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Jan 31, 2023
Car-Mart Q3 2023 Earnings Report
America’s Car-Mart reported earnings for Q3 2023, which reflected market share gains in a challenging used vehicle market and strategic investments for long-term growth.
Key Takeaways
America's Car-Mart reported a 2.7% increase in unit volumes due to market share gains, despite severe winter storms impacting sales. The company is focused on supporting customers and communities, with strategic reorganization and investments aimed at improving efficiencies and long-term profitability.
Unit volumes increased by 2.7% due to market share gains.
Gross profit totaled $92.5 million, with unit gross profits at $6,373.
Net charge-offs as a percent of average finance receivables were 5.9%.
Interest income increased by 31.0% to $51.1 million due to higher average finance receivables and interest rate increases.
Car-Mart
Car-Mart
Forward Guidance
America's Car-Mart anticipates improvements in volume productivity and gross margins, leveraging SG&A, and strategic acquisitions to generate historical levels of return on equity over the next three to five years. They expect capital expenditures to be approximately $15-20 million for fiscal year 2024.
Positive Outlook
- Expects to generate returns on equity at historical levels by increasing volume productivity.
- Anticipates improving gross margins as a function of procurement initiatives.
- Plans to leverage SG&A.
- Pursuing acquisitions of well-operated dealerships.
- Expects dealerships to be selling an average of 40-50 vehicles per month and eventually supporting an average of 1,000 or more active customers within the next three years.
Challenges Ahead
- Short-term operating conditions are difficult.
- Severe winter storms disrupted operations in January, negatively impacting sales volumes by an estimated 300-400 units.
- Many potential customers are sitting on the sidelines based on affordability.
- Higher vehicle prices have resulted in longer contract term lengths.
- Interest expense increased to $9.8 million due to higher borrowing levels and increased interest rates.