CarMax, Inc. (NYSE:KMX), the nation’s largest retailer of used
cars, today reported results for the third quarter ended November
30, 2019.
Highlights:
- Net sales and operating revenues increased 11.5% to $4.79
billion.
- Used unit sales in comparable stores increased 7.5%.
- Total used unit sales rose 11.0%.
- Total wholesale unit sales increased 3.3%.
- CarMax Auto Finance (CAF) income increased 3.9% to $114.0
million.
- Net earnings declined 9.0% to $173.2 million and net earnings
per diluted share declined 4.6% to $1.04.
- Omni-channel experience remains on track to be available to the
majority of customers by the end of fiscal 2020, and we plan to
complete the roll out in fiscal 2021.
CEO Commentary:
“We are pleased with our strong unit sales growth this quarter,”
said Bill Nash, president and chief executive officer. “Our retail
sales strength was a direct result of our ability to execute well,
with solid performance in operations, financing, customer
progression, and marketing all contributing to our growth. In
addition, we benefited from a favorable underlying used car sales
environment.”
Commenting on net earnings and net earnings per diluted share
for the third quarter, Nash noted that the year-over-year decrease
was largely the result of a significantly higher stock-based
compensation expense reflecting an increasing share price during
the quarter and a planned increase in third quarter advertising
expense related to the company’s omni-channel rollout and the
launch of a new national advertising campaign.
“We remain excited about the unique and powerful experience we
are providing through omni-channel, which is empowering customers
to shop on their terms, whenever and wherever it is most convenient
for them,” added Nash. “Our ability to seamlessly integrate our
physical and digital experiences while continuing to drive
comparable store sales growth, maintain an attractive used vehicle
gross profit per unit, and deliver our exceptional customer service
is a key differentiator.”
Third Quarter Business Performance
Review:
Sales. Total used vehicle
unit sales increased 11.0%, including a 7.5% increase in comparable
store used unit sales compared with the prior year’s third quarter.
The comparable store sales performance reflected strong conversion,
which was aided by continued support from our third-party lending
partners; solid growth in web traffic; and a favorable consumer
response to our consumer initiatives.
Total wholesale vehicle unit sales increased 3.3% compared with
the third quarter of fiscal 2019, driven by the growth in our store
base, partially offset by lower appraisal traffic.
Other sales and revenues increased 4.1% compared with the third
quarter of fiscal 2019. Extended protection plan (EPP) net revenues
rose $11.4 million, largely reflecting our strong used unit growth
and increased margins.
Gross Profit. Total gross
profit increased 7.8% versus last year’s third quarter to $613.6
million. Used vehicle gross profit rose 11.7%, reflecting the
increase in total used unit sales and a modest improvement in used
vehicle gross profit per unit to $2,145 compared with $2,133 in the
prior year’s quarter. Wholesale vehicle gross profit increased 2.0%
versus the prior year’s quarter, driven by the increase in
wholesale unit sales, partially offset by a decrease in wholesale
vehicle gross profit per unit to $937 compared with $949 in last
year’s third quarter. Other gross profit declined 0.8%, as the
growth in EPP profits was offset by an $11.0 million decline in
service department profits. The current quarter’s service profits
were adversely affected by a recent increase in our post-sale
warranty period from 30 to 90 days, near-term inefficiencies
resulting from our recent ramp in technician hiring to support
future sales growth, and higher stock-based compensation expense
for service operations associates.
SG&A. Compared with the
third quarter of fiscal 2019, SG&A expenses increased 18.4% to
$484.8 million. Stock-based compensation expense rose $19.0
million, representing roughly one-quarter of the total
year-over-year increase in SG&A expense. Other factors
contributing to the change included a planned increase in
advertising expense, the 10% increase in our store base since the
beginning of last year’s third quarter (representing the addition
of 19 stores), higher variable costs associated with our strong
retail sales growth, and continued spending to advance our
technology platforms and support our core and omni-channel
strategic initiatives.
The growth in stock-based compensation expense was primarily
driven by the 17% increase in our stock price during the current
quarter versus the 15% decrease during the prior year quarter.
