RICHMOND, Va., Sep 22, 2011 (BUSINESS WIRE) --
CarMax, Inc. (NYSE:KMX) today reported results for the second quarter
ended August 31, 2011.
-
Net sales and operating revenues increased 11% to $2.59 billion from
$2.34 billion in the second quarter of last year.
-
Comparable store used unit sales declined 2% for the quarter.
-
Total used unit sales decreased 1% in the second quarter.
-
Total wholesale unit sales increased 23% in the second quarter.
-
Net income increased to $111.9 million, or $0.49 per diluted share,
compared with $107.9 million, or $0.48 per diluted share, earned in
the second quarter of fiscal 2011.
Second Quarter Business Performance Review
"We are pleased with our ability to increase earnings despite the 2%
decline in comparable store used unit sales," said Tom Folliard,
president and chief executive officer. "Our diversified business model
enabled us to deliver the second highest quarterly earnings in our
history, as the strength of our wholesale and finance operations offset
the effect of softer used unit comps. We remain focused on continuing to
expand our store base and drive execution and efficiencies."
Sales. We believe the 2% decline in used unit comps primarily
reflected the recent economic slowdown and further reductions in
consumer confidence levels. Traffic and conversion trends softened
compared with recent quarters. Average selling prices continued to
climb, as the tight supply of late-model used vehicles increased our
acquisition costs compared with the prior year.
Wholesale unit sales increased 23% compared with the second quarter of
fiscal 2011. Similar to the last several quarters, our wholesale volumes
benefited from a strong increase in appraisal traffic and a continued
strong buy rate.
Other sales and revenues fell 5% compared with the prior year's second
quarter. This decline was largely driven by the decrease in third-party
finance fees, which resulted from the decision by CarMax Auto Finance
(CAF) earlier this year to retain an increased portion of the loans that
third-party providers had been purchasing. This decision should result
in increased CAF income over time.
Gross Profit. Total gross profit
increased to $354.3 million from $349.1 million in the second quarter of
fiscal 2011, primarily reflecting the strong results of our wholesale
auctions.
Used vehicle gross profit was $224.0 million, similar to the $228.1
million in the prior year period. The decline resulted from the
combination of a slight moderation in gross profit per unit, to $2,178
from $2,205 in the prior year quarter, and the 1% decline in total used
unit volumes.
Wholesale gross profit increased 33% to $78.8 million compared with
$59.3 million in the second quarter of the prior year, driven by the 23%
increase in wholesale unit sales and an improvement in gross profit per
unit to $929 from $858 in the prior year quarter. The strength of our
wholesale profit per unit reflected the continued strong demand and
pricing at our auctions.
CarMax Auto Finance. CAF income
increased 21% to $63.8 million compared with $52.6 million in last
year's second quarter primarily driven by higher interest margin, which
rose to $85.6 million from $72.2 million. The increase in interest
margin reflected increases in both average managed receivables and the
spread between the interest charged to consumers and our related funding
costs.
CAF net loans originated increased 27% compared with the prior year
quarter. The increase reflected our previously reported decision to
retain an increasing portion of the loans that third-party providers had
been purchasing, as well as higher average selling prices.
SG&A. Selling, general and
administrative expenses increased 5% to $236.4 million from $225.2
million in the prior year's second quarter. We have continued to fund
initiatives that we believe will support the long-term growth of our
company, including increased advertising and targeted spending to
support future store growth. The SG&A ratio improved to 9.1% from 9.6%
in the prior's year quarter, primarily due to the effect of higher
average selling prices.
Superstore Openings. During the
second quarter of fiscal 2012, we expanded our presence in the San Diego
market, opening a store in Escondido, California.
Credit Facilities. During the
quarter, we entered into a new 5-year, $700 million unsecured revolving
credit facility, replacing the existing secured facility that was
scheduled to expire in December. We also renewed our $800 million
warehouse facility that was scheduled to expire in August. Included in
this renewal was a temporary increase in our total warehouse capacity to
$2.0 billion. The total warehouse capacity will return to $1.6 billion
concurrent with the closing of the sale of $650 million of receivables
in the 2011-2 term securitization.
