CarMax Reports First Quarter Fiscal 2023 Results

Rhea-AI Summary

CarMax reported a 21.0% increase in net revenues to $9.3 billion for Q1 ended May 31, 2022. Despite this growth, total unit sales fell 5.5% to 427,257, with retail used unit sales declining 11.0%. The gross profit per retail used unit rose $134 to $2,339, while CarMax Auto Finance income decreased 15.4% to $204.5 million. Net earnings per diluted share were $1.56, down from $2.63 a year ago, impacted by lower used sales and increased loan loss provisions.

Positive

• Net revenues increased 21.0% to $9.3 billion.
• Gross profit per retail used unit rose $134 to $2,339.
• Wholesale vehicle sales increased 2.7% to 186,307 units.

Negative

• Retail used unit sales declined 11.0% to 240,950 vehicles.
• Net earnings per diluted share decreased 40.7% to $1.56.
• CarMax Auto Finance income fell 15.4% to $204.5 million due to increased loan loss provisions.

RICHMOND, Va.--(BUSINESS WIRE)-- CarMax, Inc. (NYSE:KMX) today reported results for the first quarter ended May 31, 2022.

Highlights:

• Enabled online self-progression capabilities for all of our retail customers.
• Net revenues of $9.3 billion, up 21.0% compared with the prior year first quarter.
• Sold 427,257 units through our combined retail and wholesale channels, down 5.5% versus the prior year first quarter.
  • Retail used unit sales declined 11.0% to 240,950 vehicles, and comparable store used unit sales declined 12.7%.
  • Wholesale units increased 2.7% to 186,307 vehicles.
• Bought 362,280 vehicles from consumers and dealers, up 6.2% versus last year’s first quarter.
  • 345,216 of these vehicles were from consumers, up 3.0% over last year’s record results.
  • 17,064 of these vehicles were through MaxOffer, our digital appraisal product for dealers, up 183.4% over last year’s first quarter.
• Gross profit per retail used unit of $2,339, an increase of $134 versus the prior year’s first quarter, and gross profit per wholesale unit of $1,029, consistent with last year’s first quarter.
• CarMax Auto Finance (CAF) income of $204.5 million, a 15.4% year-over-year decline as the $82.2 million swing in the provision for loan losses, reflecting a more normalized environment, outweighed the effects of robust growth in CAF’s net interest margin and average managed receivables. Net interest margin improved to 7.5% of average managed receivables, up from 6.9% in the prior year’s first quarter.
• Net earnings per diluted share of $1.56, down from a record $2.63 a year ago.
  • While the decline in used sales was a key contributor, net earnings were also negatively impacted by the year-over-year swing in the provision for loan losses and a $22.2 million unrealized gain on investment in last year’s first quarter.

CEO Commentary:

“While the used vehicle market environment was challenging in the first quarter, we continued to make progress on the key strategic priorities that enable CarMax to grow profitable market share, now and into the future,” said Bill Nash, president and chief executive officer. “For the past several years, our priorities and investments have focused on building a leading e-commerce platform that integrates buying and selling cars with our best-in-class store experience. All of our retail customers are now able to transact online on their own. We will now turn our efforts to further improving the experience for customers and associates by focusing on the seamlessness of our online and in-store offerings.”

First Quarter Business Performance Review:

Sales. Combined retail and wholesale used vehicle unit sales were 427,257, a decrease of 5.5% from the prior year’s first quarter. Online retail sales⁽¹⁾ accounted for 11% of retail unit sales, compared with 8% in the first quarter of last year. Revenue from online transactions⁽²⁾, including retail and wholesale unit sales, was $2.9 billion, or approximately 31% of net revenues, compared with 24% of net revenues in last year’s first quarter.

Total retail used vehicle unit sales declined 11.0% to 240,950 and comparable store used unit sales declined 12.7% from the prior year’s first quarter. We believe a number of macroeconomic factors weighed on our first quarter unit sales performance, including the lapping of stimulus benefits paid in the prior year period; widespread inflationary pressures, including challenges to vehicle affordability; and waning consumer confidence. Total retail used vehicle revenues increased 13.9% compared with the prior year’s first quarter due to an increase in the average retail selling price, which rose approximately $6,300 per unit, or 28.0%, partially offset by the decrease in retail used units sold. The increase in average retail selling price largely reflected higher vehicle acquisition costs resulting from strong wholesale industry valuations.

