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CarMax Reports Third Quarter Results

December 20, 2019 GMT

RICHMOND, Va.--(BUSINESS WIRE)--Dec 20, 2019--

CarMax, Inc. (NYSE:KMX), the nation’s largest retailer of used cars, today reported results for the third quarter ended November 30, 2019.

Highlights:

CEO Commentary:

“We are pleased with our strong unit sales growth this quarter,” said Bill Nash, president and chief executive officer. “Our retail sales strength was a direct result of our ability to execute well, with solid performance in operations, financing, customer progression, and marketing all contributing to our growth. In addition, we benefited from a favorable underlying used car sales environment.”

Commenting on net earnings and net earnings per diluted share for the third quarter, Nash noted that the year-over-year decrease was largely the result of a significantly higher stock-based compensation expense reflecting an increasing share price during the quarter and a planned increase in third quarter advertising expense related to the company’s omni-channel rollout and the launch of a new national advertising campaign.

“We remain excited about the unique and powerful experience we are providing through omni-channel, which is empowering customers to shop on their terms, whenever and wherever it is most convenient for them,” added Nash. “Our ability to seamlessly integrate our physical and digital experiences while continuing to drive comparable store sales growth, maintain an attractive used vehicle gross profit per unit, and deliver our exceptional customer service is a key differentiator.”

Third Quarter Business Performance Review:

Sales. Total used vehicle unit sales increased 11.0%, including a 7.5% increase in comparable store used unit sales compared with the prior year’s third quarter. The comparable store sales performance reflected strong conversion, which was aided by continued support from our third-party lending partners; solid growth in web traffic; and a favorable consumer response to our consumer initiatives.

Total wholesale vehicle unit sales increased 3.3% compared with the third quarter of fiscal 2019, driven by the growth in our store base, partially offset by lower appraisal traffic.

Other sales and revenues increased 4.1% compared with the third quarter of fiscal 2019. Extended protection plan (EPP) net revenues rose $11.4 million, largely reflecting our strong used unit growth and increased margins.

Gross Profit. Total gross profit increased 7.8% versus last year’s third quarter to $613.6 million. Used vehicle gross profit rose 11.7%, reflecting the increase in total used unit sales and a modest improvement in used vehicle gross profit per unit to $2,145 compared with $2,133 in the prior year’s quarter. Wholesale vehicle gross profit increased 2.0% versus the prior year’s quarter, driven by the increase in wholesale unit sales, partially offset by a decrease in wholesale vehicle gross profit per unit to $937 compared with $949 in last year’s third quarter. Other gross profit declined 0.8%, as the growth in EPP profits was offset by an $11.0 million decline in service department profits. The current quarter’s service profits were adversely affected by a recent increase in our post-sale warranty period from 30 to 90 days, near-term inefficiencies resulting from our recent ramp in technician hiring to support future sales growth, and higher stock-based compensation expense for service operations associates.

SG&A. Compared with the third quarter of fiscal 2019, SG&A expenses increased 18.4% to $484.8 million. Stock-based compensation expense rose $19.0 million, representing roughly one-quarter of the total year-over-year increase in SG&A expense. Other factors contributing to the change included a planned increase in advertising expense, the 10% increase in our store base since the beginning of last year’s third quarter (representing the addition of 19 stores), higher variable costs associated with our strong retail sales growth, and continued spending to advance our technology platforms and support our core and omni-channel strategic initiatives.

The growth in stock-based compensation expense was primarily driven by the 17% increase in our stock price during the current quarter versus the 15% decrease during the prior year quarter. Advertising expense increased $14.5 million due to both our new national advertising campaign launched in October and incremental marketing to support our omni-channel roll out. For the full year, we expect our fiscal 2020 advertising expense per retail unit to be slightly higher than the fiscal 2019 level. SG&A per used unit was $2,518 in the current quarter, up $157 year-over-year. The growth in stock-based compensation expense increased SG&A per used unit by $94.

