CarMax Reports Third Quarter Fiscal 2024 Results
- Total gross profit increased 6.3% YoY, with strong retail and wholesale gross profit per unit.
- SG&A expenses decreased by 5.4% YoY, driven by cost management efforts.
- Net earnings per diluted share increased to $0.52 from $0.24 YoY.
- Net revenues decreased by 5.5% YoY, driven by a 2.9% decline in total retail used vehicle unit sales.
- CAF income decreased by 2.3% due to a compression in the net interest margin percentage.
Insights
Analyzing CarMax Inc.'s third-quarter financial results reveals several critical insights. The company experienced a 5.5% decrease in net revenues and a 2.9% decline in retail used unit sales, indicative of the broader challenges in the used car industry, such as inflationary pressures and heightened interest rates. Nevertheless, CarMax managed to maintain a strong gross profit per retail used unit at $2,277, demonstrating effective cost management and pricing strategies.
The 7.7% increase in wholesale units sold and the 5.1% increase in vehicles bought from consumers and dealers suggest that CarMax is successfully expanding its inventory sourcing channels, which could be crucial for future sales growth. The 5.4% reduction in SG&A expenses suggests continued operational efficiency, which is a positive sign for investors concerned about cost control.
From a financing perspective, the 2.3% decline in CarMax Auto Finance (CAF) income reflects the current economic environment's impact on net interest margins. However, the decrease in the provision for loan losses and the increase in average managed receivables indicate a healthy credit environment and potential for future income stability.
Finally, the resumption of share repurchases signals confidence by management in the company's valuation and financial health. Share repurchases often indicate that the company believes its shares are undervalued and is a positive signal to the market.
Within the automotive retail sector, CarMax's performance must be contextualized against the backdrop of a dynamic used car market. The decline in average retail selling prices, approximately $1,300 per unit, reflects a market adjustment where consumers are sensitive to vehicle affordability amid economic uncertainties.
The increase in wholesale unit sales contrasts with the retail decline, suggesting a shift in business strategy or market demand. CarMax's online retail sales growth, from 12% to 14%, is indicative of a successful omni-channel strategy, which is increasingly important in the digitalization of the car buying process.
The automotive retail industry is highly sensitive to economic indicators such as consumer confidence, interest rates and inflation. CarMax's report indicates that they are not immune to these factors but are making strategic adjustments to navigate the challenges. Their expansion into new markets with store openings in high-density areas like New York and Los Angeles is a forward-looking move that could contribute to future growth.
The financial results of CarMax provide a microcosmic view of the broader economic climate and consumer behavior. The reduction in SG&A expenses and strong gross profit per unit despite a decrease in net revenues is a testament to the company's resilience in a period marked by economic headwinds.
The compression in the net interest margin percentage at CarMax Auto Finance is reflective of the rising interest rate environment, which has been a response to inflationary pressures. This compression affects profitability but is somewhat mitigated by a lower provision for loan losses, suggesting that CarMax is managing credit risk effectively.
CarMax's performance in the used vehicle segment is particularly significant given that it serves as an indicator of discretionary spending and consumer confidence. The decline in unit sales could be symptomatic of broader consumer retrenchment in response to economic uncertainties. However, CarMax's strategic initiatives, such as omni-channel investments and market expansion, are proactive measures to stimulate growth and may counterbalance the economic pressures faced by the consumer segment.
Highlights:
-
Net revenues were
$6.1 billion 5.5% compared with the prior year third quarter. -
Retail used unit sales decreased
2.9% and comparable store used unit sales declined4.1% from the prior year’s third quarter; strong gross profit per retail used unit of$2,277 -
Wholesale units increased
7.7% from the prior year’s third quarter; strong gross profit per wholesale unit of$961 -
Bought 250,000 vehicles from consumers and dealers, up
5.1% versus last year’s third quarter.-
228,000 of these vehicles were purchased from consumers, up
1.6% over last year’s third quarter. -
22,000 of these vehicles were purchased through dealers, up
61.7% from last year’s third quarter.
-
228,000 of these vehicles were purchased from consumers, up
-
SG&A of
$560.0 million 5.4% or$31.8 million -
CarMax Auto Finance (CAF) income of
$148.7 million 2.3% from the prior year third quarter due to compression in the net interest margin percentage, partially offset by a lower provision for loan losses and an increase in average managed receivables. -
Net earnings per diluted share of
$0.52 $0.24 - Resumed share repurchases in the third quarter.