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Supplemental Financial Information
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Sales Components
|
|
|
|
|
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|
(In millions)
|
|
Three Months Ended
August 31 (1)
|
|
Six Months Ended
August 31 (1)
|
|
|
2011
|
|
2010
|
|
Change
|
|
2011
|
|
2010
|
|
Change
|
|
Used vehicle sales
|
|
$
|
2,015.0
|
|
|
$
|
1,889.6
|
|
|
6.6
|
%
|
|
$
|
4,086.5
|
|
|
$
|
3,721.7
|
|
|
9.8
|
%
|
|
New vehicle sales
|
|
|
46.9
|
|
|
|
51.1
|
|
|
(8.2
|
)%
|
|
|
108.7
|
|
|
|
102.0
|
|
|
6.7
|
%
|
|
Wholesale vehicle sales
|
|
|
457.9
|
|
|
|
329.9
|
|
|
38.8
|
%
|
|
|
935.7
|
|
|
|
646.4
|
|
|
44.8
|
%
|
|
Other sales and revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended service plan revenues
|
|
|
44.9
|
|
|
|
45.5
|
|
|
(1.2
|
)%
|
|
|
91.3
|
|
|
|
86.9
|
|
|
5.1
|
%
|
|
Service department sales
|
|
|
26.0
|
|
|
|
27.1
|
|
|
(3.9
|
)%
|
|
|
51.2
|
|
|
|
53.4
|
|
|
(4.2
|
)%
|
|
Third-party finance fees, net
|
|
|
(2.9
|
)
|
|
|
(1.2
|
)
|
|
(128.5
|
)%
|
|
|
(6.2
|
)
|
|
|
(6.5
|
)
|
|
5.3
|
%
|
|
Total other sales and revenues
|
|
|
68.1
|
|
|
|
71.3
|
|
|
(4.5
|
)%
|
|
|
136.3
|
|
|
|
133.8
|
|
|
1.9
|
%
|
|
Net sales and operating revenues
|
|
$
|
2,587.8
|
|
|
$
|
2,341.9
|
|
|
10.5
|
%
|
|
$
|
5,267.2
|
|
|
$
|
4,603.8
|
|
|
14.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1)
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|
Percent calculations and amounts shown are based on amounts
presented on the attached consolidated statements of earnings and
may not sum due to rounding.
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Retail Vehicle Sales Changes
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|
|
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Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Comparable store vehicle sales:
|
|
|
|
|
|
|
|
|
|
Used vehicle units
|
|
(2
|
)%
|
|
4
|
%
|
|
2
|
%
|
|
6
|
%
|
|
New vehicle units
|
|
(9
|
)%
|
|
(19
|
)%
|
|
3
|
%
|
|
(9
|
)%
|
|
Total units
|
|
(2
|
)%
|
|
3
|
%
|
|
2
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle dollars
|
|
5
|
%
|
|
9
|
%
|
|
8
|
%
|
|
13
|
%
|
|
New vehicle dollars
|
|
1
|
%
|
|
(19
|
)%
|
|
12
|
%
|
|
(9
|
)%
|
|
Total dollars
|
|
5
|
%
|
|
8
|
%
|
|
8
|
%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
Total vehicle sales:
|
|
|
|
|
|
|
|
|
|
Used vehicle units
|
|
(1
|
)%
|
|
5
|
%
|
|
3
|
%
|
|
7
|
%
|
|
New vehicle units
|
|
(17
|
)%
|
|
(19
|
)%
|
|
(2
|
)%
|
|
(9
|
)%
|
|
Total units
|
|
(1
|
)%
|
|
5
|
%
|
|
3
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
Used vehicle dollars
|
|
7
|
%
|
|
11
|
%
|
|
10
|
%
|
|
14
|
%
|
|
New vehicle dollars
|
|
(8
|
)%
|
|
(19
|
)%
|
|
7
|
%
|
|
(9
|
)%
|
|
Total dollars
|
|
6
|
%
|
|
10
|
%
|
|
10
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Sales
