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CarMax Reports Record Second Quarter Results

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, September 24, 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 26825963. 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 through December 19, 2013. A telephone replay also will be available through October 1, 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 26825963.

Third Quarter Fiscal 2014 Earnings Release Date

We currently plan to release results for the third quarter ending November 30, 2013, on Friday, December 20, 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 December 2013.

About CarMax

CarMax, a member of the Fortune 500 and the S&P 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 123 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 or associate 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 August 31 Six Months Ended August 31
(In thousands except per share data)   2013     % (1)   2012   % (1)   2013     % (1)   2012   % (1)
SALES AND OPERATING REVENUES:
Used vehicle sales $ 2,639,523 81.3 $ 2,191,964 79.5 $ 5,341,278 81.5 $ 4,380,871 79.2
New vehicle sales 60,002 1.8 61,393 2.2 112,429 1.7 116,850 2.1
Wholesale vehicle sales 474,907 14.6 437,050 15.8 965,566 14.7 904,845 16.4
Other sales and revenues     71,120     2.2     67,597   2.5     137,336     2.1     129,858   2.3
NET SALES AND OPERATING REVENUES 3,245,552 100.0 2,758,004 100.0 6,556,609 100.0 5,532,424 100.0
Cost of sales     2,810,809     86.6     2,390,011   86.7     5,673,770     86.5     4,782,516   86.4
GROSS PROFIT 434,743 13.4 367,993 13.3 882,839 13.5 749,908 13.6
CARMAX AUTO FINANCE INCOME 84,422 2.6 75,676 2.7 171,441 2.6 150,855 2.7
Selling, general and administrative expenses 283,206 8.7 254,674 9.2 573,395 8.7 508,277 9.2
Interest expense 7,761 0.2 8,152 0.3 15,639 0.2 16,295 0.3
Other income (loss)     (1,073 )       259       (832 )       544  
Earnings before income taxes 227,125 7.0 181,102 6.6 464,414 7.1 376,735 6.8
Income tax provision     86,851     2.7     69,466   2.5     177,489     2.7     144,353   2.6
NET EARNINGS   $ 140,274     4.3   $ 111,636   4.0   $ 286,925     4.4   $ 232,382   4.2
WEIGHTED AVERAGE COMMON SHARES:
Basic 223,610 228,366 224,114 228,069
Diluted 227,634 231,696 228,093 231,749
NET EARNINGS PER SHARE:
Basic $ 0.63 $ 0.49 $ 1.28 $ 1.02
Diluted $ 0.62 $ 0.48 $ 1.26 $ 1.00
 

(1)

 

Calculated as a percentage of net sales and operating revenues and sums may not equal totals due to rounding.

 
     

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

(Unaudited)

August 31

February 28

August 31

(In thousands except share data)   2013     2013     2012  
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 750,032 $ 449,364 $ 458,567
Restricted cash from collections on auto loan receivables 251,340 224,287 204,731
Accounts receivable, net 85,549 91,961 70,426
Inventory 1,364,016 1,517,813 1,198,013
Deferred income taxes 4,300 5,193 7,705
Other current assets     26,173       21,513       22,106  
TOTAL CURRENT ASSETS 2,481,410 2,310,131 1,961,548
Auto loan receivables, net 6,665,985 5,895,918 5,315,232
Property and equipment, net 1,535,431 1,428,970 1,347,313
Deferred income taxes 146,167 145,875 143,754
Other assets     104,781       107,708       103,593  
TOTAL ASSETS   $ 10,933,774     $ 9,888,602     $ 8,871,440  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 346,152 $ 336,721 $ 221,430
Accrued expenses and other current liabilities 144,949 147,821 116,167
Accrued income taxes 1,808 222 557
Short-term debt 1,739 355 1,068
Current portion of finance and capital lease obligations 17,167 16,139 15,325
Current portion of non-recourse notes payable     218,104       182,915       171,292  
TOTAL CURRENT LIABILITIES 729,919 684,173 525,839
Finance and capital lease obligations, excluding current portion 325,492 337,452 345,628
Non-recourse notes payable, excluding current portion 6,512,328 5,672,175 4,909,702
Other liabilities     181,256       175,635       140,684  
TOTAL LIABILITIES     7,748,995       6,869,435       5,921,853  
 
Commitments and contingent liabilities
 
SHAREHOLDERS’ EQUITY:

Common stock, $0.50 par value; 350,000,000 shares authorized; 223,329,344 and 225,906,108 shares issued and outstanding as of August 31, 2013 and February 28, 2013, respectively

111,665 112,953 114,222
Capital in excess of par value 1,000,258 972,250 911,875
Accumulated other comprehensive loss (53,909 ) (59,808 ) (53,411 )
Retained earnings     2,126,765       1,993,772       1,976,901  
TOTAL SHAREHOLDERS’ EQUITY     3,184,779       3,019,167       2,949,587  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 10,933,774     $ 9,888,602     $ 8,871,440  
 
   

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
Six Months Ended August 31
(In thousands)   2013   2012  
OPERATING ACTIVITIES:
Net earnings $ 286,925 $ 232,382

Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation and amortization 49,160 46,442
Share-based compensation expense 38,002 30,206
Provision for loan losses 29,318 22,090
Loss on disposition of assets 930 446
Deferred income tax benefit (3,200 ) (76 )
Net decrease (increase) in:
Accounts receivable, net 6,412 16,008
Inventory 153,797 (105,421 )
Other current assets (746 ) (4,605 )
Auto loan receivables, net (799,385 ) (377,475 )
Other assets (6,736 ) 971
Net decrease in:

Accounts payable, accrued expenses and other current liabilities and accrued income taxes

(13,913 ) (132,469 )
Other liabilities     (4,173 )     (14,431 )
NET CASH USED IN OPERATING ACTIVITIES     (263,609 )     (285,932 )
INVESTING ACTIVITIES:
Capital expenditures (136,011 ) (103,918 )
Proceeds from sales of assets 4,716
Increase in restricted cash from collections on auto loan receivables (27,053 ) (417 )
Increase in restricted cash in reserve accounts (5,319 ) (3,151 )
Release of restricted cash from reserve accounts 15,017 7,992
Sales (purchases) of money market securities, net 1,337 (2,104 )
Purchases of investments available-for-sale (1,405 ) (1,227 )
Sales of investments available-for-sale     33       318  
NET CASH USED IN INVESTING ACTIVITIES     (148,685 )     (102,507 )
FINANCING ACTIVITIES:
Increase in short-term debt, net 1,384 125
Payments on finance and capital lease obligations (10,932 ) (6,721 )
Issuances of non-recourse notes payable 3,530,000 2,345,000
Payments on non-recourse notes payable (2,654,658 ) (1,948,095 )
Repurchase and retirement of common stock (179,278 )

Equity issuances, net 14,753 4,209
Excess tax benefits from share-based payment arrangements     11,693       9,830  
NET CASH PROVIDED BY FINANCING ACTIVITIES     712,962       404,348  
Increase in cash and cash equivalents 300,668 15,909
Cash and cash equivalents at beginning of year     449,364       442,658  
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 750,032     $ 458,567  
 




Stock quotes in this article: KMX 

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