CarMax Reports First Quarter Results

June 21, 2019

RICHMOND, Va.--(BUSINESS WIRE)-- CarMax, Inc. (NYSE:KMX), the nation’s largest retailer of used cars, today reported record net income and earnings per share for the first quarter ended May 31, 2019.

Highlights:

  • Net sales and operating revenues increased 12.0% to $5.37 billion.
  • Used unit sales in comparable stores increased 9.5%.
  • Total used unit sales rose 13.0%.
  • Total wholesale unit sales increased 6.6%.
  • CarMax Auto Finance (CAF) income increased 0.3% to $116.0 million.
  • Net earnings increased 11.8% to $266.7 million and net earnings per diluted share increased 19.5% to $1.59.
  • Omni-channel experience is on track to be available to the majority of customers by the end of fiscal 2020.

CEO Commentary:

“CarMax had an outstanding first quarter,” said Bill Nash, president and chief executive officer. “I’m proud of our team and its commitment to delivering an exceptional experience to both our retail and wholesale customers, which drove our strong growth in sales, gross profit and earnings.

“In addition, we’re pleased with the continued strong response to our omni-channel roll-out in Atlanta,” stated Nash. “In early June, we successfully launched this capability in most of our Florida markets, along with opening our first customer experience center in Atlanta. We believe that no other company is in a better position to deliver this omni-channel experience efficiently and profitably. This is truly an unmatched experience that we are confident is the future of car buying.”

First Quarter Business Performance Review:

Sales . Total used vehicle unit sales increased 13.0%, including a 9.5% increase in comparable store used unit sales compared with the prior year’s first quarter. The comparable store sales performance reflected strong conversion and solid growth in web traffic. We believe several factors contributed to our comparable store sales growth, including: (i) our solid execution supported by the effect of our initiatives to enhance the customer experience; (ii) a robust lending environment, including increased conversion by our Tier 2 and Tier 3 third-party finance providers; and (iii) a shift in the timing of some customer tax refunds into the first quarter of our fiscal year.

Total wholesale vehicle unit sales increased 6.6% compared with the first quarter of fiscal 2019, largely driven by an increase in our appraisal buy rate and the growth in our store base.

Other sales and revenues increased 6.1% compared with the first quarter of fiscal 2019. Extended protection plan (EPP) net revenues rose 11.2%, reflecting the combined effects of our strong used unit growth, increased product penetration rates and provider cost decreases, partially offset by an increase in cancellation reserves. In addition, last year’s first quarter EPP revenues included $4.0 million of revenue in connection with the new revenue recognition accounting standard adopted in that quarter. Net third-party finance fees declined $1.0 million, reflecting shifts in our sales mix by finance channel.

Gross Profit . Total gross profit increased 12.3% versus last year’s first quarter to $742.4 million. Used vehicle gross profit rose 13.1%, reflecting the 13.0% increase in total used unit sales. Used vehicle gross profit per unit remained stable at $2,215. Wholesale vehicle gross profit increased 9.8% versus the prior year’s quarter, driven by the 6.6% increase in wholesale unit sales and an increase in wholesale vehicle gross profit per unit to $1,043 compared with $1,012 in last year’s first quarter. Other gross profit increased 11.6%, largely reflecting the improvement in EPP revenues.

SG&A . Compared with the first quarter of fiscal 2019, SG&A expenses increased 11.7% to $489.7 million. Factors contributing to the year-over-year change included the 10% increase in our store base since the beginning of last year’s first quarter (representing the addition of 18 stores); higher variable costs associated with our strong sales growth; a $13.9 million increase in stock-based compensation expense; and continued spending to advance our technology platforms and support our core and omni-channel strategic initiatives. SG&A per used unit was $2,183 in the current quarter, down $26 year-over-year. The growth in stock-based compensation expense increased SG&A per used unit by $46.

CarMax Auto Finance .(1) Compared with last year’s first quarter, CAF income increased 0.3% to $116.0 million, reflecting a 7.9% increase in average managed receivables, largely offset by the effects of a higher loan loss provision. The provision for loan losses increased to $38.2 million from $30.9 million in the prior year quarter, reflecting both the growth in average managed receivables and an increase in the provision as a percentage of managed receivables. While net losses were modestly above expectations, they remained well within our long-term targeted performance range. The allowance for loan losses grew to 1.14% of ending managed receivables as of May 31, 2019, compared with 1.10% as of February 28, 2019, and 1.13% as of May 31, 2018. The total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was 5.6% of average managed receivables compared with 5.7% in last year’s first quarter.

