RICHMOND, Va.--(BUSINESS WIRE)--Sep. 22, 2009--
CarMax, Inc. (NYSE:KMX) today reported results for the second quarter
ended August 31, 2009.
-
Net sales and operating revenues increased 13% to $2.08 billion from
$1.84 billion in the second quarter of last year.
-
Comparable store used unit sales increased 8% for the quarter.
-
Total used unit sales rose 10% in the second quarter.
-
Net income increased to $103.0 million, or $0.46 per diluted share,
compared with $14.0 million, or $0.06 per diluted share, earned in the
second quarter of fiscal 2009.
-
In the second quarter of fiscal 2010, net income was increased by
$0.10 per share for CarMax Auto Finance (CAF) favorable
adjustments, primarily related to an increase in the fair value of
retained subordinated bonds.
-
In the second quarter of fiscal 2009, net income was reduced by
$0.08 per share for CAF unfavorable items, including increases in
cumulative net loss assumptions, a reduction in the fair value of
retained subordinated bonds and an increase in the discount rate.
Second Quarter Business Performance
Review
Sales. “We are pleased to
report healthy increases in both used and wholesale vehicle unit sales,”
said
Tom Folliard
, president and chief executive officer. In part, the
sales growth was the result of easier year-over-year comparisons;
however, it also reflected improving customer traffic trends and an
improvement in sales execution. While customer traffic in the second
quarter remained slightly below the prior year level, it has steadily
strengthened throughout the first half of the current fiscal year. The
government’s CARS, or “cash for clunkers,” program resulted in a spike
in traffic in late July and August. Similar to our experience with
previous successful, broad-based new car incentive programs, we believe
this program had a beneficial effect on our sales.
The improvement in sales execution occurred despite a further tightening
of CAF lending standards implemented at the start of this year’s second
quarter. We believe several factors may have contributed to the
improvement in the sales conversion rate, including the effects of our
new sales training initiatives and increased inventory levels, as well
as having a larger percentage of motivated buyers. We estimate the
combined effect of the tightening in CAF lending standards in the second
half of fiscal 2009 and in the current year adversely affected second
quarter comparable store used unit sales growth by several percentage
points. The current quarter tightening, which we expect to significantly
reduce loss rates, was implemented to reduce the credit enhancements
associated with future CAF securitizations.
Our wholesale unit sales increased 5% compared with the second quarter
of fiscal 2009. While our appraisal traffic improved from the first
quarter, it remained significantly below the prior year’s second
quarter. However, we experienced a substantial improvement in our
appraisal buy rate, which more than offset the lower appraisal traffic.
We believe the strong industry wholesale pricing environment and the
resulting increases in our appraisal offers, together with the increased
percentage of motivated buyers, had a favorable effect on the buy rate.
Gross Profit. Total gross
profit increased 23% to $314.5 million from $255.9 million in the second
quarter of fiscal 2009, reflecting the combination of the increase in
unit sales plus an improvement in total gross profit dollars per retail
unit, which increased $363 per unit to $3,116 in the current quarter
from $2,753 in the corresponding prior year quarter.
Used vehicle gross profit increased to $2,120 per unit from $1,870 per
unit in the prior year quarter. The improvement resulted from a
combination of factors, including the continued appreciation in used car
wholesale values since January 2009, an increase in our inventory turns
and the robust sales environment experienced in the quarter.
Wholesale gross profit per unit declined to $826 in the current quarter,
compared with $897 in the second quarter of last year, primarily
reflecting the challenging comparison with the prior year period. Other
gross profit increased to $551 per unit from $385 per unit in the second
quarter of last year. Service department profits grew because our retail
sales growth outpaced fixed service overhead costs, and extended service
plan profits benefited from the successful introduction of a guaranteed
asset protection product.
CarMax Auto Finance. CAF
reported income of $72.1 million compared with a loss of $7.1 million in
last year’s second quarter. In both periods, CAF results were affected
by adjustments related to loans originated in previous fiscal periods.
