RICHMOND, Va.--(BUSINESS WIRE)--
CarMax, Inc. (NYSE:KMX) today reported results for the third quarter
ended November 30, 2018. Year-over-year highlights include:
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Net sales and operating revenues increased 4.6% to $4.30 billion.
-
Used unit sales in comparable stores declined 1.2%.
-
Total used unit sales rose 2.3%.
-
Total wholesale unit sales increased 10.0%.
-
CarMax Auto Finance (CAF) income increased 6.7% to $109.7 million.
-
Net earnings increased 27.9% to $190.3 million and net earnings per
diluted share increased 34.6% to $1.09.
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*
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Net earnings for the three months ended November 30, 2018 benefited
from a decrease in the effective tax rate to 23.2% from 33.9% in the
prior year’s third quarter, primarily reflecting the effect of the
Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).
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Third Quarter Business Performance Review
“We are pleased to report solid growth in both pretax earnings and
earnings per share, despite having soft comparable store used unit sales
this quarter,” said Bill Nash, president and chief executive officer.
“This is a testament to the strength of our diversified business model.
We are also excited to introduce our omni-channel experience in Atlanta,
where consumers can now customize their car buying experience, whether
they want to buy a car completely from home, in-store or, most
importantly, through a seamlessly integrated combination of online and
in-store experiences.”
Sales
. Total used vehicle unit sales
increased 2.3%, while comparable store used unit sales declined 1.2%
versus the prior year’s third quarter. The comparable store sales
performance primarily reflected lower store traffic, partially offset by
improved conversion. In the prior year’s third quarter, our six
Houston-area stores drove comparable store used unit sales growth in the
wake of Hurricane Harvey; excluding these stores from the calculation,
our current quarter comparable store used unit sales would have grown by
2.3%.
Total wholesale vehicle unit sales increased 10.0% compared with the
third quarter of fiscal 2018, largely driven by the growth in our store
base and a higher appraisal buy rate.
Other sales and revenues increased 12.1% compared with the third quarter
of fiscal 2018. Extended protection plan (EPP) net revenues rose 11.1%,
primarily reflecting cost decreases from plan providers. Net third-party
finance fees improved $4.4 million, reflecting shifts in our sales mix
by finance channel, including an increase in our Tier 2 and a decrease
in our Tier 3 sales.
Gross Profit
. Total gross profit
increased 5.6% versus last year’s third quarter, to $569.2 million. Used
vehicle gross profit rose 1.5%, reflecting the 2.3% increase in total
used unit sales. Used vehicle gross profit per unit remained relatively
stable at $2,133 compared with $2,148 in the prior year period.
Wholesale vehicle gross profit increased 11.9% versus the prior year’s
quarter, driven by the 10.0% increase in wholesale unit sales. Wholesale
vehicle gross profit per unit was also largely consistent at $949
compared with $933 in last year’s third quarter. Other gross profit
increased 16.4%, largely reflecting the improvements in EPP revenues and
net third-party finance fees.
SG&A
. Compared with the third
quarter of fiscal 2018, SG&A expenses increased 2.5% to $409.5 million.
Factors contributing to the year-over-year change included continued
spending to advance our technology platforms and support our core and
omni-channel strategic initiatives, and the 11% increase in our store
base since the beginning of last year’s third quarter (representing the
addition of 19 stores). These increases were partially offset by a
$7.0 million decrease in stock-based compensation expense. SG&A per used
unit was $2,361 in the current quarter, up $5 year-over-year. The
decrease in stock-based compensation expense reduced SG&A per used unit
by $42.
CarMax Auto Finance
.(1)
Compared with last year’s third quarter, CAF income increased 6.7% to
$109.7 million. The increase reflected the net effects of an 8.4%
increase in average managed receivables and a slightly lower total
interest margin percentage. 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 third quarter. The provision for loan losses
increased to $40.8 million from $37.5 million in the prior year quarter.
The allowance for loan losses as a percentage of ending managed
receivables remained stable at 1.12% as of November 30, 2018, compared
with 1.11% as of November 30, 2017, and 1.13% as of August 31, 2018.
Interest Expense
. Interest expense
rose to $18.8 million from $17.4 million in the prior year’s third
quarter, primarily reflecting higher interest rates in fiscal 2019.
Income Taxes
. The effective tax rate
fell to 23.2% in the third quarter of fiscal 2019 from 33.9% in the
prior year’s third quarter, largely due to the reduction in the federal
statutory tax rate following the enactment of the 2017 Tax Act.
