RICHMOND, Va.--(BUSINESS WIRE)--
CarMax, Inc. (NYSE:KMX) today reported results for the first quarter
ended May 31, 2017. Year-over-year highlights include:
-
Net sales and operating revenues increased 10.1% to $4.54 billion.
-
Used unit sales in comparable stores increased 8.2%.
-
Total used unit sales rose 14.1%.
-
Total wholesale unit sales were flat versus the prior year’s first
quarter.
-
CarMax Auto Finance (CAF) income increased 8.5% to $109.4 million.
-
Net earnings increased 20.7% to $211.7 million and net earnings per
diluted share rose 25.6% to $1.13.
First Quarter Business Performance Review
Sales. Total used vehicle unit sales
grew 14.1% and comparable store used unit sales rose 8.2% versus the
prior year’s first quarter. The comparable store sales performance
reflected continued solid improvement in conversion resulting from
strong execution by our store teams and our digital initiatives. We
believe our first quarter used unit sales also benefited somewhat from
the delay of federal income tax refunds in February, which shifted some
sales from the fourth quarter of last year into this year’s first
quarter. Our third-party Tier 3 sales mix declined modestly to 10.0% of
used unit sales versus 11.2% in last year’s first quarter, as we began
to lap credit tightening by one of our Tier 3 finance providers
implemented during the first quarter of last year. Tier 3 sales
represent those financed by our third-party finance providers to whom we
pay a fee.
Wholesale vehicle unit sales were flat compared with the first quarter
of fiscal 2017, as contributions from the growth in our store base were
offset by a reduction in appraisal traffic. In particular, age 7-to
9-year old wholesale vehicles continued to be in shorter supply.
Other sales and revenues increased 12.3% compared with the first quarter
of fiscal 2017, primarily reflecting improvements in extended protection
plan (EPP) revenues. EPP revenues increased 20.5%, largely due to the
growth in our used unit sales, as well as modest favorable adjustments
to cancellation reserves resulting from lower cancellation activity.
Gross Profit. Total gross profit
increased 13.3% versus last year’s first quarter, to $648.9 million.
Used vehicle gross profit rose 14.7%, driven by the 14.1% increase in
total used unit sales. Used vehicle gross profit per unit was largely
consistent at $2,212 versus $2,202 in the prior year period. Wholesale
vehicle gross profit increased 1.7% versus the prior year’s quarter,
reflecting an increase in wholesale vehicle gross profit per unit to
$1,012 from $995, together with the flat wholesale unit sales. We
believe the delay in income tax refund season from the fourth quarter
resulted in a corresponding delay in the normal seasonal increase in
wholesale industry pricing, benefiting our first quarter wholesale gross
profit per unit. Other gross profit increased 20.7%, primarily
reflecting the improvement in EPP revenues.
SG&A. Compared with the first
quarter of fiscal 2017, SG&A expenses increased 6.1% to $403.5 million.
Several factors contributed to the increase, including: (i) the
11% increase in our store base since the beginning of last year’s first
quarter (representing the addition of 18 stores), (ii) higher variable
costs associated with our comparable store unit growth and (iii)
spending related to strategic initiatives. These increases were
partially offset by an $11.5 million decrease in share-based
compensation expense. SG&A per used unit was $2,066 in the current
quarter, down $157 year-over-year. The decrease in share-based
compensation expense reduced SG&A per unit by $80.
CarMax Auto Finance.(1)
Compared with last year’s first quarter, CAF income increased 8.5% to
$109.4 million. Average managed receivables grew 11.1% to
$10.83 billion. The total interest margin, which reflects the spread
between interest and fees charged to consumers and our funding costs,
declined to 5.8% of average managed receivables from 5.9% in last year’s
first quarter. The provision for loan losses increased 7.5% to $28.6
million, compared with $26.6 million in the prior year quarter,
primarily reflecting the growth in managed receivables. The allowance
for loan losses as a percentage of ending managed receivables was 1.18%
as of May 31, 2017, similar to the 1.16% reported as of February 28,
2017, and up from the 1.05% reported as of May 31, 2016, reflecting
higher loss experience over the course of last year.
Interest Expense. Interest expense
rose to $16.8 million in the first quarter of fiscal 2018 from
$11.1 million in the prior year’s first quarter. The increase reflected
higher average outstanding debt levels in fiscal 2018 consistent with
our capital structure strategy, as well as growth in our finance and
capital lease obligations.
