RICHMOND, Va.?(BUSINESS WIRE)?
CarMax, Inc. (KMX) today reported record results for the first
quarter ended May 31, 2013.
- Net sales and operating revenues increased 19% to $3.31?billion.
- Used unit sales in comparable stores increased 17%.
- Total used unit sales rose 22%.
- Total wholesale unit sales increased 6%.
- CarMax Auto Finance (CAF) income increased 16% to $87.0?million.
- Net earnings grew 21% to $146.7?million. Net earnings per diluted
share rose 23% to $0.64.
?We are very pleased to report our strongest increase in comparable
store used unit sales in several years,? said Tom Folliard, president
and chief executive officer. ?Strong retail sales growth, together with
continued contributions from CAF and wholesale drove all-time record
quarterly revenues and earnings.?
First Quarter Business Performance Review
Sales. Total used vehicle unit sales
grew 22% and comparable store used units grew 17% versus the prior
year?s first quarter. The comparable store used unit growth was again
driven by improved conversion, which we believe reflected continued
improvements in execution in our stores and an attractive consumer
credit environment.
Wholesale vehicle unit sales grew 6% compared with last year?s quarter.
Wholesale unit sales benefited from the growth in our store base and a
stronger appraisal buy rate.
Other sales and revenues increased 6% compared with the prior year?s
first quarter. Extended service plan (ESP) revenues increased 26%,
reflecting the 22% increase in used unit sales and an increase in ESP
penetration. Net third-party finance fees declined $11.9?million as the
third-party subprime providers (those who purchase financings at a
discount) originated 21% of used vehicle unit sales in the current
quarter versus 16% in the prior year?s first quarter. We believe that
more attractive offers by our third-party providers and a delay in the
2013 tax refund season contributed to the increase in subprime
financings.
Gross Profit. Total gross profit
increased 17% to $448.1?million. Used vehicle gross profit rose 22% to
$303.9?million, driven by the 22% increase in used unit sales, while
wholesale vehicle gross profit increased 6% to $86.5?million on the 6%
increase in wholesale unit sales. Used and wholesale vehicle gross
profit per unit were consistent with last year?s first quarter. Other
gross profit increased 15% to $56.6?million, as the increase in ESP
profits was partially offset by the reduction in net third-party finance
fees.
SGA. Selling, general and
administrative expenses increased 14% to $290.2?million. The increase
reflected the 12%?increase in our store base since the beginning of last
year?s first quarter (representing the addition of 13 stores) and higher
variable selling costs resulting from the 17% increase in comparable
store used unit sales. SGA per retail unit declined $131 to $2,086
versus $2,217 in the prior year?s quarter, as our comparable store used
unit growth generated meaningful overhead leverage.
CarMax Auto Finance.(1)
CAF income increased 16% to $87.0?million primarily as a result of the
21% increase in average managed receivables, which grew to
$6.15?billion. The increase in managed receivables reflected the rise in
CAF origination volumes in recent years resulting from an expansion of
CAF?s loan penetration rate, as well as our retail unit sales growth and
higher average amounts financed. The total interest margin, which
reflects the spread between interest and fees charged to consumers and
our funding costs, declined to 7.2% of average managed receivables in
the current quarter from 7.5% in last year?s first quarter. The average
contract rate on new loan originations has declined in recent quarters
as we provided more competitive offers in select customer segments.
As a percent of ending managed receivables, the allowance for loan
losses increased moderately to 1.0% as of May?31,?2013, compared with
0.9% as of May?31,?2012.
Superstore Openings. During the
first quarter of fiscal 2014, we opened three stores, entering the
Harrisonburg, Virginia, market and the Savannah and Columbus markets in
Georgia. Subsequent to the end of the quarter, we opened our fifth store
in the Houston, Texas, market.
Share Repurchase Program. During the
first quarter of fiscal 2014, we repurchased 2.9?million shares of
common stock for $124.6?million pursuant to our share repurchase
program. As of May?31,?2013, we had $463.5?million remaining available
for repurchase under the program.
?
Supplemental Financial Information
?
Sales Components
?
?
Three Months Ended May 31(1)
(In millions)
?
2013
?
2012
?
Change
Used vehicle sales
$
2,701.8
$
2,188.9
?
23.4
%
New vehicle sales
52.4
55.5
(5.5)
%
Wholesale vehicle sales
490.7
467.8
4.9
%
Other sales and revenues:
Extended service plan revenues
64.6
51.3
26.0
%
Service department sales
27.4
24.8
10.3
%
Third-party finance fees, net
?
?
(25.8)
?
?
(13.8)
?
?
