CARMAX REPORTS RECORD THIRD QUARTER RESULTS
Richmond, Va., December 19, 2014 – CarMax, Inc. (NYSE:KMX) today reported record results for the third quarter ended November 30, 2014.
§ | Net sales and operating revenues increased 15.8% to $3.41 billion. |
§ | Used unit sales in comparable stores increased 7.4%. |
§ | Total used unit sales rose 14.0%. |
§ | Total wholesale unit sales increased 10.0%. |
§ | CarMax Auto Finance (CAF) income increased 6.9% to $89.7 million. |
§ | Net earnings grew 22.2% to $130.0 million. Net earnings per diluted share rose 27.7% to $0.60. |
“We had another great quarter,” said Tom Folliard, president and chief executive officer. “Continued strong performance in our used, wholesale and CAF operations, along with the growth of our store base and our ongoing share repurchase program contributed to our record third quarter earnings per share.”
Third Quarter Business Performance Review
Sales. Total used vehicle unit sales grew 14.0% and comparable store used unit sales increased 7.4% versus the prior year’s third quarter. Comparable store used unit sales benefited from a combination of factors, including our sixth consecutive quarter of growth in customer traffic, as well as improved conversion.
The percentage of retail vehicles financed by third-party subprime providers (those who purchase financings at a discount), combined with those financed under the previously announced CAF loan origination test, declined from 17.7% in the third quarter of fiscal 2014 to 15.2% in this year’s third quarter.
Wholesale vehicle unit sales grew 10.0% versus the third quarter of fiscal 2014. Wholesale unit sales primarily benefited from increased appraisal traffic and the growth of our store base.
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Other sales and revenues increased $17.3 million, or 30.2%, year-over-year. Extended protection plan (EPP) revenues (which includes extended service plan and guaranteed asset protection revenues) rose $12.9 million, or 26.5%, versus the prior year’s quarter. Last year’s third quarter EPP revenues were reduced by an adjustment to the reserve for estimated cancellations of $8.8 million ($0.02 per diluted share). The remainder of the increase in EPP revenues reflected the growth in our retail unit sales, partially offset by a somewhat lower EPP penetration rate. Net third-party finance fees improved $2.5 million versus last year’s third quarter primarily due to the reduction in the percentage of sales financed by third-party subprime providers.
Gross Profit. Total gross profit increased 17.0% to $446.6 million. Used vehicle gross profit rose 15.2%, primarily driven by the 14.0% increase in total used unit sales. Used vehicle gross profit per unit rose $23 to $2,172. Wholesale vehicle gross profit increased 14.8% versus the prior year’s quarter, driven by the combination of the 10.0% increase in wholesale unit sales and an improvement in wholesale vehicle gross profit per unit, which rose 4.5%, or $40, to $927. Other gross profit rose 30.9% reflecting the improvement in other sales and revenues.
SG&A. SG&A expenses increased 11.3% to $316.6 million. The increase primarily reflected the 16% increase in our store base since the beginning of last year’s third quarter (representing the addition of 20 stores) and higher variable selling costs resulting from our 7.4% increase in comparable store used unit sales. SG&A per retail unit declined $52 to $2,243, as our comparable store unit sales growth generated overhead leverage.
CarMax Auto Finance.(1) CAF income increased 6.9% to $89.7 million, driven by an increase in average managed receivables, partly offset by a lower total interest margin percentage. Average managed receivables grew 17.9% to $8.03 billion as CAF loan originations have continued to grow. The total interest margin, which reflects the spread between interest and fees charged to consumers and our funding costs, declined to 6.4% of average managed receivables in the current quarter from 6.8% in last year’s third quarter.
We continued our test to originate loans for customers who typically would be financed by our third-party subprime providers. During the third quarter of fiscal 2015, we originated $12.3 million of loans in this test, representing 0.5% of retail unit sales. As of November 30, 2014, a total of $56.7 million of loans had been originated in this test.
Store Openings. During the third quarter of fiscal 2015, we opened four stores, including two stores in new markets (Tupelo, Mississippi; and Reno, Nevada). We also added stores in the Portland, Oregon and Raleigh, North Carolina markets. Through the first nine months of the fiscal year, we opened 12 stores.