Advertising expense increased $14.5 million due to both our new
national advertising campaign launched in October and incremental
marketing to support our omni-channel roll out. For the full year,
we expect our fiscal 2020 advertising expense per retail unit to be
slightly higher than the fiscal 2019 level. SG&A per used unit
was $2,518 in the current quarter, up $157 year-over-year. The
growth in stock-based compensation expense increased SG&A per
used unit by $94.
CarMax Auto
Finance.(1) Compared with last year’s third
quarter, CAF income increased 3.9% to $114.0 million, reflecting a
7.5% increase in average managed receivables and a modest
improvement in the total interest margin percentage, slightly
offset by a higher loan loss provision. The provision for loan
losses increased to $49.0 million from $40.8 million in the prior
year quarter, reflecting both the growth in average managed
receivables and a small increase in the provision as a percentage
of managed receivables. Net losses remained well within our
long-term targeted performance range. The allowance for loan losses
was 1.15% of ending managed receivables as of November 30, 2019,
comparable with 1.15% as of August 31, 2019, and up versus 1.12% as
of November 30, 2018. The total interest margin percentage, which
represents the spread between interest and fees charged to
consumers and our funding costs, improved to 5.7% of average
managed receivables from 5.6% in the prior year’s third
quarter.
Other Income / Expense. We
reported other income of $6.6 million in the third quarter of
fiscal 2020 compared with other expense of $2.8 million in the
prior year’s third quarter. The increase was primarily due to an
unrealized gain on an investment recorded in the current year
period.
Share Repurchase Activity.
We repurchased 1.3 million shares of common stock for $114.8
million pursuant to our share repurchase program during the third
quarter of fiscal 2020. As of November 30, 2019, we had $1.67
billion remaining available for repurchase under the outstanding
authorization.
(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 November
30
Nine Months Ended November
30
(In millions)
2019
2018
Change
2019
2018
Change
Used vehicle sales
$
4,028.8
$
3,547.9
13.6
%
$
12,915.8
$
11,544.3
11.9
%
Wholesale vehicle sales
611.0
603.6
1.2
%
1,951.7
1,849.2
5.5
%
Other sales and revenues:
Extended protection plan revenues
97.0
85.6
13.3
%
321.7
284.2
13.2
%
Third-party finance fees, net
(9.4
)
(8.4
)
(12.2
)%
(35.2
)
(32.5
)
(8.2
)%
Other
62.6
67.2
(6.7
)%
203.5
209.2
(2.7
)%
Total other sales and revenues
150.2
144.4
4.1
%
490.0
460.9
6.3
%
Total net sales and operating revenues
$
4,790.0
$
4,295.9
11.5
%
$
15,357.5
$
13,854.5
10.8
%
Unit Sales
Three Months Ended November
30
Nine Months Ended November
30
2019
2018
Change
2019
2018
Change
Used vehicles
192,563
173,476
11.0
%
625,922
568,754
10.1
%
Wholesale vehicles
113,996
110,403
3.3
%
361,277
344,604
4.8
%
Average Selling Prices
Three Months Ended November
30
Nine Months Ended November
30
2019
2018
Change
2019
2018
Change
Used vehicles
$
20,710
$
20,273
2.2
%
$
20,431
$
20,109
1.6
%
Wholesale vehicles
$
5,079
$
5,214
(2.6
)%
$
5,128
$
5,120
0.2
%
Vehicle Sales Changes
Three Months Ended
November 30
Nine Months Ended
November 30
2019
2018