(86.4)
%
Total other sales and revenues
?
?
66.2
?
?
62.3
?
?
6.4
%
Total net sales and operating revenues
?
$
3,311.1
?
$
2,774.4
?
?
19.3
%
?
?
Selected Operating Ratios
?
?
Three Months Ended May 31
(In millions)
?
2013
?
% (1)
?
2012
?
% (1)
Net sales and operating revenues
$
3,311.1
?
100.0
?
$
2,774.4
?
100.0
Gross profit
$
448.1
13.5
$
381.9
13.8
CarMax Auto Finance income
$
87.0
2.6
$
75.2
2.7
Selling, general, and administrative
expenses
$
290.2
8.8
$
253.6
9.1
Interest expense
$
7.9
0.2
$
8.1
0.3
Earnings before income taxes
$
237.3
7.2
$
195.6
7.1
Net earnings
$
146.7
4.4
$
120.7
4.4
?
?
Gross Profit per Unit
?
?
Three Months Ended May 31
?
?
2013
?
2012
?
?
$ per unit(1)
?
%(2)
?
$ per unit(1)
?
%(2)
Used vehicle gross profit
$
2,216
?
11.2
?
$
2,221
?
11.4
New vehicle gross profit
$
551
2.0
$
755
2.9
Wholesale vehicle gross profit
$
979
17.6
$
980
17.5
Other gross profit
$
407
85.5
$
429
78.8
Total gross profit
$
3,221
13.5
$
3,338
13.8
?
?
Components of CAF Income and Other CAF
Information
?
?
Three Months Ended May 31
(In millions)
?
2013
?
% (1)
?
2012
?
% (1)
Interest margin:
?
?
?
Interest and fee income
$
133.5
8.7
$
120.3
9.5
Interest expense
?
?
(22.8
)
?
(1.5
)
?
?
(25.1
)
?
(2.0
)
Total interest margin
110.7
7.2
95.2
7.5
Provision for loan losses
?
?
(11.3
)
?
(0.7
)
?
?
(9.2
)
?
(0.7
)
Total interest margin after provision for loan losses
99.4
6.5
86.0
6.8
Total direct expenses
?
?
(12.4
)
?
(0.8
)
?
?
(10.8
)
?
(0.9
)
CarMax Auto Finance income
?
$
87.0
?
?
5.7
?
?
$
75.2
?
?
5.9
?
?
Total average managed receivables
$
6,152.5
$
5,075.2
Net loans originated
$
1,120.2
$
786.8
Net CAF penetration rate
41.5
%
36.4
%
Weighted average contract rate
7.0
%
8.9
%
?
Ending allowance for loan losses
$
60.9
$
46.6
?
Warehouse facility information:
Ending funded receivables
$
941.0
$
1,251.0
Ending unused capacity
$
759.0
$
349.0
?
?
Planned Superstore Openings
?
We currently plan to open the following superstores within 12
months from May 31, 2013:
?
?
Location
?
?
Television Market
?
?
Market Status
?
?
Planned Opening Date
Katy, Texas (1)
?
?
Houston
?
?
Existing
?
?
Q2 Fiscal 2014
Fairfield, California
Sacramento
Existing
Q2 Fiscal 2014
Jackson, Tennessee
Jackson
New
Q3 Fiscal 2014
Brandywine, Maryland
Washington/Baltimore
Existing
Q3 Fiscal 2014
St. Louis, Missouri
St. Louis
New
Q3 Fiscal 2014
St. Peters, Missouri
St. Louis
New
Q4 Fiscal 2014
Newark, Delaware
Philadelphia
New
Q4 Fiscal 2014
King of Prussia, Pennsylvania
Philadelphia
New
Q4 Fiscal 2014
Frederick, Maryland
Washington/Baltimore
Existing
Q4 Fiscal 2014
Elk Grove, California
Sacramento
Existing
Q4 Fiscal 2014
Henrietta, New York
Rochester
New
Q1 Fiscal 2015
Dothan, Alabama
Dothan
New
Q1 Fiscal 2015
Mechanicsburg, Pennsylvania
Harrisburg
Existing
Q1 Fiscal 2015
Spokane, Washington
Spokane
New
Q1 Fiscal 2015
?
Normal construction, permitting or other scheduling delays could shift
the opening dates of any of these stores into a later period. We
currently estimate capital expenditures will total approximately
$300?million in fiscal 2014. We expect to open between 10 and 15
superstores in each of the following 2?fiscal years.
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today, June
21, 2013. 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 26820891. 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
beginning at approximately 1:00?p.m. ET on June 21, 2013, through
September 23, 2013. A telephone replay also will be available through
June 28, 2013, 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 26820891.