Store Openings
. During the third
quarter of fiscal 2019, we opened four stores, all in new television
markets (Wilmington, North Carolina; Lafayette, Louisiana; Corpus
Christi, Texas; and Shreveport, Louisiana).
Share Repurchase Activity
. During
the third quarter of fiscal 2019, we repurchased 3.7 million shares of
common stock for $254.3 million pursuant to our share repurchase
program. Also during the third quarter, the Board of Directors approved
a $2.0 billion expansion of this program, with no expiration date. As of
November 30, 2018, we had $2.38 billion remaining available for
repurchase under the outstanding authorizations.
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(1)
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Although CAF benefits from certain indirect overhead
expenditures, we have not allocated indirect costs to CAF to avoid
making subjective allocation decisions.
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Supplemental Financial Information
Amounts and percentage calculations may not total due to rounding.
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Sales Components
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Three Months Ended November 30
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Nine Months Ended November 30
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(In millions)
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2018
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2017
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Change
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2018
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2017
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Change
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Used vehicle sales
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$
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3,547.9
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$
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3,425.5
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3.6
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%
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$
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11,544.3
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$
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10,963.1
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5.3
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%
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Wholesale vehicle sales
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603.6
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552.8
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9.2
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%
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1,849.2
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1,653.9
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11.8
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%
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Other sales and revenues:
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Extended protection plan revenues
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85.6
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77.1
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11.1
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%
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284.2
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254.5
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11.7
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%
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Third-party finance fees, net
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(8.4
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)
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(12.8
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)
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34.7
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%
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(32.5
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)
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(35.8
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)
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9.2
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%
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Other
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67.2
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64.4
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4.1
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%
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209.2
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200.3
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4.5
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%
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Total other sales and revenues
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144.4
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|
128.7
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12.1
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%
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460.9
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|
419.0
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10.0
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%
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Total net sales and operating revenues
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$
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4,295.9
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$
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4,107.0
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4.6
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%
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$
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13,854.5
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$
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13,036.0
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6.3
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%
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Unit Sales
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Three Months Ended November 30
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Nine Months Ended November 30
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2018
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2017
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Change
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2018
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2017
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Change
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Used vehicles
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173,476
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169,648
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2.3
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%
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568,754
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550,940
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3.2
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%
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Wholesale vehicles
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110,403
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100,332
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10.0
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%
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344,604
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309,283
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11.4
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%
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Average Selling Prices
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Three Months Ended November 30
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Nine Months Ended November 30
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2018
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2017
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Change
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2018
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2017
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Change
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Used vehicles
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$
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20,273
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$
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20,008
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1.3
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%
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$
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20,109
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$
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19,705
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2.1
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%
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Wholesale vehicles
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$
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5,214
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$
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5,268
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(1.0
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)%
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$
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5,120
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$
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5,110
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0.2
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%
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Vehicle Sales Changes
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Three Months Ended
November 30
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Nine Months Ended
November 30
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2018
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2017
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2018
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2017
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Used vehicle units
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2.3
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%
|
8.2
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%
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|
3.2
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%
|
11.2
|
%
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|
Used vehicle revenues
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|
3.6
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%
|
10.8
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%
|
|
5.3
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%
|
11.6
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%
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|
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|
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Wholesale vehicle units
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10.0
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%
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9.1
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%
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|
11.4
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%
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2.9
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%
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Wholesale vehicle revenues
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9.2
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%
|
13.2
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%
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|
11.8
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%
|
2.3
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%
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Comparable Store Used Vehicle Sales
Changes
(1)
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Three Months Ended
November 30
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Nine Months Ended
November 30
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2018
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2017
|
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2018
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|
2017
|
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Used vehicle units
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(1.2
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)%
|
2.7
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%
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(0.5
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)%
|
5.5
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%
|
|
Used vehicle revenues
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|
0.1
|
%
|
5.3
|
%
|
|
1.5
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%
|
5.8
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%
|
|
|
|
|
|
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(1)
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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.
