America's Car-Mart Reports Second Quarter Earnings
BENTONVILLE, Ark.--Dec. 10, 2002--America's Car-Mart, Inc. today announced its operating results for the second fiscal quarter and six months ended October 31, 2002. The Company's results are segmented into continuing and discontinued operations.
Highlights of second quarter operating results (continuing operations, excluding charges in prior fiscal period):
| -- | Revenue growth of 20% over the prior year quarter |
| -- | Income growth of 57% over the prior year quarter |
| -- | EPS growth of 38% over the prior year quarter |
| -- | Retail unit sales growth of 18% over the prior year quarter |
| -- | Increased gross margins to 46.9% vs. 45.4% in the year ago quarter |
For the three months ended October 31, 2002, revenues from continuing operations increased 20% to $38.3 million, compared with $31.8 million in the same period of the prior fiscal year. Income from continuing operations for the quarter increased 57% to $3.1 million, or $0.40 per diluted share, versus $2.0 million, or $0.29 per diluted share, in the same period last year, excluding $4.1 million of after tax charges in the prior fiscal year. Retail unit sales increased 18% to 5,536 vehicles in the current quarter, compared to 4,686 vehicles in the same period last year.
Highlights of six month operating results (continuing operations, excluding charges in prior fiscal period):
-- Revenue growth of 19% over the prior year period
-- Income growth of 55% over the prior year period
-- EPS growth of 38% over the prior year period
-- Retail unit sales growth of 19% over the prior year period
-- Increased gross margins to 47.2% vs. 46.0% in the prior year
period
For the six months ended October 31, 2002, revenues from continuing operations increased 19% to $74.4 million, compared with $62.3 million in the same period of the prior fiscal year. Income from continuing operations for the first six months of FY2003 increased 55% to $6.5 million, or $0.83 per diluted share, versus $4.2 million, or $0.60 per diluted share in the same period last year, excluding $4.4 million of after tax charges in the prior fiscal period. Retail unit sales increased 19% to 10,809 vehicles in the current period, compared to 9,115 vehicles in the same period last year.
"We are very pleased to report stronger than expected operating results for the fiscal second quarter, which is typically a difficult quarter," commented T.J. ("Skip") Falgout, Chief Executive Officer of America's Car-Mart. "Car-Mart's credit losses as a percentage of sales were slightly lower compared with the year ago quarter and fell within our historical range," continued Falgout. "We are also pleased to report that the Company recently received a federal tax refund related to our discontinued operations in the amount of $8.1 million, which we have used to reduce debt. Currently, our total debt is approximately $27 million, and our debt-to-equity ratio is less than 0.5 to 1."
"Although we have historically exhibited higher credit losses as a percentage of sales in the second and third fiscal quarters, a more stringent focus on collection policies and procedures helped improve collections and credit losses over the year ago quarter," stated Hank Henderson, President of America's Car-Mart. "More recently, we have focused on improving our credit application process in terms of both thoroughness and accuracy," added Henderson. "We believe that the improvements in the application and verification process are already improving our collection efficiency and will ultimately help to lower overall credit losses. Finally, the recent creation of a third management region is an important step in building an infrastructure that can effectively manage our growing business. The new region will be based in Oklahoma and will oversee all Oklahoma and Kansas operations, as well as all new store openings in North Texas."
Also during the second quarter, the Company continued to repurchase shares under its stock repurchase program. Stock repurchases during the second quarter were made primarily in the open market and totaled 103,500 shares at a cost of approximately $1.2 million. In addition, subsequent to the end of the second quarter, the Company's revolving credit facility with Bank of Oklahoma was amended such that the credit line was increased to $39.5 million, an increase of $2.5 million over its previous limit of $37 million, and the maturity date was extended to April 2004. The cost of funds borrowed through this facility remains unchanged at the Prime rate plus .50%, or currently 4.75%.