In the second quarter of fiscal 2010, the adjustments increased CAF
income by $36.2 million and they included:
-
$28.5 million of favorable mark-to-market adjustments on retained
subordinated bonds. As of August 31, 2009, the retained subordinated
bonds had a fair value of $219.7 million.
-
A $5.6 million benefit related to modestly more favorable funding
terms and costs for the $636.0 million of auto loan receivables that
were funded in the warehouse facility at the start of the second
quarter.
-
$2.0 million of other net favorable adjustments, including decreases
in prepayment speed assumptions, partially offset by modest changes in
cumulative net loss rate assumptions on select pools of loans.
In the second quarter of last year, the adjustments reduced CAF income
by $28.2 million, which included $15.7 million related to increases in
cumulative net loss rate assumptions, $7.7 million of mark-to-market
write-downs and $4.1 million resulting from an increase in the discount
rate assumption.
Excluding these adjustments from both periods, CAF income increased to
$36.0 million in the second quarter of fiscal 2010 from $21.0 million in
the second quarter of fiscal 2009. CAF’s gain on loans originated and
sold was $19.9 million, or 4.2% of loans originated and sold, in the
current quarter versus $9.4 million, or 1.8%, in the prior year quarter.
Compared with the prior year period, the increase in the gain as a
percentage of loans originated and sold reflected an increase in the
spread between the rates charged customers and CAF’s funding cost,
primarily due to lower benchmark rates. In addition, the increase in the
credit quality of the loans originated in the quarter resulted in
reduced credit enhancement requirements for these loans.
SG&A. Selling, general
and administrative expenses declined to $218.1 million in the second
quarter of fiscal 2010 from $225.1 million in the prior year’s quarter,
despite the increase in unit sales. The decline was primarily the result
of lower levels of advertising spending and decreases in growth-related
costs. The SG&A ratio improved to 10.5% in the current year quarter
compared with 12.2% in the prior year quarter, due to both the reduction
in absolute SG&A spending and the leverage associated with the increases
in used unit sales and average selling prices.
Earnings and Earnings Per Share.
“We are extremely pleased to report a record level of quarterly income,
despite the continued challenging economic environment,” said Folliard.
“We are especially encouraged by the breadth of factors contributing to
the earnings improvement, from the strong sales execution to our
continued achievement of solid gross profit per unit, and from the
improved CAF income to our ability to generate solid SG&A leverage.
While cash for clunkers certainly had a positive effect on traffic and
sales, this was only one of many elements that drove our success this
quarter.”
Credit Facilities. As of
August 31, 2009, we had net debt of $257.2 million, consisting of $351.1
million outstanding under the revolving credit facility and $28.4
million of capitalized leases, net of $122.3 million of cash and cash
equivalents. At that date, based on then-current inventory levels, we
had additional borrowing capacity of $245.6 million under the revolving
credit facility, which expires in December 2011.
During the second quarter of fiscal 2010, we renewed our warehouse
facility, which has a 364-day term. The size of the warehouse facility
was reduced to $1.2 billion from the previous $1.4 billion. As of
August 31, 2009, $575.0 million of auto loan receivables were funded in
the warehouse facility and unused warehouse capacity totaled $625.0
million.