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Used vehicles
|
|
102,825
|
|
103,433
|
|
211,336
|
|
204,358
|
|
New vehicles
|
|
1,798
|
|
2,168
|
|
4,233
|
|
4,302
|
|
Wholesale vehicles
|
|
84,885
|
|
69,140
|
|
169,947
|
|
133,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Selling Prices
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Used vehicles
|
|
$
|
19,408
|
|
$
|
18,084
|
|
$
|
19,148
|
|
$
|
18,025
|
|
New vehicles
|
|
$
|
25,927
|
|
$
|
23,418
|
|
$
|
25,559
|
|
$
|
23,569
|
|
Wholesale vehicles
|
|
$
|
5,249
|
|
$
|
4,642
|
|
$
|
5,359
|
|
$
|
4,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Ratios
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
% (1)
|
|
2010
|
|
% (1)
|
|
2011
|
|
% (1)
|
|
2010
|
|
% (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating revenues
|
|
$
|
2,587.8
|
|
100.0
|
%
|
|
$
|
2,341.9
|
|
100.0
|
%
|
|
$
|
5,267.2
|
|
100.0
|
%
|
|
$
|
4,603.8
|
|
100.0
|
%
|
|
Gross profit
|
|
$
|
354.3
|
|
13.7
|
%
|
|
$
|
349.1
|
|
14.9
|
%
|
|
$
|
737.4
|
|
14.0
|
%
|
|
$
|
682.7
|
|
14.8
|
%
|
|
CarMax Auto Finance income
|
|
$
|
63.8
|
|
2.5
|
%
|
|
$
|
52.6
|
|
2.2
|
%
|
|
$
|
133.5
|
|
2.5
|
%
|
|
$
|
110.1
|
|
2.4
|
%
|
|
Selling, general, and administrative expenses
|
|
$
|
236.4
|
|
9.1
|
%
|
|
$
|
225.2
|
|
9.6
|
%
|
|
$
|
484.6
|
|
9.2
|
%
|
|
$
|
451.9
|
|
9.8
|
%
|
|
Earnings before income taxes
|
|
$
|
181.0
|
|
7.0
|
%
|
|
$
|
175.2
|
|
7.5
|
%
|
|
$
|
384.9
|
|
7.3
|
%
|
|
$
|
339.5
|
|
7.4
|
%
|
|
Net earnings
|
|
$
|
111.9
|
|
4.3
|
%
|
|
$
|
107.9
|
|
4.6
|
%
|
|
$
|
238.2
|
|
4.5
|
%
|
|
$
|
209.0
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated as the ratio of the applicable amount to net sales
and operating revenues.
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
(In millions)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
Change
|
|
2011
|
|
2010
|
|
Change
|
|
Used vehicle gross profit
|
|
$
|
224.0
|
|
$
|
228.1
|
|
(1.8
|
)%
|
|
$
|
465.2
|
|
$
|
451.3
|
|
3.1
|
%
|
|
New vehicle gross profit
|
|
|
1.7
|
|
|
1.2
|
|
47.6
|
%
|
|
|
3.1
|
|
|
2.7
|
|
16.6
|
%
|
|
Wholesale vehicle gross profit
|
|
|
78.8
|
|
|
59.3
|
|
32.9
|
%
|
|
|
165.0
|
|
|
120.0
|
|
37.6
|
%
|
|
Other gross profit
|
|
|
49.8
|
|
|
60.6
|
|
(17.8
|
)%
|
|
|
104.0
|
|
|
108.7
|
|
(4.3
|
)%
|
|
Total gross profit
|
|
$
|
354.3
|
|
$
|
349.1
|
|
1.5
|
%
|
|
$
|
737.4
|
|
$
|
682.7
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit per Unit
|
|
|
|
|
|
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
$/unit (1)
|
|
% (2) |
|
$/unit (1)
|
|
% (2) |
|
$/unit (1)
|
|
% (2) |
|
$/unit (1)
|
|
% (2) |
|
Used vehicle gross profit
|
|
$
|
2,178
|
|
|
11.1
|
%
|
|
$
|
2,205
|
|
|
12.1
|
%
|
|
$
|
2,201
|
|
|
11.4
|
%
|
|
$
|
2,208
|
|
|
12.1
|
%
|
|
New vehicle gross profit
|
|
$
|
948
|
|
|
3.6
|
%
|
|
$
|
533
|
|
|
2.3
|
%