Fiscal 2003 Earnings Guidance
The Company has adjusted its fiscal year 2003 earnings estimate from continuing operations to reflect higher than expected earnings in the second quarter and has reaffirmed its outlook for the remainder of the fiscal year. Accordingly, the Company projects that it will earn $1.69 per diluted share from continuing operations in FY2003 as follows:
1st quarter: $0.43 (actual)
2nd quarter: $0.40 (actual)
3rd quarter: $0.39 (projected)
4th quarter: $0.47 (projected)
Fiscal 2003: $1.69
Conference Call
Management will be holding a conference call on Tuesday, December 10, 2002 at 11:00 a.m. Eastern time to discuss second quarter results. To participate, please dial 888/207-9995, security code: "America's." Callers should dial in approximately 10 minutes before the call begins.
A conference call replay will be available one hour following the call for seven days and can be accessed by calling: 800/858-5309 (domestic) or 334/323-7226 (international), access code: 40844, pass code: 86753.
About America's Car-Mart
America's Car-Mart operates 62 automotive dealerships in seven states and is the largest publicly held automotive retailer in the United States focused exclusively on the "Buy Here/Pay Here" segment of the used car market. The Company operates its dealerships primarily in small cities throughout the South-Central United States, selling quality used vehicles and providing financing for substantially all of its customers. For more information on America's Car-Mart, please visit our website at www.car-mart.com.
Included herein are forward-looking statements, including statements with respect to projected earnings per share amounts. There are many factors that affect management's view about future earnings. These factors involve risks and uncertainties that could cause actual results to differ materially from management's present view. These factors include, without limitation, assumptions relating to unit sales, credit losses, gross margins, operating expenses and economic conditions, and other risk factors described under "Forward-Looking Statements" of Item 1 of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2002. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company does not undertake any obligation to update forward-looking statements.
America's Car-Mart, Inc.
Consolidated Results of Operations
(in thousands, except operating and share data)
Three Months Ended Six Months Ended
October 31, October 31,
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Operating data:
Retail units sold 5,536 4,686 10,809 9,115
Average number of stores in
operation 61.7 52.0 59.7 51.2
Average retail units sold
per store per month 29.9 30.0 30.2 29.7
Average retail sales price $6,279 $6,013 $6,249 $6,072
Same store revenue growth 14.2% 15.6% 14.0% 16.5%
Accounts 30 days or more
past due (at period end) 3.9% 4.7% 3.9% 4.7%
Revenues:
Sales $35,926 $29,343 $69,747 $57,467
Interest income 2,352 2,425 4,628 4,840
---------- ---------- ---------- ----------
Total 38,278 31,768 74,375 62,307
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 19,066 16,033 36,816 31,043
Selling, general and
administrative 6,631 5,166 13,186 10,175
Provision for credit
losses 7,192 6,126 12,794 11,623
Interest expense 470 847 1,006 1,782
Depreciation and
amortization 71 72 136 158
Restructuring charge 2,732 2,732
Write-down of investments
and equipment 3,528 3,928
---------- ---------- ---------- ----------
Total 33,430 34,504 63,938 61,441
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before taxes and
minority interests 4,848 (2,736) 10,437 866
Provision (benefit) for
income taxes 1,748 (709) 3,900 777
Minority interests 126 280
---------- ---------- ---------- ----------
Income (loss) from
continuing operations 3,100 (2,153) 6,537 (191)
Discontinued operations:
Income (loss) from
discontinued operations,
net of taxes and
minority interests (12,814) 375 (13,582)
Gain on sale of
discontinued operation,
net of tax 256 131
---------- ---------- ---------- ----------
Income (loss) from
discontinued operations 256 (12,814) 506 (13,582)
---------- ---------- ---------- ----------
Net income (loss) $3,356 $(14,967) $7,043 $(13,773)
========== ========== ========== ==========
Basic earnings (loss) per
share:
Continuing operations $0.44 $(0.32) $0.94 $(0.03)
Discontinued operations 0.04 (1.90) 0.07 (2.00)
---------- ---------- ---------- ----------
Total $0.48 $(2.22) $1.01 $(2.03)
========== ========== ========== ==========
Diluted earnings (loss) per
share:
Continuing operations $0.40 $(0.32) $0.83 $(0.03)
Discontinued operations 0.03 (1.90) 0.06 (2.00)
---------- ---------- ---------- ----------
Total $0.43 $(2.22) $0.89 $(2.03)
========== ========== ========== ==========
Weighted average number of
shares outstanding:
Basic 6,997,169 6,731,351 6,982,659 6,799,946
Diluted 7,808,712 6,731,351 7,872,863 6,799,946
America's Car-Mart, Inc.
