America’s Car-Mart Q2 Sales Beat Expectations, Stock Gains on Strong Margins, Interest Income Growth – America’s Car-Mart (NASDAQ:CRMT)

America’s Car Mart, Inc. CRMT Shares are trading higher on Thursday.

The company reported second-quarter revenue of $347.269 million (down 3.5%), topping the Street view of $344.37 million. Sales fell as less retail space was sold.

The decrease in revenue was partially offset by an increase in interest income and a $13.2 million benefit in service contract revenue.

Adjusted gross margin as a percentage of sales was 36.5% for the quarter, an improvement of 200 basis points from the year-ago quarter and 150 basis points from the prior quarter.

“Our initiatives to improve wholesale results and pricing improvements are reflected in these improved margins,” the company said.

America’s Car-Mart reported a 3.6% increase in interest income to $61.495 million. Total collections grew 3.3%, reaching $173.8 million.

“We improved contract structures, generated higher down payments and benefited from higher collections and gross margins,” said President and CEO Doug Campbell.

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The allowance for loan losses as a percentage of financial receivables, net of deferred income and outstanding casualty claims, decreased from 25.00% as of July 31 to 24.72% as of October 31.

The primary reason for this change was the favorable performance of loans originated under the LOS (enhanced underwriting system) and the resulting improvements in historical loss rates, America’s Car-Mart said.

The company reported an adjusted loss per share of 24 cents in the quarter.

During the quarter, the company increased its financial receivables by $8.5 million, increased inventory by $7.6 million and purchased $1.4 million in fixed assets. Additionally, debt net of cash was reduced by $49.6 million.

“We are closely monitoring expenses as we continue to implement technology upgrades to strengthen our operations,” Campbell added.

CRMT Price promotion: America’s Car-Mart shares are trading 18.25% higher at $54.04 at last check on Thursday.

Read more:
• America’s Car-Mart posts positive sales, joining Method Electronics, Verint Systems, Brown-Forman and other major stocks on Thursday

Photo: Courtesy of Americas Car-Mart