CEO Commentary:
“Our third quarter performance reflects the continued efforts of the team that have resulted in several quarters of sequential improvements across key components of our business, despite the persistent widespread pressures in the used car industry,” said Bill Nash, president and chief executive officer. “Key results this quarter include year-over-year growth in wholesale units, further SG&A reductions, a strengthened credit mix in CAF’s portfolio, strong retail and wholesale gross profit per unit, and year-over-year growth in profitability. In addition, we continue to be encouraged by the positive impact that our omni-channel investments are having on our business. Some of those benefits include incremental retail customers, web traffic growth and enhanced vehicle sourcing.”
Third Quarter Business Performance Review:
Sales. Combined retail and wholesale used vehicle unit sales were 302,666, an increase of
Total retail used vehicle unit sales declined
Total wholesale vehicle unit sales increased
We bought 250,000 vehicles from consumers and dealers, up
Gross Profit. Total gross profit was
Wholesale vehicle gross profit increased
Other gross profit increased
SG&A. Compared with the third quarter of fiscal 2023, SG&A expenses decreased
CarMax Auto Finance.(3) CAF income decreased
As of November 30, 2023, the allowance for loan losses was
CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was
Share Repurchase Activity. During the third quarter of fiscal year 2024, we resumed our share repurchase program after a pause initiated during the third quarter of fiscal year 2023. We repurchased 648,500 shares of common stock for
Location Openings. During the fourth quarter of fiscal year 2024, we will open four stores including two in the
(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 November 30 |
|
Nine Months Ended November 30 |
||||||||||||||||
(In millions) |
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||||
Used vehicle sales |
$ |
4,832.1 |
|
|
$ |
5,204.6 |
|
(7.2 |
)% |
|
$ |
16,424.7 |
|
|
$ |
18,503.2 |
|
(11.2 |
)% |
Wholesale vehicle sales |
|
1,165.2 |
|
|
|
1,152.2 |
|
1.1 |
% |
|
|
4,001.5 |
|
|
|
4,959.1 |
|
(19.3 |
)% |
Other sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Extended protection plan revenues |
|
90.8 |
|
|
|
91.8 |
|
(1.0 |
)% |
|
|
303.8 |
|
|
|
318.1 |
|
(4.5 |
)% |
Third-party finance (fees)/income, net |
|
(1.2 |
) |
|
|
1.0 |
|
(227.5 |
)% |
|
|
(2.4 |
) |
|
|
7.1 |
|
(133.7 |
)% |
Advertising & subscription revenues (1) |
|
36.7 |
|
|
|
33.3 |
|
10.4 |
% |
|
|
101.6 |
|
|
|
101.9 |
|
(0.3 |
)% |
Other |
|
25.0 |
|
|
|
23.1 |
|
7.8 |
% |
|
|
80.2 |
|
|
|
73.1 |
|
9.8 |
% |
Total other sales and revenues |
|
151.3 |
|
|
|
149.2 |
|
1.4 |
% |
|
|
483.2 |
|
|
|
500.2 |
|
(3.4 |
)% |
Total net sales and operating revenues |
$ |
6,148.5 |
|
|
$ |
6,506.0 |
|
(5.5 |
)% |
|
$ |
20,909.4 |
|
|
$ |
23,962.4 |
|
(12.7 |
)% |
(1) Excludes intersegment revenues that have been eliminated in consolidation. |
|||||||||||||||||||
Unit Sales
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||
|
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||
Used vehicles |
174,766 |
|
180,050 |
|
(2.9 |
)% |
|
593,515 |
|
637,939 |
|
(7.0 |
)% |
Wholesale vehicles |
127,900 |
|
118,757 |
|
7.7 |
% |
|
430,785 |
|
464,741 |
|
(7.3 |
)% |
Average Selling Prices
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||||||