Store Openings . During the first quarter of fiscal 2020, we opened three stores -- two in new markets (Waco, Texas and McAllen, Texas) and one in an existing market (Memphis, Tennessee).

Share Repurchase Activity . We repurchased 3.0 million shares of common stock for $204.8 million pursuant to our share repurchase program during the first quarter of fiscal 2020. As of May 31, 2019, we had $1.91 billion remaining available for repurchase under the outstanding authorization.

Accounting for Leases . Effective March 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842, the new accounting standard for leases. Assets and liabilities were increased by approximately $450 million as a result of recording operating leases on our consolidated balance sheet. However, this adoption did not materially change our results of operations.

 

(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 May 31

(In millions)

 

2019

 

 

 

2018

 

 

Change

Used vehicle sales

$

4,540.7

 

 

$

4,021.0

 

 

12.9

%

Wholesale vehicle sales

 

662.4

 

 

 

617.7

 

 

7.3

%

Other sales and revenues:

 

 

 

 

 

Extended protection plan revenues

 

111.3

 

 

 

100.1

 

 

11.2

%

Third-party finance fees, net

 

(15.5

)

 

 

(14.5

)

 

(7.0

)%

Other

 

67.4

 

 

 

68.3

 

 

(1.4

)%

Total other sales and revenues

 

163.2

 

 

 

153.9

 

 

6.1

%

Total net sales and operating revenues

$

5,366.3

 

 

$

4,792.6

 

 

12.0

%

 

Unit Sales

 

 

Three Months Ended May 31

 

 

2019

 

 

 

2018

 

 

Change

Used vehicles

 

224,268

 

 

 

198,398

 

 

13.0

%

Wholesale vehicles

 

120,768

 

 

 

113,335

 

 

6.6

%

 

Average Selling Prices

 

 

Three Months Ended May 31

 

 

2019

 

 

 

2018

 

 

Change

Used vehicles

$

20,050

 

 

$

20,067

 

 

(0.1

)%

Wholesale vehicles

$

5,213

 

 

$

5,205

 

 

0.2

%

Vehicle Sales Changes

 

 

Three Months Ended May 31

 

2019

2018

Used vehicle units

13.0

%

1.6

%

Used vehicle revenues

12.9

%

4.6

%

 

 

 

Wholesale vehicle units

6.6

%

9.6

%

Wholesale vehicle revenues

7.3

%

11.6

%

Comparable Store Used Vehicle Sales Changes (1)

 

 

Three Months Ended May 31

 

2019

2018

Used vehicle units

9.5

%

(2.3

)%

Used vehicle revenues

9.4

%

0.6

%

(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 May 31

 

2019

 

2018

CAF (2)

46.2

%

 

48.3

%

Tier 2 (3)

20.3

%

 

17.0

%

Tier 3 (4)

11.5

%

 

10.9

%

Other (5)

22.0

%

 

23.8

%

Total

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 May 31

(In millions)

2019

% (1)

2018

% (1)

Net sales and operating revenues

$

5,366.3

100.0

$

4,792.6

100.0

Gross profit

$

742.4

13.8

$

661.3

13.8

CarMax Auto Finance income

$

116.0

2.2

$

115.6

2.4

Selling, general, and administrative expenses

$

489.7

9.1

$

438.2

9.1

Interest expense

$

17.8

0.3

$

18.1

0.4

Earnings before income taxes

$

351.3

6.5

$

319.7

6.7

Net earnings

$

266.7

5.0

$

238.7

5.0

(1)

Calculated as a percentage of net sales and operating revenues.

Gross Profit

 

 

Three Months Ended May 31

(In millions)

2019

 

2018

 

Change

Used vehicle gross profit

$

496.8

 

$

439.4

 

13.1

%

Wholesale vehicle gross profit

126.0

 

114.7

 

9.8

%

Other gross profit

119.6

 

107.2

 

11.6

%

Total

$

742.4

 

$

661.3

 

12.3

%

Gross Profit per Unit

 

 

Three Months Ended May 31

 

2019

2018

 

$ per unit(1)

%(2)

$ per unit(1)

%(2)

