Car-Mart’s quarter blows hubcaps off analysts’ forecasts

Wednesday, February 20, 2013

Correction: America's Car-Mart released its third-quarter earnings report Monday night. The release date was incorrect in this article.

America’s Car-Mart, the Bentonville-based buy-here, pay-here auto dealer, reported third-quarter net income Tuesday of $8 million for the period ending Jan. 31, up 9.5 percent from $7.3 million for the corresponding period a year ago.

The company earned 84 cents per share, up from 73 cents. Car-Mart’s stock traded sharply higher Tuesday on the Nasdaq exchange.

Revenue increased to $119 million from $105 million a year ago. At the company’s car lots open at least a year, sales rose 8.8 percent.

Car-Mart’s stock closed Tuesday at $45.93, up $4.37, or 10.5 percent, on the Nasdaq. The stock has traded between $35.81 and $49.20 inthe past year.

“We are very pleased with our results for the quarter,and especially so with the significant increases in sales,” Hank Henderson, president and chief executive officer, said in the company’s earnings release.

Analysts polled by Thomson Reuters expected the company to earn 73 cents a share for the quarter. S&P Capital IQ forecast earnings at 74 cents a share.

Retail unit sales rose 16 percent to 10,403 from 8,965 a year ago. Sales per car lot totaled 29.4 units per store per month, up from 26.9 for the year-ago quarter.

Henderson said on the conference call that the company currently has more than 57,000 active accounts. The biggest sales gains were made at stores open five to 10 years, he said. With 30 stores less than 5 years old, he said, that bodes well for sales in the years ahead.

And income-tax filing season is the company’s busiest time of year as many customers have more cash in hand because of tax refunds, he said.

“Our stores right now are busier than ever,” he said.

John Hecht, analyst with Stephens Inc., said Car-Mart’s sales were “much higher than expected.”

“They captured market share through effective marketing,” he said. “I think that they’re well-positioned intheir market, and they continue to execute well in a challenging environment.”

Car-Mart recently opened its first store in Georgia, which Henderson said has many towns that are in the ideal size range for the company. Also in planning stages are two stores each in Missouri and Alabama and one in Mississippi, he said.

Jeff Williams, chief financial officer, said the company is focused on keeping car loans to less than 30 months.

“We’re not going to go a week longer than we absolutely have to to attract the best customers,” he said. He added, however, that “in order to remain competitive, our term lengths may increase in the future.”

Business, Pages 26 on 02/20/2013