|
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||
Used vehicles |
$ |
27,228 |
|
$ |
28,530 |
|
(4.6 |
)% |
|
$ |
27,331 |
|
$ |
28,692 |
|
(4.7 |
)% |
Wholesale vehicles |
$ |
8,674 |
|
$ |
9,294 |
|
(6.7 |
)% |
|
$ |
8,887 |
|
$ |
10,280 |
|
(13.6 |
)% |
Vehicle Sales Changes
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||
|
2023 |
2022 |
|
2023 |
2022 |
||||
Used vehicle units |
(2.9 |
)% |
(20.8 |
)% |
|
(7.0 |
)% |
(12.6 |
)% |
Used vehicle revenues |
(7.2 |
)% |
(19.1 |
)% |
|
(11.2 |
)% |
(1.0 |
)% |
|
|
|
|
|
|
||||
Wholesale vehicle units |
7.7 |
% |
(36.7 |
)% |
|
(7.3 |
)% |
(16.6 |
)% |
Wholesale vehicle revenues |
1.1 |
% |
(40.1 |
)% |
|
(19.3 |
)% |
(0.8 |
)% |
Comparable Store Used Vehicle Sales Changes (1)
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||
|
2023 |
2022 |
|
2023 |
2022 |
||||
Used vehicle units |
(4.1 |
)% |
(22.4 |
)% |
|
(8.5 |
)% |
(14.3 |
)% |
Used vehicle revenues |
(8.3 |
)% |
(21.0 |
)% |
|
(12.7 |
)% |
(3.2 |
)% |
(1) |
Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods. |
Used Vehicle Financing Penetration by Channel (Before the Impact of 3-day Payoffs) (1)
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
CAF (2) |
46.5 |
% |
|
47.3 |
% |
|
46.1 |
% |
|
44.9 |
% |
Tier 2 (3) |
18.0 |
% |
|
20.5 |
% |
|
18.9 |
% |
|
22.6 |
% |
Tier 3 (4) |
6.9 |
% |
|
6.1 |
% |
|
6.7 |
% |
|
6.4 |
% |
Other (5) |
28.6 |
% |
|
26.1 |
% |
|
28.3 |
% |
|
26.1 |
% |
Total |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
(1) |
Calculated as used vehicle units financed for respective channel as a percentage of total used units sold. |
(2) |
Includes CAF's Tier 2 and Tier 3 loan originations, which represent less than |
(3) |
Third-party finance providers who generally pay us a fee or to whom no fee is paid. |
(4) |
Third-party finance providers to whom we pay a fee. |
(5) |
Represents customers arranging their own financing and customers that do not require financing. |
Selected Operating Ratios
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||||
(In millions) |
2023 |
% (1) |
|
2022 |
% (1) |
|
2023 |
% (1) |
|
2022 |
% (1) |
||||
Net sales and operating revenues |
$ |
6,148.5 |
100.0 |
|
$ |
6,506.0 |
100.0 |
|
$ |
20,909.4 |
100.0 |
|
$ |
23,962.4 |
100.0 |
Gross profit |
$ |
612.9 |
10.0 |
|
$ |
576.7 |
8.9 |
|
$ |
2,127.0 |
10.2 |
|
$ |
2,189.2 |
9.1 |
CarMax Auto Finance income |
$ |
148.7 |
2.4 |
|
$ |
152.2 |
2.3 |
|
$ |
421.0 |
2.0 |
|
$ |
539.5 |
2.3 |
Selling, general, and administrative expenses |
$ |
560.0 |
9.1 |
|
$ |
591.7 |
9.1 |
|
$ |
1,705.5 |
8.2 |
|
$ |
1,914.5 |
8.0 |
Interest expense |
$ |
31.3 |
0.5 |
|
$ |
30.2 |
0.5 |
|
$ |
93.3 |
0.4 |
|
$ |
91.7 |
0.4 |
Earnings before income taxes |
$ |
110.6 |
1.8 |
|
$ |
50.0 |
0.8 |
|
$ |
576.1 |
2.8 |
|
$ |
554.2 |
2.3 |
Net earnings |
$ |
82.0 |
1.3 |
|
$ |
37.6 |
0.6 |
|
$ |
428.9 |
2.1 |
|
$ |
415.8 |
1.7 |
| (1) | Calculated as a percentage of net sales and operating revenues. |
Gross Profit (1)
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||||||
(In millions) |
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||
Used vehicle gross profit |
$ |
397.9 |
|
$ |
402.8 |
|
(1.2 |
)% |
|
$ |
1,364.6 |
|
$ |
1,461.3 |
|
(6.6 |
)% |
Wholesale vehicle gross profit |
|
122.9 |
|
|
114.7 |
|
7.2 |
% |
|
|
427.3 |
|
|
447.0 |
|
(4.4 |
)% |
Other gross profit |
|
92.1 |
|
|
59.2 |
|
55.4 |
% |
|
|
335.1 |
|
|
280.9 |
|