Total wholesale vehicle unit sales increased 2.7% to 186,307 versus the prior year’s first quarter as we rolled over last year’s nationwide launch of our instant offer appraisal product on carmax.com. Wholesale volume was negatively impacted by a calendar shift, which reduced auction volume when compared to the prior year as well as our decision to shift some units from wholesale to retail to meet consumer demand for lower priced vehicles. Total wholesale revenues increased 54.0% compared with the prior year’s first quarter due to the average wholesale selling price rising by more than $3,700 per unit, or 51.3%, together with the increase in wholesale units sold.

Other sales and revenues rose 8.9% compared with the first quarter of fiscal 2022, representing an increase of $14.7 million. The increase was largely driven by the consolidation of Edmunds as of June 1, 2021, as well as improvements in net third-party finance income resulting from lower Tier 3 originations. The increase was partially offset by a $17.7 million decline in extended protection plan (EPP) revenues largely reflecting the decline in retail unit sales, as well as the divestiture of our remaining new car franchise in fiscal 2022.

Gross Profit. Total gross profit was $875.4 million, down 5.3% versus last year’s first quarter. Retail used vehicle gross profit declined 5.6%, reflecting the combined effects of the decline in retail unit sales and an improvement in the related gross profit per unit, which rose $134 to $2,339.

Wholesale vehicle gross profit increased 3.1% versus the prior year’s quarter, reflecting the continued growth in wholesale unit volume and a slight increase in the related gross profit per unit, which rose $4 to $1,029.

Other gross profit declined 15.1% largely reflecting a reduction in service department margins and EPP revenues, partially offset by the consolidation of Edmunds and the improvement in net third-party finance income. Service margins declined primarily due to the deleverage resulting from the decline in retail unit sales and also due to inflationary pressures.

SG&A. Compared with the first quarter of fiscal 2022, SG&A expenses increased 18.5% to $656.7 million. Contributing factors included the effect of increases in staffing and wage pressures over the past year, investments to advance our technology platforms and strategic initiatives as well as growth related costs, increases in advertising expenses and the consolidation of Edmunds. Partially offsetting these items was a reduction in share-based compensation, which largely reflected changes in the company’s share price. SG&A as a percent of gross profit was 75.0%, versus 59.9% in the prior year’s first quarter driven by the expenses noted above, combined with the decrease in sales volume.

CarMax Auto Finance.⁽³⁾ CAF income decreased 15.4% to $204.5 million, driven by an $82.2 million year- over-year swing in the provision for loan losses. This year’s provision was more normalized to the pre-pandemic environment at $57.8 million compared to $24.4 million of income in the prior year’s first quarter due to favorable loan loss performance. This provision impact outweighed the effects of the robust growth in CAF’s net interest margin and average managed receivables.

As of May 31, 2022, the allowance for loan losses was 2.85% of ending managed receivables, up from 2.77% as of February 28, 2022. The increase in the allowance percentage primarily reflected the effect of the previously disclosed expansion of Tier 2 and Tier 3 originations within CAF’s portfolio.

CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, improved to 7.5% of average managed receivables from 6.9% in the prior year’s first quarter, due to lower funding costs with additional support from our hedging strategy. After the effect of 3-day payoffs, CAF financed 39.3% of units sold in the current quarter, compared with 43.7% in the prior year’s first quarter, largely reflecting an increase in the mix of customers utilizing outside financing.

Share Repurchase Activity. During the first quarter of fiscal 2023, we repurchased 1.6 million shares of common stock for $157.6 million pursuant to our share repurchase program. As of May 31, 2022, we had $2.62 billion remaining available for repurchase under the outstanding authorization.

Store Openings. During the first quarter of fiscal 2023, we opened one new retail location in Edison, New Jersey, our first retail store in the New York metro market. In fiscal 2023, we plan to open a total of ten new locations.

