America’s Car-Mart, Inc. Announces Proposed $65 Million Underwritten Public Offering Of Common Stock

Rhea-AI Summary

America's Car-Mart (NASDAQ: CRMT), a major automotive retailer specializing in the 'Integrated Auto Sales and Finance' segment of the used car market, has announced plans for a $65 million underwritten public offering of common stock. The company also intends to grant underwriters a 30-day option to purchase up to an additional $9.75 million of shares. Jefferies is acting as the sole bookrunning manager for the offering.

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. The offering is subject to market conditions, and there's no guarantee of its completion or final terms. The securities will be offered through a shelf registration statement previously filed with the SEC.

Positive

• Potential to raise up to $74.75 million in capital through the offering
• Opportunity to reduce debt by repaying revolving credit facilities
• Strengthening of the company's financial position

Negative

• Potential dilution of existing shareholders' ownership
• Increased share count may negatively impact earnings per share
• Market reaction to the offering could lead to short-term stock price volatility

Insights

Financial Analyst

America's Car-Mart's proposed $65 million public offering signals a strategic move to strengthen its financial position. By using the proceeds to repay revolving credit facilities, the company aims to reduce its debt burden and improve its balance sheet. This could lead to lower interest expenses and increased financial flexibility in the long term.

However, investors should note that this offering will dilute existing shareholders' ownership. The additional $9.75 million option for underwriters could further increase dilution. The market's reaction will likely depend on how effectively the company utilizes this capital to drive growth and improve profitability in the competitive used car market.

The timing of this offering amidst current market conditions suggests Car-Mart may be capitalizing on investor interest in the auto retail sector. Investors should closely monitor the pricing and demand for these shares as indicators of market sentiment towards the company and its growth prospects.

Market Research Analyst

This offering by America's Car-Mart reflects broader trends in the used car market. With the ongoing chip shortage affecting new car production, demand for used vehicles has remained strong. Car-Mart's focus on the "Integrated Auto Sales and Finance" segment positions it uniquely in this market, potentially attracting investor interest.

The company's decision to raise capital through equity rather than debt suggests confidence in its equity valuation and a desire to maintain financial flexibility in a potentially volatile market. This move could be seen as preparation for expansion or acquisition opportunities in the fragmented used car market.

Investors should consider how this capital raise compares to competitors' strategies and whether it will enhance Car-Mart's competitive position in the evolving automotive retail landscape, particularly as digital sales channels and alternative ownership models gain traction.

ROGERS, Ark., Sept. 18, 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 that it intends to offer and sell, subject to market and other conditions, $65,000,000 of shares of common stock in an underwritten public offering. In addition, Car-Mart intends to grant the underwriters a 30-day option to purchase up to an additional $9,750,000 of shares of common stock. There can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

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

What is the size of America's Car-Mart's (CRMT) proposed public offering?

America's Car-Mart (CRMT) has announced a proposed $65 million underwritten public offering of common stock, with an additional option for underwriters to purchase up to $9.75 million in shares.

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

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

Who is the bookrunning manager for America's Car-Mart's (CRMT) stock offering?

Jefferies is acting as the sole bookrunning manager for America's Car-Mart's (CRMT) underwritten public offering of common stock.

When will America's Car-Mart (CRMT) file the prospectus for the stock offering?

America's Car-Mart (CRMT) will file a preliminary prospectus supplement and accompanying prospectus relating to the offering with the SEC. The exact filing date is not specified in the press release.