UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 24, 2013
___________
CARMAX, INC.
(Exact name of registrant as specified in its charter)
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Virginia (State or other jurisdiction of incorporation) |
1-31420 (Commission File Number) |
54-1821055 (I.R.S. Employer Identification No.) |
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12800 Tuckahoe Creek Parkway Richmond, Virginia (Address of principal executive offices) |
23238 (Zip Code) |
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Registrant’s telephone number, including area code: (804) 747-0422
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 |
Results of Operations and Financial Condition |
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The registrant issued a press release on September 24, 2013, announcing its second quarter results. The press release is being furnished as Exhibit 99.1 hereto and is incorporated by reference into this Item 2.02. |
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Item 9.01 |
Financial Statements and Exhibits |
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(d) Exhibits
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The following exhibit is being furnished pursuant to Item 2.02 above. |
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99.1 |
Press release, dated September 24, 2013, issued by CarMax, Inc., entitled “CarMax Reports Record Second Quarter Results.” |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CARMAX, INC.
(Registrant)
Dated: September 24, 2013 By: /s/ Thomas W. Reedy
Thomas W. Reedy
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
|
Exhibit No. |
Description |
|
99.1 |
Press release, dated September 24, 2013, issued by CarMax, Inc., entitled “CarMax Reports Record Second Quarter Results.” |
CARMAX REPORTS RECORD SECOND QUARTER RESULTS
Richmond, Va., September 24, 2013 – CarMax, Inc. (NYSE:KMX) today reported record second quarter results for the quarter ended August 31, 2013.
|
§ |
Net sales and operating revenues increased 18% to $3.25 billion. |
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§ |
Used unit sales in comparable stores increased 16%. |
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§ |
Total used unit sales rose 21%. |
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§ |
Total wholesale unit sales increased 10%. |
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§ |
CarMax Auto Finance (CAF) income increased 12% to $84.4 million. |
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§ |
Net earnings grew 26% to $140.3 million. Net earnings per diluted share rose 29% to $0.62. |
“We are very pleased with our continued strong sales and earnings growth,” said Tom Folliard, president and chief executive officer. “The improvement was driven by several contributors, including double-digit growth in used and wholesale unit sales and CAF income.”
Second Quarter Business Performance Review
Sales. Total used vehicle unit sales grew 21% and comparable store used units grew 16% versus the prior year’s second quarter. Comparable store used unit sales benefited from improved execution in our stores and an attractive consumer credit environment, as well as a modest increase in store traffic.
Wholesale vehicle unit sales grew 10% compared with last year’s quarter. Wholesale unit sales benefited from an increase in the appraisal buy rate and the growth in our store base.
Other sales and revenues increased 5% year-over-year, as an increase in extended service plan (ESP) revenues was largely offset by a reduction in net third-party finance fees. ESP revenues climbed 23%, reflecting both the increase in used unit sales and higher ESP penetration. Net third-party finance fees declined $9.2 million as the third-party subprime providers (those who purchase financings at a discount) originated 18% of used vehicle unit sales in the current quarter versus 15% in the prior year’s second quarter. We believe that attractive offers by our third-party providers continued to support the increase in subprime financings.
-more-
Gross Profit. Total gross profit increased 18% to $434.7 million. Used vehicle gross profit rose 21%, consistent with the increase in used unit sales, and used vehicle gross profit per unit remained comparable to the prior year at $2,174. Wholesale vehicle gross profit increased 3%, as the 10% increase in wholesale unit sales was partially offset by a decrease in wholesale vehicle gross profit per unit, which declined $58 to $849. Other gross profit increased 27%, driven by stronger ESP and service department profits, partially offset by the reduction in net third-party finance fees.
SG&A. Selling, general and administrative expenses increased 11% to $283.2 million. The increase reflected both higher variable selling costs resulting from the 16% increase in comparable store used unit sales and the 12% increase in our store base since the beginning of last year’s second quarter (representing the addition of 13 stores.) SG&A per retail unit declined $174 to $2,067, as our comparable store used unit growth generated significant overhead leverage.