2019
2018
Used vehicle units
11.0
%
2.3
%
10.1
%
3.2
%
Used vehicle revenues
13.6
%
3.6
%
11.9
%
5.3
%
Wholesale vehicle units
3.3
%
10.0
%
4.8
%
11.4
%
Wholesale vehicle revenues
1.2
%
9.2
%
5.5
%
11.8
%
Comparable Store Used Vehicle Sales
Changes (1)
Three Months Ended
November 30
Nine Months Ended
November 30
2019
2018
2019
2018
Used vehicle units
7.5
%
(1.2
)%
6.7
%
(0.5
)%
Used vehicle revenues
10.0
%
0.1
%
8.5
%
1.5
%
(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
November 30
Nine Months Ended
November 30
2019
2018
2019
2018
CAF (2)
47.2
%
49.1
%
46.7
%
48.9
%
Tier 2 (3)
20.4
%
18.3
%
20.1
%
17.4
%
Tier 3 (4)
9.5
%
9.3
%
10.3
%
9.7
%
Other (5)
22.9
%
23.3
%
22.9
%
24.0
%
Total
100.0
%
100.0
%
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 November
30
Nine Months Ended November
30
(In millions)
2019
% (1)
2018
% (1)
2019
% (1)
2018
% (1)
Net sales and operating revenues
$
4,790.0
100.0
$
4,295.9
100.0
$
15,357.5
100.0
$
13,854.5
100.0
Gross profit
$
613.6
12.8
$
569.2
13.3
$
2,049.5
13.3
$
1,881.2
13.6
CarMax Auto Finance income
$
114.0
2.4
$
109.7
2.6
$
344.1
2.2
$
335.0
2.4
Selling, general, and administrative
expenses
$
484.8
10.1
$
409.5
9.5
$
1,455.3
9.5
$
1,301.3
9.4
Interest expense
$
21.8
0.5
$
18.8
0.4
$
60.7
0.4
$
54.8
0.4
Earnings before income taxes
$
227.6
4.8
$
247.8
5.8
$
884.4
5.8
$
857.0
6.2
Net earnings
$
173.2
3.6
$
190.3
4.4
$
673.5
4.4
$
649.9
4.7
(1)
Calculated as a percentage of net
sales and operating revenues.
Gross Profit
Three Months Ended November
30
Nine Months Ended November
30
(In millions)
2019
2018
Change
2019
2018
Change
Used vehicle gross profit
$
413.1
$
370.0
11.7
%
$
1,366.3
$
1,238.4
10.3
%
Wholesale vehicle gross profit
106.8
104.7
2.0
%
350.1
330.5
5.9
%
Other gross profit
93.7
94.5
(0.8
)%
333.1
312.3
6.6
%
Total
$
613.6
$
569.2
7.8
%
$
2,049.5
$
1,881.2
8.9
%
Gross Profit per Unit
Three Months Ended November
30
Nine Months Ended November
30
2019
2018
2019
2018
$ per unit(1)
%(2)
$ per unit(1)
%(2)
$ per unit(1)
%(2)
$ per unit(1)
%(2)
Used vehicle gross profit
$
2,145
10.3
$
2,133
10.4
$
2,183
10.6
$
2,177
10.7
Wholesale vehicle gross profit
$
937
17.5
$
949
17.4
$
969
17.9
$
959
17.9
Other gross profit
$
487
62.4
$
545
65.5
$
532
68.0
$
549
67.8
Total gross profit
$
3,187
12.8
$
3,281
13.3
$
3,274
13.3
$
3,308
13.6
(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)
2019
2018
Change
2019
2018
Change
Compensation and benefits:
Compensation and benefits, excluding
share-based compensation expense
$
217.2
$
197.2
10.1
%
$
674.7
$
627.8
7.5
%
Share-based compensation expense
26.3
7.3
260.3
%
89.0
57.0
56.1
%
Total compensation and benefits (1)
$
243.5
$
204.5
19.1
%
$
763.7
$
684.8
11.5
%
Store occupancy costs
98.0
90.3
8.5
%
291.2
268.9
8.3
%
Advertising expense
51.8
37.4
38.8
%
140.6
122.5
14.7
%
Other overhead costs (2)
91.5
77.3
18.3
%
259.8
225.1
15.4
%
Total SG&A expenses
$
484.8
$
409.5
18.4
%
$
1,455.3
$
1,301.3
11.8
%
SG&A per used unit
$
2,518
$
2,361
$
157
$
2,325
$
2,288
$
37
(1)
Excludes compensation and benefits related
to reconditioning and vehicle repair service, which are included in
cost of sales.
(2)
Includes IT expenses, insurance,
preopening and relocation costs, non-CAF bad debt, travel,
charitable contributions and other administrative expenses.