Financing Activities.
Our third quarter financing activities included the following:
· | We closed on a $300 million term loan, due November 2017. |
· | We increased the capacity of our unsecured revolving credit facility by $300 million, to a total of $1.0 billion. The terms and expiration date of this facility were unchanged. |
· | We increased the capacity of our warehouse facilities by $200 million, to a total of $2.3 billion. These facilities represent our initial funding source for CAF auto loan receivables. |
· | We repurchased 6.2 million shares of common stock for $327.2 million pursuant to our share repurchase program. As of November 30, 2014, we had $2.58 billion remaining available for repurchase under the program. |
(1)Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.
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Supplemental Financial Information
Amounts and percentage calculations may not total due to rounding.
Sales Components
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
(In millions) |
| 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||
Used vehicle sales |
| $ | 2,794.5 |
| $ | 2,396.8 |
| 16.6 | % | $ | 8,775.0 |
| $ | 7,738.1 |
| 13.4 | % |
New vehicle sales |
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| 54.6 |
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| 50.1 |
| 9.0 | % |
| 194.3 |
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| 162.5 |
| 19.6 | % |
Wholesale vehicle sales |
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| 481.7 |
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| 437.3 |
| 10.2 | % |
| 1,557.2 |
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| 1,402.8 |
| 11.0 | % |
Other sales and revenues: |
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Extended protection plan revenues |
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| 61.7 |
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| 48.8 |
| 26.5 | % |
| 188.4 |
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| 178.4 |
| 5.6 | % |
Service department sales |
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| 28.0 |
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| 26.1 |
| 7.1 | % |
| 84.9 |
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| 80.8 |
| 5.0 | % |
Third-party finance fees, net |
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| (15.2) |
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| (17.7) |
| 14.2 | % |
| (45.1) |
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| (64.6) |
| 30.2 | % |
Total other sales and revenues |
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| 74.5 |
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| 57.2 |
| 30.2 | % |
| 228.1 |
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| 194.6 |
| 17.3 | % |
Total net sales and operating revenues |
| $ | 3,405.2 |
| $ | 2,941.4 |
| 15.8 | % | $ | 10,754.6 |
| $ | 9,498.0 |
| 13.2 | % |
Unit Sales
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| Three Months Ended November 30 | Nine Months Ended November 30 | |||||||||||||||
| 2014 |
| 2013 |
| % Change |
| 2014 |
| 2013 |
| % Change | ||||||
Used vehicles |
| 139,158 |
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| 122,065 |
| 14.0 | % |
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| 433,011 |
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| 394,073 |
| 9.9 | % |
New vehicles |
| 2,009 |
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| 1,818 |
| 10.5 | % |
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| 7,187 |
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| 5,954 |
| 20.7 | % |
Wholesale vehicles |
| 90,988 |
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| 82,743 |
| 10.0 | % |
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| 286,075 |
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| 262,342 |
| 9.0 | % |
Average Selling Prices
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| Three Months Ended November 30 | Nine Months Ended November 30 | |||||||||||||||
| 2014 |
| 2013 |
| % Change | 2014 | 2013 |
| % Change | ||||||||
Used vehicles | $ | 19,914 |
| $ | 19,469 |
| 2.3 | % |
| $ | 20,104 |
| $ | 19,480 |
| 3.2 | % |
New vehicles | $ | 27,056 |
| $ | 27,428 |
| (1.4) | % |
| $ | 26,926 |
| $ | 27,176 |
| (0.9) | % |
Wholesale vehicles | $ | 5,124 |
| $ | 5,123 |
| 0.0 | % |
| $ | 5,277 |
| $ | 5,185 |
| 1.8 | % |
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Vehicle Sales Changes
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||
| 2014 | 2013 | 2014 | 2013 | ||||
Used vehicle units |
| 14.0% |
| 15.4% |
| 9.9% |
| 19.6% |
Used vehicle revenues |
| 16.6% |
| 15.9% |
| 13.4% |
| 20.0% |
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Wholesale vehicle units |
| 10.0% |
| 3.8% |
| 9.0% |
| 6.6% |
Wholesale vehicle revenues |
| 10.2% |
| 2.2% |
| 11.0% |
| 5.3% |
Comparable Store Used Vehicle Sales Changes (1)
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||
| 2014 | 2013 | 2014 | 2013 | ||||
Used vehicle units |
| 7.4% |
| 9.9% |
| 3.5% |
| 14.3% |
Used vehicle revenues |
| 9.9% |
| 10.5% |
| 6.8% |
| 14.7% |
(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.
