Buy-here, pay-here used-car dealer America's Car-Mart smashed earnings and revenue estimates for its first quarter, saying its efforts to find and retain customers are paying off.
According to a release after a Thursday morning conference call, Bentonville-based Car-Mart reported net income of $7.3 million, or 79 cents per share, for the first quarter of fiscal 2015 that ended July 31, down slightly from $7.5 million, or 79 cents per share, for the first quarter of 2014.
A consensus of four analysts predicted earnings of 60 cents a share. In the four previous quarters, Car-Mart's earnings did not meet analysts' estimates.
Investors reacted favorably to the news. Shares closed at $41.86, up $4.67 or nearly 13 percent, in trading Thursday on the Nasdaq exchange. Shares have traded between $34.56 and$47.93 over the past year.
In the conference call, Hank Henderson, president and chief executive officer of Car-Mart, said the first-quarter results were a solid start for the year. He said the company's long-term strategy of keeping its cars affordable and earning repeat business is working.
Henderson said productivity has improved as the company has done a better job at training and retaining its general managers. He said during the quarter, 90 percent of all locations met their individual sales goals.
The company reported revenue for the first quarter of $127 million compared with $123 million in the same period a year ago. Two analysts had predicted revenue of $116.3 million for the first quarter of fiscal 2015.
Over the year, the company has said it is facing fierce competition from both new- and used-car dealers, who are courting Car-Mart customers with zero down offers and loans with extended terms.
Vehicle sales were 11,482, up 7.9 percent when compared with the same quarter a year ago. Productivity was flat, with 28.4 vehicles sold per store per month. The average sale price was $9,464, down $372 or 3.8 percent when compared with the first quarter of 2014.
The company's active account base is 63,000 vehicles, up 2,000 from the previous quarter.
Jeff Williams, Car-Mart's chief financial officer, said a new one-year service contract being offered to customers for $595 has been popular and will help the company show significant profits once it's in place across all locations.
He said the average contract term for the quarter was 27.2 months, down from 27.7 months. He said the company is continuing to try to keep the term lengths of its loans down and customers' equity in their vehicles up.
The company opened two lots during the quarter, one in Tennessee and the other in Alabama. Car-Mart intends to open a total of eight new lots in fiscal 2015.
Business on 08/22/2014