Used vehicle gross profit

$

2,215

10.9

$

2,215

10.9

Wholesale vehicle gross profit

$

1,043

19.0

$

1,012

18.6

Other gross profit

$

533

73.3

$

540

69.7

Total gross profit

$

3,310

13.8

$

3,333

13.8

(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 May 31

(In millions)

2019

 

2018

 

Change

Compensation and benefits (1)

$

270.9

 

$

241.5

 

12.2

%

Store occupancy costs

96.6

 

87.8

 

10.0

%

Advertising expense

41.9

 

38.5

 

8.8

%

Other overhead costs (2)

80.3

 

70.4

 

14.0

%

Total SG&A expenses

$

489.7

 

$

438.2

 

11.7

%

SG&A per used unit

$

2,183

 

$

2,209

 

$

(26

)

(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 May 31

(In millions)

2019

% (1)

2018

% (1)

Interest margin:

 

 

 

 

Interest and fee income

$

266.2

 

8.4

 

$

232.3

 

7.9

 

Interest expense

(87.4

)

(2.8

)

(63.8

)

(2.2

)

Total interest margin

178.8

 

5.6

 

168.5

 

5.7

 

Provision for loan losses

(38.2

)

(1.2

)

(30.9

)

(1.0

)

Total interest margin after provision for loan losses

140.6

 

4.4

 

137.6

 

4.7

 

Total direct expenses

(24.6

)

(0.8

)

(22.0

)

(0.7

)

CarMax Auto Finance income

$

116.0

 

3.7

 

$

115.6

 

3.9

 

 

 

 

 

 

Total average managed receivables

$

12,707.3

 

 

$

11,775.4

 

 

Net loans originated

$

1,826.3

 

 

$

1,665.5

 

 

Net penetration rate

41.4

%

 

42.9

%

 

Weighted average contract rate

8.9

%

 

8.4

%

 

 

 

 

 

 

Ending allowance for loan losses

$

147.0

 

 

$

134.3

 

 

 

 

 

 

 

Warehouse facility information:

 

 

 

 

Ending funded receivables

$

2,178.0

 

 

$

2,028.0

 

 

Ending unused capacity

$

1,322.0

 

 

$

1,112.0

 

 

(1)

Annualized percentage of total average managed receivables.

Earnings Highlights

 

 

Three Months Ended May 31

(In millions except per share data)

2019

 

2018

 

Change

Net earnings

$

266.7

 

$

238.7

 

11.8

%

Diluted weighted average shares outstanding

167.6

 

179.4

 

(6.6

)%

Net earnings per diluted share

$

1.59

 

$

1.33

 

19.5

%

Planned Store Openings

We currently plan to open the following stores within 12 months from May 31, 2019. During this period, we will be entering four new television markets and expanding our presence in ten existing television markets. Of the 14 stores we plan to open during the 12 months ending May 31, 2020, 5 will be in Metropolitan Statistical Areas having populations of 600,000 or less, which we define as small markets.

 

 

 

 

Location

 

Television Market

 

Metropolitan Statistical Area

 

Planned
Opening Date

Pleasant Hill, California

 

San Francisco/Oakland/San Jose

 

San Francisco/Oakland

 

Q2 Fiscal 2020

Lubbock, Texas

 

Lubbock (1)

 

Lubbock

 

Q2 Fiscal 2020

Scottsdale, Arizona

 

Phoenix

 

Phoenix/Mesa/Scottsdale

 

Q2 Fiscal 2020

Denton, Texas

 

Dallas/Ft. Worth

 

Dallas/Fort Worth/Arlington

 

Q3 Fiscal 2020

Palm Desert, California

 

Palm Springs (1)

 

Riverside/San Bernardino/Ontario

 

Q3 Fiscal 2020

Bogart, Georgia

 

Atlanta

 

Athens/Clarke County

 

Q3 Fiscal 2020

Gulfport, Mississippi

 

Biloxi/Gulfport (1)

 

Gulfport/Biloxi/Pascagoula

 

Q3 Fiscal 2020

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

(1)

Represents new television market as of planned store opening date.

Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period.

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, June 21, 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 9272539. 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 September 23, 2019. A telephone replay also will be available through June 28, 2019, 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 9272539.

Second Quarter Fiscal 2020 Earnings Release Date

We currently plan to release results for the second quarter ending August 31, 2019, on Tuesday, September 24, 2019, 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 early September 2019.