|
|
$
|
744
|
|
|
2.9
|
%
|
|
$
|
628
|
|
|
2.6
|
%
|
|
Wholesale vehicle gross profit
|
|
$
|
929
|
|
|
17.2
|
%
|
|
$
|
858
|
|
|
18.0
|
%
|
|
$
|
971
|
|
|
17.6
|
%
|
|
$
|
899
|
|
|
18.6
|
%
|
|
Other gross profit
|
|
$
|
476
|
|
|
73.1
|
%
|
|
$
|
574
|
|
|
84.9
|
%
|
|
$
|
482
|
|
|
76.3
|
%
|
|
$
|
521
|
|
|
81.2
|
%
|
|
Total gross profit
|
|
$
|
3,386
|
|
|
13.7
|
%
|
|
$
|
3,306
|
|
|
14.9
|
%
|
|
$
|
3,421
|
|
|
14.0
|
%
|
|
$
|
3,272
|
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
Components of CAF Income and Other CAF
Information
|
|
|
|
|
|
| (In millions) |
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
$ |
|
% (1) |
|
$ |
|
% (1) |
|
$ |
|
% (1) |
|
$ |
|
% (1) |
|
Interest and fee income
|
|
$
|
111.8
|
|
|
9.7
|
|
|
$
|
107.5
|
|
|
10.2
|
|
|
$
|
219.7
|
|
|
9.8
|
|
|
$
|
207.3
|
|
|
10.0
|
|
|
Interest expense
|
|
|
(26.2
|
)
|
|
(2.3
|
)
|
|
|
(35.3
|
)
|
|
(3.4
|
)
|
|
|
(54.7
|
)
|
|
(2.4
|
)
|
|
|
(70.4
|
)
|
|
(3.4
|
)
|
|
Interest margin
|
|
|
85.6
|
|
|
7.5
|
|
|
|
72.2
|
|
|
6.9
|
|
|
|
165.0
|
|
|
7.3
|
|
|
|
136.9
|
|
|
6.6
|
|
|
Provision for loan losses
|
|
|
(10.8
|
)
|
|
(0.9
|
)
|
|
|
(9.0
|
)
|
|
(0.9
|
)
|
|
|
(9.8
|
)
|
|
(0.4
|
)
|
|
|
(9.9
|
)
|
|
(0.5
|
)
|
|
Interest margin after provision for loan losses
|
|
|
74.8
|
|
|
6.5
|
|
|
|
63.2
|
|
|
6.0
|
|
|
|
155.2
|
|
|
6.9
|
|
|
|
127.0
|
|
|
6.1
|
|
|
Other gain (loss) (2) |
|
|
0.4
|
|
|
--
|
|
|
|
(0.1
|
)
|
|
--
|
|
|
|
1.1
|
|
|
--
|
|
|
|
5.0
|
|
|
0.2
|
|
|
Direct CAF expenses
|
|
|
(11.4
|
)
|
|
(1.0
|
)
|
|
|
(10.5
|
)
|
|
(1.0
|
)
|
|
|
(22.8
|
)
|
|
(1.0
|
)
|
|
|
(21.9
|
)
|
|
(1.1
|
)
|
|
CarMax Auto Finance income
|
|
$
|
63.8
|
|
|
5.6
|
|
|
$
|
52.6
|
|
|
5.0
|
|
|
$
|
133.5
|
|
|
5.9
|
|
|
$
|
110.1
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average managed receivables (3) |
|
$
|
4,596.6
|
|
|
|
|
$
|
4,205.4
|
|
|
|
|
$
|
4,492.2
|
|
|
|
|
$
|
4,164.2
|
|
|
|
|
Net loans originated
|
|
$
|
771.9
|
|
|
|
|
$
|
607.9
|
|
|
|
|
$
|
1,461.2
|
|
|
|
|
$
|
1,125.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance for loan losses
|
|
$
|
36.2
|
|
|
|
|
$
|
46.6
|
|
|
|
|
$
|
36.2
|
|
|
|
|
$
|
46.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse facility information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending funded receivables
|
|
$
|
1,559.0
|
|
|
|
|
$
|
718.0
|
|
|
|
|
$
|
1,559.0
|
|
|
|
|
$
|
718.0
|
|
|
|
|
Ending unused capacity
|
|
$
|
441.0
|
|
|
|
|
$
|
882.0
|
|
|
|
|
$
|
441.0
|
|
|
|
|
$
|
882.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Annualized percent of total average managed receivables.
|
|
(2)
|
|
The amount for the six months ended August 31, 2010, includes
$2.5 million of service fee income and interest income on retained
interest in securitized receivables that previously was reported
separately.
|
|
(3)
|
|
Principal balance only.