Continuing Operating Results by Segment
(in thousands)
For the Three Months Ended October 31, 2002
--------------------------------------------
Car-Mart Corporate Eliminations Consolidated
-------- --------- ------------ ------------
Revenues:
Sales $35,926 $35,926
Interest income 2,343 $74 $(65) 2,352
-------- --------- ------------ ------------
Total 38,269 74 (65) 38,278
-------- --------- ------------ ------------
Costs and expenses:
Cost of sales 19,066 19,066
Selling, general and
administrative 6,012 619 6,631
Provision for credit
losses 7,192 7,192
Interest expense 503 32 (65) 470
Depreciation and
amortization 50 21 71
-------- --------- ------------ ------------
Total 32,823 672 (65) 33,430
-------- --------- ------------ ------------
Income (loss) before
taxes and minority
interests $5,446 $(598) $-- $4,848
======== ========= ============ ============
For the Three Months Ended October 31, 2001
--------------------------------------------
Car-Mart Corporate Eliminations Consolidated
-------- --------- ------------ ------------
Revenues:
Sales $29,343 $29,343
Interest income 2,268 $240 $(83) 2,425
-------- --------- ------------ ------------
Total 31,611 240 (83) 31,768
-------- --------- ------------ ------------
Costs and expenses:
Cost of sales 16,033 16,033
Selling, general and
administrative 4,624 542 5,166
Provision for credit
losses 6,026 100 6,126
Interest expense 732 198 (83) 847
Depreciation and
amortization 36 36 72
Restructuring charge 2,732 2,732
Write-down of investments
and equipment 3,528 3,528
-------- --------- ------------ ------------
Total 27,451 7,136 (83) 34,504
-------- --------- ------------ ------------
Income (loss) before
taxes and minority
interests $4,160 $(6,896) $-- $(2,736)
======== ========= ============ ============
America's Car-Mart, Inc.
Continuing Operating Results by Segment
(in thousands)
For the Six Months Ended October 31, 2002
--------------------------------------------
Car-Mart Corporate Eliminations Consolidated
-------- --------- ------------ ------------
Revenues:
Sales $69,747 $69,747
Interest income 4,559 $194 $(125) 4,628
-------- --------- ------------ ------------
Total 74,306 194 (125) 74,375
-------- --------- ------------ ------------
Costs and expenses:
Cost of sales 36,816 36,816
Selling, general and
administrative 11,927 1,259 13,186
Provision for credit
losses 12,794 12,794
Interest expense 989 142 (125) 1,006
Depreciation and
amortization 96 40 136
-------- --------- ------------ ------------
Total 62,622 1,441 (125) 63,938
-------- --------- ------------ ------------
Income (loss) before
taxes and minority
interests $11,684 $(1,247) $-- $10,437
======== ========= ============ ============
For the Six Months Ended October 31, 2001
--------------------------------------------
Car-Mart Corporate Eliminations Consolidated
-------- --------- ------------ ------------
Revenues:
Sales $57,467 $57,467
Interest income 4,501 $516 $(177) 4,840
-------- --------- ------------ ------------
Total 61,968 516 (177) 62,307
-------- --------- ------------ ------------
Costs and expenses:
Cost of sales 31,043 31,043
Selling, general and
administrative 8,721 1,454 10,175
Provision for credit
losses 11,523 100 11,623
Interest expense 1,516 443 (177) 1,782
Depreciation and
amortization 70 88 158
Restructuring charge 2,732 2,732
Write-down of investments
and equipment 3,928 3,928
-------- --------- ------------ ------------
Total 52,873 8,745 (177) 61,441
-------- --------- ------------ ------------
Income (loss) before
taxes and minority
interests $9,095 $(8,229) $-- $866
======== ========= ============ ============
America's Car-Mart, Inc.