Components of CAF Income and Other CAF
Information
Three Months Ended November
30
Nine Months Ended November
30
(In millions)
2019
% (1)
2018
% (1)
2019
% (1)
2018
% (1)
Interest margin:
Interest and fee income
$
278.9
8.4
$
247.8
8.0
$
820.8
8.4
$
722.3
8.0
Interest expense
(90.4
)
(2.7
)
(75.3
)
(2.4
)
(268.4
)
(2.8
)
(208.2
)
(2.3
)
Total interest margin
188.5
5.7
172.5
5.6
552.4
5.7
514.1
5.7
Provision for loan losses
(49.0
)
(1.5
)
(40.8
)
(1.3
)
(132.7
)
(1.4
)
(111.7
)
(1.2
)
Total interest margin after provision for
loan losses
139.5
4.2
131.7
4.3
419.7
4.3
402.4
4.5
Total other expense
—
—
(0.1
)
—
—
—
(0.4
)
—
Total direct expenses
(25.5
)
(0.8
)
(21.9
)
(0.7
)
(75.6
)
(0.8
)
(67.0
)
(0.7
)
CarMax Auto Finance income
$
114.0
3.4
$
109.7
3.6
$
344.1
3.5
$
335.0
3.7
Total average managed receivables
$
13,239.2
$
12,321.0
$
12,986.2
$
12,054.6
Net loans originated
$
1,698.2
$
1,503.7
$
5,297.1
$
4,847.6
Net penetration rate
43.3
%
44.1
%
42.3
%
43.6
%
Weighted average contract rate
8.1
%
8.5
%
8.5
%
8.5
%
Ending allowance for loan losses
$
153.6
$
138.3
$
153.6
$
138.3
Warehouse facility information:
Ending funded receivables
$
2,305.7
$
1,993.0
$
2,305.7
$
1,993.0
Ending unused capacity
$
1,194.3
$
1,257.0
$
1,194.3
$
1,257.0
(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)
2019
2018
Change
2019
2018
Change
Net earnings
$
173.2
$
190.3
(9.0
)%
$
673.5
$
649.9
3.6
%
Diluted weighted average shares
outstanding
166.5
175.3
(5.0
)%
167.2
177.7
(5.9
)%
Net earnings per diluted share
$
1.04
$
1.09
(4.6
)%
$
4.03
$
3.66
10.1
%
Store Openings
During the third quarter of fiscal 2020, we opened four stores
-- two in new markets (Palm Springs, California and Gulfport,
Mississippi) and two in existing markets (Dallas, Texas and
Atlanta, Georgia).
We currently plan to open the following stores during the 12
months ending November 30, 2020. During this period, we will be
entering one new television market and expanding our presence in
eight existing television markets. Of the 11 stores we plan to open
during this period, 3 will be in Metropolitan Statistical Areas
having populations of 600,000 or less, which we define as small
markets. Normal construction, permitting or other scheduling delays
could shift the opening dates of any of these stores into a later
period.
Location
Television Market
Metropolitan Statistical
Area
Planned Opening Date
Fort Wayne, Indiana
Fort Wayne (1)
Fort Wayne
Q4 Fiscal 2020
Salem, Oregon
Portland
Salem
Q4 Fiscal 2020
Murfreesboro, Tennessee
Nashville
Nashville/Davidson/Murfreesboro
Q4 Fiscal 2020
Easton, Pennsylvania
Philadelphia
Allentown/Bethlehem/Easton
Q1 Fiscal 2021
Bradenton, Florida
Tampa
North Port/Sarasota/Bradenton
Q1 Fiscal 2021
Canoga Park, California
Los Angeles
Los Angeles
Q1 Fiscal 2021
Covington, Louisiana
New Orleans
New Orleans
Q1 Fiscal 2021
West Palm Beach, Florida
Miami/Ft. Lauderdale/W. Palm
Beach
Miami/Ft. Lauderdale/W. Palm
Beach
Q2 Fiscal 2021
Jacksonville, N. Carolina
Greenville/New
Bern/Washington
Jacksonville
Q2 Fiscal 2021
Lakeland, Florida
Tampa
Lakeland/Winter Haven
Q3 Fiscal 2021
Norco, California
Los Angeles
Riverside/San
Bernardino/Ontario
Q3 Fiscal 2021
(1)
Represents new television market as of
planned store opening date.