(1) An online retail unit sale is defined as a sale where the customer completes all four of these major transactional activities remotely: reserving the vehicle; financing the vehicle, if needed; trading-in or opting out of a trade in; and creating a remote sales order.

(2) Revenue from online transactions is defined as revenue from retail sales that qualify for an online retail sale, as well as any EPP and third-party finance contribution, wholesale sales where the winning bid was an online bid, and all revenue earned by Edmunds.

(3) 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 May 31
(In millions)		2022			2021			Change
Used vehicle sales	$	7,014.5		$	6,157.3			13.9	%
Wholesale vehicle sales		2,116.5			1,374.4			54.0	%
Other sales and revenues:
Extended protection plan revenues		116.5			134.2			(13.2	)%
Third-party finance income/(fees), net		3.4			(4.6	)		173.9	%
Advertising & subscription revenues (1)		34.4			—			100.0	%
Other		26.3			36.3			(27.3	)%
Total other sales and revenues		180.6			165.9			8.9	%
Total net sales and operating revenues	$	9,311.6		$	7,697.6			21.0	%
(1) Excludes intersegment revenues that have been eliminated in consolidation.

Unit Sales
	Three Months Ended May 31
	2022		2021		Change
Used vehicles	240,950		270,799		(11.0	)%
Wholesale vehicles	186,307		181,389		2.7	%

Average Selling Prices
	Three Months Ended May 31
		2022			2021		Change
Used vehicles	$	28,844		$	22,533		28.0	%
Wholesale vehicles	$	10,996		$	7,266		51.3	%

Vehicle Sales Changes
	Three Months Ended May 31
	2022		2021
Used vehicle units	(11.0	)%	100.6	%
Used vehicle revenues	13.9	%	121.0	%
Wholesale vehicle units	2.7	%	186.6	%
Wholesale vehicle revenues	54.0	%	300.9	%

Comparable Store Used Vehicle Sales Changes (1)
	Three Months Ended May 31
	2022		2021
Used vehicle units	(12.7	)%	99.1	%
Used vehicle revenues	11.6	%	120.6	%

(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 May 31
	2022			2021
CAF (2)	43.3	%		46.7	%
Tier 2 (3)	25.2	%		22.8	%
Tier 3 (4)	7.1	%		10.0	%
Other (5)	24.4	%		20.5	%
Total	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 2 and Tier 3 loan originations, which represent approximately 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 May 31
(In millions)			2022		% (1)			2021		% (1)
Net sales and operating revenues		$	9,311.6		100.0		$	7,697.6		100.0
Gross profit		$	875.4		9.4		$	924.5		12.0
CarMax Auto Finance income		$	204.5		2.2		$	241.7		3.1
Selling, general, and administrative expenses		$	656.7		7.1		$	554.1		7.2
Interest expense		$	28.8		0.3		$	20.5		0.3
Earnings before income taxes		$	336.6		3.6		$	567.3		7.4
Net earnings		$	252.3		2.7		$	436.8		5.7
(1) Calculated as a percentage of net sales and operating revenues.

Gross Profit (1)
	Three Months Ended May 31
(In millions)		2022			2021		Change
Used vehicle gross profit	$	563.5		$	597.0		(5.6	)%
Wholesale vehicle gross profit		191.7			185.8		3.1	%
Other gross profit		120.2			141.7		(15.1	)%
Total	$	875.4		$	924.5		(5.3	)%
(1) Amounts are net of intercompany eliminations.

Gross Profit per Unit (1)
		Three Months Ended May 31
		2022					2021
		$ per unit(2)			%(3)		$ per unit(2)			%(3)
Used vehicle gross profit		$	2,339		8.0		$	2,205		9.7
Wholesale vehicle gross profit		$	1,029		9.1		$	1,025		13.5
Other gross profit		$	499		66.6		$	523		85.4
(1) Amounts are net of intercompany eliminations. Those eliminations had the effect of increasing used vehicle gross profit per unit and wholesale vehicle gross profit per unit and decreasing other gross profit per unit by immaterial amounts.
(2) Calculated as category gross profit divided by its respective units sold, except the other category, which is divided by total used units sold.
(3) Calculated as a percentage of its respective sales or revenue.

