ROGERS, Ark. - America's Car-Mart, Inc. (NASDAQ:CRMT), a major player in the used car market, announced its intention to offer $65 million of common stock in a public offering, with the possibility of an additional $9.75 million subject to market conditions. The company is known for its focus on the "Integrated Auto Sales and Finance" segment and operates across 12 states in the U.S.
The proceeds from this offering are earmarked for the repayment of debts on Car-Mart's revolving credit facilities, with any surplus to be directed towards general corporate purposes. Jefferies LLC is the sole bookrunner managing the offering.
The offering is being made under a shelf registration statement previously filed and declared effective by the Securities and Exchange Commission (SEC). Details about the offering, including a preliminary prospectus supplement and the accompanying prospectus, will be filed with the SEC and made available through Jefferies LLC.
This announcement comes as part of Car-Mart's broader strategy to manage its capital structure and support its growth initiatives. The company has emphasized its commitment to superior customer service and building strong personal relationships with its customers, operating primarily in smaller cities in the South-Central United States.
It is important to note that the press release contains forward-looking statements regarding the company's future plans and performance, which are subject to various risks and uncertainties. These include factors such as general economic conditions, the availability of quality used vehicles, access to credit facilities, competition, technological advances, and regulatory changes.
The proposed stock offering is contingent on market conditions, and there is no guarantee of its completion or the terms upon which it will be finalized. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Investors and interested parties should understand that the information provided is based on a press release statement from America's Car-Mart, Inc. and should consider the inherent risks and uncertainties in such forward-looking statements.
In other recent news, Americas CarMart has adjusted its credit facilities, introducing a new guarantor, Colonial Underwriting, and modifying its fixed charge coverage ratio covenant. The company has also reduced its total permitted borrowings by $20 million, bringing the new limit to $320 million. These changes are a part of Americas CarMart's strategy to maintain a stronger liquidity position.
In financial results, the company reported a 5.2% decrease in revenues for the first quarter of fiscal year 2025, primarily due to a decline in retail units sold. Despite this, the company saw an increase in website traffic and a reduction in average retail price, indicating strong consumer demand.
Americas CarMart has also entered into a strategic partnership with Cox Automotive, aiming to improve affordability and gross profit margins. The company reported a decrease in delinquencies to 3.5% and an expected 72.4% cash-on-cash return for the first quarter. These recent developments reflect Americas CarMart's ongoing efforts to improve operational strategies and navigate the dynamic auto retail market.
InvestingPro Insights
In light of America's Car-Mart, Inc.'s (NASDAQ:CRMT) recent announcement regarding its public offering of common stock, a glance at the company's financial health and market performance provides additional context for investors. According to InvestingPro data, Car-Mart is currently navigating a challenging landscape with a market capitalization of $322.2 million and a negative P/E ratio of -8.96, reflecting investor concerns about profitability.
The company's revenue for the last twelve months as of Q1 2023 stood at approximately $1.37 billion, indicating a slight decline of 3.85% in revenue growth. This contraction is mirrored in the company's quarterly revenue growth, which decreased by 5.21%. Despite these figures, Car-Mart's gross profit margin remains at 14.96%, suggesting some resilience in its operational efficiency.
InvestingPro Tips highlight that Car-Mart operates with a significant debt burden and has been grappling with weak gross profit margins. The stock's price volatility has been notable, and analysts do not anticipate the company will turn a profit this year. These insights are particularly relevant as the company seeks to manage its capital structure through the public stock offering. Furthermore, the company's valuation implies a poor free cash flow yield, and it is trading at a high EBITDA valuation multiple, which could be points of consideration for potential investors.
For those seeking a more comprehensive analysis, there are additional InvestingPro Tips available on the platform, including insights into Car-Mart's liquidity position and dividend policies. In total, there are 11 InvestingPro Tips listed for America's Car-Mart, Inc., which can be explored for a deeper understanding of the company's financial nuances and market outlook. Investors can access these tips by visiting https://www.investing.com/pro/CRMT.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.