|
Supplemental Financial
Information
|
|
|
|
Sales Components
|
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31 (1)
|
|
Six Months Ended
August 31 (1)
|
|
|
|
2009
|
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
Change
|
|
Used vehicle sales
|
|
$1,706.6
|
|
$1,476.3
|
|
15.6
|
%
|
|
$3,255.9
|
|
$3,293.2
|
|
(1.1
|
)%
|
|
New vehicle sales
|
|
63.2
|
|
77.8
|
|
(18.8
|
)%
|
|
111.8
|
|
159.9
|
|
(30.1
|
)%
|
|
Wholesale vehicle sales
|
|
237.0
|
|
223.3
|
|
6.1
|
%
|
|
408.5
|
|
465.6
|
|
(12.3
|
)%
|
|
Other sales and revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended service plan revenues
|
|
39.9
|
|
31.7
|
|
25.7
|
%
|
|
74.4
|
|
68.3
|
|
9.0
|
%
|
|
Service department sales
|
|
26.8
|
|
26.5
|
|
1.2
|
%
|
|
53.5
|
|
51.0
|
|
4.8
|
%
|
|
Third-party finance fees, net
|
|
3.1
|
|
3.4
|
|
(7.3
|
)%
|
|
6.9
|
|
9.9
|
|
(29.8
|
)%
|
|
Total other sales and revenues
|
|
69.9
|
|
61.7
|
|
13.3
|
%
|
|
134.8
|
|
129.2
|
|
4.4
|
%
|
|
Net sales and operating revenues
|
|
$2,076.7
|
|
$1,839.1
|
|
12.9
|
%
|
|
$3,911.0
|
|
$4,047.8
|
|
(3.4
|
)%
|
(1) Percent calculations and amounts shown are based on
amounts presented on the attached consolidated statements of earnings
and may not sum due to rounding.
|
Retail Vehicle Sales Changes
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Comparable store vehicle sales:
|
|
|
|
|
|
|
|
|
|
Used vehicle units
|
|
8 %
|
|
(17)%
|
|
(6)%
|
|
(8)%
|
|
New vehicle units
|
|
(19)%
|
|
(20)%
|
|
(31)%
|
|
(19)%
|
|
Total units
|
|
7 %
|
|
(17)%
|
|
(7)%
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle dollars
|
|
13 %
|
|
(22)%
|
|
(4)%
|
|
(12)%
|
|
New vehicle dollars
|
|
(19)%
|
|
(21)%
|
|
(30)%
|
|
(20)%
|
|
Total dollars
|
|
12 %
|
|
(22)%
|
|
(6)%
|
|
(13)%
|
|
|
|
|
|
|
|
|
|
|
|
Total vehicle sales:
|
|
|
|
|
|
|
|
|
|
Used vehicle units
|
|
10 %
|
|
(7)%
|
|
(3)%
|
|
2 %
|
|
New vehicle units
|
|
(19)%
|
|
(24)%
|
|
(31)%
|
|
(25)%
|
|
Total units
|
|
9 %
|
|
(7)%
|
|
(4)%
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle dollars
|
|
16 %
|
|
(12)%
|
|
(1)%
|
|
(3)%
|
|
New vehicle dollars
|
|
(19)%
|
|
(26)%
|
|
(30)%
|
|
(26)%
|
|
Total dollars
|
|
14 %
|
|
(13)%
|
|
(2)%
|
|
(4)%
|
|
Retail Vehicle Sales Mix
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Vehicle units:
|
|
|
|
|
|
|
|
|
|
Used vehicles
|
|
97
|
%
|
|
96
|
%
|
|
98
|
%
|
|
97
|
%
|
|
New vehicles
|
|
3
|
|
|
4
|
|
|
2
|
|
|
3
|
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle dollars:
|
|
|
|
|
|
|
|
|
|
Used vehicles
|
|
96
|
%
|
|
95
|
%
|
|
97
|
%
|
|
95
|
%
|
|
New vehicles
|
|
4
|
|
|
5
|
|
|
3
|
|
|
5
|
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Unit Sales
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Used vehicles
|
|
98,260
|
|
89,664
|
|
191,123
|
|
196,411
|
|
New vehicles
|
|
2,689
|
|
3,300
|
|
4,720
|
|
6,815
|
|
Wholesale vehicles
|
|
57,790
|
|
55,124
|
|
100,016
|
|
111,453
|
|
Average Selling Prices
