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Jul 31, 2023
Car-Mart Q1 2024 Earnings Report
America’s Car-Mart reported strong revenue growth, but net income was negatively impacted by credit results.
Key Takeaways
America's Car-Mart reported a 2.4% increase in unit volumes and a 4.1% rise in average retail sales price, contributing to strong revenue growth. However, net income was negatively impacted by an increase in the provision for loan losses due to post-stimulus normalization of charge-offs and increased contract terms.
Unit volumes increased by 2.4% driven by online credit applications.
Average retail sales price rose by 4.1% to $18,799.
Gross margin improved, driven by expertise in purchasing and disposition business practices.
Net charge-offs as a percentage of average finance receivables were 5.8%.
Car-Mart
Car-Mart
Forward Guidance
The company expects improvements from the Loan Origination System and Microsoft Dynamics 365 ERP, and anticipates benefits from increased online credit applications and improved customer service.
Positive Outlook
- Anticipates benefits from the Loan Origination System (LOS).
- Expects the LOS to increase the funnel of potential customers and retention of existing customers.
- LOS will enable more selective customer financing and improved deal structures.
- Implementation of Microsoft Dynamics 365 ERP is progressing.
- Expects the ERP to improve back-office accounting, inventory management, and customer service.
Challenges Ahead
- Higher loan losses related to post-stimulus normalization of charge-offs.
- Additional provisioning resulting from increased contract term.
- Higher average interest rate for the portfolio.
- Credit fundamentals will normalize.
- Increased inflationary pressures.