America’s Car-Mart Inc. (CRMT) reported fiscal first-quarter results before the opening bell today. The company posted GAAP net income of $7.02 million, compared to $5.29 million in the year-ago period. Earnings per share came in at 60 cents, compared to 45 cents in the year-ago quarter, topping the Zacks Consensus Estimate by 46.3%.
America’s Car-Mart currently operates 96 automotive dealerships across 8 states in the U.S., and is one of the largest automotive retailers in the country focused exclusively on the “Buy Here/Pay Here” segment of the used car market. The company operates primarily in small cities and rural locations throughout the South Central U.S. and provides financing for most of its customers.
The company recorded a 10.7% year-over-year growth in revenues to $83.8 million driven by a 8.5% rise in same-store sales coupled with the launch of new dealerships in Rogers, Arkansas, Okmulgee, Oklahoma and Lebanon, Missouri. During the quarter, the company sold 8,182 units, compared to 7,353 units in the same period last year, while the average selling price rose slightly by 1.0% to $9,041.
Sluggish economic conditions have benefited used car retailers compared to new car outlets, as thrifty customers search for values. The company said that the active customer base rose 5% year over year to over 44,000, while average down-payments increased 50 basis points (bps) to 7.0%.
America’s Car-Mart’s gross profit grew 11% year over year to $40.7 million, while margin improved slightly by 14 bps to 48.6%. The company also recorded an improvement in credit quality as net charge-offs dipped to 5.1% from 5.7% in the year-ago quarter. Moreover, provision for credit losses, as a percentage of sales, reduced by 140 bps year over year to 19.5%.
Cash and equivalents at the end of quarter was $238,000, compared to $168,000 at the end the previous quarter. The company’s balance sheet consists of low debt as indicated by a debt-to-capitalization ratio of just 15.7%.
Moving forward, the company expects the continuation of tight credit markets to attract more customers who are looking for affordable vehicles. Accordingly, the company is adding a new location in Owasso, Oklahoma, which is scheduled to commence operations this week.
Meanwhile, the Zacks Consensus Estimate (derived from 4 covering analysts) on the company’s earnings for the fiscal year ending April 2010 is currently pegged at $1.71 per share, which has edged up a penny over the past week. The most accurate estimate is even bullish at $1.75 per share.
Read the full analyst report on “CRMT”
Zacks Investment Research