19.2 |
% |
Total |
$ |
612.9 |
|
$ |
576.7 |
|
6.3 |
% |
|
$ |
2,127.0 |
|
$ |
2,189.2 |
|
(2.8 |
)% |
(1) |
Amounts are net of intercompany eliminations. |
Gross Profit per Unit (1)
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||
|
2023 |
2022 |
|
2023 |
2022 |
||||||||
|
$ per unit(2) |
%(3) |
$ per unit(2) |
%(3) |
|
$ per unit(2) |
%(3) |
$ per unit(2) |
%(3) |
||||
Used vehicle gross profit per unit |
$ |
2,277 |
8.2 |
$ |
2,237 |
7.7 |
|
$ |
2,299 |
8.3 |
$ |
2,291 |
7.9 |
Wholesale vehicle gross profit per unit |
$ |
961 |
10.5 |
$ |
966 |
10.0 |
|
$ |
992 |
10.7 |
$ |
962 |
9.0 |
Other gross profit per unit |
$ |
527 |
60.9 |
$ |
329 |
39.7 |
|
$ |
564 |
69.3 |
$ |
440 |
56.2 |
(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 November 30 |
|
Nine Months Ended November 30 |
||||||||||||||||||
(In millions) |
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||||||
Compensation and benefits: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits, excluding share-based compensation expense |
$ |
286.3 |
|
|
$ |
306.2 |
|
|
(6.5 |
)% |
|
$ |
922.7 |
|
|
$ |
985.2 |
|
|
(6.3 |
)% |
Share-based compensation expense |
|
19.9 |
|
|
|
17.2 |
|
|
15.7 |
% |
|
|
86.5 |
|
|
|
64.0 |
|
|
35.2 |
% |
Total compensation and benefits (2) |
$ |
306.2 |
|
|
$ |
323.4 |
|
|
(5.3 |
)% |
|
$ |
1,009.2 |
|
|
$ |
1,049.2 |
|
|
(3.8 |
)% |
Occupancy costs |
|
70.3 |
|
|
|
70.1 |
|
|
0.2 |
% |
|
|
204.2 |
|
|
|
204.8 |
|
|
(0.3 |
)% |
Advertising expense |
|
63.3 |
|
|
|
58.7 |
|
|
7.9 |
% |
|
|
201.5 |
|
|
|
230.5 |
|
|
(12.6 |
)% |
Other overhead costs (3) |
|
120.2 |
|
|
|
139.5 |
|
|
(13.9 |
)% |
|
|
290.6 |
|
|
|
430.0 |
|
|
(32.4 |
)% |
Total SG&A expenses |
$ |
560.0 |
|
|
$ |
591.7 |
|
|
(5.4 |
)% |
|
$ |
1,705.5 |
|
|
$ |
1,914.5 |
|
|
(10.9 |
)% |
SG&A as a % of gross profit |
|
91.4 |
% |
|
|
102.6 |
% |
|
(11.2 |
)% |
|
|
80.2 |
% |
|
|
87.5 |
% |
|
(7.3 |
)% |
(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, preopening and relocation costs, insurance, charitable contributions, travel and other administrative expenses. |
Components of CAF Income and Other CAF Information
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||||||||||
(In millions) |
2023 |
% (1) |
2022 |
% (1) |
|
2023 |
% (1) |
2022 |
% (1) |
||||||||||||
Interest margin: |
|
|
|
|
|
|
|
|
|
||||||||||||
Interest and fee income |
$ |
426.9 |
|
9.8 |
|
$ |
365.4 |
|
8.8 |
|
|
$ |
1,244.3 |
|
9.6 |
|
$ |
1,069.3 |
|
8.8 |
|
Interest expense |
|
(170.2 |
) |
(3.9 |
) |
|
(88.8 |
) |
(2.1 |
) |
|
|
(464.8 |
) |
(3.6 |
) |
|
(200.1 |
) |
(1.6 |
) |
Total interest margin |
|
256.7 |
|
5.9 |
|
|
276.6 |
|
6.7 |
|
|
|
779.5 |
|
6.0 |
|
|
869.2 |
|
7.2 |
|
Provision for loan losses |
|
(68.3 |
) |
(1.6 |
) |
|
(85.7 |
) |
(2.1 |
) |
|
|
(239.0 |
) |
(1.8 |
) |
|
(219.0 |
) |
(1.8 |
) |
Total interest margin after provision for loan losses |
|
188.4 |
|
4.3 |
|
|
190.9 |
|
4.6 |
|
|
|
540.5 |
|
4.2 |
|
|
650.2 |
|
5.4 |
|
Total direct expenses |
|
(39.7 |
) |
(0.9 |
) |
|
(38.8 |
) |
(0.9 |
) |
|
|
(119.5 |
) |
(0.9 |
) |
|
(110.7 |
) |
(0.9 |
) |
CarMax Auto Finance income |
$ |
148.7 |
|
3.4 |
|
$ |
152.2 |
|
3.7 |
|
|
$ |
421.0 |
|
3.2 |
|
$ |
539.5 |
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total average managed receivables |
$ |
17,508.9 |
|
|
$ |
16,540.2 |
|
|
|
$ |
17,276.0 |
|
|
$ |
16,177.8 |
|
|
||||
Net loans originated |
$ |
1,953.4 |
|
|
$ |
2,147.2 |
|
|
|