Selected Operating Ratios
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| Three Months Ended November 30 | Nine Months Ended November 30 |
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(In millions) | 2014 | % (1) | 2013 | % (1) | 2014 | % (1) | 2013 | % (1) | ||||||||||||
Net sales and operating revenues | $ | 3,405.2 |
| 100.0 |
| $ | 2,941.4 |
| 100.0 |
| $ | 10,754.6 |
| 100.0 |
| $ | 9,498.0 |
| 100.0 |
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Gross profit | $ | 446.6 |
| 13.1 |
| $ | 381.7 |
| 13.0 |
| $ | 1,411.7 |
| 13.1 |
| $ | 1,264.6 |
| 13.3 |
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CarMax Auto Finance income | $ | 89.7 |
| 2.6 |
| $ | 83.9 |
| 2.9 |
| $ | 276.9 |
| 2.6 |
| $ | 255.3 |
| 2.7 |
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Selling, general, and administrative |
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expenses | $ | 316.6 |
| 9.3 |
| $ | 284.4 |
| 9.7 |
| $ | 927.7 |
| 8.6 |
| $ | 857.8 |
| 9.0 |
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Interest expense | $ | 7.3 |
| 0.2 |
| $ | 7.6 |
| 0.3 |
| $ | 22.3 |
| 0.2 |
| $ | 23.3 |
| 0.2 |
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Earnings before income taxes | $ | 210.8 |
| 6.2 |
| $ | 173.2 |
| 5.9 |
| $ | 736.5 |
| 6.8 |
| $ | 637.6 |
| 6.7 |
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Net earnings | $ | 130.0 |
| 3.8 |
| $ | 106.5 |
| 3.6 |
| $ | 454.2 |
| 4.2 |
| $ | 393.4 |
| 4.1 |
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(1) | Calculated as a percentage of net sales and operating revenues. |
Gross Profit
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||
(In millions) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||
Used vehicle gross profit | $ | 302.2 |
| $ | 262.4 |
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| 15.2 | % | $ | 947.8 |
| $ | 859.5 |
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| 10.3 | % |
New vehicle gross profit |
| 1.5 |
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| 1.1 |
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| 25.8 | % |
| 5.4 |
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| 3.4 |
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| 55.9 | % |
Wholesale vehicle gross profit |
| 84.3 |
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| 73.4 |
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| 14.8 | % |
| 271.5 |
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| 237.4 |
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| 14.4 | % |
Other gross profit |
| 58.6 |
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| 44.8 |
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| 30.9 | % |
| 186.9 |
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| 164.3 |
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| 13.8 | % |
Total | $ | 446.6 |
| $ | 381.7 |
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| 17.0 | % | $ | 1,411.7 |
| $ | 1,264.6 |
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| 11.6 | % |
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Gross Profit per Unit
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| $ per unit(1) | %(2) |
| $ per unit(1) | %(2) |
| $ per unit(1) | %(2) |
| $ per unit(1) | %(2) |
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Used vehicle gross profit | $ | 2,172 |
| 10.8 |
| $ | 2,149 |
| 10.9 |
| $ | 2,189 |
| 10.8 |
| $ | 2,181 |
| 11.1 |
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New vehicle gross profit | $ | 724 |
| 2.7 |
| $ | 636 |
| 2.3 |
| $ | 747 |
| 2.8 |
| $ | 578 |
| 2.1 |
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Wholesale vehicle gross profit | $ | 927 |
| 17.5 |
| $ | 887 |
| 16.8 |
| $ | 949 |
| 17.4 |
| $ | 905 |
| 16.9 |
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Other gross profit | $ | 415 |
| 78.7 |
| $ | 361 |
| 78.3 |
| $ | 425 |
| 82.0 |
| $ | 411 |
| 84.4 |
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Total gross profit | $ | 3,164 |
| 13.1 |
| $ | 3,081 |
| 13.0 |
| $ | 3,207 |
| 13.1 |
| $ | 3,161 |
| 13.3 |
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(1)Calculated as category gross profit divided by each category’s respective units sold, except the other and total categories, which are calculated by dividing their respective gross profit by total retail units sold.