|
|
|
|
|
|
|
|
|
|
Earnings Highlights
|
|
|
|
|
|
|
(In millions except per share data)
|
|
Three Months Ended
August 31
|
|
Six Months Ended
August 31
|
|
|
2011
|
|
2010
|
|
Change
|
|
2011
|
|
2010
|
|
Change
|
|
Net earnings
|
|
$
|
111.9
|
|
$
|
107.9
|
|
3.7
|
%
|
|
$
|
238.2
|
|
$
|
209.0
|
|
14.0
|
%
|
|
Diluted weighted average shares outstanding
|
|
|
230.7
|
|
|
226.1
|
|
2.0
|
%
|
|
|
230.5
|
|
|
226.2
|
|
1.9
|
%
|
|
Net earnings per share
|
|
$
|
0.49
|
|
$
|
0.48
|
|
2.1
|
%
|
|
$
|
1.03
|
|
$
|
0.92
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Planned Store Openings
|
|
|
We currently plan to open the following superstores within 12
months from August 31, 2011:
|
|
|
|
|
|
|
|
|
Location
|
|
Television
Market
|
|
Market
Status
|
|
Planned
Opening Date
|
|
North Attleborough, Massachusetts
|
|
Providence
|
|
New
|
|
Q3 Fiscal 2012
|
|
Chattanooga, Tennessee
|
|
Chattanooga
|
|
New
|
|
Q4 Fiscal 2012
|
|
Lancaster, Pennsylvania
|
|
Harrisburg
|
|
New
|
|
Q1 Fiscal 2013
|
|
Bakersfield, California
|
|
Bakersfield
|
|
New
|
|
Q1 Fiscal 2013
|
|
Nashville, Tennessee
|
|
Nashville
|
|
Existing
|
|
Q1 Fiscal 2013
|
|
Fort Myers, Florida
|
|
Fort Myers
|
|
New
|
|
Q2 Fiscal 2013
|
|
Oxnard, California
|
|
Los Angeles
|
|
Existing
|
|
Q2 Fiscal 2013
|
|
Naples, Florida
|
|
Fort Myers
|
|
New
|
|
Q2 Fiscal 2013
|
|
|
|
|
|
|
|
We expect to open a total of between eight and ten superstores in the
fiscal year ending February 28, 2013.
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today,
September 22, 2011. 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 97138755.
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, 2011, through
December 20, 2011. A telephone replay also will be available through
September 29, 2011, 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 97138755.
Third Quarter Fiscal 2011 Earnings Release Date
We currently plan to release third quarter sales and earnings on
Wednesday, December 21, 2011, 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 member of the Fortune 500 and the S&P 500,
and one of the Fortune 2011 "100 Best Companies to Work
For," is the nation's largest retailer of used cars. Headquartered in
Richmond, Va., CarMax currently operates 106 used car superstores in 51
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, 2011, the company retailed 396,181 used cars and sold
263,061 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, including changes related to the asset-backed
securitization market.
-
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 and 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.
-
Factors related to geographic growth, including the inability to
acquire or lease suitable real estate at favorable terms or to
effectively manage our growth.
-
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 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.
-
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, 2011,
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 |
|
|
2011 |
|
% (1) |
|
2010 |
|
% (1) |
|
2011 |
|
% (1) |
|
2010 |
|
% (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle sales
|
|
$
|
2,014,983
|
|
77.9
|
|
$
|
1,889,598
|
|
80.7
|
|
$
|
4,086,523
|
|
77.6
|
|
$
|
3,721,664
|
|
80.8
|
|
New vehicle sales
|
|
|
46,853
|
|
1.8
|
|
|
51,057
|
|
2.2
|
|
|
108,739
|
|
2.1
|
|
|
101,955
|
|
2.2
|
|
Wholesale vehicle sales
|
|
|
457,870
|
|
17.7
|
|
|
329,889
|
|
14.1
|
|
|
935,664
|
|
17.8
|
|
|
646,378
|
|
