For Immediate Release
AMERICA’S CAR-MART REPORTS SECOND QUARTER EARNINGS OF $.29 PER SHARE ON REVENUE INCREASE OF 14.6%
Bentonville, Arkansas (December 4, 2007) – America’s Car-Mart, Inc. (NASDAQ NMS: CRMT) today announced its operating results for the second fiscal quarter ended October 31, 2007.
Highlights of second quarter operating results:
| o | Net income of $3.5 million or $.29 per diluted share vs. a net loss of $1.9 million or ($.16) per diluted share for the second fiscal quarter of 2007 |
| o | Overall revenue growth of 14.6% with same store revenue growth of 12.3% |
| o | Retail unit sales increase of 7.8% |
| o | Provision for credit losses of 22.9% of sales vs. 37.0% for the second fiscal quarter of 2007 |
| o | Accounts over 30 days past due down to 3.8% at October 31, 2007 from 5.4% at October 31, 2006 |
| o | Finance receivables increase of $9.1 million or 5.1% for the quarter to $190 million |
| o | Debt to equity of 28.8% and debt to finance receivables of 19.7% |
For the three months ended October 31, 2007, revenues increased 14.6% to $68.2 million compared with $59.5 million in the same period of the prior year. Income for the quarter was $3.5 million or $.29 per diluted share, versus a net loss of $1.9 million, or ($.16) per diluted share in the same period last year. The prior year loss included the effect of a non-cash increase in the allowance for loan losses at October 31, 2006 of $5.3 million (pre-tax). Excluding this charge to increase the allowance for loan losses, the Company earned profits of $1.4 million ($.12 per diluted share) during the quarter ended October 31, 2006. Retail unit sales were up 7.8%, with 6,914 vehicles in the current quarter, compared to 6,413 in the same period last year. Same store revenue increased 12.3% during the quarter. Finance Receivables grew by $9.1 million during the quarter or 5.1% to $190 million as the result of higher vehicle sales and sales of our new Payment Protection Plan product. The allowance for credit losses is 22% of Finance Receivables principal balance at October 31, 2007 and 2006.
Highlights of six month operating results:
| o | Net income of $5.6 million or $.47 per diluted share vs. $2.2 million or $.19 per diluted share for the prior year |
| o | Overall revenue growth of 4.3% with same store revenue growth of 1.6% |
| o | Retail unit sales decrease of 3.9% |
| o | Provision for credit losses of 22.4% compared to 29.5% for the prior year |
| o | Finance receivables increase of $11.4 million or 6.4% to $190 million |
| o | $3.5 million decrease in debt during the six month period |
| o | Cash flows from operations improved by $6.7 million to $3.2 million compared to ($3.5) million for the prior year |
For the six months ended October 31, 2007, revenues increased 4.3% to $127.0 million, compared with $121.7 million in the same period of the prior fiscal year. Income for the first six months of FY 2008 was $5.6 million ($.47 per diluted share) compared to $2.2 million ($.19 per diluted share) for the same period in the prior year. Excluding the effect of the non-cash increase in the allowance for loan losses at October 31, 2006, the Company earned profits of $5.5 million ($.46 per diluted share) during the prior year period. Retail unit sales decreased 3.9% to 12,761 vehicles in the current period, compared to 13,280 vehicles in the same period last year.
“Vehicle sales were strong during the quarter as we are beginning to realize the benefits of our increased advertising efforts and numerous sales initiatives. Also, the market is recognizing our value proposition and our associates are excited and proud to be offering a superior value to our core market. We expect sales volumes to continue to be solid into the future. Additionally, we continue to focus significant efforts on our underwriting initiatives to enhance the quality of our Finance Receivable portfolio,” said T. J. (“Skip”) Falgout, III, Chairman of the Board of America’s Car-Mart. “We are pleased with the improvement in our credit losses and the results of our collections efforts for the second quarter, but we have further progress to make in this vitally important area of our business. However, the positive results in the first two quarters of FY 2008 are good indicators that we are on the right track. Also, our recent initiatives related to vehicle acquisition and improved car quality are having a positive effect on both sales and collections.”
“Credit losses, collections and current receivables all showed improvement. Our average percentage of Finance Receivables current was 83.3% for the quarter compared to 78.2% for the prior period,” stated William H. (“Hank”) Henderson, Chief Executive Officer and President of America’s Car Mart. “In addition, our net charge-offs as a percentage of average Finance Receivables was 6.7% compared with 7.8% for the prior period. We continue to be disciplined in requiring higher down payments at certain dealerships and shorter terms with our loans to ensure we set the customer up for success. In fact, our average down payment percentage is 7%, compared to 6% for the prior period. The combination of these efforts has improved our operating cash flows and has allowed us to pay down our debt by $3.5 million during the year, while at the same time we have grown Finance Receivables by $11.4 million.”
“We are beginning to see the positive effects of the numerous initiatives we have instituted in each area of our business, namely purchasing, underwriting, sales, and collections,” stated Mr. Henderson. “These initiatives, along with product offerings for our customers, such as the Payment Protection Plan, allow us to continue to grow our business as we attract new customers and build upon our history of high repeat sales. Car-Mart’s value proposition to our customer is unmatched by our competition. We will continue to build on this solid foundation to support our future growth.”
Conference Call
Management will be holding a conference call on Tuesday, December 4, 2007 at 11:00 a.m. Eastern time to discuss first quarter results. A live audio of the conference call will be accessible to the public by calling (800) 309-9490. International callers dial (706) 634-0104. Callers should dial in approximately 10 minutes before the call begins.
A conference call replay will be available one hour following the call for seven days and can be accessed by calling (800) 642-1687 (domestic) or (706) 645-9291 (international), conference call ID #25372956.
About America's Car-Mart
America’s Car-Mart operates 93 automotive dealerships in nine states and is the largest publicly held automotive retailer in the United States focused exclusively on the “Buy Here/Pay Here” segment of the used car market. The Company operates its dealerships primarily in small cities throughout the South-Central United States selling quality used vehicles and providing financing for substantially all of its customers. For more information on America’s Car-Mart, please visit our website at www.car-mart.com.
Included herein are forward-looking statements, including statements with respect to projected revenues and earnings per share amounts. Such forward-looking statements are based upon management’s current knowledge and assumptions. There are many factors that affect management’s view about future revenues and earnings. These factors involve risks and uncertainties that could cause actual results to differ materially from management’s present view. These factors include, without limitation, assumptions relating to unit sales, average selling prices, credit losses, gross margins, operating expenses, collection results, operational initiatives underway and economic conditions, and other risk factors described under “Forward-Looking Statements” of Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2007 and its current and quarterly reports filed with or furnished to the Securities and Exchange Commission. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company does not undertake any obligation to update forward-looking statements.
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| Contacts: | T. J. (“Skip”) Falgout, III, Chairman at (972) 717-3423 |
| | Jeffrey A. Williams, CFO at (479) 464-9944 |