Store Openings. During the first
quarter of fiscal 2018, we opened three stores, including two stores in
Seattle, Washington, a new television market, and one store in
Pensacola, Florida.
Share Repurchase Activity. During
the first quarter of fiscal 2018, we repurchased 3.0 million shares of
common stock for $182.1 million pursuant to our share repurchase
program. As of May 31, 2017, we had $1.41 billion remaining available
for repurchase under the program.
|
(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)
|
|
2017
|
|
2016
|
|
Change
|
|
Used vehicle sales
|
|
$
|
3,843.4
|
|
|
$
|
3,429.0
|
|
|
12.1
|
%
|
|
Wholesale vehicle sales
|
|
553.4
|
|
|
567.7
|
|
|
(2.5
|
)%
|
|
Other sales and revenues:
|
|
|
|
|
|
|
|
Extended protection plan revenues
|
|
91.9
|
|
|
76.2
|
|
|
20.5
|
%
|
|
Third-party finance fees, net
|
|
(11.4
|
)
|
|
(11.9
|
)
|
|
4.2
|
%
|
|
Other
|
|
65.1
|
|
|
65.4
|
|
|
(0.4
|
)%
|
|
Total other sales and revenues
|
|
145.6
|
|
|
129.7
|
|
|
12.3
|
%
|
|
Total net sales and operating revenues
|
|
$
|
4,542.3
|
|
|
$
|
4,126.4
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Sales
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
Used vehicles
|
|
195,273
|
|
171,076
|
|
14.1
|
%
|
|
Wholesale vehicles
|
|
103,443
|
|
103,462
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Selling Prices
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
Used vehicles
|
|
$
|
19,478
|
|
|
$
|
19,858
|
|
|
(1.9
|
)%
|
|
Wholesale vehicles
|
|
$
|
5,113
|
|
|
$
|
5,268
|
|
|
(2.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle Sales Changes
|
|
|
|
|
|
|
|
|
|
Three Months Ended
May 31
|
|
|
|
2017
|
|
2016
|
|
Used vehicle units
|
|
14.1
|
%
|
|
4.0
|
%
|
|
Used vehicle revenues
|
|
12.1
|
%
|
|
4.1
|
%
|
|
|
|
|
|
|
|
Wholesale vehicle units
|
|
—
|
%
|
|
1.8
|
%
|
|
Wholesale vehicle revenues
|
|
(2.5
|
)%
|
|
(1.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Store Used Vehicle Sales
Changes (1)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
May 31
|
|
|
|
2017
|
|
2016
|
|
Used vehicle units
|
|
8.2
|
%
|
|
0.2
|
%
|
|
Used vehicle revenues
|
|
6.1
|
%
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
2017
|
|
2016
|
|
CAF (2)
|
|
47.3
|
%
|
|
49.1
|
%
|
|
Tier 2 (3)
|
|
19.0
|
%
|
|
18.5
|
%
|
|
Tier 3 (4)
|
|
10.0
|
%
|
|
11.2
|
%
|
|
Other (5)
|
|
23.7
|
%
|
|
21.2
|
%
|
|
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)
|
|
2017
|
|
% (1)
|
|
2016
|
|
% (1)
|
|
Net sales and operating revenues
|
|
$
|
4,542.3
|
|
|
100.0
|
|
|
$
|
4,126.4
|
|
|
100.0
|
|
Gross profit
|
|
$
|
648.9
|
|
|
14.3
|
|
|
$
|
572.6
|
|
|
13.9
|
|
CarMax Auto Finance income
|
|
$
|
109.4
|
|
|
2.4
|
|
|
$
|
100.8
|
|
|
2.4
|
|
Selling, general, and administrative expenses
|
|
$
|
403.5
|
|
|
8.9
|
|
|
$
|
380.2
|
|
|
9.2
|
|
Interest expense
|
|
$
|
16.8
|
|
|
0.4
|
|
|
$
|
11.1
|
|
|
0.3
|
|
Earnings before income taxes
|
|
$
|
338.1
|
|
|
7.4
|
|
|
$
|
282.7
|
|
|
6.9
|
|
Net earnings
|
|
$
|
211.7
|
|
|
4.7
|
|
|
$
|
175.4
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated as a percentage of net sales and operating revenues.