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Used Vehicle Financing Penetration by
Channel (Before the Impact of 3-day Payoffs)
(1)
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|
|
|
Three Months Ended
November 30
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Nine Months Ended
November 30
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
CAF (2)
|
|
49.1
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%
|
|
49.2
|
%
|
|
48.9
|
%
|
|
48.5
|
%
|
|
Tier 2 (3) |
|
18.3
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%
|
|
15.4
|
%
|
|
17.4
|
%
|
|
16.9
|
%
|
|
Tier 3 (4) |
|
9.3
|
%
|
|
10.8
|
%
|
|
9.7
|
%
|
|
10.1
|
%
|
|
Other (5) |
|
23.3
|
%
|
|
24.6
|
%
|
|
24.0
|
%
|
|
24.5
|
%
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
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Calculated as used vehicle units financed for respective
channel as a percentage of total used units sold.
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(2)
|
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Includes CAF's Tier 3 loan originations, which represent less
than 1% of total used units sold.
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(3)
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Third-party finance providers who generally pay us a fee or to
whom no fee is paid.
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(4)
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Third-party finance providers to whom we pay a fee.
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(5)
|
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Represents customers arranging their own financing and
customers that do not require financing.
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|
|
|
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Selected Operating Ratios
|
|
|
|
|
|
|
|
Three Months Ended November 30
|
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Nine Months Ended November 30
|
|
(In millions)
|
|
2018
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
2018
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
Net sales and operating revenues
|
|
$
|
4,295.9
|
|
100.0
|
|
|
$
|
4,107.0
|
|
100.0
|
|
|
$
|
13,854.5
|
|
100.0
|
|
|
$
|
13,036.0
|
|
100.0
|
|
Gross profit
|
|
$
|
569.2
|
|
13.3
|
|
|
$
|
539.2
|
|
13.1
|
|
|
$
|
1,881.2
|
|
13.6
|
|
|
$
|
1,792.1
|
|
13.7
|
|
CarMax Auto Finance income
|
|
$
|
109.7
|
|
2.6
|
|
|
$
|
102.8
|
|
2.5
|
|
|
$
|
335.0
|
|
2.4
|
|
|
$
|
320.1
|
|
2.5
|
|
Selling, general, and administrative expenses
|
|
$
|
409.5
|
|
9.5
|
|
|
$
|
399.7
|
|
9.7
|
|
|
$
|
1,301.3
|
|
9.4
|
|
|
$
|
1,208.2
|
|
9.3
|
|
Interest expense
|
|
$
|
18.8
|
|
0.4
|
|
|
$
|
17.4
|
|
0.4
|
|
|
$
|
54.8
|
|
0.4
|
|
|
$
|
51.1
|
|
0.4
|
|
Earnings before income taxes
|
|
$
|
247.8
|
|
5.8
|
|
|
$
|
225.2
|
|
5.5
|
|
|
$
|
857.0
|
|
6.2
|
|
|
$
|
853.5
|
|
6.5
|
|
Net earnings
|
|
$
|
190.3
|
|
4.4
|
|
|
$
|
148.8
|
|
3.6
|
|
|
$
|
649.9
|
|
4.7
|
|
|
$
|
542.0
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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(1)
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Calculated as a percentage of net sales and operating revenues.
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|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
Three Months Ended November 30
|
|
Nine Months Ended November 30
|
|
(In millions)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Used vehicle gross profit
|
|
$
|
370.0
|
|
|
$
|
364.3
|
|
|
1.5
|
%
|
|
$
|
1,238.4
|
|
|
$
|
1,201.4
|
|
|
3.1
|
%
|
|
Wholesale vehicle gross profit
|
|
104.7
|
|
|
93.6
|
|
|
11.9
|
%
|
|
330.5
|
|
|
298.5
|
|
|
10.7
|
%
|
|
Other gross profit
|
|
94.5
|
|
|
81.3
|
|
|
16.4
|
%
|
|
312.3
|
|
|
292.2
|
|
|
6.9
|
%
|
|
Total
|
|
$
|
569.2
|
|
|
$
|
539.2
|
|
|
5.6
|
%
|
|
$
|
1,881.2
|
|
|
$
|
1,792.1
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit per Unit
|
|
|
|
|
|
|
|
Three Months Ended November 30
|
|
Nine Months Ended November 30
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
$ per unit(1) |
|
%(2) |
|
$ per unit(1) |
|
%(2) |
|
$ per unit(1) |
|
%(2) |
|
$ per unit(1) |
|
%(2) |
|
Used vehicle gross profit
|
|
$
|
2,133
|
|
10.4
|
|
$
|
2,148
|
|
10.6
|
|
|
$
|
2,177
|
|
10.7
|
|
$
|
2,181
|
|
11.0
|
|
Wholesale vehicle gross profit
|
|
$
|
949
|
|
17.4
|
|
$
|
933
|
|
16.9
|
|
|
$
|
959
|
|
17.9
|
|
$
|
965
|
|
18.1
|
|
Other gross profit
|
|
$
|
545
|
|
65.5
|
|
$
|
479
|
|
63.1
|
|
|
$
|
549
|
|
67.8
|
|
$
|
530
|
|
69.7
|
|
Total gross profit
|
|
$
|
3,281
|
|
13.3
|
|
$
|
3,178
|
|
13.1
|
|
|
$
|
3,308
|
|
13.6
|
|
$
|
3,253
|
|
13.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated as category gross profit divided by its respective
units sold, except the other and total categories, which are
divided by total used units sold.