CarMax Auto Finance. (1) Compared with last year’s third quarter, CAF income increased 3.9% to $114.0 million, reflecting a 7.5% increase in average managed receivables and a modest improvement in the total interest margin percentage, slightly offset by a higher loan loss provision. The provision for loan losses increased to $49.0 million from $40.8 million in the prior year quarter, reflecting both the growth in average managed receivables and a small increase in the provision as a percentage of managed receivables. Net losses remained well within our long-term targeted performance range. The allowance for loan losses was 1.15% of ending managed receivables as of November 30, 2019, comparable with 1.15% as of August 31, 2019, and up versus 1.12% as of November 30, 2018. The total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, improved to 5.7% of average managed receivables from 5.6% in the prior year’s third quarter.

Other Income / Expense. We reported other income of $6.6 million in the third quarter of fiscal 2020 compared with other expense of $2.8 million in the prior year’s third quarter. The increase was primarily due to an unrealized gain on an investment recorded in the current year period.

Share Repurchase Activity. We repurchased 1.3 million shares of common stock for $114.8 million pursuant to our share repurchase program during the third quarter of fiscal 2020. As of November 30, 2019, we had $1.67 billion remaining available for repurchase under the outstanding authorization.

 

 

(1)

Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.

Supplemental Financial Information

Amounts and percentage calculations may not total due to rounding.

Sales Components

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions)

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Used vehicle sales

$

4,028.8

 

 

$

3,547.9

 

 

13.6

%

 

$

12,915.8

 

 

$

11,544.3

 

 

11.9

%

Wholesale vehicle sales

611.0

 

 

603.6

 

 

1.2

%

 

1,951.7

 

 

1,849.2

 

 

5.5

%

Other sales and revenues:

 

 

 

 

 

 

 

 

 

 

 

Extended protection plan revenues

97.0

 

 

85.6

 

 

13.3

%

 

321.7

 

 

284.2

 

 

13.2

%

Third-party finance fees, net

(9.4

)

 

(8.4

)

 

(12.2

)%

 

(35.2

)

 

(32.5

)

 

(8.2

)%

Other

62.6

 

 

67.2

 

 

(6.7

)%

 

203.5

 

 

209.2

 

 

(2.7

)%

Total other sales and revenues

150.2

 

 

144.4

 

 

4.1

%

 

490.0

 

 

460.9

 

 

6.3

%

Total net sales and operating revenues

$

4,790.0

 

 

$

4,295.9

 

 

11.5

%

 

$

15,357.5

 

 

$

13,854.5

 

 

10.8

%

 

Unit Sales

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Used vehicles

192,563

 

173,476

 

11.0

%

 

625,922

 

568,754

 

10.1

%

Wholesale vehicles

113,996

 

110,403

 

3.3

%

 

361,277

 

344,604

 

4.8

%

 

Average Selling Prices

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Used vehicles

$

20,710

 

 

$

20,273

 

 

2.2

%

 

$

20,431

 

 

$

20,109

 

 

1.6

%

Wholesale vehicles

$

5,079

 

 

$

5,214

 

 

(2.6

)%

 

$

5,128

 

 

$

5,120

 

 

0.2

%

 

Vehicle Sales Changes

 

 

Three Months Ended

November 30

 

Nine Months Ended

November 30

 

2019

 

2018

 

2019

 

2018

Used vehicle units

11.0

%

2.3

%

 

10.1

%

3.2

%

Used vehicle revenues

13.6

%

3.6

%

 

11.9

%

5.3

%

 

 

 

 

 

 

Wholesale vehicle units

3.3

%

10.0

%

 

4.8

%

11.4

%

Wholesale vehicle revenues

1.2

%

9.2

%

 

5.5

%

11.8

%

 

Comparable Store Used Vehicle Sales Changes(1)

 

 

Three Months Ended

November 30

 

Nine Months Ended

November 30

 

2019

 

2018

 

2019

 

2018

Used vehicle units

7.5

%

(1.2

)%

 

6.7

%

(0.5

)%

Used vehicle revenues

10.0

%

0.1

%

 

8.5

%

1.5

%

 

(1)

Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods.