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
(In millions)
|
|
2017
|
|
2016
|
|
Change
|
|
Used vehicle gross profit
|
|
$
|
431.9
|
|
|
$
|
376.6
|
|
|
14.7
|
%
|
|
Wholesale vehicle gross profit
|
|
104.7
|
|
102.9
|
|
1.7
|
%
|
|
Other gross profit
|
|
112.3
|
|
93.1
|
|
20.7
|
%
|
|
Total
|
|
$
|
648.9
|
|
|
$
|
572.6
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit per Unit
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
|
|
2017
|
|
2016
|
|
|
|
$ per unit(1)
|
|
%(2)
|
|
$ per unit(1)
|
|
%(2)
|
|
Used vehicle gross profit
|
|
$
|
2,212
|
|
11.2
|
|
|
$
|
2,202
|
|
11.0
|
|
Wholesale vehicle gross profit
|
|
$
|
1,012
|
|
18.9
|
|
|
$
|
995
|
|
18.1
|
|
Other gross profit
|
|
$
|
575
|
|
77.2
|
|
|
$
|
544
|
|
71.8
|
|
Total gross profit
|
|
$
|
3,323
|
|
14.3
|
|
|
$
|
3,347
|
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
2017
|
|
2016
|
|
Change
|
|
Compensation and benefits (1)
|
|
$
|
222.5
|
|
$
|
216.6
|
|
2.7
|
%
|
|
Store occupancy costs
|
|
79.7
|
|
71.7
|
|
11.1
|
%
|
|
Advertising expense
|
|
38.2
|
|
34.8
|
|
9.7
|
%
|
|
Other overhead costs (2)
|
|
63.1
|
|
57.1
|
|
10.6
|
%
|
|
Total SG&A expenses
|
|
$
|
403.5
|
|
$
|
380.2
|
|
6.1
|
%
|
|
SG&A per used unit
|
|
$
|
2,066
|
|
$
|
2,223
|
|
$
|
(157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes compensation and benefits related to reconditioning
and vehicle repair service, which are included in cost of sales.
|
|
(2)
|
|
Includes IT expenses, preopening and relocation costs,
insurance, travel, non-CAF bad debt, charitable contributions and
other administrative expenses.
|
|
|
|
|
|
|
|
|
|
Components of CAF Income and Other CAF
Information
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
(In millions)
|
|
2017
|
|
% (1)
|
|
2016
|
|
% (1)
|
|
Interest margin:
|
|
|
|
|
|
|
|
|
|
Interest and fee income
|
|
$
|
206.7
|
|
|
7.6
|
|
|
$
|
184.1
|
|
|
7.6
|
|
|
Interest expense
|
|
(49.0
|
)
|
|
(1.8
|
)
|
|
(39.4
|
)
|
|
(1.6
|
)
|
|
Total interest margin
|
|
157.7
|
|
|
5.8
|
|
|
144.7
|
|
|
5.9
|
|
|
Provision for loan losses
|
|
(28.6
|
)
|
|
(1.1
|
)
|
|
(26.6
|
)
|
|
(1.1
|
)
|
|
Total interest margin after provision for loan losses
|
|
129.1
|
|
|
4.8
|
|
|
118.1
|
|
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Total direct expenses
|
|
(19.7
|
)
|
|
(0.7
|
)
|
|
(17.3
|
)
|
|
(0.7
|
)
|
|
CarMax Auto Finance income
|
|
$
|
109.4
|
|
|
4.0
|
|
|
$
|
100.8
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average managed receivables
|
|
$
|
10,829.5
|
|
|
|
|
$
|
9,745.0
|
|
|
|
|
Net loans originated
|
|
$
|
1,546.1
|
|
|
|
|
$
|
1,443.4
|
|
|
|
|
Net penetration rate
|
|
41.9
|
%
|
|
|
|
43.9
|
%
|
|
|
|
Weighted average contract rate
|
|
7.8
|
%
|
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance for loan losses
|
|
$
|
129.8
|
|
|
|
|
$
|
104.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse facility information:
|
|
|
|
|
|
|
|
|
|
Ending funded receivables
|
|
$
|
2,022.0
|
|
|
|
|
$
|
1,472.0
|
|
|
|
|
Ending unused capacity
|
|
$
|
778.0
|
|
|
|
|
$
|
1,028.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Annualized percentage of total average managed receivables.