$ |
6,491.0 |
|
|
$ |
6,928.0 |
|
|
||||
Net penetration rate |
|
44.0 |
% |
|
|
44.4 |
% |
|
|
|
43.1 |
% |
|
|
41.4 |
% |
|
||||
Weighted average contract rate |
|
11.3 |
% |
|
|
9.8 |
% |
|
|
|
11.1 |
% |
|
|
9.4 |
% |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ending allowance for loan losses |
$ |
511.9 |
|
|
$ |
491.0 |
|
|
|
$ |
511.9 |
|
|
$ |
491.0 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Warehouse facility information: |
|
|
|
|
|
|
|
|
|
||||||||||||
Ending funded receivables |
$ |
4,529.6 |
|
|
$ |
3,420.9 |
|
|
|
$ |
4,529.6 |
|
|
$ |
3,420.9 |
|
|
||||
Ending unused capacity |
$ |
1,070.4 |
|
|
$ |
1,979.1 |
|
|
|
$ |
1,070.4 |
|
|
$ |
1,979.1 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
| (1) Annualized percentage of total average managed receivables. | |||||||||||||||||||||
Earnings Highlights
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
||||||||||||||
(In millions except per share data) |
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||
Net earnings |
$ |
82.0 |
|
$ |
37.6 |
|
118.2 |
% |
|
$ |
428.9 |
|
$ |
415.8 |
|
3.2 |
% |
Diluted weighted average shares outstanding |
|
158.8 |
|
|
158.5 |
|
0.2 |
% |
|
|
158.9 |
|
|
160.2 |
|
(0.8 |
)% |
Net earnings per diluted share |
$ |
0.52 |
|
$ |
0.24 |
|
116.7 |
% |
|
$ |
2.70 |
|
$ |
2.60 |
|
3.8 |
% |
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today, December 21, 2023. Domestic investors may access the call at 1-800-274-8461 (international callers dial 1-203-518-9814). The conference I.D. for both domestic and international callers is 3171396. 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 April 10, 2024, or via telephone (for approximately one week) by dialing 1-800-374-1216 (or 1-402-220-0681 for international access) and entering the conference ID 3171396.
Fourth Quarter Fiscal 2024 Earnings Release Date
We currently plan to release results for the fourth quarter ending February 29, 2024, on Thursday, April 11, 2024, 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 April 2024.
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. During the fiscal year ended February 28, 2023, CarMax sold approximately 810,000 used vehicles and 590,000 wholesale vehicles at its auctions. In addition, CarMax Auto Finance originated nearly
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, share repurchase plans, 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:
- Changes in the competitive landscape and/or our failure to successfully adjust to such changes.
-
Changes in general or regional
U.S. economic conditions, including inflationary pressures, climbing interest rates and the potential impact of international events. - Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
- Events that damage our reputation or harm the perception of the quality of our brand.
- 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.
- Our inability to realize the benefits associated with our omni-channel initiatives and strategic investments.
- Factors related to geographic and sales growth, including the inability to effectively manage our growth.
- 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.
- Changes in economic conditions or other factors that result in greater credit losses for CAF’s portfolio of auto loans receivable than anticipated.
- The failure or inability to realize the benefits associated with our strategic transactions.