Conference Call
Information
We will host a conference call for investors at 9:00 a.m. ET
today, December 20, 2019. Domestic investors may access the call at
1-888-298-3261 (international callers dial 1-706-679-7457). The
conference I.D. for both domestic and international callers is
1888153. 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 April 1, 2020. A telephone replay also
will be available for approximately one week 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
1888153.
Fourth Quarter Fiscal 2020 Earnings
Release Date
We currently plan to release results for the fourth quarter and
fiscal year ending February 29, 2020, on Thursday, April 2, 2020,
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 March
2020.
About CarMax
CarMax, the nation’s largest retailer of used cars,
revolutionized the automotive retail industry by driving integrity,
honesty and transparency in every interaction. CarMax continues to
innovate and is currently rolling out an omni-channel experience,
providing customers the option to complete transactions entirely
from home, in store, or in a seamless combination of both. CarMax
has more than 200 stores nationwide, and during the latest fiscal
year sold nearly 750,000 used cars and 450,000 wholesale vehicles
at its in-store auctions. With more than 25,000 associates, CarMax
is proud to have been recognized for 15 consecutive years as one of
the Fortune 100 Best Companies to Work For®. For more
information, visit www.carmax.com.
Forward-Looking
Statements
We caution readers that the statements contained in this release
about our future business plans, operations, opportunities or
prospects, including without limitation any statements or factors
regarding expected sales, margins, expenses, capital expenditures,
debt obligations, tax rates or earnings, are forward-looking
statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. You can identify
these forward-looking statements by the use of words such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,”
“may,” “outlook,” “plan,” “predict,” “should,” “will” and other
similar expressions, whether in the negative or affirmative. Such
forward-looking statements are based upon management’s current
knowledge and assumptions about future events and involve risks and
uncertainties that could cause actual results to differ materially
from anticipated results. Among the factors that could cause actual
results and outcomes to differ materially from those contained in
the forward-looking statements are the following:
- Changes in the competitive landscape and/or our failure to
successfully adjust to such changes.
- Events that damage our reputation or harm the perception of the
quality of our brand.
- Changes in general or regional U.S. economic conditions.
- Our inability to realize the benefits associated with our
omni-channel initiatives.
- Changes in the availability or cost of capital and working
capital financing, including changes related to the asset-backed
securitization market.
- Our inability to recruit, develop and retain associates and
maintain positive associate relations.
- The loss of key associates from our store, regional or
corporate management teams or a significant increase in labor
costs.
- Security breaches or other events that result in the
misappropriation, loss or other unauthorized disclosure of
confidential customer, associate or corporate information.
- Significant changes in prices of new and used vehicles.
- Changes in economic conditions or other factors that result in
greater credit losses for CAF’s portfolio of auto loan receivables
than anticipated.
- A reduction in the availability of or access to sources of
inventory or a failure to expeditiously liquidate inventory.
- Changes in consumer credit availability provided by our
third-party finance providers.
- Changes in the availability of extended protection plan
products from third-party providers.
- Factors related to the regulatory and legislative environment
in which we operate.
- Factors related to geographic and sales growth, including the
inability to effectively manage our growth.
- The failure of or inability to sufficiently enhance key
information systems.
- The effect of various litigation matters.
- Adverse conditions affecting one or more automotive
manufacturers, and manufacturer recalls.
- The inaccuracy of estimates and assumptions used in the
preparation of our financial statements, or the effect of new
accounting requirements or changes to U.S. generally accepted
accounting principles.
- The volatility in the market price for our common stock.
- The performance of the third-party vendors we rely on for key
components of our business.
- Factors related to seasonal fluctuations in our business.
- The occurrence of severe weather events.
- Factors related to the geographic concentration of our
stores.
