America’s Car-Mart, Inc. Announces Pricing of Public Offering of Common Stock

Rhea-AI Summary

America's Car-Mart (NASDAQ: CRMT) has announced the pricing of its public offering of 1,700,000 shares of common stock at $43.00 per share. The company has also granted underwriters a 30-day option to purchase up to an additional 255,000 shares at the same price. The offering is expected to close around September 20, 2024. Car-Mart plans to use the net proceeds to repay a portion of its revolving credit facilities, with any remaining funds allocated for general corporate purposes. Jefferies is acting as the sole bookrunning manager for the offering. The securities are being offered through a shelf registration statement previously filed with the SEC.

Positive

• Successful pricing of public offering at $43.00 per share
• Potential to raise additional capital through underwriters' option
• Proceeds to be used for debt repayment, potentially improving financial position
• Offering backed by a reputable financial institution (Jefferies)

Negative

• Dilution of existing shareholders' ownership
• Increased share count may negatively impact earnings per share
• Potential downward pressure on stock price due to increased supply of shares

Insights

Financial Analyst

America's Car-Mart's public offering of 1,700,000 shares at $43.00 per share is a significant move to raise capital. This offering could potentially generate $73.1 million in gross proceeds, or up to $84.065 million if the underwriters' option is fully exercised. The company's intention to use the proceeds to repay revolving credit facilities suggests a strategic focus on debt reduction and balance sheet improvement.

However, this offering will lead to dilution for existing shareholders, potentially by 12.7% (or 14.6% if the option is exercised). The pricing at $43.00 per share represents a discount to the current market price, which may put short-term pressure on the stock. Investors should weigh the benefits of improved financial flexibility against the dilutive impact and consider how effectively management deploys the capital raised.

Market Research Analyst

The timing of this offering is intriguing, given the current market conditions in the used car industry. With interest rates elevated and consumer spending under pressure, Car-Mart's move to strengthen its balance sheet could be seen as a defensive strategy. The used car market has been volatile, with prices normalizing after pandemic-induced spikes. This capital raise may position Car-Mart to capitalize on potential market opportunities or weather economic uncertainties.

Investors should monitor how this offering impacts Car-Mart's competitive position in the "Integrated Auto Sales and Finance" segment. The company's focus on this niche market, combined with improved financial flexibility, could enhance its ability to serve credit-challenged customers. However, success will depend on management's execution in a challenging economic environment for subprime auto lending.

ROGERS, Ark., Sept. 19, 2024 (GLOBE NEWSWIRE) -- America’s Car-Mart, Inc. (NASDAQ: CRMT) (“Car-Mart” or the “Company”), a large publicly held automotive retailer focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market, announced today the pricing of its underwritten public offering of 1,700,000 shares of its common stock at a price to the public of $43.00 per share. In addition, Car-Mart has granted the underwriters a 30-day option to purchase up to an additional 255,000 shares of common stock at the public offering price, less underwriting discounts and commissions. The offering is expected to close on or about September 20, 2024, subject to satisfaction of customary closing conditions.

Car-Mart intends to use the net proceeds from the proposed offering to repay a portion of the balance on its revolving credit facilities. Any remaining proceeds will be used for general corporate purposes.

Jefferies is acting as the sole bookrunning manager for the offering.

The securities described above are being offered by Car-Mart pursuant to a shelf registration statement on Form S-3 (File No. 333-273034) previously filed with and declared effective by the Securities and Exchange Commission (“SEC”). A preliminary prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC. When available, copies of the preliminary prospectus supplement and the accompanying prospectus relating to the offering may be obtained from: Jefferies LLC, Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022, by telephone at (877) 821-7388 or by email at prospectus_department@jefferies.com. Electronic copies of the preliminary prospectus supplement and accompanying prospectus will also be available on the website of the SEC at http://www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About America’s Car-Mart, Inc.

