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CarMax Reports Record Third Quarter Results

CarMax, Inc. (NYSE:KMX) today reported record results for the third quarter ended November 30, 2012.

  • Net sales and operating revenues increased 15% to $2.60 billion from $2.26 billion in the third quarter of last year.
  • Used unit sales in comparable stores increased 12% for the quarter.
  • Total used unit sales rose 16% in the third quarter.
  • Total wholesale unit sales increased 10% in the third quarter.
  • CarMax Auto Finance (CAF) income increased 16% to $72.5 million in the third quarter.
  • Net earnings grew 15% to $94.7 million, or $0.41 per diluted share, compared with $82.1 million, or $0.36 per diluted share, in the third quarter of fiscal 2012.

Third Quarter Business Performance Review

“We are pleased to report strong increases in used and wholesale vehicle unit sales and CAF income, which drove solid bottom-line earnings growth,” said Tom Folliard, president and chief executive officer. “Our strong comparable store sales growth allowed us to leverage SG&A expenses, even as we expanded our store base.”

Sales . Used vehicle sales improved significantly, with total used units climbing 16% and comparable store used units up 12%. The comparable store used unit growth was driven by improved conversion, which we believe benefited from a variety of factors, including more compelling credit offers from third-party finance providers and CAF, increased inventory selection, improved customer sentiment and continued strong in-store execution. The used vehicle average selling price was similar to the prior year’s quarter.

Wholesale vehicle unit sales grew 10% compared with last year’s quarter. Wholesale unit sales benefited from an increase in appraisal traffic, while the appraisal buy rate was similar to the prior year’s quarter.

Other sales and revenues increased 5% compared with the prior year’s third quarter, as an increase in extended service plan (ESP) revenues was largely offset by a reduction in net third-party finance fees. Third-party subprime providers, who purchase subprime financings at a discount, originated 14% of used vehicle unit sales in the current quarter compared with 9% in the prior year quarter. ESP revenues climbed 22% due to both the growth in used vehicle sales and an increase in ESP penetration.

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