 

Used Vehicle Financing Penetration by Channel (Before the Impact of 3-day Payoffs)(1)

 

 

Three Months Ended

November 30

 

Nine Months Ended

November 30

 

2019

 

2018

 

2019

 

2018

CAF (2)

47.2

%

 

49.1

%

 

46.7

%

 

48.9

%

Tier 2 (3)

20.4

%

 

18.3

%

 

20.1

%

 

17.4

%

Tier 3 (4)

9.5

%

 

9.3

%

 

10.3

%

 

9.7

%

Other (5)

22.9

%

 

23.3

%

 

22.9

%

 

24.0

%

Total

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

(1)

Calculated as used vehicle units financed for respective channel as a percentage of total used units sold.

(2)

Includes CAF's Tier 3 loan originations, which represent less than 1% of total used units sold.

(3)

Third-party finance providers who generally pay us a fee or to whom no fee is paid.

(4)

Third-party finance providers to whom we pay a fee.

(5)

Represents customers arranging their own financing and customers that do not require financing.

 

Selected Operating Ratios

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions)

2019

 

%(1)

 

2018

 

%(1)

 

2019

 

%(1)

 

2018

 

%(1)

Net sales and operating revenues

$

4,790.0

 

100.0

 

 

$

4,295.9

 

100.0

 

 

$

15,357.5

 

100.0

 

 

$

13,854.5

 

100.0

 

Gross profit

$

613.6

 

12.8

 

 

$

569.2

 

13.3

 

 

$

2,049.5

 

13.3

 

 

$

1,881.2

 

13.6

 

CarMax Auto Finance income

$

114.0

 

2.4

 

 

$

109.7

 

2.6

 

 

$

344.1

 

2.2

 

 

$

335.0

 

2.4

 

Selling, general, and administrative expenses

$

484.8

 

10.1

 

 

$

409.5

 

9.5

 

 

$

1,455.3

 

9.5

 

 

$

1,301.3

 

9.4

 

Interest expense

$

21.8

 

0.5

 

 

$

18.8

 

0.4

 

 

$

60.7

 

0.4

 

 

$

54.8

 

0.4

 

Earnings before income taxes

$

227.6

 

4.8

 

 

$

247.8

 

5.8

 

 

$

884.4

 

5.8

 

 

$

857.0

 

6.2

 

Net earnings

$

173.2

 

3.6

 

 

$

190.3

 

4.4

 

 

$

673.5

 

4.4

 

 

$

649.9

 

4.7

 

 

(1)

Calculated as a percentage of net sales and operating revenues.

 

Gross Profit

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions)

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Used vehicle gross profit

$

413.1

 

 

$

370.0

 

 

11.7

%

 

$

1,366.3

 

 

$

1,238.4

 

 

10.3

%

Wholesale vehicle gross profit

106.8

 

 

104.7

 

 

2.0

%

 

350.1

 

 

330.5

 

 

5.9

%

Other gross profit

93.7

 

 

94.5

 

 

(0.8

)%

 

333.1

 

 

312.3

 

 

6.6

%

Total

$

613.6

 

 

$

569.2

 

 

7.8

%

 

$

2,049.5

 

 

$

1,881.2

 

 

8.9

%

 

Gross Profit per Unit

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

 

2019

 

2018

 

2019

 

2018

 

$ per unit (1)

 

% (2)

 

$ per unit (1)

 

% (2)

 

$ per unit (1)

 

% (2)

 

$ per unit (1)

 

% (2)

Used vehicle gross profit

$

2,145

 

10.3

 

$

2,133

 

10.4

 

 

$

2,183

 