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Used vehicles
|
|
$
|
17,185
|
|
$
|
16,278
|
|
$
|
16,847
|
|
$
|
16,590
|
|
New vehicles
|
|
$
|
23,373
|
|
$
|
23,434
|
|
$
|
23,545
|
|
$
|
23,319
|
|
Wholesale vehicles
|
|
$
|
3,978
|
|
$
|
3,935
|
|
$
|
3,960
|
|
$
|
4,061
|
|
Selected Operating Ratios
|
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
% (1)
|
|
2008
|
|
% (1)
|
|
2009
|
|
% (1)
|
|
2008
|
|
% (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating revenues
|
|
$
|
2,076.7
|
|
100.0
|
%
|
|
$
|
1,839.1
|
|
|
100.0
|
%
|
|
$
|
3,911.0
|
|
100.0
|
%
|
|
$
|
4,047.8
|
|
100.0
|
%
|
|
Gross profit
|
|
$
|
314.5
|
|
15.1
|
%
|
|
$
|
255.9
|
|
|
13.9
|
%
|
|
$
|
590.8
|
|
15.1
|
%
|
|
$
|
538.6
|
|
13.3
|
%
|
|
CarMax Auto Finance income (loss)
|
|
$
|
72.1
|
|
3.5
|
%
|
|
$
|
(7.1
|
)
|
|
(0.4
|
)%
|
|
$
|
50.5
|
|
1.3
|
%
|
|
$
|
2.7
|
|
0.1
|
%
|
|
Selling, general, and administrative expenses
|
|
$
|
218.1
|
|
10.5
|
%
|
|
$
|
225.1
|
|
|
12.2
|
%
|
|
$
|
424.3
|
|
10.9
|
%
|
|
$
|
468.1
|
|
11.6
|
%
|
|
Operating profit (EBIT) (2)
|
|
$
|
168.6
|
|
8.1
|
%
|
|
$
|
23.6
|
|
|
1.3
|
%
|
|
$
|
216.9
|
|
5.5
|
%
|
|
$
|
73.2
|
|
1.8
|
%
|
|
Net earnings
|
|
$
|
103.0
|
|
5.0
|
%
|
|
$
|
14.0
|
|
|
0.8
|
%
|
|
$
|
131.7
|
|
3.4
|
%
|
|
$
|
43.6
|
|
1.1
|
%
|
(1) Calculated as the ratio of the applicable amount to net
sales and operating revenues.
(2) Operating profit equals earnings before interest and
income taxes.
|
Gross Profit
|
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
Change
|
|
Used vehicle gross profit
|
|
$208.3
|
|
$167.7
|
|
24.3
|
%
|
|
$394.1
|
|
$353.6
|
|
11.5
|
%
|
|
New vehicle gross profit
|
|
2.9
|
|
3.0
|
|
(4.9
|
)%
|
|
3.9
|
|
6.0
|
|
(34.7
|
)%
|
|
Wholesale vehicle gross profit
|
|
47.7
|
|
49.5
|
|
(3.5
|
)%
|
|
85.9
|
|
93.6
|
|
(8.3
|
)%
|
|
Other gross profit
|
|
55.6
|
|
35.8
|
|
55.4
|
%
|
|
106.8
|
|
85.3
|
|
25.2
|
%
|
|
Total gross profit
|
|
$314.5
|
|
$255.9
|
|
22.9
|
%
|
|
$590.8
|
|
$538.6
|
|
9.7
|
%
|
|
Gross Profit per Unit
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
$/unit (1)
|
|
% (2)
|
|
$/unit (1)
|
|
% (2)
|
|
$/unit (1)
|
|
% (2)
|
|
$/unit (1)
|
|
% (2)
|
|
Used vehicle gross profit
|
|
$
|
2,120
|
|
12.2%
|
|
$
|
1,870
|
|
11.4%
|
|
$
|
2,062
|
|
12.1%
|
|
$
|
1,800
|
|
10.7%
|
|
New vehicle gross profit
|
|
$
|
1,060
|
|
4.5%
|
|
$
|
909
|
|
3.9%
|
|
$
|
833
|
|
3.5%
|
|
$
|
883
|
|
3.8%
|
|
Wholesale vehicle gross profit
|
|
$
|
826
|
|
20.1%
|
|
$
|
897
|
|
22.2%
|
|
$
|
859
|
|
21.0%
|
|
$
|
840
|
|
20.1%
|
|
Other gross profit
|
|
$
|
551
|
|
79.6%
|
|
$
|
385
|
|
58.0%
|
|
$
|
545
|
|
79.2%
|
|
$
|
420
|
|
66.1%
|
|
Total gross profit
|
|
$
|
3,116
|
|
15.1%
|
|
$
|
2,753
|
|
13.9%
|
|
$
|
3,017
|
|
15.1%
|
|
$
|
2,650
|
|
13.3%
|
(1) Calculated as category gross profit divided by its
respective units sold, except the other and total categories, which are
divided by total retail units sold.
