America's Car-Mart saw its share price wilt Friday, dropping 9 percent after the company released first-quarter earning results that missed analysts' profit estimates by more than 30 cents per share.
Company management said while Car-Mart faced challenges from a highly competitive market going into fiscal 2016, it was still disappointed in the first-quarter results. In particular, it noted high charge-offs for bad car loans as the primary drag on profits.
Car-Mart released its results after market close Thursday and held a conference call Friday with analysts.
The Bentonville-based buy-here, pay-here used-car dealer reported net income of $4.6 million, or 52 cents per share, for the company's first quarter for fiscal 2016, compared with $7.3 million, or 79 cents per share, for the first quarter of 2015. The average estimates of six analysts projected earnings of 86 cents per share for the quarter ending July 31.
The company posted revenue of $143 million compared with $127 million for the first quarter of fiscal 2015, beating the average revenue estimate of three analysts, which stood at $142.3 million. Revenue at car lots open at least a year increased 8.9 percent for the quarter.
Shares closed at $37.91 Friday, down $3.77, or just over 9 percent, in trading on the Nasdaq exchange. Shares have traded as low as $37.50 and as high as $57.55 over the past year.
During the conference call, Chief Executive Officer Hank Henderson said operational inconsistencies among dealerships -- including issues with a new GPS-tracking technology, collections practices and new software -- were key contributors to the poor showing. Provisions for credit losses were 27.7 percent for the first quarter, compared with 23.6 percent for the same quarter a year ago.
"We are disappointed but not deterred," Henderson said during the conference call.
Car-Mart sold 12,244 vehicles during its first quarter, up 6.6 percent from 11,482 for the same quarter a year ago. The company averaged 28.9 vehicle sales per dealership per month during the quarter, up from 28.4 a year earlier.
The average selling price rose $501 to $9,965, up 5.3 percent from the first quarter of fiscal 2015.
Car-Mart operates 143 dealerships in 10 states and is developing eight new locations, including its first in Iowa.
SundayMonday Business on 08/22/2015