For more details on factors that could affect expectations, see
our Annual Report on Form 10-K for the fiscal year ended February
28, 2019, and our quarterly or current reports as filed with or
furnished to the U.S. Securities and Exchange Commission. Our
filings are publicly available on our investor information home
page at investors.carmax.com. Requests for information may also be
made to the Investor Relations Department by email to
investor_relations@carmax.com or by calling (804) 747-0422 x7865.
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)
2019
% (1)
2018
% (1)
2019
% (1)
2018
% (1)
SALES AND OPERATING REVENUES:
Used vehicle sales
$
4,028,811
84.1
$
3,547,925
82.6
$
12,915,763
84.1
$
11,544,340
83.3
Wholesale vehicle sales
610,983
12.8
603,584
14.1
1,951,718
12.7
1,849,225
13.3
Other sales and revenues
150,234
3.1
144,362
3.4
490,016
3.2
460,933
3.3
NET SALES AND OPERATING
REVENUES
4,790,028
100.0
4,295,871
100.0
15,357,497
100.0
13,854,498
100.0
COST OF SALES:
Used vehicle cost of sales
3,615,704
75.5
3,177,953
74.0
11,549,445
75.2
10,305,945
74.4
Wholesale vehicle cost of sales
504,177
10.5
498,840
11.6
1,601,573
10.4
1,518,698
11.0
Other cost of sales
56,500
1.2
49,841
1.2
156,996
1.0
148,642
1.1
TOTAL COST OF SALES
4,176,381
87.2
3,726,634
86.7
13,308,014
86.7
11,973,285
86.4
GROSS PROFIT
613,647
12.8
569,237
13.3
2,049,483
13.3
1,881,213
13.6
CARMAX AUTO FINANCE INCOME
114,033
2.4
109,725
2.6
344,123
2.2
334,985
2.4
Selling, general and administrative
expenses
484,848
10.1
409,520
9.5
1,455,339
9.5
1,301,308
9.4
Interest expense
21,843
0.5
18,814
0.4
60,700
0.4
54,816
0.4
Other (income) expense
(6,570
)
(0.1
)
2,820
0.1
(6,786
)
—
3,097
—
Earnings before income taxes
227,559
4.8
247,808
5.8
884,353
5.8
856,977
6.2
Income tax provision
54,403
1.1
57,497
1.3
210,854
1.4
207,120
1.5
NET EARNINGS
$
173,156
3.6
$
190,311
4.4
$
673,499
4.4
$
649,857
4.7
WEIGHTED AVERAGE COMMON SHARES:
Basic
164,273
173,816
165,321
176,088
Diluted
166,534
175,321
167,154
177,656
NET EARNINGS PER SHARE:
Basic
$
1.05
$
1.09
$
4.07
$
3.69
Diluted
$
1.04
$
1.09
$
4.03
$
3.66
(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)
2019
2019 (1)
2018 (1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
56,583
$
46,938
$
35,049
Restricted cash from collections on auto
loan receivables
458,493
440,669
426,613
Accounts receivable, net
142,737
139,850
111,156
Inventory
2,682,574
2,519,455
2,424,700
Other current assets
109,857
67,101
59,901
TOTAL CURRENT ASSETS
3,450,244
3,214,013
3,057,419
Auto loan receivables, net
13,276,654
12,428,487
12,299,270
Property and equipment, net
3,036,663
2,828,058
2,800,051
Deferred income taxes
67,162
61,346
57,893
Operating lease assets
454,708
—
—
Other assets
201,799
185,963
182,179
TOTAL ASSETS
$
20,487,230
$
18,717,867
$
18,396,812
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
641,434
$
593,171
$
558,324
Accrued expenses and other current
liabilities
340,475
318,204
281,012
Accrued income taxes
1,497
3,784
1,634
Current portion of operating lease
liabilities
30,813
—
—
Short-term debt
421
1,129
436
Current portion of long-term debt
8,541
10,177
10,184
Current portion of non-recourse notes
payable
397,860
385,044
373,283
TOTAL CURRENT LIABILITIES
1,421,041
1,311,509
1,224,873
Long-term debt, excluding current
portion
1,704,284
1,649,244
1,478,503
Non-recourse notes payable, excluding
current portion
12,899,970
12,127,290
11,997,315
Operating lease liabilities, excluding
current portion
446,302
—
—
Other liabilities
317,580
272,796
261,008
TOTAL LIABILITIES
16,789,177
15,360,839
14,961,699
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000
shares authorized; 163,795,082 and 167,478,924 shares issued and
outstanding as of November 30, 2019 and February 28, 2019,
respectively
81,897
83,739
85,893
Capital in excess of par value
1,321,567
1,237,153
1,255,966
Accumulated other comprehensive loss
(82,007
)
(68,010
)
(54,137
)
Retained earnings
2,376,596
2,104,146
2,147,391
TOTAL SHAREHOLDERS’ EQUITY
3,698,053
3,357,028
3,435,113
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
20,487,230
$
18,717,867
$
18,396,812
(1)
In connection with our adoption of ASC
842, the new accounting standard for leases, during the first
quarter of fiscal 2020, certain prior period amounts have been
reclassified to conform to the current period’s presentation.