Second Quarter Fiscal 2014 Earnings Release Date
We currently plan to release results for the second quarter ending
August 31, 2013, on Tuesday, September 24, 2013, before the opening of
the New York Stock Exchange. We will 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 early September 2013.
About CarMax
CarMax, a member of the Fortune 500 and the SP 500,
and one of the Fortune ?100 Best Companies to Work For,?
for nine consecutive years, is the nation?s largest retailer of used
vehicles. Headquartered in Richmond, Va., CarMax currently operates 122
used car superstores in 61 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 twelve months
ended February 28, 2013, the company retailed 447,728 used vehicles and
sold 324,779 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 general or regional U.S. economic conditions.
- Changes in the competitive landscape within our industry.
- 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 related to our third-party
financing providers. - Significant changes in retail prices for used and new vehicles.
- A reduction in the availability of or access to sources of inventory.
- Factors related to the regulatory and legislative environment in which
we operate. - Events that damage our reputation or harm the perception of the
quality of our brand. - Security breaches or other events that result in the misappropriation,
loss or other unauthorized disclosure of confidential customer
information. - 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 loss of key employees from our store, regional or corporate
management teams or a significant increase in labor costs. - The failure of key information systems.
- The effect of various litigation matters.
- Adverse conditions affecting one or more automotive manufacturers or
manufacturer recalls. - The occurrence of severe weather events.
- Factors related to the seasonal fluctuations in our business.
- Factors related to the geographic concentration of our superstores.
- The effect of new accounting requirements or changes to U.S. generally
accepted accounting principles. - Acts of terrorism, the outbreak of war, or other significant national
or international events.
For more details on factors that could affect expectations, see our
Annual Report on Form 10-K for the fiscal year ended February 28, 2013,
and our quarterly or current reports as filed with or furnished to the
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 disclaim any intent or
obligation to update our forward-looking statements.
?
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
?
?
Three Months Ended May 31
(In thousands except per share data)
?
2013
?
% (1)
?
2012
?
% (1)
SALES AND OPERATING REVENUES:
?
?
?
Used vehicle sales
$
2,701,755
81.6
$
2,188,907
78.9
New vehicle sales
52,427
1.6
55,457
2.0
Wholesale vehicle sales
490,659
14.8
467,795
16.9
Other sales and revenues
?
?
66,216
?
2.0
?
?
62,261
?
2.2
NET SALES AND OPERATING REVENUES
3,311,057
100.0
2,774,420
100.0
Cost of sales
?
?
2,862,961
?
86.5
?
?
2,392,505
?
86.2
GROSS PROFIT
448,096
13.5
381,915
13.8
CARMAX AUTO FINANCE INCOME
87,019
2.6
75,179
2.7
Selling, general and administrative expenses
290,189
8.8
253,603
9.1
Interest expense
7,878
0.2
8,143
0.3
Other income
?
?
241
?
?
?
?
285
?
?
Earnings before income taxes
237,289
7.2
195,633
7.1
Income tax provision
?
?
90,638
?
2.7
?
?
74,887
?
2.7
NET EARNINGS
?
$
146,651
?
4.4
?
$
120,746
?
4.4
WEIGHTED AVERAGE COMMON SHARES:
Basic
224,618
227,773
Diluted
228,552
231,802
NET EARNINGS PER SHARE:
Basic
$
0.65
$
0.53
Diluted
$
0.64
$
0.52
?
?
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
?
?
(Unaudited)
?
?
(Unaudited)
May 31
February 28
May 31
(In thousands except share data)
?
2013
?
2013
?
2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
725,267
$
449,364
$
456,413
Restricted cash from collections on auto loan receivables
240,715
224,287
182,316
Accounts receivable, net
70,452
91,961
65,705
Inventory
1,398,200
1,517,813
1,210,196
Deferred income taxes
4,737
5,193
6,119
Other current assets
?
?
15,402
?
?
?
21,513
?
?
?
10,258
?
TOTAL CURRENT ASSETS
2,454,773
2,310,131
1,931,007
Auto loan receivables, net
6,310,446
5,895,918
5,132,163
Property and equipment, net
1,444,128
1,428,970
1,305,462
Deferred income taxes
138,158
145,875
130,583
Other assets
?
?
102,949
?
?
?
107,708
?
?
?
98,948
?
TOTAL ASSETS
?
$
10,450,454
?
?
$
9,888,602
?
?
$
8,598,163
?
?