10.6

 

$

2,177

 

10.7

 

Wholesale vehicle gross profit

$

937

 

17.5

 

$

949

 

17.4

 

 

$

969

 

17.9

 

$

959

 

17.9

 

Other gross profit

$

487

 

62.4

 

$

545

 

65.5

 

 

$

532

 

68.0

 

$

549

 

67.8

 

Total gross profit

$

3,187

 

12.8

 

$

3,281

 

13.3

 

 

$

3,274

 

13.3

 

$

3,308

 

13.6

 

 

(1)

Calculated as category gross profit divided by its respective units sold, except the other and total categories, which are divided by total used units sold.

(2)

Calculated as a percentage of its respective sales or revenue.

 

SG&A Expenses

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions)

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Compensation and benefits:

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits, excluding share-based compensation expense

$

217.2

 

 

$

197.2

 

 

10.1

%

 

$

674.7

 

 

$

627.8

 

 

7.5

%

Share-based compensation expense

26.3

 

 

7.3

 

 

260.3

%

 

89.0

 

 

57.0

 

 

56.1

%

Total compensation and benefits (1)

$

243.5

 

 

$

204.5

 

 

19.1

%

 

$

763.7

 

 

$

684.8

 

 

11.5

%

Store occupancy costs

98.0

 

 

90.3

 

 

8.5

%

 

291.2

 

 

268.9

 

 

8.3

%

Advertising expense

51.8

 

 

37.4

 

 

38.8

%

 

140.6

 

 

122.5

 

 

14.7

%

Other overhead costs (2)

91.5

 

 

77.3

 

 

18.3

%

 

259.8

 

 

225.1

 

 

15.4

%

Total SG&A expenses

$

484.8

 

 

$

409.5

 

 

18.4

%

 

$

1,455.3

 

 

$

1,301.3

 

 

11.8

%

SG&A per used unit

$

2,518

 

 

$

2,361

 

 

$

157

 

 

$

2,325

 

 

$

2,288

 

 

$

37

 

 

(1)

Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.

(2)

Includes IT expenses, insurance, preopening and relocation costs, non-CAF bad debt, travel, charitable contributions and other administrative expenses.

 

Components of CAF Income and Other CAF Information

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions)

2019

 

%(1)

 

2018

 

%(1)

 

2019

 

%(1)

 

2018

 

%(1)

Interest margin:

 

 

 

 

 

 

 

 

 

Interest and fee income

$

278.9

 

8.4

 

$

247.8

 

8.0

 

 

$

820.8

 

8.4

 

$

722.3

 

8.0

 

Interest expense

(90.4

)

(2.7

)

(75.3

)

(2.4

)

 

(268.4

)

(2.8

)

(208.2

)

(2.3

)

Total interest margin

188.5

 

5.7

 

172.5

 

5.6

 

 

552.4

 

5.7

 

514.1

 

5.7

 

Provision for loan losses

(49.0

)

(1.5

)

(40.8

)

(1.3

)

 

(132.7

)

(1.4

)

(111.7

)

(1.2

)

Total interest margin after provision for loan losses

139.5

 

4.2

 

131.7

 

4.3

 

 

419.7

 

4.3

 

402.4

 

4.5

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

 

(0.1

)

 

 

 

 

(0.4

)

 

 

 

 

 

 

 

 

 

 

 

Total direct expenses

(25.5

)

(0.8

)

(21.9

)

(0.7

)

 

(75.6

)

(0.8

)

(67.0

)

(0.7

)

CarMax Auto Finance income

$

114.0

 

3.4

 

$

109.7

 

3.6

 

 

$

344.1

 

3.5

 

$

335.0

 

3.7

 

 

 

 

 

 

 

 

 

 

 

Total average managed receivables

$

13,239.2

 

 

$

12,321.0

 

 

 

$

12,986.2

 

 

$

12,054.6

 

 