(2) Calculated as a percentage of its respective sales or
revenue.
|
CAF Income (Loss)
|
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Gain on sales of loans originated and sold
|
|
$
|
19.9
|
|
|
$
|
9.4
|
|
|
$
|
24.7
|
|
|
$
|
23.6
|
|
|
Other gains (losses)
|
|
|
36.2
|
|
|
|
(28.2
|
)
|
|
|
(6.0
|
)
|
|
|
(45.2
|
)
|
|
Total gain (loss)
|
|
|
56.1
|
|
|
|
(18.8
|
)
|
|
|
18.7
|
|
|
|
(21.6
|
)
|
|
Servicing fee income
|
|
|
10.4
|
|
|
|
10.4
|
|
|
|
20.9
|
|
|
|
20.6
|
|
|
Interest income
|
|
|
16.3
|
|
|
|
11.2
|
|
|
|
32.7
|
|
|
|
22.2
|
|
|
Direct CAF expenses
|
|
|
10.7
|
|
|
|
10.0
|
|
|
|
21.8
|
|
|
|
18.6
|
|
|
CarMax Auto Finance income (loss)
|
|
$
|
72.1
|
|
|
$
|
(7.1
|
)
|
|
$
|
50.5
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans originated and sold
|
|
$
|
475.2
|
|
|
$
|
526.9
|
|
|
$
|
935.7
|
|
|
$
|
1,153.4
|
|
|
Gain on sales of loans originated and sold as a percentage of
loans originated and sold
|
|
|
4.2
|
%
|
|
|
1.8
|
%
|
|
|
2.6
|
%
|
|
|
2.0
|
%
|
|
Earnings Highlights
|
|
|
|
|
|
|
|
(In millions except per share data)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
|
2009
|
|
2008
|
|
Change
|
|
2009
|
|
2008
|
|
Change
|
|
Net earnings
|
|
$
|
103.0
|
|
$
|
14.0
|
|
635.2
|
%
|
|
$
|
131.7
|
|
$
|
43.6
|
|
202.4
|
%
|
|
Diluted weighted average shares outstanding
|
|
|
221.3
|
|
|
220.0
|
|
0.6
|
%
|
|
|
220.1
|
|
|
220.2
|
|
(0.1
|
)%
|
|
Net earnings per share
|
|
$
|
0.46
|
|
$
|
0.06
|
|
666.7
|
%
|
|
$
|
0.59
|
|
$
|
0.20
|
|
195.0
|
%
|
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today,
September 22, 2009. 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 66399029.
A live webcast of the call will be available on our investor information
home page at investor.carmax.com and at www.streetevents.com.
A webcast replay of the call will be available at investor.carmax.com
beginning at approximately 1:00 p.m. ET on September 22, 2009, through
December 17, 2009. A telephone replay also will be available through
September 29, 2009, and may be accessed by dialing 1-800-642-1687
(international callers dial 1-706-645-9291). The conference I.D. for
both domestic and international callers is 66399029.
Third Quarter Fiscal 2010 Earnings
Release Date
We currently plan to release third quarter sales and earnings on Friday,
December 18, 2009, before the opening of the New York Stock Exchange. We
will 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 investor.carmax.com in early December.