The Company operates automotive dealerships in 12 states and is one of the largest publicly held automotive retailers in the United States focused exclusively on the “Integrated Auto Sales and Finance” segment of the used car market. The Company emphasizes superior customer service and the building of strong personal relationships with its customers. The Company operates its dealerships primarily in smaller cities throughout the South-Central United States, selling quality used vehicles and providing financing for substantially all of its customers. For more information about Car-Mart, including investor presentations, please visit www.car-mart.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address the Company’s future objectives, plans and goals, as well as the Company’s intent, beliefs and current expectations and projections regarding future operating performance and can generally be identified by words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “project,” “foresee,” and other similar words or phrases. Specific events addressed by these forward-looking statements may include, but are not limited to:

• operational infrastructure investments;
• same dealership sales and revenue growth;
• customer growth and engagement;
• gross profit percentages;
• gross profit per retail unit sold;
• business acquisitions;
• inventory acquisition, reconditioning, transportation, and remarketing;
• technological investments and initiatives;
• future revenue growth;
• receivables growth as related to revenue growth;
• new dealership openings;
• performance of new dealerships;
• interest rates;
• future credit losses;
• the Company’s collection results, including but not limited to collections during income tax refund periods;
• cash-on-cash returns from the collection of contracts originated by the Company
• seasonality; and
• the Company’s business, operating and growth strategies and expectations.

These forward-looking statements are based on the Company’s current estimates and assumptions and involve various risks and uncertainties. As a result, you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements. Factors that may cause actual results to differ materially from the Company’s projections include, but are not limited to:

• general economic conditions in the markets in which the Company operates, including but not limited to fluctuations in gas prices, grocery prices and employment levels and inflationary pressure on operating costs;
• the availability of quality used vehicles at prices that will be affordable to our customers, including the impacts of changes in new vehicle production and sales;
• the ability to leverage the Cox Automotive services agreement to perform reconditioning and improve vehicle quality to reduce the average vehicle cost, improve gross margins, reduce credit loss, and enhance cash flow;
• the availability of credit facilities and access to capital through securitization financings or other sources on terms acceptable to us, and any increase in the cost of capital, to support the Company’s business;
• the Company’s ability to underwrite and collect its contracts effectively, including whether anticipated benefits from the Company’s recently implemented loan origination system are achieved as expected or at all;
• competition;
• dependence on existing management;
• ability to attract, develop, and retain qualified general managers;
• changes in consumer finance laws or regulations, including but not limited to rules and regulations that have recently been enacted or could be enacted by federal and state governments;
• the ability to keep pace with technological advances and changes in consumer behavior affecting our business;
• security breaches, cyber-attacks, or fraudulent activity;
• the ability to identify and obtain favorable locations for new or relocated dealerships at reasonable cost;
• the ability to successfully identify, complete and integrate new acquisitions;
• the occurrence and impact of any adverse weather events or other natural disasters affecting the Company’s dealerships or customers; and
• potential business and economic disruptions and uncertainty that may result from any future public health crises and any efforts to mitigate the financial impact and health risks associated with such developments.
  

Additionally, risks and uncertainties that may affect future results include those described from time to time in the Company’s SEC filings. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

Contact:

Vickie Judy, CFO
479-464-9944
Investor_relations@car-mart.com

FAQ

How many shares is America's Car-Mart (CRMT) offering in its public offering?

America's Car-Mart (CRMT) is offering 1,700,000 shares of common stock in its public offering, with an additional option for underwriters to purchase up to 255,000 shares.

What is the price per share for America's Car-Mart's (CRMT) public offering?

The price per share for America's Car-Mart's (CRMT) public offering is $43.00.

When is the expected closing date for America's Car-Mart's (CRMT) public offering?

The public offering for America's Car-Mart (CRMT) is expected to close on or about September 20, 2024.

How does America's Car-Mart (CRMT) plan to use the proceeds from the public offering?

America's Car-Mart (CRMT) intends to use the net proceeds from the offering to repay a portion of the balance on its revolving credit facilities, with any remaining funds used for general corporate purposes.