|
|
(2)
|
|
Calculated as a percentage of its respective sales or revenue.
|
|
|
|
|
SG&A Expenses
|
|
|
|
|
|
|
|
Three Months Ended November 30
|
|
Nine Months Ended November 30
|
|
(In millions)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Compensation and benefits (1) |
|
$
|
204.5
|
|
|
$
|
209.8
|
|
|
(2.5
|
)%
|
|
$
|
684.8
|
|
|
$
|
650.4
|
|
|
5.3
|
%
|
|
Store occupancy costs
|
|
90.3
|
|
|
86.0
|
|
|
5.0
|
%
|
|
268.9
|
|
|
250.9
|
|
|
7.2
|
%
|
|
Advertising expense
|
|
37.4
|
|
|
36.5
|
|
|
2.2
|
%
|
|
122.5
|
|
|
114.3
|
|
|
7.2
|
%
|
|
Other overhead costs (2) |
|
77.3
|
|
|
67.4
|
|
|
14.8
|
%
|
|
225.1
|
|
|
192.6
|
|
|
16.8
|
%
|
|
Total SG&A expenses
|
|
$
|
409.5
|
|
|
$
|
399.7
|
|
|
2.5
|
%
|
|
$
|
1,301.3
|
|
|
$
|
1,208.2
|
|
|
7.7
|
%
|
|
SG&A per used unit
|
|
$
|
2,361
|
|
|
$
|
2,356
|
|
|
$
|
5
|
|
|
$
|
2,288
|
|
|
$
|
2,193
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, non-CAF bad debt, travel, charitable contributions and
other administrative expenses.
|
|
|
|
|
Components of CAF Income and Other CAF
Information
|
|
|
|
|
|
|
|
Three Months Ended November 30
|
|
Nine Months Ended November 30
|
|
(In millions)
|
|
2018
|
|
|
%
(1)
|
|
2017
|
|
|
%
(1)
|
|
2018
|
|
|
%
(1)
|
|
2017
|
|
|
%
(1)
|
|
Interest margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee income
|
|
$
|
247.8
|
|
|
8.0
|
|
|
$
|
217.1
|
|
|
7.6
|
|
|
$
|
722.3
|
|
|
8.0
|
|
|
$
|
637.4
|
|
|
7.7
|
|
|
Interest expense
|
|
(75.3
|
)
|
|
(2.4
|
)
|
|
(55.4
|
)
|
|
(2.0
|
)
|
|
(208.2
|
)
|
|
(2.3
|
)
|
|
(156.6
|
)
|
|
(1.9
|
)
|
|
Total interest margin
|
|
172.5
|
|
|
5.6
|
|
|
161.7
|
|
|
5.7
|
|
|
514.1
|
|
|
5.7
|
|
|
480.8
|
|
|
5.8
|
|
|
Provision for loan losses
|
|
(40.8
|
)
|
|
(1.3
|
)
|
|
(37.5
|
)
|
|
(1.3
|
)
|
|
(111.7
|
)
|
|
(1.2
|
)
|
|
(99.0
|
)
|
|
(1.2
|
)
|
|
Total interest margin after provision for loan losses
|
|
131.7
|
|
|
4.3
|
|
|
124.2
|
|
|
4.4
|
|
|
402.4
|
|
|
4.5
|
|
|
381.8
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total direct expenses
|
|
(21.9
|
)
|
|
(0.7
|
)
|
|
(21.4
|
)
|
|
(0.8
|
)
|
|
(67.0
|
)
|
|
(0.7
|
)
|
|
(61.7
|
)
|
|
(0.7
|
)
|
|
CarMax Auto Finance income
|
|
$
|
109.7
|
|
|
3.6
|
|
|
$
|
102.8
|
|
|
3.6
|
|
|
$
|
335.0
|
|
|
3.7
|
|
|
$
|
320.1
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average managed receivables
|
|
$
|
12,321.0
|
|
|
|
|
$
|
11,365.6
|
|
|
|
|
$
|
12,054.6
|
|
|
|
|
$
|
11,102.4
|
|
|
|
|
Net loans originated
|
|
$
|
1,503.7
|
|
|
|
|
$
|
1,454.5
|
|
|
|
|
$
|
4,847.6
|
|
|
|
|
$
|
4,542.8
|
|
|
|
|
Net penetration rate
|
|
44.1
|
%
|
|
|
|
44.2
|
%
|
|
|
|
43.6
|
%
|
|
|
|
43.1
|
%
|
|
|
|
Weighted average contract rate
|
|
8.5
|
%
|
|
|
|
7.7
|
%
|
|
|
|
8.5
|
%
|
|
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance for loan losses