(2)Calculated as a percentage of its respective sales or revenue.
SG&A Expenses
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||
(In millions) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||
Compensation and benefits (1) | $ | 179.6 |
| $ | 161.4 |
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| 11.3 | % | $ | 540.1 |
| $ | 494.4 |
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| 9.2 | % |
Store occupancy costs |
| 61.9 |
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| 53.9 |
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| 14.9 | % |
| 180.1 |
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| 160.9 |
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| 12.0 | % |
Advertising expense |
| 28.3 |
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| 23.4 |
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| 21.2 | % |
| 88.4 |
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| 77.0 |
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| 14.9 | % |
Other overhead costs (2) |
| 46.8 |
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| 45.7 |
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| 2.5 | % |
| 119.1 |
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| 125.5 |
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| (5.1) | % |
Total SG&A expenses | $ | 316.6 |
| $ | 284.4 |
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| 11.3 | % | $ | 927.7 |
| $ | 857.8 |
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| 8.1 | % |
SG&A per retail unit | $ | 2,243 |
| $ | 2,295 |
| $ | (52) |
| $ | 2,107 |
| $ | 2,144 |
| $ | (37) |
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(1)Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.
(2)Includes IT expenses, insurance, non-CAF bad debt, travel, preopening and relocation costs, charitable contributions and other administrative expenses. Costs for the nine months ended November 30, 2014, were reduced by $20.9 million in connection with the receipt of settlement proceeds in a class action lawsuit.
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Components of CAF Income and Other CAF Information
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||
(In millions) |
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| 2014 |
| % (1) |
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| 2013 |
| % (1) |
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| 2014 |
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| 2013 |
| % (1) |
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Interest margin: |
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Interest and fee income |
| $ | 152.7 |
| 7.6 |
| $ | 138.3 |
| 8.1 |
| $ | 450.4 |
| 7.8 |
| $ | 409.0 |
| 8.4 |
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Interest expense |
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| (24.8) |
| (1.2) |
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| (22.2) |
| (1.3) |
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| (71.8) |
| (1.2) |
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| (67.6) |
| (1.4) |
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Total interest margin |
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| 127.9 |
| 6.4 |
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| 116.1 |
| 6.8 |
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| 378.6 |
| 6.5 |
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| 341.4 |
| 7.0 |
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Provision for loan losses |
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| (24.1) |
| (1.2) |
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| (19.7) |
| (1.2) |
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| (60.3) |
| (1.0) |
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| (49.0) |
| (1.0) |
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Total interest margin after provision |
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for loan losses |
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| 103.8 |
| 5.2 |
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| 96.4 |
| 5.7 |
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| 318.3 |
| 5.5 |
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| 292.4 |
| 6.0 |
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Other income |
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| 0.1 |
| ― |
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Total direct expenses |
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| (14.1) |
| (0.7) |
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| (12.5) |
| (0.7) |
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| (41.4) |
| (0.7) |
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| (37.2) |
| (0.8) |
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CarMax Auto Finance income |
| $ | 89.7 |
| 4.5 |
| $ | 83.9 |
| 4.9 |
| $ | 276.9 |
| 4.8 |
| $ | 255.3 |
| 5.2 |
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Total average managed receivables |
| $ | 8,026.2 |
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| $ | 6,805.3 |
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| $ | 7,713.6 |
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| $ | 6,491.4 |
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Net loans originated |
| $ | 1,152.6 |
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| $ | 960.6 |
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| $ | 3,554.3 |
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| $ | 3,168.7 |