SG&A Expenses (1)
	Three Months Ended May 31
(In millions)		2022				2021			Change
Compensation and benefits:
Compensation and benefits, excluding share-based compensation expense	$	345.3			$	284.2			21.5	%
Share-based compensation expense		22.2				38.4			(42.1	)%
Total compensation and benefits (2)	$	367.5			$	322.6			13.9	%
Occupancy costs		65.8				50.6			30.2	%
Advertising expense		88.9				72.5			22.7	%
Other overhead costs (3)		134.5				108.4			24.0	%
Total SG&A expenses	$	656.7			$	554.1			18.5	%
SG&A as % of gross profit		75.0	%			59.9	%		15.1	%
(1) Amounts are net of intercompany eliminations.
(2) Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.
(3) Includes IT expenses, non-CAF bad debt, insurance, preopening and relocation costs, charitable contributions, travel and other administrative expenses.

Components of CAF Income and Other CAF Information
		Three Months Ended May 31
(In millions)			2022			% (1)				2021			% (1)
Interest margin:
Interest and fee income		$	346.7			8.8			$	310.3			8.8
Interest expense			(48.8	)		(1.2	)			(65.8	)		(1.9	)
Total interest margin			297.9			7.5				244.5			6.9
Provision for loan losses			(57.8	)		(1.5	)			24.4			0.7
Total interest margin after provision for loan losses			240.1			6.1				268.9			7.6
Total direct expenses			(35.6	)		(0.9	)			(27.2	)		(0.8	)
CarMax Auto Finance income		$	204.5			5.2			$	241.7			6.8
Total average managed receivables		$	15,817.0						$	14,148.7
Net loans originated		$	2,446.8						$	2,483.4
Net penetration rate			39.3	%						43.7	%
Weighted average contract rate			9.0	%						9.0	%
Ending allowance for loan losses		$	458.2						$	379.5
Warehouse facility information:
Ending funded receivables		$	3,629.9						$	2,856.9
Ending unused capacity		$	1,770.1						$	1,068.1
(1) Annualized percentage of total average managed receivables.

Earnings Highlights
	Three Months Ended May 31
(In millions except per share data)		2022			2021		Change
Net earnings	$	252.3		$	436.8		(42.2	)%
Diluted weighted average shares outstanding		161.8			166.3		(2.7	)%
Net earnings per diluted share	$	1.56		$	2.63		(40.7	)%

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, June 24, 2022. Domestic investors may access the call at 1-800-289-0720 (international callers dial 1-323-701-0160). The conference I.D. for both domestic and international callers is 3170513. A live webcast of the call will be available on our investor information home page at investors.carmax.com.

A replay of the webcast will be available on the company’s website at investors.carmax.com through September 28, 2022, or via telephone (for approximately one week) by dialing 1-888-203-1112 (or 1-719-457-0820 for international access) and entering the conference ID 3170513.

Second Quarter Fiscal 2023 Earnings Release Date

We currently plan to release results for the second quarter ending August 31, 2022, on Thursday, September 29, 2022, 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 early September 2022.

About CarMax

CarMax, the nation’s largest retailer of used autos, revolutionized the automotive retail industry by driving integrity, honesty and transparency in every interaction. The company offers a truly personalized experience with the option for customers to do as much, or as little, online and in-store as they want. CarMax also provides a variety of vehicle delivery methods, including home delivery, express pickup and appointments in its stores. During the fiscal year ended February 28, 2022, CarMax sold approximately 924,000 used vehicles and 706,000 wholesale vehicles at its auctions. In addition, CarMax Auto Finance originated more than $9 billion in receivables during fiscal 2022, adding to its nearly $16 billion portfolio. CarMax has more than 230 stores, more than 30,000 associates, and is proud to have been recognized for 18 consecutive years as one of the Fortune 100 Best Companies to Work For®. CarMax is committed to making a positive impact on people, communities and the environment. Learn more in the 2022 Responsibility Report. For more information, visit www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release that are not statements of historical fact, including statements about our future business plans, operations, challenges, opportunities or prospects, including without limitation any statements or factors regarding expected operating capacity, sales, inventory, market share, financial targets, revenue, margins, expenses, liquidity, loan originations, capital expenditures, debt obligations 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,” “positioned,” “predict,” “should,” “target,” “will” and other similar expressions, whether in the negative or affirmative. Such forward-looking statements are based upon management’s current knowledge, expectations and assumptions 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:

• The effect and consequences of the Coronavirus public health crisis on matters including U.S. and local economies; our business operations and continuity; the availability of corporate and consumer financing; the health and productivity of our associates; the ability of third-party providers to continue uninterrupted service; and the regulatory environment in which we operate.
• Changes in general or regional U.S. economic conditions, including the potential impact of Russia’s invasion of Ukraine.
• Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
• 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.
• Our inability to realize the benefits associated with our omni-channel initiatives and strategic investments.
• 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 loans receivable 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 performance of the third-party vendors we rely on for key components of our business.
• The effect of various litigation matters.
• Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
• The failure or inability to realize the benefits associated with our strategic transactions.
• 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 failure or inability to adequately protect our intellectual property.
• 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, 2022, 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 May 31
(In thousands except per share data)			2022		%(1)			2021			%(1)
SALES AND OPERATING REVENUES:
Used vehicle sales		$	7,014,490		75.3		$	6,157,344			80.0
Wholesale vehicle sales			2,116,517		22.7			1,374,357			17.9
Other sales and revenues			180,614		1.9			165,898			2.2
NET SALES AND OPERATING REVENUES			9,311,621		100.0			7,697,599			100.0
COST OF SALES:
Used vehicle cost of sales			6,451,010		69.3			5,560,337			72.2
Wholesale vehicle cost of sales			1,924,850		20.7			1,188,513			15.4
Other cost of sales			60,370		0.6			24,240			0.3
TOTAL COST OF SALES			8,436,230		90.6			6,773,090			88.0
GROSS PROFIT			875,391		9.4			924,509			12.0
CARMAX AUTO FINANCE INCOME			204,473		2.2			241,731			3.1
Selling, general and administrative expenses			656,740		7.1			554,069			7.2
Depreciation and amortization			55,648		0.6			49,890			0.6
Interest expense			28,775		0.3			20,534			0.3
Other expense (income)			2,099		—			(25,577	)		(0.3	)
Earnings before income taxes			336,602		3.6			567,324			7.4
Income tax provision			84,337		0.9			130,568			1.7
NET EARNINGS		$	252,265		2.7		$	436,756			5.7
WEIGHTED AVERAGE COMMON SHARES:
Basic			160,298					163,151
Diluted			161,798					166,295
NET EARNINGS PER SHARE:
Basic		$	1.57				$	2.68
Diluted		$	1.56				$	2.63
(1) Percents are calculated as a percentage of net sales and operating revenues and may not total due to rounding.

	CARMAX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		As of
		May 31			February 28				May 31
(In thousands except share data)			2022			2022				2021
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	95,313		$	102,716			$	377,954
	Restricted cash from collections on auto loans receivable		531,344			548,099				549,578
	Accounts receivable, net		610,587			560,984				413,219
	Inventory		4,691,085			5,124,569				3,248,849
	Other current assets		189,638			212,922				101,005
	TOTAL CURRENT ASSETS		6,117,967			6,549,290				4,690,605
	Auto loans receivable, net		15,672,605			15,289,701				14,159,044
	Property and equipment, net		3,258,614			3,209,068				3,076,173
	Deferred income taxes		91,305			120,931				138,487
	Operating lease assets		533,355			537,357				453,851
	Goodwill		141,258			141,258				653
	Other assets		523,590			490,659				314,076
	TOTAL ASSETS	$	26,338,694		$	26,338,264			$	22,832,889
LIABILITIES AND SHAREHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable	$	1,066,922		$	937,717			$	1,058,005
	Accrued expenses and other current liabilities		489,619			533,271				401,043
	Accrued income taxes		18,365			—				96,624
	Current portion of operating lease liabilities		44,384			44,197				30,836
	Current portion of long-term debt		111,517			11,203				10,210
	Current portion of non-recourse notes payable		520,944			521,069				496,669
	TOTAL CURRENT LIABILITIES		2,251,751			2,047,457				2,093,387
	Long-term debt, excluding current portion		2,569,751			3,255,304				1,320,208
	Non-recourse notes payable, excluding current portion		15,218,229			14,919,715				13,840,787
	Operating lease liabilities, excluding current portion		519,818			523,269				446,497
	Other liabilities		378,508			357,080				428,529
	TOTAL LIABILITIES		20,938,057			21,102,825				18,129,408
	Commitments and contingent liabilities
	SHAREHOLDERS’ EQUITY:
	Common stock, $0.50 par value; 350,000,000 shares authorized; 159,613,860 and 161,053,983 shares issued and outstanding as of May 31, 2022 and February 28, 2022, respectively		79,807			80,527				81,401
	Capital in excess of par value		1,678,172			1,677,268				1,527,876
	Accumulated other comprehensive income (loss)		5,892			(46,422	)			(115,754	)
	Retained earnings		3,636,766			3,524,066				3,209,958
	TOTAL SHAREHOLDERS’ EQUITY		5,400,637			5,235,439				4,703,481
	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	26,338,694		$	26,338,264			$	22,832,889