Net loans originated

$

1,698.2

 

 

$

1,503.7

 

 

 

$

5,297.1

 

 

$

4,847.6

 

 

Net penetration rate

43.3

%

 

44.1

%

 

 

42.3

%

 

43.6

%

 

Weighted average contract rate

8.1

%

 

8.5

%

 

 

8.5

%

 

8.5

%

 

 

 

 

 

 

 

 

 

 

 

Ending allowance for loan losses

$

153.6

 

 

$

138.3

 

 

 

$

153.6

 

 

$

138.3

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse facility information:

 

 

 

 

 

 

 

 

 

Ending funded receivables

$

2,305.7

 

 

$

1,993.0

 

 

 

$

2,305.7

 

 

$

1,993.0

 

 

Ending unused capacity

$

1,194.3

 

 

$

1,257.0

 

 

 

$

1,194.3

 

 

$

1,257.0

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized percentage of total average managed receivables.

 

Earnings Highlights

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In millions except per share data)

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Net earnings

$

173.2

 

 

$

190.3

 

 

(9.0

)%

 

$

673.5

 

 

$

649.9

 

 

3.6

%

Diluted weighted average shares outstanding

166.5

 

 

175.3

 

 

(5.0

)%

 

167.2

 

 

177.7

 

 

(5.9

)%

Net earnings per diluted share

$

1.04

 

 

$

1.09

 

 

(4.6

)%

 

$

4.03

 

 

$

3.66

 

 

10.1

%

 

Store Openings

During the third quarter of fiscal 2020, we opened four stores -- two in new markets (Palm Springs, California and Gulfport, Mississippi) and two in existing markets (Dallas, Texas and Atlanta, Georgia).

We currently plan to open the following stores during the 12 months ending November 30, 2020. During this period, we will be entering one new television market and expanding our presence in eight existing television markets. Of the 11 stores we plan to open during this period, 3 will be in Metropolitan Statistical Areas having populations of 600,000 or less, which we define as small markets. Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period.

 

 

 

 

Location

 

Television Market

 

Metropolitan Statistical Area

 

Planned Opening Date

Fort Wayne, Indiana

Fort Wayne (1)

Fort Wayne

Q4 Fiscal 2020

Salem, Oregon

Portland

Salem

Q4 Fiscal 2020

Murfreesboro, Tennessee

Nashville

Nashville/Davidson/Murfreesboro

Q4 Fiscal 2020

Easton, Pennsylvania

Philadelphia

Allentown/Bethlehem/Easton

Q1 Fiscal 2021

Bradenton, Florida

Tampa

North Port/Sarasota/Bradenton

Q1 Fiscal 2021

Canoga Park, California

Los Angeles

Los Angeles

Q1 Fiscal 2021

Covington, Louisiana

New Orleans

New Orleans

Q1 Fiscal 2021

West Palm Beach, Florida

Miami/Ft. Lauderdale/W. Palm Beach

Miami/Ft. Lauderdale/W. Palm Beach

Q2 Fiscal 2021

Jacksonville, N. Carolina

Greenville/New Bern/Washington

Jacksonville

Q2 Fiscal 2021

Lakeland, Florida

Tampa

Lakeland/Winter Haven

Q3 Fiscal 2021

Norco, California

Los Angeles

Riverside/San Bernardino/Ontario

Q3 Fiscal 2021

 

(1)

Represents new television market as of planned store opening date.

 

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, December 20, 2019. Domestic investors may access the call at 1-888-298-3261 (international callers dial 1-706-679-7457). The conference I.D. for both domestic and international callers is 1888153. A live webcast of the call will be available on our investor information home page at investors.carmax.com.

A webcast replay of the call will be available at investors.carmax.com through April 1, 2020. A telephone replay also will be available for approximately one week and may be accessed by dialing 1-855-859-2056 (international callers dial 1-404-537-3406). The conference I.D. for both domestic and international callers is 1888153.