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Net CAF penetration rate |
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| 41.8 | % |
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| 40.6 | % |
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| 41.2 | % |
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| 41.2 | % |
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Weighted average contract rate |
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| 7.0 | % |
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| 7.0 | % |
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| 7.1 | % |
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| 6.9 | % |
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Ending allowance for loan losses |
| $ | 80.4 |
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| $ | 67.9 |
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| $ | 80.4 |
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| $ | 67.9 |
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Warehouse facility information: |
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Ending funded receivables |
| $ | 959.0 |
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| $ | 807.0 |
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| $ | 959.0 |
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| $ | 807.0 |
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Ending unused capacity |
| $ | 1,341.0 |
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| $ | 993.0 |
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| $ | 1,341.0 |
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| $ | 993.0 |
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(1) | Annualized percentage of total average managed receivables. |
Earnings Highlights
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| Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||
(In millions except per share data) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||
Net earnings | $ | 130.0 |
| $ | 106.5 |
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| 22.2 | % | $ | 454.2 |
| $ | 393.4 |
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| 15.5 | % |
Diluted weighted average shares outstanding |
| 217.0 |
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| 227.4 |
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| (4.6) | % |
| 220.6 |
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| 227.9 |
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| (3.2) | % |
Net earnings per diluted share | $ | 0.60 |
| $ | 0.47 |
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| 27.7 | % | $ | 2.06 |
| $ | 1.73 |
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| 19.1 | % |
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Planned Store Openings
We currently plan to open the following stores within 12 months from November 30, 2014:
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Location | Television Market | Market Status | Planned Opening Date |
Warrensville Heights, Ohio | Cleveland | New | Q4 Fiscal 2015 |
Brooklyn Park, Minnesota | Minneapolis/St Paul | New | Q1 Fiscal 2016 |
Sicklerville, New Jersey | Philadelphia | Existing | Q1 Fiscal 2016 |
Gainesville, Florida | Gainesville | New | Q1 Fiscal 2016 |
Cranston, Rhode Island | Providence | Existing | Q2 Fiscal 2016 |
Parker, Colorado | Denver | Existing | Q2 Fiscal 2016 |
Loveland, Colorado | Denver | Existing | Q2 Fiscal 2016 |
Tallahassee, Florida | Tallahassee | New | Q2 Fiscal 2016 |
Gaithersburg, Maryland (1) | Washington/Baltimore | Existing | Q2 Fiscal 2016 |
Richmond, Texas | Houston | Existing | Q2 Fiscal 2016 |
Maplewood, Minnesota | Minneapolis/St Paul | Existing | Q3 Fiscal 2016 |
(1) | Represents a store relocation being made in connection with the expiration of the lease on our Rockville, Maryland, store. |
Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period. We currently estimate total capital expenditures will be approximately
$300 million in fiscal 2015. We plan to open 13 stores in fiscal 2015 and between 10 and 15 stores in each of the following two fiscal years.
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today, December 19, 2014. 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 53294466. A live webcast of the call will be available on our investor information home page at investor.carmax.com and at www.streetevents.com.
A webcast replay of the call will be available at investor.carmax.com through April 1, 2015. A telephone replay also will be available through December 31, 2014, 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 53294466.
Fourth Quarter Fiscal 2015 Earnings Release Date
We currently plan to release results for the fourth quarter and fiscal year February 28, 2014, on Thursday, April 2, 2015, 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 investor.carmax.com in March 2015.
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About CarMax
CarMax, a member of the Fortune 500 and the S&P 500, and one of the Fortune “100 Best Companies to Work For,” for ten consecutive years, is the nation’s largest retailer of used vehicles. Headquartered in Richmond, Va., CarMax currently operates 143 used car stores in 72 markets. The CarMax consumer offer features low, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles and superior customer service. During the fiscal year ended February 28, 2014, the company retailed 526,929 used vehicles and sold 342,576 wholesale vehicles at our in-store auctions. For more information, access the CarMax website at www.carmax.com.