14.0
|
|
Other sales and revenues
|
|
|
68,113
|
|
2.6
|
|
|
71,336
|
|
3.0
|
|
|
136,310
|
|
2.6
|
|
|
133,795
|
|
2.9
|
|
Net sales and operating revenues
|
|
|
2,587,819
|
|
100.0
|
|
|
2,341,880
|
|
100.0
|
|
|
5,267,236
|
|
100.0
|
|
|
4,603,792
|
|
100.0
|
|
Cost of sales
|
|
|
2,233,544
|
|
86.3
|
|
|
1,992,762
|
|
85.1
|
|
|
4,529,866
|
|
86.0
|
|
|
3,921,126
|
|
85.2
|
|
Gross profit
|
|
|
354,275
|
|
13.7
|
|
|
349,118
|
|
14.9
|
|
|
737,370
|
|
14.0
|
|
|
682,666
|
|
14.8
|
|
CarMax Auto Finance income
|
|
|
63,826
|
|
2.5
|
|
|
52,604
|
|
2.2
|
|
|
133,487
|
|
2.5
|
|
|
110,099
|
|
2.4
|
|
Selling, general and administrative expenses
|
|
|
236,435
|
|
9.1
|
|
|
225,236
|
|
9.6
|
|
|
484,640
|
|
9.2
|
|
|
451,928
|
|
9.8
|
|
Interest expense
|
|
|
787
|
|
--
|
|
|
1,413
|
|
0.1
|
|
|
1,578
|
|
--
|
|
|
1,485
|
|
--
|
|
Interest income
|
|
|
110
|
|
--
|
|
|
102
|
|
--
|
|
|
213
|
|
--
|
|
|
182
|
|
--
|
|
Earnings before income taxes
|
|
|
180,989
|
|
7.0
|
|
|
175,175
|
|
7.5
|
|
|
384,852
|
|
7.3
|
|
|
339,534
|
|
7.4
|
|
Income tax provision
|
|
|
69,094
|
|
2.7
|
|
|
67,290
|
|
2.9
|
|
|
146,669
|
|
2.8
|
|
|
130,530
|
|
2.8
|
|
Net earnings
|
|
$
|
111,895
|
|
4.3
|
|
$
|
107,885
|
|
4.6
|
|
$
|
238,183
|
|
4.5
|
|
$
|
209,004
|
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
226,300
|
|
|
|
|
222,857
|
|
|
|
|
225,935
|
|
|
|
|
222,539
|
|
|
|
Diluted
|
|
|
230,681
|
|
|
|
|
226,132
|
|
|
|
|
230,479
|
|
|
|
|
226,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.49
|
|
|
|
$
|
0.48
|
|
|
|
$
|
1.05
|
|
|
|
$
|
0.93
|
|
|
|
Diluted
|
|
$
|
0.49
|
|
|
|
$
|
0.48
|
|
|
|
$
|
1.03
|
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Percents are calculated as a percentage of net sales and
operating revenues and may not equal totals due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
CARMAX, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(UNAUDITED)
|
| (In thousands) |
|
|
|
|
|
|
|
|
|
|
|
August 31
2011
|
|
August 31
2010
|
|
February 28
2011
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ 181,913
|
|
$ 55,163
|
|
$ 41,121
|
|
Restricted cash from collections on auto loan receivables
|
|
154,944
|
|
166,574
|
|
161,052
|
|
Accounts receivable, net
|
|
64,849
|
|
65,982
|
|
119,597
|
|
Inventory
|
|
1,061,309
|
|
929,170
|
|
1,049,477
|
|
Deferred income taxes
|
|
11,042
|
|
8,829
|
|
5,191
|
|
Other current assets
|
|
21,762
|
|
8,854
|
|
33,660
|
|
|
|
|
|
|
|
|
Total current assets
|
|
1,495,819
|
|
1,234,572
|
|
1,410,098
|
|
|
|
|
|
|
|
|
Auto loan receivables, net
|
|
4,699,074
|
|
4,262,590
|
|
4,320,575
|
|
Property and equipment, net
|
|
976,901
|
|
880,197
|
|
920,045
|
|
Deferred income taxes
|
|
88,451
|
|
100,554
|
|
92,278
|
|
Other assets
|
|
98,730
|
|
99,266
|
|
96,913
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$7,358,975
|
|
$6,577,179
|
|
$ 6,839,909
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ 243,473
|
|
$ 236,997
|
|
$ 269,763
|
|
Accrued expenses and other current liabilities
|
|
107,653
|
|
92,144
|
|
103,389
|
|
Accrued income taxes
|
|
7,451
|
|
15,499
|
|
772
|
|
Short-term debt
|
|
1,333
|
|
565
|
|
1,002
|
|
Current portion of long-term debt
|
|
815
|
|
681
|
|
772
|
|
Current portion of non-recourse notes payable
|
|
129,565
|
|
139,952
|
|
132,519
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
490,290
|
|
485,838
|
|
508,217
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current portion
|
|
27,931
|
|
28,747
|
|
28,350
|
|