About CarMax
CarMax, a Fortune 500 company, and one of the Fortune
2009 “100 Best Companies to Work For,” is the nation’s largest
retailer of used cars. Headquartered in Richmond, Va., CarMax currently
operates 100 used car superstores in 46 markets. The CarMax consumer
offer is structured around four customer benefits: low, no-haggle
prices; a broad selection; high quality vehicles; and customer-friendly
service. During the twelve months ended February 28, 2009, the company
retailed 345,465 used cars and sold 194,081 wholesale vehicles at our
in-store auctions. For more information, access the CarMax website at 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 or earnings, are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. 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 general or regional U.S. economic conditions.
-
Changes in the availability or cost of capital and working capital
financing.
-
Changes in consumer credit availability related to our third-party
financing providers.
-
Changes in the competitive landscape within our industry.
-
Significant changes in retail prices for used or new vehicles.
-
A reduction in the availability of or access to sources of inventory.
-
Factors related to the regulatory and legislative environment in which
we operate.
-
The loss of key employees from our store, regional or corporate
management teams.
-
The failure of key information systems.
-
The effect of new accounting requirements or changes to U.S. generally
accepted accounting principles.
-
Security breaches or other events that result in the misappropriation,
loss or other unauthorized disclosure of confidential customer
information.
-
The effect of various litigation matters.
-
Adverse conditions affecting one or more domestic-based automotive
manufacturers.
-
The occurrence of severe weather events.
-
Factors related to the seasonal fluctuations in our business.
-
Factors related to the geographic concentration of our superstores.
-
Our inability to acquire or lease suitable real estate at favorable
terms.
-
The occurrence of certain other material events.
For more details on factors that could affect expectations, see our
Annual Report on Form 10-K for the fiscal year ended February 28, 2009,
and our quarterly or current reports as filed with or furnished to the
Securities and Exchange Commission. Our filings are publicly available
on our investor information home page at investor.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. 4287. We disclaim any intent or
obligation to update our forward-looking statements.
|
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS
(UNAUDITED)
(In thousands except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
|
|
|
2009
|
|
%(1)
|
|
2008
|
|
%(1)
|
|
2009
|
|
%(1)
|
|
2008
|
|
%(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle sales
|
|
$1,706,616
|
|
82.2
|
|
$1,476,317
|
|
|
80.3
|
|
|
$ 3,255,891
|
|
83.3
|
|
$ 3,293,165
|
|
81.4
|
|
|
New vehicle sales
|
|
63,206
|
|
3.0
|
|
77,818
|
|
|
4.2
|
|
|
111,759
|
|
2.9
|
|
159,888
|
|
3.9
|
|
|
Wholesale vehicle sales
|
|
236,991
|
|
11.4
|
|
223,269
|
|
|
12.1
|
|
|
408,487
|
|
10.4
|
|
465,596
|
|
11.5
|
|
|
Other sales and revenues
|
|
69,858
|
|
3.4
|
|
61,650
|
|
|
3.4
|
|
|
134,834
|
|
3.4
|
|
129,168
|
|
3.2
|
|
Net sales and operating revenues
|
|
2,076,671
|
|
100.0
|
|
1,839,054
|
|
|
100.0