CARMAX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Three Months Ended May 31
(In thousands)		2022				2021
OPERATING ACTIVITIES:
Net earnings	$	252,265			$	436,756
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		70,473				62,356
Share-based compensation expense		22,443				41,074
Provision for loan losses		57,840				(24,375	)
Provision for cancellation reserves		31,719				34,128
Deferred income tax provision		11,561				24,751
Other		5,342				(21,037	)
Net (increase) decrease in:
Accounts receivable, net		(49,603	)			(174,149	)
Inventory		433,484				(91,690	)
Other current assets		73,315				(9,873	)
Auto loans receivable, net		(440,744	)			(644,850	)
Other assets		(15,154	)			(2,853	)
Net increase (decrease) in:
Accounts payable, accrued expenses and other current liabilities and accrued income taxes		105,445				315,784
Other liabilities		(27,434	)			(57,905	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		530,952				(111,883	)
INVESTING ACTIVITIES:
Capital expenditures		(94,808	)			(59,145	)
Proceeds from sale of business		—				617
Purchases of investments		(4,380	)			(4,701	)
Sales and returns of investments		150				86
NET CASH USED IN INVESTING ACTIVITIES		(99,038	)			(63,143	)
FINANCING ACTIVITIES:
Proceeds from issuances of long-term debt		1,043,100				388,600
Payments on long-term debt		(1,629,024	)			(391,235	)
Cash paid for debt issuance costs		(3,940	)			(3,910	)
Payments on finance lease obligations		(2,925	)			(2,789	)
Issuances of non-recourse notes payable		3,569,605				3,610,819
Payments on non-recourse notes payable		(3,272,242	)			(3,014,131	)
Repurchase and retirement of common stock		(162,974	)			(133,838	)
Equity issuances		3,443				21,589
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(454,957	)			475,105
(Decrease) increase in cash, cash equivalents, and restricted cash		(23,043	)			300,079
Cash, cash equivalents, and restricted cash at beginning of year		803,618				771,947
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	780,575			$	1,072,026

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220624005041/en/

Investors:

David Lowenstein, Assistant Vice President, Investor Relations

investor_relations@carmax.com, (804) 747-0422 x7865

Media:

pr@carmax.com, (855) 887-2915

Source: CarMax, Inc.

FAQ

What were CarMax's Q1 2022 earnings results?

CarMax reported net earnings per diluted share of $1.56, down from $2.63 in the previous year.

How did CarMax's revenues perform in Q1 2022?

CarMax's net revenues increased by 21.0% to $9.3 billion compared to the prior year.

What was the impact of loan loss provisions on CarMax's earnings?

CarMax's income from CarMax Auto Finance decreased by 15.4% due to a greater provision for loan losses.

What changes occurred in CarMax's retail and wholesale unit sales?

Total unit sales fell by 5.5%, with retail used unit sales down 11.0% but wholesale unit sales up 2.7%.

What strategic initiatives did CarMax highlight in the press release?

CarMax emphasized its focus on enhancing online sales capabilities and improving customer experience.