America's Car Mart (NASDAQ: CRMT) reported Q3 EPS of $2.85, $0.30 better than the analyst estimate of $2.55. Revenue for the quarter came in at $228.26 million versus the consensus estimate of $216.87 million.

“Our results reflect the power of our business model which, at its core, is based on giving our customers ‘peace of mind’ by ‘keeping them on the road.’ What we do is unique, and our customers recognize and appreciate our passionate approach in providing an outstanding customer experience before, during and after the vehicle sale to help them succeed. As we move forward, we believe more consumers will see the benefits of being part of the Car-Mart Family,” said Jeff Williams, President and CEO. “We are proud of our work, but we believe we are in the early stages of our transformation from a collections company to more of a sales company that is very good at collections. When you combine our community-based bricks and mortar structure with a growing digital presence, for which we are investing significant resources, we are very optimistic about our place in the world and the advantages we will continue to leverage as we move forward.”

“During the quarter, we saw a strong increase in the top line with solid volume productivity improvement. Even with our increasing investments in our infrastructure to support a much larger customer base, we saw nice leveraging of our cost structure. Also, our credit results once again showed significant improvement over prior year quarters,” added Mr. Williams. “We will continue to make significant investments in key areas as we fulfill our vision – to be America’s best auto sales and finance company in the eyes of our associates and customers while improving the communities we serve. We believe that we are seeing some initial benefits from the various initiatives we have been working on and we will continue to push to get better. Our on-going investments will not only keep us relevant but will put us in the position of being a market leader focused on recruiting, training, and retaining great associates, inventory procurement and delivering great customer experience.”

“Foundational to these efforts is a significant investment and upgrade to our information technology platform. We have recently begun the implementation of Microsoft Dynamics 365, a full Enterprise Resource Planning product. An important part of this project will be the Customer Relationship Management module which will allow us to better manage the entire customer relationship journey and to exceed expectations from the consumer viewpoint with heavy emphasis on digital,” added Mr. Williams. “We will continue to increase our investment in the corporate Customer Experience team as we build out an infrastructure to support a larger customer base at the highest levels.”

“We believe we have an obligation to serve significantly more customers over time as customers’ lives and the communities we serve are better because we are there. We are so proud of our team and excited for the opportunities we have in front of us,” said Mr. Williams. “Our balance sheet, which is strong as the result of years of disciplined focus on cash flows, gives us a distinct competitive advantage as we move to pick up market share in areas we already serve, add new dealership locations and look for additional acquisition opportunities. Lastly, we have over 2,000 associates, over 85,000 customers and thousands of vendor partners, and together we have a responsibility to positively contribute to making the world a better place. We take that responsibility very seriously.”

“Revenue increases were driven by a 16.5% increase in the average retail sales price and a 5.6% increase in units sold. We were pleased to see our productivity, the average retail units sold per store per month, improve by 2.0% for the quarter. Productivity increased although we continue to see a tight supply of vehicles at lower price points. We are working diligently in our procurement efforts to provide a quality assortment of vehicles to meet consumer demand,” said Vickie Judy, Chief Financial Officer. “Net charge-offs for the quarter, as a percentage of average finance receivables, were down to 4.9% compared to 5.9% in the prior year quarter, as we continue to work to keep customers on the road and in their vehicles. Although credit results have improved over the nine months since the pandemic began, there is still much uncertainty and as such we have left the allowance at 26.5% of finance receivables, net of deferred revenue. Our investments in our associates and the business are paying off as we had some nice leveraging in our selling, general and administrative expenses decreasing to 16.7% of sales compared to 18.6% in the prior year quarter.”

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