Financing obligations have been reclassified to Current portion of
long-term debt and Long-term debt, excluding current portion.
Capital lease obligations have been reclassified to Accrued
expenses and other current liabilities and Other liabilities.
CARMAX,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended November
30
(In thousands)
2019
2018 (1)
OPERATING ACTIVITIES:
Net earnings
$
673,499
$
649,857
Adjustments to reconcile net earnings to
net cash (used in) provided by operating activities:
Depreciation and amortization
158,226
135,609
Share-based compensation expense
98,177
61,403
Provision for loan losses
132,650
111,703
Provision for cancellation reserves
65,166
54,952
Deferred income tax (benefit)
provision
(744
)
909
Other
(72
)
4,104
Net (increase) decrease in:
Accounts receivable, net
(2,887
)
22,165
Inventory
(163,119
)
(34,006
)
Other current assets
(41,869
)
40,952
Auto loan receivables, net
(980,817
)
(875,269
)
Other assets
10,185
(6,734
)
Net increase (decrease) in:
Accounts payable, accrued expenses and
other current liabilities and accrued income taxes
20,604
22,236
Other liabilities
(86,905
)
(73,251
)
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES
(117,906
)
114,630
INVESTING ACTIVITIES:
Capital expenditures
(249,177
)
(243,311
)
Proceeds from disposal of property and
equipment
3
680
Purchases of investments
(8,438
)
(5,470
)
Sales of investments
1,025
1,104
NET CASH USED IN INVESTING
ACTIVITIES
(256,587
)
(246,997
)
FINANCING ACTIVITIES:
(Decrease) increase in short-term debt,
net
(708
)
309
Proceeds from issuances of long-term
debt
4,707,500
2,758,000
Payments on long-term debt
(4,702,807
)
(2,768,419
)
Cash paid for debt issuance costs
(14,849
)
(12,329
)
Payments on finance lease obligations
(2,813
)
(528
)
Issuances of non-recourse notes
payable
8,596,000
8,183,502
Payments on non-recourse notes payable
(7,810,958
)
(7,435,128
)
Repurchase and retirement of common
stock
(458,587
)
(633,170
)
Equity issuances
96,367
54,580
NET CASH PROVIDED BY FINANCING
ACTIVITIES
409,145
146,817
Increase in cash, cash equivalents, and
restricted cash
34,652
14,450
Cash, cash equivalents, and restricted
cash at beginning of year
595,377
554,898
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH AT END OF PERIOD
$
630,029
$
569,348
(1)
In connection with the changes to the
Consolidated Balance Sheets as a result of our adoption of ASC 842,
the new accounting standard for leases, during the first quarter of
fiscal 2020, payments on financing obligations have been
reclassified to payments on long-term debt. Prior period amounts
have been reclassified to conform to the current period’s
presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191220005079/en/
Investors: Stacy Frole, Vice President, Investor Relations
investor_relations@carmax.com, (804) 747-0422 x7865
Media: pr@carmax.com, (855) 887-2915
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