Fourth Quarter Fiscal 2020 Earnings Release Date

We currently plan to release results for the fourth quarter and fiscal year ending February 29, 2020, on Thursday, April 2, 2020, before the opening of trading on the New York Stock Exchange. We plan to host a conference call for investors at 9:00 a.m. ET on that date. Information on this conference call will be available on our investor information home page at investors.carmax.com in March 2020.

About CarMax

CarMax, the nation’s largest retailer of used cars, revolutionized the automotive retail industry by driving integrity, honesty and transparency in every interaction. CarMax continues to innovate and is currently rolling out an omni-channel experience, providing customers the option to complete transactions entirely from home, in store, or in a seamless combination of both. CarMax has more than 200 stores nationwide, and during the latest fiscal year sold nearly 750,000 used cars and 450,000 wholesale vehicles at its in-store auctions. With more than 25,000 associates, CarMax is proud to have been recognized for 15 consecutive years as one of the Fortune 100 Best Companies to Work For ®. For more information, visit www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release about our future business plans, operations, opportunities or prospects, including without limitation any statements or factors regarding expected sales, margins, expenses, capital expenditures, debt obligations, tax rates or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “should,” “will” and other similar expressions, whether in the negative or affirmative. Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2019, and our quarterly or current reports as filed with or furnished to the U.S. Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investors.carmax.com. Requests for information may also be made to the Investor Relations Department by email to investor_relations@carmax.com or by calling (804) 747-0422 x7865. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

 

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In thousands except per share data)

2019

 

%(1)

 

2018

 

%(1)

 

2019

 

%(1)

 

2018

 

%(1)

SALES AND OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Used vehicle sales

$

4,028,811

 

84.1

 

$

3,547,925

 

82.6

 

 

$

12,915,763

 

84.1

 

$

11,544,340

 

83.3

 

Wholesale vehicle sales

610,983

 

12.8

 

603,584

 

14.1

 

 

1,951,718

 

12.7

 

1,849,225

 

13.3

 

Other sales and revenues

150,234

 

3.1

 

144,362

 

3.4

 

 

490,016

 

3.2

 

460,933

 

3.3

 

NET SALES AND OPERATING REVENUES

4,790,028

 

100.0

 

4,295,871

 

100.0

 

 

15,357,497

 

100.0

 

13,854,498

 

100.0

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

Used vehicle cost of sales

3,615,704

 

75.5

 

3,177,953

 

74.0

 

 

11,549,445

 

75.2

 

10,305,945

 

74.4

 

Wholesale vehicle cost of sales

504,177

 

10.5

 

498,840

 

11.6

 

 

1,601,573

 

10.4

 

1,518,698

 

11.0

 

Other cost of sales

56,500

 

1.2

 

49,841

 

1.2

 

 

156,996

 

1.0

 

148,642

 

1.1

 

TOTAL COST OF SALES

4,176,381

 

87.2

 

3,726,634

 

86.7

 

 

13,308,014

 

86.7

 

11,973,285

 

86.4

 

GROSS PROFIT

613,647

 

12.8

 

569,237

 

13.3

 

 

2,049,483

 

13.3

 

1,881,213

 

13.6

 

CARMAX AUTO FINANCE INCOME

114,033

 

2.4

 

109,725

 

2.6

 

 

344,123

 

2.2

 

334,985

 

2.4

 

Selling, general and administrative expenses

484,848

 

10.1

 

409,520

 

9.5

 

 

1,455,339

 

9.5

 

1,301,308

 

9.4

 

Interest expense

21,843

 

0.5

 

18,814

 

0.4

 

 

60,700

 

0.4

 

54,816

 

0.4

 

Other (income) expense

(6,570

)

(0.1

)

2,820

 

0.1

 

 

(6,786

)

 

3,097

 

 

Earnings before income taxes

227,559

 

4.8

 

247,808

 

5.8

 

 

884,353

 

