CARMAX REVISES FIRST QUARTER EXPECTATIONS;
Narrows Earnings Expectation Range and
Lowers Comparable Store Used Unit Growth Expectations
Richmond, Va., May 20, 2005 - CarMax, Inc. (NYSE: KMX) announced today that it
has revised expectations for the first quarter ended May 31, 2005.
|X| CarMax now expects first quarter earnings to be 35 cents or 36 cents
per share.
|X| CarMax now expects first quarter comparable store used unit growth
to be approximately 6%.
On March 30, 2005, CarMax had issued first quarter earnings expectations in a
range of 35 cents to 38 cents per share and comparable store used unit growth
expectations in a range of 9% to 12%.
"We currently expect first quarter earnings per share to be at the low end of
the range we anticipated on March 30 even though we now think we'll report
lower-than-expected used unit comp growth of approximately 6%," said Austin
Ligon, president and chief executive officer. "Our sales momentum has become
less robust as we have progressed through the quarter. We suspect the higher gas
prices we noted on March 30 are having some impact on consumer demand. Also as
we pointed out on March 30, wholesale auction prices are rising faster than
historical norms would indicate they should. We believe such an atypical price
rise played a role in the sales softness we experienced last spring and summer,
and it appears to be a factor again. We think we learned from last year's
experience. Last year in the spring and summer, we kept our inventories higher
than our sales rates, anticipating a stronger summer selling season than
materialized. This year, we have begun reducing our inventories to get them in
line with sales rates. We also are countering the unusually high wholesale
market pricing by adjusting our purchase offers on cars that we buy in our
stores. A result of our purchase pricing actions is higher margins on the
wholesale cars we sell at our in-store auctions.
"We also have seen our DRIVE-financed sales return to normalized levels more
rapidly than we had forecast," said Ligon. "We had expected the tax-refund
seasonal increase in DRIVE sales to continue into April; they actually returned
to normal levels in April. DRIVE-financed sales provide lower incremental
margins than sales financed through our other lenders. Consequently,
lower-than-expected DRIVE-financed sales have a smaller effect on earnings.
"In addition, CarMax Auto Finance's April public securitization benefited from
the recent very strong market demand for asset-backed securities," Ligon said.
"Consequently, the cost of funds for this securitization was lower than
anticipated. Also, we expect to benefit from a favorable adjustment in the
valuation of the retained interest in securitized receivables. We are lowering
the loss assumptions on previously securitized receivables, reflecting favorable
market conditions and the continued excellent performance of CAF's portfolio."
-more-
CarMax, Inc.
Page 2 of 2
First Quarter Fiscal 2006 Earnings Release Date
- -----------------------------------------------
As previously announced, the company currently plans to release first quarter
results on Monday, June 20, 2005. On that date, CarMax will host a conference
call for investors at 8:00 a.m. Eastern time. Domestic investors may access the
call at 1-888-298-3261 (conference I.D.: 6459732). International investors
should dial 1-706-679-7457 (conference I.D.: 6459732). A live webcast of the
call will be available on the company's investor information home page at
http://investor.carmax.com or at www.streetevents.com.
A replay of the call will be available beginning at approximately noon Eastern
time on June 20, 2005, and will run through midnight, June 27, 2005. Domestic
investors may access the recording at 1-800-642-1687 (conference I.D.: 6459732)
and international investors at 1-706-645-9291 (conference I.D.: 6459732). A
replay of the call also will be available on the company's investor information
home page or at www.streetevents.com.
About CarMax
- ------------
CarMax, a Fortune 500 company and one of the Fortune 2005 "100 Best Companies to
Work For," is the nation's largest retailer of used cars. Headquartered in
Richmond, Va., CarMax currently operates 62 used car superstores in 28 markets.
CarMax also operates seven new car franchises, all of which are integrated or
co-located with its used car superstores. During the twelve month period ended
February 28, 2005, the company retailed 253,168 used cars, which is 92 percent
of the total 273,804 vehicles the company retailed during that period. For more
information, access the CarMax website at www.carmax.com.
Forward-Looking Statements
- --------------------------
The company cautions readers that the statements in this release about the
company's 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. These
forward-looking statements are based on 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. For more
details on factors that could affect expectations, see the company's Annual
Report on Form 10-K for the fiscal year ended February 28, 2005, and its
quarterly or current reports as filed with or furnished to the Securities and
Exchange Commission.
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Contacts:
Investors and Financial Media:
Dandy Barrett, Assistant Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
General Media:
Lisa Van Riper, Assistant Vice President, Public Affairs, (804) 935-4594
Trina Lee, Public Relations Manager, (804) 747-0422, ext. 4197