|
|
|
3,910,971
|
|
100.0
|
|
4,047,817
|
|
100.0
|
|
Cost of sales
|
|
1,762,122
|
|
84.9
|
|
1,583,141
|
|
|
86.1
|
|
|
3,320,185
|
|
84.9
|
|
3,509,190
|
|
86.7
|
|
Gross profit
|
|
314,549
|
|
15.1
|
|
255,913
|
|
|
13.9
|
|
|
590,786
|
|
15.1
|
|
538,627
|
|
13.3
|
|
CarMax Auto Finance income (loss)
|
|
72,130
|
|
3.5
|
|
(7,141
|
)
|
|
(0.4
|
)
|
|
50,494
|
|
1.3
|
|
2,678
|
|
0.1
|
|
Selling, general and administrative expenses
|
|
218,122
|
|
10.5
|
|
225,148
|
|
|
12.2
|
|
|
424,347
|
|
10.9
|
|
468,132
|
|
11.6
|
|
Interest expense
|
|
1,348
|
|
0.1
|
|
1,477
|
|
|
0.1
|
|
|
2,414
|
|
0.1
|
|
3,535
|
|
0.1
|
|
Interest income
|
|
190
|
|
--
|
|
354
|
|
|
--
|
|
|
373
|
|
--
|
|
618
|
|
--
|
|
Earnings before income taxes
|
|
167,399
|
|
8.1
|
|
22,501
|
|
|
1.2
|
|
|
214,892
|
|
5.5
|
|
70,256
|
|
1.7
|
|
Provision for income taxes
|
|
64,428
|
|
3.1
|
|
8,495
|
|
|
0.5
|
|
|
83,173
|
|
2.1
|
|
26,692
|
|
0.7
|
|
Net earnings
|
|
$ 102,971
|
|
5.0
|
|
$ 14,006
|
|
|
0.8
|
|
|
$ 131,719
|
|
3.4
|
|
$ 43,564
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
218,747
|
|
|
|
217,600
|
|
|
|
|
218,376
|
|
|
|
217,347
|
|
|
|
|
Diluted
|
|
221,334
|
|
|
|
219,956
|
|
|
|
|
220,087
|
|
|
|
220,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 0.47
|
|
|
|
$ 0.06
|
|
|
|
|
$ 0.60
|
|
|
|
$ 0.20
|
|
|
|
|
Diluted
|
|
$ 0.46
|
|
|
|
$ 0.06
|
|
|
|
|
$ 0.59
|
|
|
|
$ 0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Percents are calculated as a percentage of
net sales and operating revenues and may not equal totals due to
rounding.
|
|
|
|
|
|
|
|
|
|
|
|
(2) Reflects the implementation of FASB Staff
Position Emerging Issues Task Force 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities” and the resulting restatement of the
diluted share count for the three months and the six months ended
August 31, 2008.
|
|
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
August 31
2009
|
|
August 31
2008
|
|
February 28
2009
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
122,347
|
|
$
|
10,917
|
|
$
|
140,597
|
|
Accounts receivable, net
|
|
|
79,110
|
|
|
59,149
|
|
|
75,876
|
|
Auto loan receivables held for sale
|
|
|
25,679
|
|
|
31,037
|
|
|
9,748
|
|
Retained interest in securitized receivables
|
|
|
486,120
|
|
|
311,027
|
|
|
348,262
|
|
Inventory
|
|
|
790,081
|
|
|
736,131
|
|
|
703,157
|
|
Deferred income taxes
|
|
|
8,052
|
|
|
--
|
|
|
--
|
|
Prepaid expenses and other current assets
|
|
|
10,193
|
|
|
15,050
|
|
|
10,112
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,521,582
|
|
|
1,163,311
|
|
|
1,287,752
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
916,162
|
|
|
960,524
|
|
|
938,259
|
|
Deferred income taxes
|
|
|
100,699
|
|
|
89,420
|
|
|
103,163
|
|
Other assets
|
|
|
48,857
|
|
|
50,897
|
|
|
50,013
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,587,300
|
|
$
|
2,264,152
|
|
$
|
2,379,187
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
224,835
|
|
$
|
228,578
|
|
$
|
237,312
|
|
Accrued expenses and other current liabilities
|
|
|
92,925
|
|
|
62,038
|
|
|
55,793
|
|
Accrued income taxes
|
|
|
36,183
|
|
|
23,380
|
|
|
26,551
|
|
Deferred income taxes
|
|
|
--
|
|
|
17,468
|
|
|
12,129
|
|
Short-term debt
|
|
|
1,937
|
|
|
12,600
|
|
|
878
|
|
Current portion of long-term debt
|
|
|
199,855
|
|
|
48,229
|
|
|
158,107
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