Car-Mart Results Only
(in thousands)
% Change As a % of Sales
---------- ---------------
Three Months Three Months
Ended 2002 Ended
October 31, vs October 31,
2002 2001 2001 2002 2001
-------- -------- ---------- ------- -------
Revenues:
Sales $35,926 $29,343 22.4% 100.0% 100.0%
Interest income 2,343 2,268 3.3 6.5 7.7
-------- -------- ------- -------
Total 38,269 31,611 21.1 106.5 107.7
-------- -------- ------- -------
Costs and expenses:
Cost of sales 19,066 16,033 18.9 53.1 54.6
Selling, general and
administrative 6,012 4,624 30.0 16.7 15.8
Provision for credit
losses 7,192 6,026 19.3 20.0 20.5
Interest expense 503 732 (31.3) 1.4 2.5
Depreciation and
amortization 50 36 38.9 0.1 0.1
-------- -------- ------- -------
Total 32,823 27,451 19.6 91.3 93.5
-------- -------- ------- -------
Pretax income $5,446 $4,160 30.9 15.2 14.2
======== ======== ======= =======
% Change As a % of Sales
---------- ---------------
Six Months Ended 2002 Six Months Ended
October 31, vs October 31,
2002 2001 2001 2002 2001
-------- -------- ---------- ------- -------
Revenues:
Sales $69,747 $57,467 21.4% 100.0% 100.0%
Interest income 4,559 4,501 1.3 6.6 7.8
-------- -------- ------- -------
Total 74,306 61,968 19.9 106.6 107.8
-------- -------- ------- -------
Costs and expenses:
Cost of sales 36,816 31,043 18.6 52.8 54.0
Selling, general and
administrative 11,927 8,721 36.8 17.1 15.2
Provision for credit
losses 12,794 11,523 11.0 18.3 20.1
Interest expense 989 1,516 (34.8) 1.4 2.6
Depreciation and
amortization 96 70 37.1 0.2 0.1
-------- -------- ------- -------
Total 62,622 52,873 18.4 89.8 92.0
-------- -------- ------- -------
Pretax income $11,684 $9,095 28.5 16.8 15.8
======== ======== ======= =======
America's Car-Mart, Inc.
Consolidated Balance Sheet and Other Data
October 31, April 30,
2002 2002
------------- -------------
Cash and cash equivalents $516,945 $1,229,920
Finance receivables, net $84,294,417 $75,079,603
Total assets $102,382,848 $128,142,362
Stockholders' equity $58,721,281 $52,813,187
Shares outstanding 6,977,944 6,944,325
Book value per share $8.42 $7.61
Stores open at period end 62 55
Finance receivables:
Principal balance $103,428,720 $92,122,212
Allowance for credit losses (19,134,303) (17,042,609)
------------- -------------
Finance receivables, net $84,294,417 $75,079,603
============= =============
Allowance as % of principal balance 18.5% 18.5%
============= =============
Changes in allowance for credit
losses:
Six Months Ended
October 31,
2002 2001
------------- -------------
Balance at beginning of period $17,042,609 $14,066,782
Provision for credit losses 12,793,997 11,522,683
Net charge offs (10,702,303) (9,931,913)
------------- -------------
Balance at end of period $19,134,303 $15,657,552
============= =============