-
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 consumer credit availability provided by our third-party finance providers.
- Changes in the availability of extended protection plan products from third-party providers.
- The performance of the third-party vendors we rely on for key components of our business.
- Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
-
The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to
U.S. generally accepted accounting principles. - The failure or inability to adequately protect our intellectual property.
- The occurrence of severe weather events.
- Factors related to the geographic concentration of our stores.
- Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer, associate or corporate information.
- The failure of or inability to sufficiently enhance key information systems.
- Factors related to the regulatory and legislative environment in which we operate.
- The effect of various litigation matters.
- The volatility in the market price for our common stock.
For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, and our quarterly or current reports as filed with or furnished to the
CARMAX, INC. AND SUBSIDIARIES |
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||||||||||||||
(UNAUDITED) |
||||||||||||||||||||
|
Three Months Ended November 30 |
|
Nine Months Ended November 30 |
|||||||||||||||||
(In thousands except per share data) |
2023 |
%(1) |
2022 |
%(1) |
|
2023 |
|
%(1) |
|
2022 |
|
%(1) |
||||||||
SALES AND OPERATING REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Used vehicle sales |
$ |
4,832,077 |
|
78.6 |
$ |
5,204,584 |
|
80.0 |
|
$ |
16,424,691 |
|
|
78.6 |
|
$ |
18,503,159 |
|
|
77.2 |
Wholesale vehicle sales |
|
1,165,204 |
|
19.0 |
|
1,152,207 |
|
17.7 |
|
|
4,001,542 |
|
|
19.1 |
|
|
4,959,050 |
|
|
20.7 |
Other sales and revenues |
|
151,257 |
|
2.5 |
|
149,165 |
|
2.3 |
|
|
483,204 |
|
|
2.3 |
|
|
500,171 |
|
|
2.1 |
NET SALES AND OPERATING REVENUES |
|
6,148,538 |
|
100.0 |
|
6,505,956 |
|
100.0 |
|
|
20,909,437 |
|
|
100.0 |
|
|
23,962,380 |
|
|
100.0 |
COST OF SALES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Used vehicle cost of sales |
|
4,434,165 |
|
72.1 |
|
4,801,790 |
|
73.8 |
|
|
15,060,045 |
|
|
72.0 |
|
|
17,041,898 |
|
|
71.1 |
Wholesale vehicle cost of sales |
|
1,042,303 |
|
17.0 |
|
1,037,534 |
|
15.9 |
|
|
3,574,200 |
|
|
17.1 |
|
|
4,512,053 |
|
|
18.8 |
Other cost of sales |
|
59,207 |
|
1.0 |
|
89,944 |
|
1.4 |
|
|
148,174 |
|
|
0.7 |
|
|
219,205 |
|
|
0.9 |
TOTAL COST OF SALES |
|
5,535,675 |
|
90.0 |
|
5,929,268 |
|
91.1 |
|
|
18,782,419 |
|
|
89.8 |
|
|
21,773,156 |
|
|
90.9 |
GROSS PROFIT |
|
612,863 |
|
10.0 |
|
576,688 |
|
8.9 |
|
|
2,127,018 |
|
|
10.2 |
|
|
2,189,224 |
|
|
9.1 |
CARMAX AUTO FINANCE INCOME |
|
148,659 |
|
2.4 |
|
152,196 |
|
2.3 |
|
|
421,004 |
|
|
2.0 |
|
|
539,538 |
|
|
2.3 |
Selling, general, and administrative expenses |
|
559,962 |
|
9.1 |
|
591,727 |
|
9.1 |
|
|
1,705,493 |
|
|
8.2 |
|
|
1,914,508 |
|
|
8.0 |
Depreciation and amortization |
|
60,623 |
|
1.0 |
|
57,377 |
|
0.9 |
|
|
177,859 |
|
|
0.9 |
|
|
170,717 |
|
|
0.7 |
Interest expense |
|
31,265 |
|
0.5 |
|
30,150 |
|
0.5 |
|
|
93,316 |
|
|
0.4 |
|
|
91,670 |
|
|
0.4 |
Other income |
|
(886 |
) |
— |
|
(363 |
) |
— |
|
|
(4,730 |