555,735
|
|
|
392,293
|
|
|
490,770
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current portion
|
|
|
177,716
|
|
|
176,864
|
|
|
178,062
|
|
Deferred revenue and other liabilities
|
|
|
109,622
|
|
|
134,049
|
|
|
117,288
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
843,073
|
|
|
703,206
|
|
|
786,120
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
1,744,227
|
|
|
1,560,946
|
|
|
1,593,067
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
2,587,300
|
|
$
|
2,264,152
|
|
$
|
2,379,187
|
|
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
UNAUDITED
(In thousands)
|
|
|
|
|
|
|
|
Six Months Ended August 31
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
Net earnings
|
|
$
|
131,719
|
|
|
$
|
43,564
|
|
|
Adjustments to reconcile net earnings to net cash (used in)
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
29,579
|
|
|
|
27,494
|
|
|
Share-based compensation expense
|
|
|
22,654
|
|
|
|
19,095
|
|
|
Loss on disposition of assets
|
|
|
276
|
|
|
|
1,547
|
|
|
Deferred income tax benefit
|
|
|
(17,711
|
)
|
|
|
(22,777
|
)
|
|
Net (increase) decrease in:
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(3,234
|
)
|
|
|
14,079
|
|
|
Auto loan receivables held for sale, net
|
|
|
(15,931
|
)
|
|
|
(26,053
|
)
|
|
Retained interest in securitized receivables
|
|
|
(137,858
|
)
|
|
|
(40,266
|
)
|
|
Inventory
|
|
|
(86,924
|
)
|
|
|
239,646
|
|
|
Prepaid expenses and other current assets
|
|
|
(81
|
)
|
|
|
4,152
|
|
|
Other assets
|
|
|
1,152
|
|
|
|
(215
|
)
|
|
Net increase (decrease) in:
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities
and accrued income taxes
|
|
|
35,365
|
|
|
|
(48,356
|
)
|
|
Deferred revenue and other liabilities
|
|
|
(10,295
|
)
|
|
|
6,991
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(51,289
|
)
|
|
|
218,901
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
Capital expenditures
|
|
|
(14,328
|
)
|
|
|
(137,519
|
)
|
|
Proceeds from sales of assets
|
|
|
50
|
|
|
|
1,254
|
|
|
Insurance proceeds related to damaged property
|
|
|
447
|
|
|
|
--
|
|
|
Purchases of money market securities, net
|
|
|
(2,196
|
)
|
|
|
(4,009
|
)
|
|
Sales of investments available-for-sale
|
|
|
2,200
|
|
|
|
--
|
|
|
Net cash used in investing activities
|
|
|
(13,827
|
)
|
|
|
(140,274
|
)
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
Increase (decrease) in short-term debt, net
|
|
|
1,059
|
|
|
|
(8,417
|
)
|
|
Issuances of long-term debt
|
|
|
386,000
|
|
|
|
278,200
|
|
|
Payments on long-term debt
|
|
|
(344,598
|
)
|
|
|
(359,921
|
)
|
|
Equity issuances, net
|
|
|
3,819
|
|
|
|
9,100
|
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
586
|
|
|
|
363
|
|
|
Net cash provided by (used in) financing activities
|
|
|
46,866
|
|
|
|
(80,675
|
)
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(18,250
|
)
|
|
|
(2,048
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
|
140,597
|
|
|
|
12,965
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
122,347
|
|
|
$
|
10,917
|
|
Source: CarMax, Inc.
CarMax, Inc.
Investors and Financial Media:
Katharine Kenny,
804-935-4591
Vice President, Investor Relations
OR
Celeste
Gunter, 804-935-4597
Manager, Investor Relations
OR
General
Media:
Laura Donahue, 804-747-0422, ext. 4434
Vice President,
Public Affairs
OR
Trina Lee, 804-747-0422, ext. 4197
Director,
Public Relations