America's Car-Mart Reports Second Quarter Earnings
Company Revises EPS Guidance for Full Fiscal Year; Increases Stock Repurchase Plan
BENTONVILLE, Ark., Dec. 6 -- America's Car-Mart, Inc. today announced its operating results for the second fiscal quarter and six months ended October 31, 2005.
For the three months ended October 31, 2005, revenues increased 9.5% to $55.3 million compared with $50.5 million in the same period of the prior year. Income for the quarter decreased 36% to $2.8 million or $0.23 per diluted share versus $4.4 million, or $0.37 per diluted share, in the same period last year. Retail unit sales increased 5.6% to 6,635 vehicles in the current quarter, compared to 6,281 in the same period last year. Same store revenue growth increased 5.9% compared to the same period last year, and finance receivable balances increased by $3.9 million from July 31, 2005. At October 31, 2005, 4.1% of the Company's finance receivable balances were over 30 days past due, down from 4.7% at July 31, 2005, and compared to 3.5% at October 31, 2004.
For the six months ended October 31, 2005, revenues increased 12% to $113.5 million, compared with $101.3 million in the same period of the prior year. Income for the first six months of FY 2006 decreased 17.6% to $7.7 million, or $0.64 per diluted share, versus $9.3 million, or $0.78 per diluted share, in the same period last year. Retail unit sales increased 6.1% to 13,520 vehicles in the current period, compared to 12,742 vehicles in the same period last year. Same store revenue growth increased 8.1% compared to the same period last year, and finance receivable balances increased approximately $15 million from April 30, 2005, to $167.4 million.
"This quarter, many of our customers, as well as our Company, were affected by macroeconomic factors that presented unique challenges," said T. J. ("Skip") Falgout, III, Chairman and Chief Executive Officer of America's Car-Mart. "First, the impact of rising energy prices which peaked during the quarter placed a strain on our customers' ability to meet all of their financial obligations and certainly created a difficult environment for vehicle sales. Second, Hurricanes Katrina and Rita created significant disruptions to our customers' lives, as many people were affected and businesses were shut down for various periods of time. These two issues combined had a decidedly negative effect on our results for the quarter. We expect to continue to see some lingering effects of the hurricanes, including a relatively tight supply of vehicle inventory, a situation that has not been helped by relatively slow new-car sales, which provide a source of trade-ins.
"However, we have been successful in building up our inventory for income tax refund season, which is one of the busiest times of the year, and we currently have approximately 1,800 retail units on the lots and around 800 vehicles in our corporate stockpiles," added Mr. Falgout. "Also, we are extremely encouraged by our performance late in the second quarter and in the first month of the third quarter (November). Sales are beginning to come back, and credit losses are improving. With sufficient inventory going into the tax refund season, we expect to see solid sales growth, and we will continue to press hard on reducing credit losses."
"We have opened five new dealerships this fiscal year, and we expect to open three more this month, in West Plains, Missouri; Claremore, Oklahoma; and Van Buren, Arkansas," stated William H. ("Hank") Henderson, President of America's Car Mart. "In addition, three of our dealership expansion projects should be completed in December, in Springfield, Missouri; Ardmore, Oklahoma; and Jonesboro, Arkansas. In each case, these dealerships should be able to increase their business and provide significantly better customer service in these brand new facilities. Our new and expanded dealerships, along with the organic growth at our other dealerships, should allow us to increase revenues over the balance of the fiscal year consistent with our earlier guidance of 10% to 14%."
Stock Repurchase Plan
The Board of Directors of the Company has increased its authorization for stock repurchases under the Company's stock repurchase plan to 1,000,000 shares. The plan has no expiration date, and repurchases will depend upon, among other things, the Company's earnings, capital requirements and surplus, general financial condition, contractual restrictions that may exist, and other factors that the Board of Directors deems relevant.
Fiscal 2006 Earnings Guidance
Based upon the results of this second quarter of Fiscal 2006, the Company is reducing its earnings guidance to $1.43 to $1.50 diluted earnings per share for the year ended April 30, 2006.
About America's Car-Mart
America's Car-Mart operates 81 automotive dealerships in eight 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 http://www.car-mart.com/ .