) |
|
— |
|
|
(2,303 |
) |
|
— |
Earnings before income taxes |
|
110,558 |
|
1.8 |
|
49,993 |
|
0.8 |
|
|
576,084 |
|
|
2.8 |
|
|
554,170 |
|
|
2.3 |
Income tax provision |
|
28,555 |
|
0.5 |
|
12,413 |
|
0.2 |
|
|
147,148 |
|
|
0.7 |
|
|
138,420 |
|
|
0.6 |
NET EARNINGS |
$ |
82,003 |
|
1.3 |
$ |
37,580 |
|
0.6 |
|
$ |
428,936 |
|
|
2.1 |
|
$ |
415,750 |
|
|
1.7 |
WEIGHTED AVERAGE COMMON SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
|
158,446 |
|
|
|
158,003 |
|
|
|
|
158,347 |
|
|
|
|
|
159,044 |
|
|
|
Diluted |
|
158,799 |
|
|
|
158,536 |
|
|
|
|
158,866 |
|
|
|
|
|
160,195 |
|
|
|
NET EARNINGS PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.52 |
|
|
$ |
0.24 |
|
|
|
$ |
2.71 |
|
|
|
|
$ |
2.61 |
|
|
|
Diluted |
$ |
0.52 |
|
|
$ |
0.24 |
|
|
|
$ |
2.70 |
|
|
|
|
$ |
2.60 |
|
|
|
(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 |
|||||||
|
|
November 30 |
|
February 28 |
|
November 30 |
|||
(In thousands except share data) |
2023 |
|
2023 |
|
2022 |
||||
ASSETS |
|
|
|
|
|
||||
|
CURRENT ASSETS: |
|
|
|
|
|
|||
|
Cash and cash equivalents |
$ |
605,375 |
|
$ |
314,758 |
|
$ |
688,618 |
|
Restricted cash from collections on auto loans receivable |
|
483,570 |
|
|
470,889 |
|
|
466,525 |
|
Accounts receivable, net |
|
212,406 |
|
|
298,783 |
|
|
246,794 |
|
Inventory |
|
3,638,946 |
|
|
3,726,142 |
|
|
3,414,937 |
|
Other current assets |
|
169,653 |
|
|
230,795 |
|
|
167,143 |
|
TOTAL CURRENT ASSETS |
|
5,109,950 |
|
|
5,041,367 |
|
|
4,984,017 |
|
Auto loans receivable, net |
|
17,081,891 |
|
|
16,341,791 |
|
|
16,240,832 |
|
Property and equipment, net |
|
3,623,697 |
|
|
3,430,914 |
|
|
3,375,001 |
|
Deferred income taxes |
|
121,219 |
|
|
80,740 |
|
|
87,262 |
|
Operating lease assets |
|
533,387 |
|
|
545,677 |
|
|
529,781 |
|
Goodwill |
|
141,258 |
|
|
141,258 |
|
|
141,258 |
|
Other assets |
|
561,848 |
|
|
600,989 |
|
|
580,790 |
|
TOTAL ASSETS |
$ |
27,173,250 |
|
$ |
26,182,736 |
|
$ |
25,938,941 |
|
|
|
|
|
|
|
|||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
||||
|
CURRENT LIABILITIES: |
|
|
|
|
|
|||
|
Accounts payable |
$ |
762,594 |
|
$ |
826,592 |
|
$ |
802,780 |
|
Accrued expenses and other current liabilities |
|
494,365 |
|
|
478,964 |
|
|
496,202 |
|
Accrued income taxes |
|
10,581 |
|
|
— |
|
|
— |
|
Current portion of operating lease liabilities |
|
56,410 |
|
|
53,287 |
|
|
51,215 |
|
Current portion of long-term debt |
|
312,744 |
|
|
111,859 |
|
|
112,708 |
|
Current portion of non-recourse notes payable |
|
446,544 |
|
|
467,609 |
|
|
474,147 |
|
TOTAL CURRENT LIABILITIES |
|
2,083,238 |
|
|
1,938,311 |
|
|
1,937,052 |
|
Long-term debt, excluding current portion |
|
1,605,638 |
|
|
1,909,361 |
|
|
1,903,223 |
|
Non-recourse notes payable, excluding current portion |
|
16,558,053 |
|
|
15,865,776 |
|
|
15,737,459 |
|
Operating lease liabilities, excluding current portion |
|
509,141 |
|
|
523,828 |
|
|
509,106 |
|
Other liabilities |
|
372,815 |
|
|
332,383 |
|
|
364,528 |
|
TOTAL LIABILITIES |
|
21,128,885 |
|
|
20,569,659 |
|
|
20,451,368 |
|
|
|
|
|
|
|
|||
|
Commitments and contingent liabilities |
|
|
|
|
|
|||
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|||
|
Common stock, |
|
79,011 |
|
|
79,040 |
|
|
79,010 |
|
Capital in excess of par value |
|
