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Jan 31, 2022
Car-Mart Q3 2022 Earnings Report
Reported diluted earnings per share of $2.77 on record revenues of $292 million.
Key Takeaways
America's Car-Mart reported a strong third quarter with revenues up almost 28% to a record $292 million, driven by higher average retail prices and significantly higher interest income. The company's EPS was $2.77. Unit volumes were up slightly, and the average sales price increased by 24.8% to just over $17,000.
Revenues increased by almost 28% to a record $292 million.
Interest income increased by $11 million.
Unit volumes were up slightly for the quarter.
Average sales price was up 24.8% to just over $17,000.
Car-Mart
Car-Mart
Forward Guidance
The company is making investments in key areas to support dealerships with 1,000 or more active customers, with a goal of increasing productivity per dealership from 33 to 40 units sold per month and beyond. They may utilize their balance sheet to participate in the securitization market. They are excited about the future and believe they are making the investments to further enhance the business and they have the balance sheet to grow and take advantage of market opportunities
Positive Outlook
- Collections are promising over longer contract terms.
- The company can earn more absolute dollar profits and potentially earn percentage returns at historical levels.
- Customer demand is strong.
- The overall rate of price increases has begun to slow.
- The company is in a good position to capitalize on volume opportunities if prices decline.
Challenges Ahead
- Higher prices are keeping some customers out of the market for now.
- A potential rapid decline in used car prices is possible.
- Increased sales prices generally cause the gross margin percentage to go down.
- Net charge-offs increased to 5.3% compared to 4.9% in the prior year quarter.
- The stimulus money in December 2020 and January 2021 had some positive impact on both collections and net charge-off metrics in the prior year quarter.