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:

  • Changes in the competitive landscape and/or our failure to successfully adjust to such changes.
  • Events that damage our reputation or harm the perception of the quality of our brand.
  • Changes in general or regional U.S. economic conditions.
  • Our inability to realize the benefits associated with our omni-channel initiatives.
  • Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
  • Our inability to recruit, develop and retain associates and maintain positive associate relations.
  • The loss of key associates from our store, regional or corporate management teams or a significant increase in labor costs.
  • Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer, associate or corporate information.
  • Significant changes in prices of new and used vehicles.
  • Changes in economic conditions or other factors that result in greater credit losses for CAF’s portfolio of auto loan receivables than anticipated.
  • A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.
  • Changes in consumer credit availability provided by our third-party finance providers.
  • Changes in the availability of extended protection plan products from third-party providers.
  • Factors related to the regulatory and legislative environment in which we operate.
  • Factors related to geographic and sales growth, including the inability to effectively manage our growth.
  • The failure of or inability to sufficiently enhance key information systems.
  • The effect of various litigation matters.
  • Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
  • The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
  • The volatility in the market price for our common stock.
  • The performance of the third-party vendors we rely on for key components of our business.
  • Factors related to seasonal fluctuations in our business.
  • The occurrence of severe weather events.
  • Factors related to the geographic concentration of our stores.

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 1-804-747-0422 ext. 4391. 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 May 31

(In thousands except per share data)

2019

% (1)

2018

% (1)

SALES AND OPERATING REVENUES:

 

 

 

 

Used vehicle sales

$

4,540,657

 

84.6

$

4,021,047

83.9

Wholesale vehicle sales

662,449

 

12.3

617,651

12.9

Other sales and revenues

163,212

 

3.0

153,894

3.2

NET SALES AND OPERATING REVENUES

5,366,318

 

100.0

4,792,592

100.0

COST OF SALES:

 

 

 

 

Used vehicle cost of sales

4,043,824

 

75.4

3,581,609

74.7

Wholesale vehicle cost of sales

536,490

 

10.0

502,945

10.5

Other cost of sales

43,621

 

0.8

46,698

1.0

TOTAL COST OF SALES

4,623,935

 

86.2

4,131,252

86.2

GROSS PROFIT

742,383

 

13.8

661,340

13.8

CARMAX AUTO FINANCE INCOME

115,959

 

2.2

115,593

2.4

Selling, general and administrative expenses

489,660

 

9.1

438,234

9.1

Interest expense

17,784

 

0.3

18,052

0.4

Other (income) expense

(359

)

963

Earnings before income taxes

351,257

 

6.5

319,684

6.7

Income tax provision

84,513

 

1.6

81,028

1.7

NET EARNINGS

$

266,744

 

5.0

$

238,656

5.0

WEIGHTED AVERAGE COMMON SHARES:

 

 

 

 

Basic

166,324

 

 

178,139

 

Diluted

167,643

 

 

179,421

 

NET EARNINGS PER SHARE:

 

 

 

 

Basic

$

1.60

 

 

$

1.34

 

Diluted

$

1.59

 

 

$

1.33

 

(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

 

May 31

 

February 28

 

May 31

(In thousands except share data)

2019

 

2019 (1)

 

2018 (1)

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

$

42,197

 

 

$

46,938

 

 

$

76,348

 

Restricted cash from collections on auto loan receivables

479,436

 

 

440,669

 

 

431,407

 

Accounts receivable, net

133,879

 

 

139,850

 

 

101,351

 

Inventory

2,551,143

 

 

2,519,455

 

 

2,260,029

 

Other current assets

77,090

 

 

67,101

 

 

88,359

 

TOTAL CURRENT ASSETS

3,283,745

 

 

3,214,013

 

 

2,957,494

 

Auto loan receivables, net

12,777,257

 

 

12,428,487

 

 

11,842,749

 

Property and equipment, net

2,926,592

 

 

2,828,058

 

 

2,714,495

 

Deferred income taxes

56,708

 

 

61,346

 

 

55,494

 

Operating lease assets

466,380

 

 

 

 

 

Other assets

203,794

 

 

185,963

 

 

185,935

 

TOTAL ASSETS

$

19,714,476

 

 

$

18,717,867

 

 

$

17,756,167

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

$

656,902

 

 

$

593,171

 

 

$

586,337

 

Accrued expenses and other current liabilities

288,136

 

 

318,204

 

 

253,392

 

Accrued income taxes

78,200

 

 

3,784

 

 

55,991

 