Non-recourse notes payable, excluding current portion
|
|
4,169,037
|
|
3,867,045
|
|
3,881,142
|
|
Other liabilities
|
|
119,495
|
|
126,546
|
|
130,570
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
4,806,753
|
|
4,508,176
|
|
4,548,279
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
2,552,222
|
|
2,069,003
|
|
2,291,630
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$7,358,975
|
|
$ 6,577,179
|
|
$ 6,839,909
|
|
|
|
|
|
|
|
|
|
|
|
CARMAX, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
| (In thousands) |
|
|
|
|
|
|
|
Six Months Ended August 31 |
|
|
2011 |
|
2010 |
|
Operating Activities:
|
|
|
|
|
|
Net earnings
|
|
$
|
238,183
|
|
|
$
|
209,004
|
|
|
Adjustments to reconcile net earnings to net cash used in
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
31,004
|
|
|
|
29,048
|
|
|
Share-based compensation expense
|
|
|
26,303
|
|
|
|
21,957
|
|
|
Provision for loan losses
|
|
|
9,783
|
|
|
|
9,883
|
|
|
Loss on disposition of assets
|
|
|
1,195
|
|
|
|
316
|
|
|
Deferred income tax provision
|
|
|
4,408
|
|
|
|
10,304
|
|
|
Net decrease (increase) in:
|
|
|
|
|
|
Accounts receivable, net
|
|
|
54,748
|
|
|
|
13,077
|
|
|
Retained interest in securitized receivables
|
|
|
--
|
|
|
|
43,746
|
|
|
Inventory
|
|
|
(11,832
|
)
|
|
|
(86,037
|
)
|
|
Other current assets
|
|
|
11,648
|
|
|
|
(4,702
|
)
|
|
Auto loan receivables, net
|
|
|
(388,282
|
)
|
|
|
(228,878
|
)
|
|
Other assets
|
|
|
(1,797
|
)
|
|
|
(4,688
|
)
|
|
Net (decrease) increase in:
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities
and accrued income taxes
|
|
|
(42,095
|
)
|
|
|
(26,102
|
)
|
|
Other liabilities
|
|
|
(14,907
|
)
|
|
|
3,606
|
|
|
Net cash used in operating activities
|
|
|
(81,641
|
)
|
|
|
(9,466
|
)
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
Capital expenditures
|
|
|
(80,225
|
)
|
|
|
(15,232
|
)
|
|
Decrease (increase) in restricted cash from collections on auto
loan receivables
|
|
|
6,108
|
|
|
|
(3,966
|
)
|
|
Increase in restricted cash in reserve accounts
|
|
|
(4,562
|
)
|
|
|
(8,680
|
)
|
|
Release of restricted cash from reserve accounts
|
|
|
6,997
|
|
|
|
7,028
|
|
|
(Purchases) sales of money market securities, net
|
|
|
(291
|
)
|
|
|
1
|
|
|
Purchases of investments available-for-sale
|
|
|
(2,164
|
)
|
|
|
--
|
|
|
Net cash used in investing activities
|
|
|
(74,137
|
)
|
|
|
(20,849
|
)
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
Increase (decrease) in short-term debt, net
|
|
|
331
|
|
|
|
(318
|
)
|
|
Issuances of long-term debt
|
|
|
--
|
|
|
|
243,300
|
|
|
Payments on long-term debt
|
|
|
(376
|
)
|
|
|
(365,299
|
)
|
|
Issuances of non-recourse notes payable
|
|
|
1,869,000
|
|
|
|
1,873,000
|
|
|
Payments on non-recourse notes payable
|
|
|
(1,584,059
|
)
|
|
|
(1,692,413
|
)
|
|
Equity issuances, net
|
|
|
4,362
|
|
|
|
6,387
|
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
7,312
|
|
|
|
2,543
|
|
|
Net cash provided by financing activities
|
|
|
296,570
|
|
|
|
67,200
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
140,792
|
|
|
|
36,885
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
41,121
|
|
|
|
18,278
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
181,913
|
|
|
$
|
55,163
|
|
|
|
|
|
|
SOURCE: CarMax, Inc.
CarMax, Inc.
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
or
General Media:
Laura Donahue, Vice President, Public Affairs, (804) 747-0422, ext. 4434
Trina Lee, Director, Public Relations (804) 747-0422, ext. 4197