.3 percent and its debt-to-finance receivables is 18.5 percent. Furthermore, its allowance for credit losses remained unchanged in the second quarter at 22 percent of finance receivables.

Despite plenty of positive news, Car-Mart president and chief executive officer William "Hank" Henderson is looking for an even better performance.

"Our financial results for the quarter were solid, but short of our own internal expectations," Henderson said. "An uptick in our credit losses means we've got to do a better job taking care of our customers.

"Our commitment to helping our customers succeed has always been a cornerstone of our success, and this will not change as we move forward," Henderson added.

The president and CEO went on to touch on other aspects of the company, including recent growth that took its dealership network above 100.

"Our new-store openings are going very well and we are on pace," Henderson stated. "We have added four great locations so far in fiscal 2011 and we have four more in the works that we intend to have in operation by the end of the fiscal year.

"While we expect that most of our top line growth year-to-year will come from existing stores, the contributions of these new locations will be an important factor in keeping us on our projected growth targets," he explained. "Our biggest promotion of the year, the ‘Zero Down' tax promotion is off to a great start and we look forward to reporting the success for this program next quarter."

Jeff Williams, Car-Mart's chief financial officer, discussed another potential growth avenue that didn't have anything to do with a company decision.

"We are happy to report that on Nov. 2, the voters in Arkansas approved a state constitutional amendment to allow up to 17 percent interest for non-bank loans and contracts in the state," Williams shared. "This amendment removes the major unknown we were facing as to interest rates we could charge to our Arkansas customers.

"We continue to focus on cash returns by ensuring that our customers have equity in their vehicles throughout the term of their contracts," he added. "We are expecting strong collections during the spring months this year based on some operational and software changes that have recently been installed."

Another company segment in Williams' jurisdiction is shares, and the CFO said Car-Mart repurchased 168,230 shares of common stock during the quarter. That amount represents approximately 1.5 percent of the company's outstanding shares.

Since February, Williams indicated Car-Mart has repurchased 917,762 shares, or approximately 8 percent of the total outstanding amount.

"We believe in the long-term value of our company and we expect to continue to invest in the repurchase program," Williams declared.

"We have approximately 900,000 shares available to repurchase under our existing repurchase program," he continued. "Our debt-to-equity ratio of 28.3 percent and our debt-to-finance receivables ratio of 18.5 percent continue to be strong and what we consider to be the best in the industry. The ratios are even more impressive when considering the fact that we have repurchased almost $22 million of common stock and added approximately $16 million in finance receivables since Feb. 1."

Six-Month Results

Along with second-quarter tallies, Car-Mart also offered data about how the company is performing through the first six months of its fiscal year.

Net income per diluted share moved up 10.6 percent from $1.13 to $1.25, thanks to a 10.2-percent revenue increase and same-store revenue growth of 7.2 percent.

As Car-Mart's customer base moved higher by 4.5 percent to above 49,000, the company posted a retail sales increase of 4.7 percent.

But as Henderson noted, the provision for credit losses settled at 21.1 percent of sales versus 19.8 percent for the first six months of Car-Mart's previous fiscal year.

The company's strong cash flows produced finance receivables growth of $16 million. Car-Mart also reported capital expenditures of $2.2 million, $11 million in common stock re-purchases and a $12.4-million increase in debt.

New Credit Facility

At the same time they reported their second-quarter performance, Car-Mart executives revealed they entered into a loan and security agreement with a group of lenders providing credit facilities totaling $90 million. This new facility is designed to replace the company's existing one.

The company noted a breakdown of the facility includes:

—Bank of America: $45 million.

—Bank of Arkansas: $30 million.

—Commerce Bank: $10 million.

—Arvest Bank: $5 million.

Management explained initial proceeds were used to pay off all existing debt under the company's previous $61.5 million financing package last amended in January. That amount included the remaining balance $6.3 million related to a $10 million term loan.

Total debt outstanding at July 31, the end of the company's first quarter of the current fiscal year was $44.3 million.

"We are very pleased with our new loan package and are excited to have Bank of America join our long-time primary lender Bank of Arkansas," Williams stressed. "Our lenders are familiar with our industry, and we expect that our current lending group will be able to grow with us into the future."

Williams went on to mention that the loan package contains revolving loan agreements for Car-Mart's operating subsidiaries and tiered pricing — currently at Libor plus 2.75 percent or prime less 0.25 percent with no floor. He also said the package has a three-year term and a $15 million accordion feature.

"The company did incur an early pay-off penalty associated with the term loan, which will result in an approximate 3 cent charge to fully diluted earnings per share for the current quarter," Williams indicated.