Current portion of operating lease liabilities

29,822

 

 

 

 

 

Short-term debt

671

 

 

1,129

 

 

365

 

Current portion of long-term debt

14,362

 

 

10,177

 

 

9,791

 

Current portion of non-recourse notes payable

417,309

 

 

385,044

 

 

382,326

 

TOTAL CURRENT LIABILITIES

1,485,402

 

 

1,311,509

 

 

1,288,202

 

Long-term debt, excluding current portion

1,573,866

 

 

1,649,244

 

 

1,282,361

 

Non-recourse notes payable, excluding current portion

12,453,848

 

 

12,127,290

 

 

11,565,653

 

Operating lease liabilities, excluding current portion

458,788

 

 

 

 

 

Other liabilities

289,817

 

 

272,796

 

 

236,190

 

TOTAL LIABILITIES

16,261,721

 

 

15,360,839

 

 

14,372,406

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Common stock, $0.50 par value; 350,000,000 shares authorized; 165,395,165 and 167,478,924 shares issued and outstanding as of May 31, 2019 and February 28, 2019, respectively

82,697

 

 

83,739

 

 

88,360

 

Capital in excess of par value

1,261,742

 

 

1,237,153

 

 

1,234,612

 

Accumulated other comprehensive loss

(81,206

)

 

(68,010

)

 

(55,045

)

Retained earnings

2,189,522

 

 

2,104,146

 

 

2,115,834

 

TOTAL SHAREHOLDERS’ EQUITY

3,452,755

 

 

3,357,028

 

 

3,383,761

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

19,714,476

 

 

$

18,717,867

 

 

$

17,756,167

 

(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)

 

 

Three Months Ended May 31

(In thousands)

2019

 

2018 (1)

OPERATING ACTIVITIES:

 

 

 

Net Earnings

$

266,744

 

 

$

238,656

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

51,506

 

 

45,343

 

Share-based compensation expense

45,025

 

 

28,998

 

Provision for loan losses

38,152

 

 

30,872

 

Provision for cancellation reserves

25,465

 

 

20,089

 

Deferred income tax provision

9,392

 

 

3,602

 

Other

1,736

 

 

1,468

 

Net decrease (increase) in:

 

 

 

Accounts receivable, net

5,971

 

 

31,970

 

Inventory

(31,688

)

 

130,665

 

Other current assets

(10,387

)

 

6,806

 

Auto loan receivables, net

(386,922

)

 

(337,917

)

Other assets

(6,349

)

 

(3,078

)

Net increase (decrease) in:

 

 

 

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

81,886

 

 

81,729

 

Other liabilities

(47,330

)

 

(48,354

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

43,201

 

 

230,849

 

INVESTING ACTIVITIES:

 

 

 

Capital expenditures

(78,970

)

 

(79,720

)

Proceeds from disposal of property and equipment

2

 

 

320

 

Purchases of investments

(7,224

)

 

(5,094

)

Sales of investments

81

 

 

77

 

NET CASH USED IN INVESTING ACTIVITIES

(86,111

)

 

(84,417

)

FINANCING ACTIVITIES:

 

 

 

(Decrease) increase in short-term debt, net

(458

)

 

238

 

Proceeds from issuances of long-term debt

1,715,200

 

 

817,600

 

Payments on long-term debt

(1,809,179

)

 

(1,017,334

)

Cash paid for debt issuance costs

(3,416

)

 

(3,647

)

Payments on finance lease obligations

(745

)

 

(164

)

Issuances of non-recourse notes payable

2,851,000

 

 

2,668,502

 

Payments on non-recourse notes payable

(2,492,809

)

 

(2,343,291

)

Repurchase and retirement of common stock

(211,961

)

 

(211,050

)

Equity issuances

33,251

 

 

9,052

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

80,883

 

 

(80,094

)

Increase in cash, cash equivalents, and restricted cash

37,973

 

 

66,338

 

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

595,377

 

 

554,898

 

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

$

633,350

 

 

$

621,236

 

(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.

 

Investors:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Stacy Frole, Vice President, Investor Relations, (804) 935-4598
Celeste Gunter, Manager, Investor Relations, (804) 935-4597

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

Source: CarMax, Inc.

Contact Information

Investor Relations Department
(804) 747-0422 x 7865
investor_relations@carmax.com

Stacy Frole
Vice President, Investor Relations

Celeste Gunter
Manager, Investor Relations

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