5.8

 

856,977

 

6.2

 

Income tax provision

54,403

 

1.1

 

57,497

 

1.3

 

 

210,854

 

1.4

 

207,120

 

1.5

 

NET EARNINGS

$

173,156

 

3.6

 

$

190,311

 

4.4

 

 

$

673,499

 

4.4

 

$

649,857

 

4.7

 

WEIGHTED AVERAGE COMMON SHARES:

 

 

 

 

 

 

 

 

Basic

164,273

 

 

173,816

 

 

 

165,321

 

 

176,088

 

 

Diluted

166,534

 

 

175,321

 

 

 

167,154

 

 

177,656

 

 

NET EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

Basic

$

1.05

 

 

$

1.09

 

 

 

$

4.07

 

 

$

3.69

 

 

Diluted

$

1.04

 

 

$

1.09

 

 

 

$

4.03

 

 

$

3.66

 

 

 

(1)

Percents are calculated as a percentage of net sales and operating revenues and may not total due to rounding.

 
 

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

As of

 

November 30

 

February 28

 

November 30

(In thousands except share data)

2019

 

2019 (1)

 

2018 (1)

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

$

56,583

 

 

$

46,938

 

 

$

35,049

 

Restricted cash from collections on auto loan receivables

458,493

 

 

440,669

 

 

426,613

 

Accounts receivable, net

142,737

 

 

139,850

 

 

111,156

 

Inventory

2,682,574

 

 

2,519,455

 

 

2,424,700

 

Other current assets

109,857

 

 

67,101

 

 

59,901

 

TOTAL CURRENT ASSETS

3,450,244

 

 

3,214,013

 

 

3,057,419

 

Auto loan receivables, net

13,276,654

 

 

12,428,487

 

 

12,299,270

 

Property and equipment, net

3,036,663

 

 

2,828,058

 

 

2,800,051

 

Deferred income taxes

67,162

 

 

61,346

 

 

57,893

 

Operating lease assets

454,708

 

 

 

 

 

Other assets

201,799

 

 

185,963

 

 

182,179

 

TOTAL ASSETS

$

20,487,230

 

 

$

18,717,867

 

 

$

18,396,812

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

$

641,434

 

 

$

593,171

 

 

$

558,324

 

Accrued expenses and other current liabilities

340,475

 

 

318,204

 

 

281,012

 

Accrued income taxes

1,497

 

 

3,784

 

 

1,634

 

Current portion of operating lease liabilities

30,813

 

 

 

 

 

Short-term debt

421

 

 

1,129

 

 

436

 

Current portion of long-term debt

8,541

 

 

10,177

 

 

10,184

 

Current portion of non-recourse notes payable

397,860

 

 

385,044

 

 

373,283

 

TOTAL CURRENT LIABILITIES

1,421,041

 

 

1,311,509

 

 

1,224,873

 

Long-term debt, excluding current portion

1,704,284

 

 

1,649,244

 

 

1,478,503

 

Non-recourse notes payable, excluding current portion

12,899,970

 

 

12,127,290

 

 

11,997,315

 

Operating lease liabilities, excluding current portion

446,302

 

 

 

 

 

Other liabilities

317,580

 

 

272,796

 

 

261,008

 

TOTAL LIABILITIES

16,789,177

 

 

15,360,839

 

 

14,961,699

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Common stock, $0.50 par value; 350,000,000 shares authorized; 163,795,082 and 167,478,924 shares issued and outstanding as of November 30, 2019 and February 28, 2019, respectively

81,897

 

 

83,739

 

 

85,893

 

Capital in excess of par value

1,321,567

 

 

1,237,153

 

 

1,255,966

 

Accumulated other comprehensive loss

(82,007

)

 

(68,010

)

 

(54,137

)

Retained earnings

2,376,596

 

 

2,104,146

 

 

2,147,391

 

TOTAL SHAREHOLDERS’ EQUITY

3,698,053

 

 

3,357,028

 

 

3,435,113

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

20,487,230

 

 

$

18,717,867

 

 

$

18,396,812

 

 

(1)

In connection with our adoption of ASC 842, the new accounting standard for leases, during the first quarter of fiscal 2020, certain prior period amounts have been reclassified to conform to the current period’s presentation. Financing obligations have been reclassified to Current portion of long-term debt and Long-term debt, excluding current portion. Capital lease obligations have been reclassified to Accrued expenses and other current liabilities and Other liabilities.