|
|
$
|
138.3
|
|
|
|
|
$
|
127.7
|
|
|
|
|
$
|
138.3
|
|
|
|
|
$
|
127.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse facility information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending funded receivables
|
|
$
|
1,993.0
|
|
|
|
|
$
|
1,882.0
|
|
|
|
|
$
|
1,993.0
|
|
|
|
|
$
|
1,882.0
|
|
|
|
|
Ending unused capacity
|
|
$
|
1,257.0
|
|
|
|
|
$
|
1,058.0
|
|
|
|
|
$
|
1,257.0
|
|
|
|
|
$
|
1,058.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Annualized percentage of total average
managed receivables.
|
|
|
|
Earnings Highlights
|
|
|
|
|
Three Months Ended November 30
|
|
Nine Months Ended November 30
|
|
(In millions except per share data)
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Net earnings
|
|
$
|
190.3
|
|
|
$
|
148.8
|
|
|
27.9
|
%
|
|
$
|
649.9
|
|
|
$
|
542.0
|
|
|
19.9
|
%
|
|
Diluted weighted average shares outstanding
|
|
175.3
|
|
|
184.0
|
|
|
(4.7
|
)%
|
|
177.7
|
|
|
185.2
|
|
|
(4.1
|
)%
|
|
Net earnings per diluted share
|
|
$
|
1.09
|
|
|
$
|
0.81
|
|
|
34.6
|
%
|
|
$
|
3.66
|
|
|
$
|
2.93
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Planned Store Openings
We currently plan to open the following stores within 12 months from
November 30, 2018. During this period, we will be entering eight new
television markets and expanding our presence in seven existing
television markets. Of the 15 stores we plan to open during the 12
months ending November 30, 2019, 6 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
|
|
Amherst, New York (1) |
|
Buffalo (2)
|
|
Buffalo
|
|
Q4 Fiscal 2019
|
|
Melbourne, Florida (1) |
|
Orlando/Daytona Beach
|
|
Palm Bay/Melbourne
|
|
Q4 Fiscal 2019
|
|
Montgomery, Alabama
|
|
Montgomery/Selma (2)
|
|
Montgomery
|
|
Q4 Fiscal 2019
|
|
Vancouver, Washington
|
|
Portland
|
|
Portland/Vancouver
|
|
Q4 Fiscal 2019
|
|
Kenner, Louisiana
|
|
New Orleans (2)
|
|
New Orleans
|
|
Q4 Fiscal 2019
|
|
Memphis, Tennessee
|
|
Memphis
|
|
Memphis
|
|
Q1 Fiscal 2020
|
|
Killeen, Texas
|
|
Waco/Temple (2) |
|
Killeen/Temple
|
|
Q1 Fiscal 2020
|
|
Pharr, Texas
|
|
Harlingen/Brownsville/McAllen (2)
|
|
McAllen/Edinburg/Mission
|
|
Q1 Fiscal 2020
|
|
Pleasant Hill, California
|
|
San Francisco/Oakland/San Jose
|
|
San Francisco/Oakland
|
|
Q2 Fiscal 2020
|
|
Lubbock, Texas
|
|
Lubbock (2)
|
|
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 (2) |
|
Riverside/San Bernadino/Ontario
|
|
Q3 Fiscal 2020
|
|
Gulfport, Mississippi
|
|
Biloxi/Gulfport (2) |
|
Gulfport/Biloxi/Pascagoula
|
|
Q3 Fiscal 2020
|
|
Bogart, Georgia
|
|
Atlanta
|
|
Athens/Clarke County
|
|
Q3 Fiscal 2020
|
|
|
|
|
|
|
|
|
(1)
|
|
Store opened in December 2018.
|
|
(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,
December 21, 2018. 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 75175333.