LIABILITIES AND SHAREHOLDERS? EQUITY
CURRENT LIABILITIES:
Accounts payable
$
316,640
$
336,721
$
293,924
Accrued expenses and other current liabilities
109,714
147,821
108,733
Accrued income taxes
58,965
222
48,070
Short-term debt
972
355
791
Current portion of finance and capital lease obligations
16,830
16,139
14,730
Current portion of non-recourse notes payable
?
?
207,113
?
?
?
182,915
?
?
?
152,268
?
TOTAL CURRENT LIABILITIES
710,234
684,173
618,516
Finance and capital lease obligations, excluding current portion
332,965
337,452
349,648
Non-recourse notes payable, excluding current portion
6,160,242
5,672,175
4,672,921
Other liabilities
?
?
171,631
?
?
?
175,635
?
?
?
136,730
?
TOTAL LIABILITIES
?
?
7,375,072
?
?
?
6,869,435
?
?
?
5,777,815
?
?
Commitments and contingent liabilities
?
SHAREHOLDERS? EQUITY:
Common stock, $0.50 par value; 350,000,000 shares authorized;
224,145,439 and 225,906,108 shares issued and outstanding
as of May 31, 2013 and February 28, 2013, respectively
112,073
112,953
114,153
Capital in excess of par value
990,778
972,250
901,725
Accumulated other comprehensive loss
(57,510
)
(59,808
)
(60,795
)
Retained earnings
?
?
2,030,041
?
?
?
1,993,772
?
?
?
1,865,265
?
TOTAL SHAREHOLDERS? EQUITY
?
?
3,075,382
?
?
?
3,019,167
?
?
?
2,820,348
?
TOTAL LIABILITIES AND SHAREHOLDERS? EQUITY
?
$
10,450,454
?
?
$
9,888,602
?
?
$
8,598,163
?
?
?
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
?
?
Three Months Ended May 31
(In thousands)
?
2013
?
2012
OPERATING ACTIVITIES:
?
Net earnings
$
146,651
$
120,746
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization
24,335
22,982
Share-based compensation expense
22,941
15,592
Provision for loan losses
11,299
9,176
(Gain) loss on disposition of assets
(178
)
192
Deferred income tax provision
6,695
7,511
Net decrease (increase) in:
Accounts receivable, net
21,509
20,729
Inventory
119,613
(117,604
)
Other current assets
7,293
7,242
Auto loan receivables, net
(425,827
)
(181,492
)
Other assets
(2,592
)
2,225
Net increase (decrease) in:
Accounts payable, accrued expenses and other current
liabilities and accrued income taxes
533
(7,641
)
Other liabilities
?
?
(9,851
)
?
?
(15,178
)
NET CASH USED IN OPERATING ACTIVITIES
?
?
(77,579
)
?
?
(115,520
)
INVESTING ACTIVITIES:
Capital expenditures
(42,045
)
(47,636
)
Proceeds from sales of assets
4,610
?
(Increase) decrease in restricted cash from collections on auto loan
receivables
(16,428
)
21,998
Increase in restricted cash in reserve accounts
(2,812
)
(236
)
Release of restricted cash from reserve accounts
10,011
6,382
Sales of money market securities, net
1,313
169
Purchases of investments available-for-sale
?
?
(1,161
)
?
?
(1,096
)
NET CASH USED IN INVESTING ACTIVITIES
?
?
(46,512
)
?
?
(20,419
)
FINANCING ACTIVITIES:
Increase (decrease) in short-term debt, net
617
(152
)
Payments on finance and capital lease obligations
(3,796
)
(3,296
)
Issuances of non-recourse notes payable
1,774,000
698,000
Payments on non-recourse notes payable
(1,261,735
)
(556,900
)
Repurchase and retirement of common stock
(130,215
)
?
Equity issuances, net
11,204
2,529
Excess tax benefits from share-based payment arrangements
?
?
9,919
?
?
?
9,513
?
NET CASH PROVIDED BY FINANCING ACTIVITIES
?
?
399,994
?
?
?
149,694
?
Increase in cash and cash equivalents
275,903
13,755
Cash and cash equivalents at beginning of year
?
?
449,364
?
?
?
442,658
?
CASH AND CASH EQUIVALENTS AT END OF PERIOD
?
$
725,267
?
?
$
456,413
?
?
CarMax, Inc.
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
or
General Media:
Trina Lee, Director, Public Relations, (855) 887-2915
Catherine Gryp, Manager, Public Relations, (855) 887-2915
Source: http://finance.yahoo.com/news/carmax-reports-record-first-quarter-113500450.html
Source: http://valoanaftershortsale.org/2013/06/21/carmax-reports-record-first-quarter-results/
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