Bentonville-based America's Car-Mart reported fourth-quarter earnings late Monday that beat analysts' estimates, and Wall Street reacted favorably to the report, pushing the buy here, pay here used-car company's shares up more than 12 percent in morning trading.
Chief Executive Officer Hank Henderson said during a conference call Tuesday that the company's earnings were headed in the right direction but added, "We're not satisfied or celebrating."
Car-Mart reported profits of $5.2 million, or 66 cents per share, for its fourth quarter of fiscal 2017, which ended April 30, compared with profits of $3.4 million, or 40 cents per share, for the same period last year. A consensus estimate of four analysts surveyed by Yahoo Finance had called for profits of 65 cents per share.
The company noted that if $500,000 in non-tax charges associated with closing eight lots were excluded, Car-Mart would have seen profits of 72 cents per share for the fourth quarter.
The company reported revenue of $152.9 million for the fourth quarter compared with $154.7 million for the same period a year ago. The four analysts had predicted average revenue of $154.9 million for the quarter.
For fiscal 2017, the company reported net income of $20.2 million, or $2.49 a share, compared with $11.6 million, or $1.33 per share, for 2016.
Shares closed at $37.40, up $2.20, or more than 6 percent, in trading Tuesday on the Nasdaq. Car-Mart shares have traded as low as $19.49 and as high as $47.75 over the past year.
The earnings results were released Monday after the stock market closed. The company held a conference call to discuss its earnings Tuesday morning.
Company President Jeff Williams said that while a delay in income-tax refunds hurt sales in the third quarter, it may have helped buoy the fourth-quarter results.
Third-quarter sales are typically helped by car buyers who use income tax refunds for down payments or to make additional payments on their vehicles. Because of new laws, taxpayers filing with the Earned Income Tax Credit, typically claimed by low-income families, or with the Additional Child Tax Credit saw their checks delayed this year, according to the IRS.
Car-Mart's customers often do not have access to traditional vehicle financing because of poor credit or no credit history. In recent years, Car-Mart has seen increased competition for its customer base from traditional car dealers that are offering newer vehicles with extended loan terms to those with poor credit. Henderson said Tuesday that the company is seeing indications the competition is lessening, noting his lot managers are seeing fewer pay-offs from other car dealers, indicating fewer Car-Mart customers are opting for those sorts of deals.
In the fourth quarter, Car-Mart saw greater sales volume with 29.1 vehicles sold per store per month, an increase from 28.2 for the year earlier. The sale price was also up for the quarter, with the average vehicle bringing $10,654, up $13 from the year-ago period.
Net charge-offs stood at 8.7 percent for the fourth quarter, down from 9 percent for the same quarter a year ago. Charge-offs are an indication of debt that is unlikely to be collected.
Business on 05/24/2017
Print Headline: Car-Mart's 4Q earnings top forecasts