 
 

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended November 30

(In thousands)

2019

 

2018(1)

OPERATING ACTIVITIES:

 

 

 

Net earnings

$

673,499

 

 

$

649,857

 

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

158,226

 

 

135,609

 

Share-based compensation expense

98,177

 

 

61,403

 

Provision for loan losses

132,650

 

 

111,703

 

Provision for cancellation reserves

65,166

 

 

54,952

 

Deferred income tax (benefit) provision

(744

)

 

909

 

Other

(72

)

 

4,104

 

Net (increase) decrease in:

 

 

 

Accounts receivable, net

(2,887

)

 

22,165

 

Inventory

(163,119

)

 

(34,006

)

Other current assets

(41,869

)

 

40,952

 

Auto loan receivables, net

(980,817

)

 

(875,269

)

Other assets

10,185

 

 

(6,734

)

Net increase (decrease) in:

 

 

 

Accounts payable, accrued expenses and other current liabilities and accrued income taxes

20,604

 

 

22,236

 

Other liabilities

(86,905

)

 

(73,251

)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

(117,906

)

 

114,630

 

INVESTING ACTIVITIES:

 

 

 

Capital expenditures

(249,177

)

 

(243,311

)

Proceeds from disposal of property and equipment

3

 

 

680

 

Purchases of investments

(8,438

)

 

(5,470

)

Sales of investments

1,025

 

 

1,104

 

NET CASH USED IN INVESTING ACTIVITIES

(256,587

)

 

(246,997

)

FINANCING ACTIVITIES:

 

 

 

(Decrease) increase in short-term debt, net

(708

)

 

309

 

Proceeds from issuances of long-term debt

4,707,500

 

 

2,758,000

 

Payments on long-term debt

(4,702,807

)

 

(2,768,419

)

Cash paid for debt issuance costs

(14,849

)

 

(12,329

)

Payments on finance lease obligations

(2,813

)

 

(528

)

Issuances of non-recourse notes payable

8,596,000

 

 

8,183,502

 

Payments on non-recourse notes payable

(7,810,958

)

 

(7,435,128

)

Repurchase and retirement of common stock

(458,587

)

 

(633,170

)

Equity issuances

96,367

 

 

54,580

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

409,145

 

 

146,817

 

Increase in cash, cash equivalents, and restricted cash

34,652

 

 

14,450

 

Cash, cash equivalents, and restricted cash at beginning of year

595,377

 

 

554,898

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

$

630,029

 

 

$

569,348

 

 

(1)

In connection with the changes to the Consolidated Balance Sheets as a result of our adoption of ASC 842, the new accounting standard for leases, during the first quarter of fiscal 2020, payments on financing obligations have been reclassified to payments on long-term debt. Prior period amounts have been reclassified to conform to the current period’s presentation.

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191220005079/en/

CONTACT: Investors:

Stacy Frole, Vice President, Investor Relations

investor_relations@carmax.com, (804) 747-0422 x7865Media:

pr@carmax.com, (855) 887-2915

KEYWORD: VIRGINIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: GENERAL AUTOMOTIVE AFTERMARKET AUTOMOTIVE

SOURCE: CarMax, Inc.

Copyright Business Wire 2019.

PUB: 12/20/2019 06:50 AM/DISC: 12/20/2019 06:50 AM

http://www.businesswire.com/news/home/20191220005079/en