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 March 28, 2019. A telephone replay also will be available
through December 28, 2018, 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 75175333.
Fourth Quarter Fiscal 2019 Earnings Release Date
We currently plan to release results for the fourth quarter ending
February 28, 2019, on Friday, March 29, 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 mid-March 2019.
About CarMax
CarMax is the nation’s largest retailer of used cars, currently
operating 200 stores in 41 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 25
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 approximately
25,000 associates nationwide andfor 14 consecutive years
has been named as one of the Fortune 100 Best Companies to
Work For®. During the twelve months ended February 28, 2018,
the company retailed 721,512 used vehicles and sold 408,509 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, 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.
-
Changes in tax law, including the effect of the 2017 Tax Act.
-
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 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, 2018,
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 November 30
|
|
Nine Months Ended November 30
|
|
(In thousands except per share data)
|
|
2018
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
2018
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
SALES AND OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle sales
|
|
$
|
3,547,925
|
|
82.6
|
|
$
|
3,425,540
|
|
|
83.4
|
|
$
|
11,544,340
|
|
83.3
|
|
$
|
10,963,113
|
|
|
84.1
|
|
Wholesale vehicle sales
|
|
603,584
|
|
14.1
|
|
552,754
|
|
|
13.5
|
|
1,849,225
|
|
13.3
|
|
1,653,911
|
|
|
12.7
|
|
Other sales and revenues
|
|
144,362
|
|
3.4
|
|
128,723
|
|
|
3.1
|
|
460,933
|
|
3.3
|
|
418,967
|
|
|
3.2
|
|
NET SALES AND OPERATING REVENUES
|
|
4,295,871
|
|
100.0
|
|
4,107,017
|
|
|
100.0
|
|
13,854,498
|
|
100.0
|
|
13,035,991
|
|
|
100.0
|
|
COST OF SALES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Used vehicle cost of sales
|
|
3,177,953
|
|
74.0
|
|
3,061,193
|
|
|
74.5
|
|
10,305,945
|
|
74.4
|
|
9,761,690
|
|
|
74.9
|
|
Wholesale vehicle cost of sales
|
|
498,840
|
|
11.6
|
|
459,153
|
|
|
11.2
|
|
1,518,698
|
|
11.0
|
|
1,355,361
|
|
|
10.4
|
|
Other cost of sales
|
|
49,841
|
|
1.2
|
|
47,483
|
|
|
1.2
|
|
148,642
|
|
1.1
|
|
126,809
|
|
|
1.0
|
|
TOTAL COST OF SALES
|
|
3,726,634
|
|
86.7
|
|
3,567,829
|
|
|
86.9
|
|
11,973,285
|
|
86.4
|
|
11,243,860
|
|
|
86.3
|
|
GROSS PROFIT
|
|
569,237
|
|
13.3
|
|
539,188
|
|
|
13.1
|
|
1,881,213
|
|
13.6
|
|
1,792,131
|
|
|
13.7
|
|
CARMAX AUTO FINANCE INCOME
|
|
109,725
|
|
2.6
|
|
102,810
|
|
|
2.5
|
|
334,985
|
|
2.4
|
|
320,109
|
|
|
2.5
|
|
Selling, general and administrative expenses
|
|
409,520
|
|
9.5
|
|
399,672
|
|
|
9.7
|
|
1,301,308
|
|
9.4
|
|
1,208,237
|
|
|
9.3
|
|
Interest expense
|
|
18,814
|
|
0.4
|
|
17,405
|
|
|
0.4
|
|
54,816
|
|
0.4
|
|
51,079
|
|
|
0.4
|
|
Other expense (income)
|
|
2,820
|
|
0.1
|
|
(279
|
)
|
|
—
|
|
3,097
|
|
—
|
|
(561
|
)
|
|
—
|
|
Earnings before income taxes
|
|
247,808
|
|
5.8
|
|
225,200
|
|
|
5.5
|
|
856,977
|
|
6.2
|
|
853,485
|
|
|
6.5
|
|
Income tax provision
|
|
57,497
|
|
1.3
|
|
76,360
|
|
|
1.9
|
|
207,120
|
|
1.5
|
|
311,519
|
|
|
2.4
|
|
NET EARNINGS
|
|
$
|
190,311
|
|
4.4
|
|
$
|
148,840
|
|
|
3.6
|
|
$
|
649,857
|
|
4.7
|
|
$
|
541,966
|
|
|
4.2
|
|
WEIGHTED AVERAGE COMMON SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
173,816
|
|
|
|
181,888
|
|
|
|
|
176,088
|
|
|
|
183,324
|
|
|
|
|
Diluted
|
|
175,321
|
|
|
|
184,033
|
|
|
|
|
177,656
|
|
|
|
185,201
|
|
|
|
|
NET EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.09
|
|
|
|
$
|
0.82
|
|
|
|
|
$
|
3.69
|
|
|
|
$
|
2.96
|
|
|
|
|
Diluted
|
|
$
|
1.09
|
|
|
|
$
|
0.81
|
|
|
|
|
$
|
3.66
|
|
|
|
$
|
2.93
|
|
|
|
|
|
|
(1)
|
|
Percents are calculated as a percentage of net sales and
operating revenues and may not total due to rounding.
