CarMax Reports Third Quarter Results

RICHMOND, Va.–(BUSINESS WIRE)–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

 

 

 

Contacts

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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