Forward-Looking Statements
We caution readers that the statements contained in this release about our future business plans, operations, opportunities or prospects, including without limitation any statements or factors regarding expected sales, margins or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:
· | Changes in the competitive landscape and/or our failure to successfully adjust to such changes. |
· | Changes in general or regional U.S. economic conditions. |
· | Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market. |
· | Changes in consumer credit availability provided by our third-party financing providers. |
· | Events that damage our reputation or harm the perception of the quality of our brand. |
· | 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 or associate information. |
· | Significant changes in prices of new and used vehicles. |
· | A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory. |
· | Factors related to the regulatory and legislative environment in which we operate. |
· | Factors related to geographic growth, including the inability to acquire or lease suitable real estate at favorable terms or to effectively manage our growth. |
· | The failure of 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. |
· | Factors related to seasonal fluctuations in our business. |
· | The occurrence of severe weather events. |
· | Factors related to the geographic concentration of our stores. |
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For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2014, 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 investor.carmax.com. Requests for information may also be made to the Investor Relations Department by email to investor_relations@carmax.com or by calling 1-804-747-0422 ext. 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.
Contacts:
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
General Media:
Trina Lee, Director, Public Relations, (855) 887-2915
Catherine Gryp, Manager, Public Relations, (855) 887-2915
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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
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| Three Months Ended November 30 |
| Nine Months Ended November 30 | ||||||||
(In thousands except per share data) |
| 2014 | % (1) |
| 2013 | % (1) |
| 2014 | % (1) |
| 2013 | % (1) |
SALES AND OPERATING REVENUES: |
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|
|
Used vehicle sales | $ | 2,794,515 | 82.1 | $ | 2,396,840 | 81.5 | $ | 8,775,021 | 81.6 | $ | 7,738,118 | 81.5 |
New vehicle sales |
| 54,561 | 1.6 |
| 50,073 | 1.7 |
| 194,294 | 1.8 |
| 162,502 | 1.7 |
Wholesale vehicle sales |
| 481,676 | 14.1 |
| 437,272 | 14.9 |
| 1,557,191 | 14.5 |
| 1,402,838 | 14.8 |
Other sales and revenues |
| 74,482 | 2.2 |
| 57,222 | 1.9 |
| 228,118 | 2.1 |
| 194,558 | 2.0 |
NET SALES AND OPERATING REVENUES |
| 3,405,234 | 100.0 |
| 2,941,407 | 100.0 |
| 10,754,624 | 100.0 |
| 9,498,016 | 100.0 |
Cost of sales |
| 2,958,614 | 86.9 |
| 2,559,686 | 87.0 |
| 9,342,934 | 86.9 |
| 8,233,456 | 86.7 |
GROSS PROFIT |
| 446,620 | 13.1 |
| 381,721 | 13.0 |
| 1,411,690 | 13.1 |
| 1,264,560 | 13.3 |
CARMAX AUTO FINANCE INCOME |
| 89,722 | 2.6 |
| 83,905 | 2.9 |
| 276,911 | 2.6 |
| 255,346 | 2.7 |
Selling, general and administrative expenses |
| 316,632 | 9.3 |
| 284,366 | 9.7 |
| 927,716 | 8.6 |
| 857,761 | 9.0 |
Interest expense |
| 7,338 | 0.2 |
| 7,649 | 0.3 |
| 22,290 | 0.2 |
| 23,288 | 0.2 |
Other expense |
| 1,536 | ― |
| 411 | ― |
| 2,096 | ― |
| 1,243 | ― |
Earnings before income taxes |
| 210,836 | 6.2 |
| 173,200 | 5.9 |
| 736,499 | 6.8 |
| 637,614 | 6.7 |
Income tax provision |
| 80,787 | 2.4 |
| 66,748 | 2.3 |
| 282,279 | 2.6 |
| 244,237 | 2.6 |
NET EARNINGS | $ | 130,049 | 3.8 | $ | 106,452 | 3.6 | $ | 454,220 | 4.2 | $ | 393,377 | 4.1 |
WEIGHTED AVERAGE COMMON SHARES: |
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|
|
Basic |
| 214,228 |
|
| 223,259 |
|
| 217,568 |
|
| 223,831 |
|
Diluted |
| 217,025 |
|
| 227,417 |
|
| 220,585 |
|
| 227,870 |
|
NET EARNINGS PER SHARE: |
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|
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|
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|
|
|
|
|
|
Basic | $ | 0.61 |
| $ | 0.48 |
| $ | 2.09 |
| $ | 1.76 |
|
Diluted | $ | 0.60 |
| $ | 0.47 |
| $ | 2.06 |
| $ | 1.73 |
|
(1)Calculated as a percentage of net sales and operating revenues and sums may not equal totals due to rounding.