|
|
|
|
|
|
|
|
|
|
Earnings Highlights
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
(In millions except per share data)
|
|
2017
|
|
2016
|
|
Change
|
|
Net earnings
|
|
$
|
211.7
|
|
$
|
175.4
|
|
20.7
|
%
|
|
Diluted weighted average shares outstanding
|
|
186.9
|
|
195.3
|
|
(4.3
|
)%
|
|
Net earnings per diluted share
|
|
$
|
1.13
|
|
$
|
0.90
|
|
25.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Planned Store Openings
We currently plan to open the following stores within 12 months from
May 31, 2017. During this period, we will be entering five new
television markets and expanding our presence in ten existing television
markets. Of the 16 stores we plan to open during the 12 months ending
May 31, 2018, 8 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
|
|
Waterbury, Connecticut (1)
|
|
Hartford/New Haven
|
|
New Haven
|
|
Q2 Fiscal 2018
|
|
San Jose, California
|
|
San Francisco/Oakland/San Jose
|
|
San Jose
|
|
Q2 Fiscal 2018
|
|
Salisbury, Maryland
|
|
Salisbury (2)
|
|
Salisbury
|
|
Q2 Fiscal 2018
|
|
Langhorne, Pennsylvania
|
|
Philadelphia
|
|
Philadelphia
|
|
Q3 Fiscal 2018
|
|
Tyler, Texas
|
|
Tyler/Longview (2)
|
|
Tyler
|
|
Q3 Fiscal 2018
|
|
Las Vegas, Nevada
|
|
Las Vegas
|
|
Las Vegas
|
|
Q3 Fiscal 2018
|
|
Colma, California
|
|
San Francisco/Oakland/San Jose
|
|
San Francisco/Oakland
|
|
Q3 Fiscal 2018
|
|
Renton, Washington
|
|
Seattle/Tacoma
|
|
Seattle/Tacoma
|
|
Q3 Fiscal 2018
|
|
Myrtle Beach, South Carolina
|
|
Myrtle Beach/Florence (2)
|
|
Myrtle Beach
|
|
Q4 Fiscal 2018
|
|
South Portland, Maine
|
|
Portland/Auburn (2)
|
|
Portland
|
|
Q4 Fiscal 2018
|
|
Manchester, New Hampshire
|
|
Boston
|
|
Manchester
|
|
Q4 Fiscal 2018
|
|
Golden, Colorado
|
|
Denver
|
|
Denver/Aurora
|
|
Q4 Fiscal 2018
|
|
Santa Fe, New Mexico
|
|
Albuquerque/Santa Fe
|
|
Santa Fe
|
|
Q1 Fiscal 2019
|
|
Winterville, North Carolina
|
|
Greenville/New Bern/Washington (2)
|
|
Greenville
|
|
Q1 Fiscal 2019
|
|
McKinney, Texas
|
|
Dallas/Ft. Worth
|
|
Dallas/Ft. Worth
|
|
Q1 Fiscal 2019
|
|
Jensen Beach, Florida
|
|
Miami/Ft. Lauderdale/W. Palm Beach
|
|
Port St. Lucie
|
|
Q1 Fiscal 2019
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Store opened in June 2017.
|
|
(2)
|
|
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, 2017. 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 73770787. 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 21, 2017. A telephone replay also will be available
through June 28, 2017, 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 73770787.
Second Quarter Fiscal 2018 Earnings Release Date
We currently plan to release results for the second quarter ending
August 31, 2017, on Friday, September 22, 2017, 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 2017.
About CarMax
CarMax is the nation’s largest retailer of used cars, currently
operating 177 stores in 39 states nationwide. CarMax revolutionized the
auto industry by delivering the honest, transparent and high-integrity
car buying experience customers want and deserve. For more than 20
years, CarMax has made car buying more ethical, fair and stress-free by
offering a no-haggle, no-hassle experience and an incredible selection
of vehicles. CarMax makes selling your car easy too, by offering
no-obligation appraisals good for seven days. At CarMax, we’ll buy your
car even if you don’t buy ours®. CarMax has more than 24,000
associates nationwide and for 13 consecutive years has
been named as one of the Fortune 100 Best Companies to
Work For®. During the twelve months ended February 28, 2017,
the company retailed 671,294 used vehicles and sold 391,686 wholesale
vehicles at its 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, expenses, capital expenditures, debt
obligations 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.