As a % of Sales
Three Months % Change Three Months
Ended 2005 Ended
October 31, vs. October 31,
2005 2004 2004 2005 2004
Operating Data:
Retail units sold 6,635 6,281 5.6%
Average number of
stores in operation 80.0 74.7 7.1
Average retail units
sold per store
per month 27.6 28.0 (1.4)
Average retail sales
price $7,301 $7,120 2.5
Same store revenue
growth 5.9% 10.3%
Period End Data:
Stores open 81 76 6.6%
Accounts over 30 days
past due 4.1% 3.5%
Operating Statement:
Revenues:
Sales $50,581 $46,694 8.3% 100.0% 100.0%
Interest income 4,748 3,821 24.3 9.4 8.2
Total 55,329 50,515 9.5 109.4 108.2
Costs and expenses:
Cost of sales 28,114 25,325 11.0 55.6 54.2
Selling, general and
administrative 9,610 8,361 14.9 19.0 17.9
Provision for credit
losses 12,459 9,487 31.3 24.6 20.3
Interest expense 567 287 97.6 1.1 0.6
Depreciation and
amortization 130 99 31.3 0.3 0.2
Total 50,880 43,559 16.8 100.6 93.3
Income before taxes 4,449 6,956 (36.0) 8.8 14.9
Provision for income
taxes 1,650 2,565 (35.7) 3.3 5.5
Net income $2,799 $4,391 (36.3) 5.5 9.4
Earnings per share:
Basic $0.24 $0.37
Diluted $0.23 $0.37
Weighted average number
of shares outstanding:
Basic 11,855,982 11,714,522
Diluted 12,030,908 12,023,786
As a % of Sales
Six Months % Change Six Months
Ended 2005 Ended
October 31, vs. October 31,
2005 2004 2004 2005 2004
Operating Data:
Retail units sold 13,520 12,742 6.1%
Average number of
stores in operation 79.5 73.0 8.9
Average retail units
sold per store
per month 28.4 29.1 (2.5)
Average retail sales
price $7,390 $7,077 4.4
Same store revenue
growth 8.1% 11.5%
Period End Data:
Stores open 81 76 6.6%
Accounts over 30 days
past due 4.1% 3.5%
Operating Statement:
Revenues:
Sales $104,177 $93,927 10.9% 100.0% 100.0%
Interest income 9,331 7,398 26.1 9.0 7.9
Total 113,508 101,325 12.0 109.0 107.9
Costs and expenses:
Cost of sales 57,375 50,567 13.5 55.1 53.8
Selling, general and
administrative 18,941 16,566 14.3 18.2 17.6
Provision for credit
losses 23,660 18,709 26.5 22.7 19.9
Interest expense 1,045 514 103.3 1.0 0.5
Depreciation and
amortization 278 191 45.5 0.3 0.2
Total 101,299 86,547 17.0 97.2 92.1
Income before taxes 12,209 14,778 (17.4) 11.7 15.7
Provision for income
taxes 4,522 5,454 (17.1) 4.3 5.8
Net income $7,687 $9,324 (17.6) 7.4 9.9
Earnings per share:
Basic $0.65 $0.80
Diluted $0.64 $0.78
Weighted average number
of shares outstanding:
Basic 11,850,609 11,689,395
Diluted 12,035,926 12,010,365
October 31, April 30,
2005 2005
Cash and cash equivalents $319,611 $459,177
Finance receivables, net $135,305,049 $123,098,966
Total assets $159,594,112 $143,668,258
Revolving credit facility $35,553,068 $29,145,090
Stockholders' equity $110,855,210 $103,265,381
Shares outstanding 11,859,074 11,843,738
Finance receivables:
Principal balance $167,455,055 $152,350,210
Allowance for credit losses (32,150,006) (29,251,244)
Finance receivables, net $135,305,049 $123,098,966
Allowance as % of principal balance 19.20% 19.20%
Changes in allowance for credit losses:
Six Months Ended
October 31,
2005 2004
Balance at beginning of year $29,251,244 $25,035,967
Provision for credit losses 23,660,177 18,709,031
Net charge-offs (20,761,415) (16,016,598)
Balance at end of period $32,150,006 $27,728,400