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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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| (Unaudited) |
|
|
| (Unaudited) | ||||
|
|
| November 30 | February 28 | November 30 | ||||||
(In thousands except share data) |
| 2014 | 2014 | 2013 | |||||||
ASSETS |
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| |
| CURRENT ASSETS: |
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| Cash and cash equivalents |
| $ | 189,880 |
| $ | 627,901 |
| $ | 664,758 |
|
| Restricted cash from collections on auto loan receivables |
|
| 275,718 |
|
| 259,299 |
|
| 246,795 |
|
| Accounts receivable, net |
|
| 88,180 |
|
| 79,923 |
|
| 68,027 |
|
| Inventory |
|
| 1,964,673 |
|
| 1,641,424 |
|
| 1,556,277 |
|
| Deferred income taxes |
|
| 6,368 |
|
| 7,866 |
|
| 2,651 |
|
| Other current assets |
|
| 48,433 |
|
| 26,811 |
|
| 20,286 |
|
| TOTAL CURRENT ASSETS |
|
| 2,573,252 |
|
| 2,643,224 |
|
| 2,558,794 |
|
| Auto loan receivables, net |
|
| 8,138,307 |
|
| 7,147,848 |
|
| 6,892,311 |
|
| Property and equipment, net |
|
| 1,833,600 |
|
| 1,652,977 |
|
| 1,588,633 |
|
| Deferred income taxes |
|
| 166,811 |
|
| 152,199 |
|
| 151,281 |
|
| Other assets |
|
| 131,436 |
|
| 110,909 |
|
| 112,856 |
|
| TOTAL ASSETS |
| $ | 12,843,406 |
| $ | 11,707,157 |
| $ | 11,303,875 |
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|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| |
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
| $ | 459,929 |
| $ | 427,492 |
| $ | 367,478 |
|
| Accrued expenses and other current liabilities |
|
| 202,533 |
|
| 202,588 |
|
| 138,910 |
|
| Accrued income taxes |
|
| 424 |
|
| 2,438 |
|
| 8,554 |
|
| Short-term debt |
|
| 2,574 |
|
| 582 |
|
| 1,287 |
|
| Current portion of finance and capital lease obligations |
|
| 20,915 |
|
| 18,459 |
|
| 17,837 |
|
| Current portion of non-recourse notes payable |
|
| 241,807 |
|
| 223,938 |
|
| 214,535 |
|
| TOTAL CURRENT LIABILITIES |
|
| 928,182 |
|
| 875,497 |
|
| 748,601 |
|
| Long-term debt, excluding current portion |
|
| 300,000 |
|
| ― |
|
| ― |
|
| Finance and capital lease obligations, excluding current portion |
|
| 311,771 |
|
| 315,925 |
|
| 320,791 |
|
| Non-recourse notes payable, excluding current portion |
|
| 7,938,626 |
|
| 7,024,506 |
|
| 6,755,534 |
|
| Other liabilities |
|
| 182,675 |
|
| 174,232 |
|
| 190,580 |
|
| TOTAL LIABILITIES |
|
| 9,661,254 |
|
| 8,390,160 |
|
| 8,015,506 |
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| Commitments and contingent liabilities |
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| SHAREHOLDERS’ EQUITY: |
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| Common stock, $0.50 par value; 350,000,000 shares authorized; |
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| 210,918,281 and 221,685,984 shares issued and outstanding |
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| as of November 30, 2014 and February 28, 2014, respectively |
|
| 105,459 |
|
| 110,843 |
|
| 111,614 |
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| Capital in excess of par value |
|
| 1,080,267 |
|
| 1,038,209 |
|
| 1,013,939 |
|
| Accumulated other comprehensive loss |
|
| (45,858) |
|
| (46,271) |
|
| (57,127) |
|
| Retained earnings |
|
| 2,042,284 |
|
| 2,214,216 |
|
| 2,219,943 |
|
| TOTAL SHAREHOLDERS’ EQUITY |
|
| 3,182,152 |
|
| 3,316,997 |
|
| 3,288,369 |
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| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ | 12,843,406 |
| $ | 11,707,157 |
| $ | 11,303,875 |
|
