‘Buy Here, Pay Here’ Car Dealer Posts Record Q4 Revenue

Source: Streetwise Reports   05/24/2022

America’s Car-Mart Inc. shares traded 26% higher after the multi-state used automotive retailer reported that it achieved record revenues of $352 million in Q4/22.

“Buy here, pay here” automotive retailer America’s Car-Mart Inc. (CRMT:NASDAQ), which operates 154 car dealerships in 12 states, today announced financial and operating results for the fourth quarter and full year of 2022 ended April 30, 2022.

The company’s President and CEO Jeff Williams led off the report by stating that total revenue in Q4/22 increased by 26% to $351.8 million, compared to $279.8 million in Q4/21. The report listed that during the latest quarter, vehicle sales, which make up the largest component of total revenues, increased by 24.5% to $309.6 million versus $248.6 million in Q4/21. CEO Williams highlighted that interest income in Q4/22 rose by 39% to $42.27 million, versus $30.45 million in Q4/21.

The firm advised that across all of its locations average sales prices in Q4/22 increased by 24% to $17,860, up from $14,387 in Q4/21, with total unit sales volume dropping 0.8% from 16,555 in Q4/21 to 16,426 in Q4/22. The company averaged 35.6 units sold per dealership in Q4/22, which was off slightly from the unit sales per dealership of 36.5 achieved in Q4/21. CEO Williams noted that Q4/21 was a record unit sales period for the company and commented that volume productivity remains strong.

The company stated that collections and credit results during Q4/22 and FY/22 were strong. The firm noted that net charge-offs in Q4/22 were 5.6%, which it said was a significant improvement compared with higher historical averages. For FY/22, the company advised that “net charge-offs were 20.2% compared to five-year and ten-year averages of 25.5% and 26.5%, respectively.”

The company stated that it is continuing to make investments in many key areas of its business including recruiting, training and retaining staff, inventory management and procurement, improving the overall customer experience and enhancing its digital information technology capabilities.

CEO Williams mentioned that one of the firm’s highest priorities is to continually source a sufficient number of affordable and mechanically sound vehicles to meet the current high demand at its stores. America’s Car-Mart dealerships now serve an average of 618 active customers each and the company’s efforts are concentrated on boosting that number to an average of 1,000 or more.

CEO Williams remarked, “Over the last five years we have grown our customer count by an average of 7.3% per year, or 42%, while we have grown our store count by just 10%. If we experience that same growth rate over the next five years, we could be supporting over 135,000 customers; 150,000 customers in less than seven years”

“While our primary focus is leveraging our existing dealership base, we anticipate acquisitions and new lot openings will also likely contribute materially to our future growth, Williams added”

The company reported that for Q4/22 it recorded net income of $26.7 million, or $4.01 per diluted share, versus net income of $45.5 million, or $6.19 per diluted share in Q4/21.

America’s Car-Mart’s CFO Vickie Judy explained that “the company repurchased 92,000 shares of its common stock during Q4/22 at an average price of approximately $89 for a total of $8.2 million,” and added that, “during FY/22, we grew finance receivables by $292 million, increased inventory by $33 million, repurchased $35 million of our common stock and funded $21 million in capital expenditures, all while holding our debt, net of cash, to 36.1% of receivables.”

America’s Car-Mart is an integrated used auto sales and finance retailer headquartered in Rogers, Ark. The firm owns and operates more than 150 automotive dealerships across 12 states making it one of the largest publicly held automotive retailers in the U.S. The company’s stores are located mostly in smaller cities in the south and central U.S. and are modeled as “Buy Here Pay Here” lots where buyers are able to purchase and receive financing for quality and reliable used vehicles.

America’s Car-Mart started the day with a market cap of around $492.4 million with approximately 6.44 million shares outstanding and a short interest of about 12.2%. CRMT shares opened almost 18% higher today at $90.00 (+$13.54, +17.71%) over yesterday’s $76.46 closing price. The stock has traded today between $89.99 and $100.00 per share and is currently trading at $96.445 (+$19.985, +26.14%).

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