1,786,924 |
|
|
1,713,074 |
|
|
1,697,062 |
|
Accumulated other comprehensive income |
|
60,667 |
|
|
97,869 |
|
|
57,420 |
|
Retained earnings |
|
4,117,763 |
|
|
3,723,094 |
|
|
3,654,081 |
|
TOTAL SHAREHOLDERS’ EQUITY |
|
6,044,365 |
|
|
5,613,077 |
|
|
5,487,573 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
27,173,250 |
|
$ |
26,182,736 |
|
$ |
25,938,941 |
|
|
|
|
|
|
|
|||
CARMAX, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(UNAUDITED) |
|||||||
|
Nine Months Ended November 30 |
||||||
(In thousands) |
2023 |
|
2022 |
||||
OPERATING ACTIVITIES: |
|
|
|
||||
Net earnings |
$ |
428,936 |
|
|
$ |
415,750 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
193,528 |
|
|
|
202,655 |
|
Share-based compensation expense |
|
90,479 |
|
|
|
64,974 |
|
Provision for loan losses |
|
238,952 |
|
|
|
218,967 |
|
Provision for cancellation reserves |
|
62,587 |
|
|
|
79,924 |
|
Deferred income tax benefit |
|
(28,290 |
) |
|
|
(2,178 |
) |
Other |
|
8,534 |
|
|
|
8,879 |
|
Net decrease (increase) in: |
|
|
|
||||
Accounts receivable, net |
|
86,377 |
|
|
|
314,190 |
|
Inventory |
|
87,196 |
|
|
|
1,709,632 |
|
Other current assets |
|
91,793 |
|
|
|
149,777 |
|
Auto loans receivable, net |
|
(979,052 |
) |
|
|
(1,170,098 |
) |
Other assets |
|
(8,775 |
) |
|
|
(43,502 |
) |
Net decrease in: |
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
||||
current liabilities and accrued income taxes |
|
(60,365 |
) |
|
|
(195,154 |
) |
Other liabilities |
|
(62,921 |
) |
|
|
(91,739 |
) |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
148,979 |
|
|
|
1,662,077 |
|
INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
|
(355,442 |
) |
|
|
(319,486 |
) |
Proceeds from disposal of property and equipment |
|
1,299 |
|
|
|
3,806 |
|
Purchases of investments |
|
(4,641 |
) |
|
|
(6,460 |
) |
Sales and returns of investments |
|
1,562 |
|
|
|
3,486 |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(357,222 |
) |
|
|
(318,654 |
) |
FINANCING ACTIVITIES: |
|
|
|
||||
Proceeds from issuances of long-term debt |
|
134,600 |
|
|
|
2,863,500 |
|
Payments on long-term debt |
|
(242,989 |
) |
|
|
(4,116,775 |
) |
Cash paid for debt issuance costs |
|
(15,576 |
) |
|
|
(13,987 |
) |
Payments on finance lease obligations |
|
(12,177 |
) |
|
|
(10,056 |
) |
Issuances of non-recourse notes payable |
|
9,099,929 |
|
|
|
11,351,696 |
|
Payments on non-recourse notes payable |
|
(8,430,615 |
) |
|
|
(10,581,076 |
) |
Repurchase and retirement of common stock |
|
(44,287 |
) |
|
|
(333,814 |
) |
Equity issuances |
|
28,430 |
|
|
|
13,504 |
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
517,315 |
|
|
|
(827,008 |
) |
Increase in cash, cash equivalents, and restricted cash |
|
309,072 |
|
|
|
516,415 |
|
Cash, cash equivalents, and restricted cash at beginning of year |
|
951,004 |
|
|
|
803,618 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD |
$ |
1,260,076 |
|
|
$ |
1,320,033 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231221202266/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 are CarMax's Q3 net revenues?
How did CarMax's retail used unit sales perform in Q3?
What is the CEO's commentary on Q3 results?
What is CarMax's Q3 net earnings per diluted share?
How much did CarMax's SG&A expenses decrease in Q3?