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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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| Nine Months Ended November 30 | |||||
(In thousands) |
| 2014 |
| 2013 | |||
OPERATING ACTIVITIES: |
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|
|
|
Net earnings |
| $ | 454,220 |
| $ | 393,377 |
|
Adjustments to reconcile net earnings to net cash |
|
|
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|
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used in operating activities: |
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|
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|
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Depreciation and amortization |
|
| 84,994 |
|
| 73,983 |
|
Share-based compensation expense |
|
| 57,192 |
|
| 54,948 |
|
Provision for loan losses |
|
| 60,274 |
|
| 48,993 |
|
Provision for cancellation reserves |
|
| 53,764 |
|
| 35,247 |
|
Deferred income tax benefit |
|
| (13,347) |
|
| (4,576) |
|
Loss on disposition of assets and other |
|
| 2,486 | – |
| 1,844 |
|
Net (increase) decrease in: |
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|
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|
|
|
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Accounts receivable, net |
|
| (8,257) |
|
| 23,934 |
|
Inventory |
|
| (323,249) |
|
| (38,464) |
|
Other current assets |
|
| (22,061) |
|
| 3,480 |
|
Auto loan receivables, net |
|
| (1,050,733) |
|
| (1,045,386) |
|
Other assets |
|
| (2,910) |
|
| (6,714) |
|
Net (decrease) increase in: |
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|
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Accounts payable, accrued expenses and other current |
|
|
|
|
|
|
|
liabilities and accrued income taxes |
|
| (16,321) |
|
| 1,707 |
|
Other liabilities |
|
| (60,667) |
|
| (35,513) |
|
NET CASH USED IN OPERATING ACTIVITIES |
|
| (784,615) |
|
| (493,140) |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Capital expenditures |
|
| (238,860) |
|
| (212,900) |
|
Proceeds from sales of assets |
|
| 5,833 |
|
| 5,143 |
|
Increase in restricted cash from collections on auto loan receivables |
|
| (16,419) |
|
| (22,508) |
|
Increase in restricted cash in reserve accounts |
|
| (11,323) |
|
| (7,826) |
|
Release of restricted cash from reserve accounts |
|
| 6,340 |
|
| 15,022 |
|
Purchases of money market securities, net |
|
| (8,604) |
|
| (3,833) |
|
Purchases of trading securities |
|
| (3,468) |
|
| (1,868) |
|
Sales of trading securities |
|
| 333 |
|
| 71 |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
| (266,168) |
|
| (228,699) |
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Increase in short-term debt, net |
|
| 1,992 |
|
| 932 |
|
Issuances of long-term debt |
|
| 300,000 |
|
| - |
|
Cash paid for issuance of long-term debt |
|
| (496) |
|
| - |
|
Payments on finance and capital lease obligations |
|
| (13,395) |
|
| (14,963) |
|
Issuances of non-recourse notes payable |
|
| 5,882,000 |
|
| 5,300,000 |
|
Payments on non-recourse notes payable |
|
| (4,950,011) |
|
| (4,185,021) |
|
Repurchase and retirement of common stock |
|
| (688,619) |
|
| (196,748) |
|
Equity issuances, net |
|
| 47,330 |
|
| 19,967 |
|
Excess tax benefits from share-based payment arrangements |
|
| 33,961 |
|
| 13,066 |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 612,762 |
|
| 937,233 |
|
(Decrease) increase in cash and cash equivalents |
|
| (438,021) |
|
| 215,394 |
|
Cash and cash equivalents at beginning of year |
|
| 627,901 |
|
| 449,364 |
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ | 189,880 |
| $ | 664,758 |
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