-
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
financing 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 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, 2017,
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)
|
|
2017
|
|
% (1)
|
|
2016
|
|
% (1)
|
|
SALES AND OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
Used vehicle sales
|
|
$
|
3,843,373
|
|
|
84.6
|
|
$
|
3,428,974
|
|
|
83.1
|
|
Wholesale vehicle sales
|
|
553,390
|
|
|
12.2
|
|
567,741
|
|
|
13.8
|
|
Other sales and revenues
|
|
145,571
|
|
|
3.2
|
|
129,671
|
|
|
3.1
|
|
NET SALES AND OPERATING REVENUES
|
|
4,542,334
|
|
|
100.0
|
|
4,126,386
|
|
|
100.0
|
|
Cost of sales
|
|
3,893,396
|
|
|
85.7
|
|
3,553,749
|
|
|
86.1
|
|
GROSS PROFIT
|
|
648,938
|
|
|
14.3
|
|
572,637
|
|
|
13.9
|
|
CARMAX AUTO FINANCE INCOME
|
|
109,363
|
|
|
2.4
|
|
100,758
|
|
|
2.4
|
|
Selling, general and administrative expenses
|
|
403,503
|
|
|
8.9
|
|
380,230
|
|
|
9.2
|
|
Interest expense
|
|
16,838
|
|
|
0.4
|
|
11,088
|
|
|
0.3
|
|
Other income
|
|
(93
|
)
|
|
—
|
|
(616
|
)
|
|
—
|
|
Earnings before income taxes
|
|
338,053
|
|
|
7.4
|
|
282,693
|
|
|
6.9
|
|
Income tax provision
|
|
126,351
|
|
|
2.8
|
|
107,333
|
|
|
2.6
|
|
NET EARNINGS
|
|
$
|
211,702
|
|
|
4.7
|
|
$
|
175,360
|
|
|
4.2
|
|
WEIGHTED AVERAGE COMMON SHARES:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
185,200
|
|
|
|
193,531
|
|
|
|
Diluted
|
|
186,859
|
|
|
|
195,253
|
|
|
|
NET EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.14
|
|
|
|
|
$
|
0.91
|
|
|
|
|
Diluted
|
|
$
|
1.13
|
|
|
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
2017
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
60,080
|
|
|
$
|
38,416
|
|
|
$
|
52,575
|
|
|
Restricted cash from collections on auto loan receivables
|
|
385,692
|
|
|
380,353
|
|
|
364,156
|
|
|
Accounts receivable, net
|
|
104,745
|
|
|
152,388
|
|
|
102,541
|
|
|
Inventory
|
|
2,148,247
|
|
|
2,260,563
|
|
|
1,864,991
|
|
|
Other current assets
|
|
35,780
|
|
|
41,910
|
|
|
32,317
|
|
|
TOTAL CURRENT ASSETS
|
|
2,734,544
|
|
|
2,873,630
|
|
|
2,416,580
|
|
|
Auto loan receivables, net
|
|
10,892,844
|
|
|
10,596,076
|
|
|
9,853,368
|
|
|
Property and equipment, net
|
|
2,557,506
|
|
|
2,518,393
|
|
|
2,234,385
|
|
|
Deferred income taxes
|
|
145,265
|
|
|
150,962
|
|
|
152,328
|
|
|
Other assets
|
|
145,530
|
|
|
140,295
|
|
|
133,266
|
|
|
TOTAL ASSETS
|
|
$
|
16,475,689
|
|
|
$
|
16,279,356
|
|
|
$
|
14,789,927
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
510,574
|
|
|
$
|
494,989
|
|
|
$
|
454,522
|
|
|
Accrued expenses and other current liabilities
|
|
203,211
|
|
|
266,128
|
|
|
205,426
|
|
|
Accrued income taxes
|
|
103,588
|
|
|
1,404
|
|
|
89,991
|
|
|
Short-term debt
|
|
693
|
|
|
62
|
|
|
1,255
|
|
|
Current portion of finance and capital lease obligations
|
|
9,772
|
|
|
9,491
|
|
|
12,411
|
|
|
Current portion of non-recourse notes payable
|
|
338,832
|
|
|
333,713
|
|
|
319,769
|
|
|
TOTAL CURRENT LIABILITIES
|
|
1,166,670
|
|
|
1,105,787
|
|
|
1,083,374
|
|
|
Long-term debt, excluding current portion
|
|
797,666
|
|
|
952,562
|
|
|
597,277
|
|
|
Finance and capital lease obligations, excluding current portion
|
|
484,394
|
|
|
486,645
|
|
|
419,875
|
|
|
Non-recourse notes payable, excluding current portion
|
|
10,643,810
|
|
|
10,387,231
|
|
|
9,494,180
|
|
|
Other liabilities
|
|
231,021
|
|
|
238,551
|
|
|
222,936
|
|
|
TOTAL LIABILITIES
|
|
13,323,561
|
|
|
13,170,776
|
|
|
11,817,642
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
Common stock, $0.50 par value; 350,000,000 shares authorized;
183,872,908 and 186,548,602 shares issued and outstanding as of May
31, 2017 and February 28, 2017, respectively
|
|
91,936
|
|
|
93,274
|
|
|
96,248
|
|
|
