ROGERS, Ark. - America's Car-Mart, Inc. (NASDAQ:CRMT) reported a challenging third quarter, with earnings and revenue falling short of Wall Street expectations.
The company's loss per share was significantly wider than anticipated, coming in at -$1.34 compared to the analyst consensus of -$0.66. Revenue for the quarter also declined, totaling $299.6 million, a decrease of 7.9% from the same quarter last year and well below the expected $345.12 million.
The decrease in revenue was primarily attributed to a drop in retail units sold, which fell by 19.6% compared to the previous year. Despite an increase in interest income and a rise in the average retail sales price, these factors were not enough to offset the overall decline in sales volume.
The company cited a challenging macro environment impacting its customers and noted that sales volumes did not meet expectations, despite the team's efforts.
Gross profit per unit showed a positive trend, with a 10.5% increase year-over-year, thanks to improved operational execution and pricing discipline. However, this was tempered by headwinds related to lower prices in the wholesale market and an increased volume of wholesale vehicles due to higher credit losses in the previous quarter.
Net charge-offs as a percentage of average finance receivables worsened, rising to 6.8% from 5.9% in the same quarter of the previous year. The company did manage to reduce its allowance for credit loss slightly, which had a positive impact on basic earnings per share.
Doug Campbell, President and CEO of America's Car-Mart, expressed determination to navigate the current challenges, stating, "While sales volumes fell short of our expectations during the quarter, they are not reflective of the efforts put forth by the team. I am encouraged by our continued progress during the quarter in gross profit, credit losses, and initial results generated by our loan origination system. We have implemented several initiatives to improve sales during the fourth quarter."
Looking ahead, the company has entered into a strategic partnership with Cox Automotive and completed a securitization during the quarter, which may positively impact future operations. Additionally, the company continues to focus on expense management and improving the efficiency of the business.
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