America's Car-Mart Inc (CRMT) Q4 Earnings: Revenue Beats Estimates, EPS Falls Short

Revenue and Earnings Below Expectations Amidst Strategic Initiatives

  • Revenue: $364.7 million for Q4, down 5.8% year-over-year, but slightly above the analyst estimate of $361.47 million.
  • Gross Margin: Improved to 35.5%, up 200 basis points from the previous year’s 33.5%.
  • Net Charge-Offs: Increased to 7.3% of average finance receivables, compared to 6.3% in the prior year.
  • Interest Expense: Rose by $4.9 million or 38.2% for the quarter.
  • Diluted Earnings Per Share (EPS): $0.06, compared to $0.32 in the same quarter last year.
  • Total Collections: Increased by 5.0% to $187.2 million for the quarter.
  • Store Count: Ended the fiscal year with 154 stores, down from 156 stores in the previous year.
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On June 18, 2024, America's Car-Mart Inc (CRMT, Financial) released its 8-K filing reporting financial results for the fourth quarter and full year ended April 30, 2024. America's Car-Mart Inc is an automotive retailer in the US focused exclusively on the Integrated Auto Sales and Finance segment of the used car market. The Company's operations are principally conducted through its two operating subsidiaries, America's Car Mart Inc and Colonial Auto Finance. It primarily sells older model used vehicles and provides financing for substantially all of its customers. The Company earns revenue from the sale of used vehicles and in most cases a related service contract and an accident protection plan product, as well as interest income and late fees from the related financing.

Performance Overview

America's Car-Mart Inc (CRMT, Financial) reported a revenue of $364.7 million for Q4 FY2024, a 5.8% decrease compared to the same period last year. This figure fell short of the analyst estimate of $361.47 million. The company's gross margin improved to 35.5%, up 200 basis points from the previous year. However, the diluted earnings per share (EPS) for the quarter were $0.06, significantly below the analyst estimate of $0.89.


Key Financial Achievements and Challenges

Despite the revenue decline, America's Car-Mart Inc (CRMT, Financial) made notable progress in several areas. Total collections increased by 5.0% to $187.2 million, and the allowance for credit loss was adjusted favorably to 25.32%, down from 25.74%. However, net charge-offs as a percentage of average finance receivables rose to 7.3% from 6.3%, indicating increased losses.

For the full fiscal year, the company reported a revenue of $1.4 billion, a slight decrease of 0.5% from the previous year. The gross margin for the year increased to 34.7%, up 120 basis points. However, the company reported a loss per share of $4.92, compared to a diluted EPS of $3.11 in the previous year.

Income Statement Highlights

Metric Q4 FY2024 Q4 FY2023 % Change
Revenue $364.7 million $387.2 million -5.8%
Gross Margin 35.5% 33.5% +200 bps
Total Collections $187.2 million $178.3 million +5.0%
Diluted EPS $0.06 $0.32 -81.3%

Balance Sheet and Cash Flow

America's Car-Mart Inc (CRMT, Financial) reported a debt to finance receivable ratio of 52.6%, up from 46.5% in the previous year. The company grew finance receivables by $62.0 million and decreased inventory by $1.8 million. Available borrowings under the revolving credit facility were $73.4 million.

Strategic Initiatives and Future Outlook

President and CEO Doug Campbell commented,

Our sales results improved sequentially but fell short of our internal expectations for the quarter. I am encouraged by our disciplined management on several fronts, including SG&A, total cash collected from customers, improved down payments, and stronger gross margins -- all of which were improved over the prior year quarter."
The company also highlighted significant progress on strategic initiatives, including the implementation of a Loan Origination System (LOS) and the acquisition of Texas Auto Center, which is expected to enhance customer outcomes and shareholder value.

Despite these achievements, the company faces challenges due to the persistent inflationary environment, which has disproportionately impacted its customer base. The company remains confident in its multi-pronged approach to lower overall vehicle costs and improve affordability for consumers.

For more detailed insights and to access the full earnings report, visit the 8-K filing.

Explore the complete 8-K earnings release (here) from America's Car-Mart Inc for further details.