Capital in excess of par value
|
|
1,184,661
|
|
|
1,188,578
|
|
|
1,136,469
|
|
|
Accumulated other comprehensive loss
|
|
(58,229
|
)
|
|
(56,555
|
)
|
|
(66,825
|
)
|
|
Retained earnings
|
|
1,933,760
|
|
|
1,883,283
|
|
|
1,806,393
|
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
|
3,152,128
|
|
|
3,108,580
|
|
|
2,972,285
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
16,475,689
|
|
|
$
|
16,279,356
|
|
|
$
|
14,789,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CARMAX, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended May 31
|
|
(In thousands)
|
|
2017
|
|
2016 (1)
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net earnings
|
|
$
|
211,702
|
|
|
$
|
175,360
|
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
43,894
|
|
|
40,801
|
|
|
Share-based compensation expense
|
|
18,726
|
|
|
31,437
|
|
|
Provision for loan losses
|
|
28,579
|
|
|
26,591
|
|
|
Provision for cancellation reserves
|
|
17,113
|
|
|
18,692
|
|
|
Deferred income tax provision
|
|
6,782
|
|
|
7,374
|
|
|
Other
|
|
621
|
|
|
268
|
|
|
Net decrease (increase) in:
|
|
|
|
|
|
Accounts receivable, net
|
|
47,643
|
|
|
29,630
|
|
|
Inventory
|
|
112,316
|
|
|
67,038
|
|
|
Other current assets
|
|
5,451
|
|
|
(4,031
|
)
|
|
Auto loan receivables, net
|
|
(325,347
|
)
|
|
(343,067
|
)
|
|
Other assets
|
|
809
|
|
|
399
|
|
|
Net increase (decrease) in:
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities
and accrued income taxes
|
|
52,673
|
|
|
69,114
|
|
|
Other liabilities
|
|
(29,469
|
)
|
|
(31,999
|
)
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
191,493
|
|
|
87,607
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
Capital expenditures
|
|
(79,416
|
)
|
|
(97,463
|
)
|
|
Increase in restricted cash from collections on auto loan receivables
|
|
(5,339
|
)
|
|
(20,327
|
)
|
|
Increase in restricted cash in reserve accounts
|
|
(6,308
|
)
|
|
(3,101
|
)
|
|
Release of restricted cash from reserve accounts
|
|
3,344
|
|
|
41
|
|
|
Purchases of money market securities, net
|
|
(1,824
|
)
|
|
(289
|
)
|
|
Purchases of trading securities
|
|
(1,055
|
)
|
|
(2,355
|
)
|
|
Sales of trading securities
|
|
238
|
|
|
244
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
(90,360
|
)
|
|
(123,250
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
Increase in short-term debt, net
|
|
631
|
|
|
827
|
|
|
Proceeds from issuances of long-term debt
|
|
762,000
|
|
|
1,093,800
|
|
|
Payments on long-term debt
|
|
(917,000
|
)
|
|
(1,208,800
|
)
|
|
Cash paid for debt issuance costs
|
|
(2,920
|
)
|
|
(4,680
|
)
|
|
Payments on finance and capital lease obligations
|
|
(2,268
|
)
|
|
(3,040
|
)
|
|
Issuances of non-recourse notes payable
|
|
2,410,000
|
|
|
2,259,000
|
|
|
Payments on non-recourse notes payable
|
|
(2,149,135
|
)
|
|
(1,952,428
|
)
|
|
Repurchase and retirement of common stock
|
|
(187,385
|
)
|
|
(137,989
|
)
|
|
Equity issuances
|
|
6,608
|
|
|
4,134
|
|
|
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
|
(79,469
|
)
|
|
50,824
|
|
|
Increase in cash and cash equivalents
|
|
21,664
|
|
|
15,181
|
|
|
Cash and cash equivalents at beginning of year
|
|
38,416
|
|
|
37,394
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
60,080
|
|
|
$
|
52,575
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In connection with our adoption of
Financial Accounting Standards Board (“FASB”) ASU 2016-09 during
the first quarter of fiscal 2018, cash flows related to excess tax
benefits from share-based payment arrangements are now classified
as operating activities rather than financing activities. Prior
period amounts have been reclassified to conform to the current
period’s presentation.
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170621005093/en/
Source: CarMax, Inc.