Profit at used-car dealer up 14%

Car-Mart to zero in on collections

America’s Car-Mart earned $7.2 million in its fourth quarter, which ended April 30, a 14 percent improvement over the $6.3 million it earned in the same period last year, the Bentonville firm said.

Car-Mart had earnings per share of 81 cents in the fourth quarter, up from 68 cents in the same quarter last year, missing the projection of 83 cents a share from five analysts who follow the company.

For the year, Car-Mart had net income of $29.5 million, up from $21.1 million in fiscal 2014.

Car-Mart, which works in the buy here/pay here segment of the used-car market, closed at $53.02 Friday, down 92 cents in trading on the Nasdaq exchange. In the past year, the stock has traded between $35.40 and $57.55 a share.

Car-Mart’s 12-month service contract, priced at $600, has had the effect of increasing overall selling prices, Jeff Williams, Car-Mart’s chief financial officer, said Friday during a conference call with analysts.

Competition with other dealers is still intense, Wil-

liams said.

“We will continue to focus our efforts on customer retention, earning repeat business and offering good quality vehicles that are affordable,” Williams said.

Car-Mart has more room for improvement in collections, said Hank Henderson, the company’s chief executive officer. Collections were 16.7 percent of average finance receivables in the fourth quarter, down from 17.5 percent in the fourth quarter last year.

“With our added focus on sales, we may have not stayed on top of our collections at every location as well as we know we’re capable of,” Henderson said. “We know we have more room for improvement with regards to collections. So that will be our top priority as we begin this new year.”

On Friday’s call, J.R. Bizzell with Stephens Inc. asked Henderson whether he thought resolving the problem with collections would be as simple as refocusing on collections.

“For the most part, it is,” Henderson said. “It is the heart of what we do. One of our strengths is that our sales and collections are so highly integrated at the local level that at times that is also one of our challenges.”

The general managers of the dealerships are compensated on the bottom line of the store, Henderson said.

“They are no more heavily compensated on the sales side than they are on the collections side,” Henderson said. “It’s just an overall matter of focus.”

The firm sold 46,760 vehicles in the 12 months through April, up about 10 percent from 42,551 in the previous year. Its total revenue was $483.3 million for the year, up from $455.5 million in the previous year.

Car-Mart operated 141 dealerships in 10 states at the end of April, up seven from April 2014. It also has seven more location projects in the works, with the next dealership set to open in June in Rolla, Mo.

Car-Mart gained about 5,000 active customers in 2015 and now has more than 64,000 customers, Henderson said.