|
|
|
|
|
CARMAX, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(UNAUDITED)
|
|
|
|
|
As of
|
|
|
November 30
|
|
February 28
|
|
November 30
|
|
(In thousands except share data)
|
|
2018
|
|
2018
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
35,049
|
|
|
$
|
44,525
|
|
|
$
|
26,287
|
|
|
Restricted cash from collections on auto loan receivables
|
|
426,613
|
|
|
399,442
|
|
|
388,945
|
|
|
Accounts receivable, net
|
|
111,156
|
|
|
133,321
|
|
|
95,841
|
|
|
Inventory
|
|
2,424,700
|
|
|
2,390,694
|
|
|
2,440,551
|
|
|
Other current assets
|
|
59,901
|
|
|
93,462
|
|
|
53,299
|
|
|
TOTAL CURRENT ASSETS
|
|
3,057,419
|
|
|
3,061,444
|
|
|
3,004,923
|
|
|
Auto loan receivables, net
|
|
12,299,270
|
|
|
11,535,704
|
|
|
11,376,825
|
|
|
Property and equipment, net
|
|
2,800,051
|
|
|
2,667,061
|
|
|
2,634,442
|
|
|
Deferred income taxes
|
|
57,893
|
|
|
63,256
|
|
|
133,173
|
|
|
Other assets
|
|
182,179
|
|
|
158,807
|
|
|
154,051
|
|
|
TOTAL ASSETS
|
|
$
|
18,396,812
|
|
|
$
|
17,486,272
|
|
|
$
|
17,303,414
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
558,324
|
|
|
$
|
529,733
|
|
|
$
|
519,984
|
|
|
Accrued expenses and other current liabilities
|
|
280,104
|
|
|
278,771
|
|
|
233,397
|
|
|
Accrued income taxes
|
|
1,634
|
|
|
—
|
|
|
—
|
|
|
Short-term debt
|
|
436
|
|
|
127
|
|
|
593
|
|
|
Current portion of finance and capital lease obligations
|
|
11,092
|
|
|
9,994
|
|
|
9,590
|
|
|
Current portion of non-recourse notes payable
|
|
373,283
|
|
|
355,433
|
|
|
348,114
|
|
|
TOTAL CURRENT LIABILITIES
|
|
1,224,873
|
|
|
1,174,058
|
|
|
1,111,678
|
|
|
Long-term debt, excluding current portion
|
|
992,091
|
|
|
995,479
|
|
|
1,042,874
|
|
|
Finance and capital lease obligations, excluding current portion
|
|
504,776
|
|
|
490,369
|
|
|
490,968
|
|
|
Non-recourse notes payable, excluding current portion
|
|
11,997,315
|
|
|
11,266,964
|
|
|
11,117,495
|
|
|
Other liabilities
|
|
242,644
|
|
|
242,553
|
|
|
239,672
|
|
|
TOTAL LIABILITIES
|
|
14,961,699
|
|
|
14,169,423
|
|
|
14,002,687
|
|
|
|
|
|
|
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
Common stock, $0.50 par value; 350,000,000 shares authorized;
171,785,396 and 179,747,894 shares issued and outstanding as of
November 30, 2018 and February 28, 2018, respectively
|
|
85,893
|
|
|
89,874
|
|
|
90,745
|
|
|
Capital in excess of par value
|
|
1,255,966
|
|
|
1,234,047
|
|
|
1,233,062
|
|
|
Accumulated other comprehensive loss
|
|
(54,137
|
)
|
|
(54,312
|
)
|
|
(51,304
|
)
|
|
Retained earnings
|
|
2,147,391
|
|
|
2,047,240
|
|
|
2,028,224
|
|
|
TOTAL SHAREHOLDERS’ EQUITY
|
|
3,435,113
|
|
|
3,316,849
|
|
|
3,300,727
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
18,396,812
|
|
|
$
|
17,486,272
|
|
|
$
|
17,303,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CARMAX, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
Nine Months Ended November 30
|
|
(In thousands)
|
|
2018
|
|
2017
(1)
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net earnings
|
|
$
|
649,857
|
|
|
$
|
541,966
|
|
|
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
135,609
|
|
|
133,175
|
|
|
Share-based compensation expense
|
|
61,403
|
|
|
52,363
|
|
|
Provision for loan losses
|
|
111,703
|
|
|
98,982
|
|
|
Provision for cancellation reserves
|
|
54,952
|
|
|
50,850
|
|
|
Deferred income tax provision
|
|
909
|
|
|
14,384
|
|
|
Other
|
|
4,104
|
|
|
1,223
|
|
|
Net decrease (increase) in:
|
|
|
|
|
|
Accounts receivable, net
|
|
22,165
|
|
|
56,547
|
|
|
Inventory
|
|
(34,006
|
)
|
|
(179,988
|
)
|
|
Other current assets
|
|
40,952
|
|
|
(5,422
|
)
|
|
Auto loan receivables, net
|
|
(875,269
|
)
|
|
(879,731
|
)
|
|
Other assets
|
|
(6,734
|
)
|
|
(348
|
)
|
|
Net increase (decrease) in:
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities
and accrued income taxes
|
|
22,236
|
|
|
(9,373
|
)
|
|
Other liabilities
|
|
(73,251
|
)
|
|
(67,750
|
)
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
114,630
|
|
|
(193,122
|
)
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
Capital expenditures
|
|
(243,311
|
)
|
|
(227,559
|
)
|
|
Proceeds from disposal of property and equipment
|
|
680
|
|
|
96
|
|
|
Purchases of investments
|
|
(5,470
|
)
|
|
(6,612
|
)
|
|
Sales of investments
|
|
1,104
|
|
|
466
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
(246,997
|
)
|
|
(233,609
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
Increase in short-term debt, net
|
|
309
|
|
|
531
|
|
|
Proceeds from issuances of long-term debt
|
|
2,758,000
|
|
|
2,996,700
|
|
|
Payments on long-term debt
|
|
(2,761,700
|
)
|
|
(2,906,700
|
)
|
|
Cash paid for debt issuance costs
|
|
(12,329
|
)
|
|
(11,524
|
)
|
|
Payments on finance and capital lease obligations
|
|
(7,247
|
)
|
|
(6,704
|
)
|
|
Issuances of non-recourse notes payable
|
|
8,183,502
|
|
|
7,720,963
|
|
|
Payments on non-recourse notes payable
|
|
(7,435,128
|
)
|
|
(6,976,360
|
)
|
|
Repurchase and retirement of common stock
|
|
(633,170
|
)
|
|
(454,960
|
)
|
|
Equity issuances
|
|
54,580
|
|
|
66,549
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
146,817
|
|
|
428,495
|
|
|
Increase in cash, cash equivalents and restricted cash
|
|
14,450
|
|
|
1,764
|
|
|
Cash, cash equivalents and restricted cash at beginning of year
|
|
554,898
|
|
|
523,865
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
|
|
$
|
569,348
|
|
|
$
|
525,629
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In connection with our adoption of Financial Accounting
Standards Board (“FASB”) ASU 2016-18 during the first quarter of
fiscal 2019, restricted cash is now included with cash and cash
equivalents in the reconciliation of beginning of year and end of
period total amounts above. Prior period amounts have been
reclassified to conform to the current period’s presentation.
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181221005070/en/
Investors:
Katharine Kenny, Vice President, Investor Relations,
(804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804)
935-4597
Media:
pr@carmax.com, (855)
887-2915
Source: CarMax, Inc.