CarMax Auto Finance.(1) CAF income increased 12% to $84.4 million. Average managed receivables grew 24% to $6.52 billion, reflecting 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 effect of the increase in managed receivables on CAF income was partially offset by a lower total interest margin rate, which declined to 7.0% of average managed receivables in the current quarter from 7.6% in last year’s second quarter. The interest margin reflects the spread between interest and fees charged to consumers and our funding costs.
As a percent of ending managed receivables, the allowance for loan losses increased modestly to 1.0% as of August 31, 2013, compared with 0.9% as of August 31, 2012.
Superstore Openings. During the second quarter of fiscal 2014, we opened two stores, including one in Katy, Texas (our fifth store in the Houston market), and one in Fairfield, California (our third store in the Sacramento market.)
Share Repurchase Program. During the second quarter, we repurchased 1.0 million shares of common stock for $48.7 million pursuant to our share repurchase program. As of August 31, 2013, we had $414.8 million remaining available for repurchase under the program.
(1) Although CAF benefits from certain indirect overhead expenditures, we have elected not to allocate indirect costs to CAF in order to avoid making arbitrary allocation decisions.
-more-
Supplemental Financial Information
Sales Components
|
|
|
|
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||||||||||||||
|
|
|
Three Months Ended August 31(1) |
Six Months Ended August 31(1) |
||||||||||||||
|
(In millions) |
|
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
|
Used vehicle sales |
|
$ |
2,639.5 |
|
$ |
2,192.0 |
|
20.4 |
% |
$ |
5,341.3 |
|
$ |
4,380.9 |
|
21.9 |
% |
|
New vehicle sales |
|
|
60.0 |
|
|
61.4 |
|
(2.3) |
% |
|
112.4 |
|
|
116.9 |
|
(3.8) |
% |
|
Wholesale vehicle sales |
|
|
474.9 |
|
|
437.1 |
|
8.7 |
% |
|
965.6 |
|
|
904.8 |
|
6.7 |
% |
|
Other sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Extended service plan revenues |
|
|
65.0 |
|
|
52.9 |
|
22.9 |
% |
|
129.6 |
|
|
104.2 |
|
24.5 |
% |
|
Service department sales |
|
|
27.3 |
|
|
26.8 |
|
2.0 |
% |
|
54.7 |
|
|
51.6 |
|
6.0 |
% |
|
Third-party finance fees, net |
|
|
(21.2) |
|
|
(12.1) |
|
(76.0) |
% |
|
(47.0) |
|
|
(25.9) |
|
(81.5) |
% |
|
Total other sales and revenues |
|
|
71.1 |
|
|
67.6 |
|
5.2 |
% |
|
137.3 |
|
|
129.9 |
|
5.8 |
% |
|
Total net sales and operating revenues |
|
$ |
3,245.6 |
|
$ |
2,758.0 |
|
17.7 |
% |
$ |
6,556.6 |
|
$ |
5,532.4 |
|
18.5 |
% |
(1) Percent calculations and amounts shown are based on amounts presented on the attached consolidated statements of earnings and may not sum due to rounding.
Comparable Store Used Vehicle Sales Changes (1)
|
|
Three Months Ended |
Six Months Ended |
||||||||||
|
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August 31 |
August 31 |
||||||||||
|
|
2013 |
2012 |
2013 |
2012 |
||||||||
|
Used vehicle units |
|
16 |
% |
|
5 |
% |
|
16 |
% |
|
2 |
% |
|
Used vehicle dollars |
|
15 |
% |
|
5 |
% |
|
17 |
% |
|
4 |
% |
(1) As of August 31, 2013 and August 31, 2012, the number of stores included in the comparable store base were 112 and 105, respectively.
Total Used Vehicle Sales Changes
|
|
Three Months Ended |
Six Months Ended |
||||||||||
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|
August 31 |
August 31 |
||||||||||
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|
2013 |
2012 |
2013 |
2012 |
||||||||
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Used vehicle units |
|
21 |
% |
|
8 |
% |
|
22 |
% |
|
6 |
% |
|
Used vehicle dollars |
|
20 |
% |
|
9 |
% |
|
22 |
% |
|
7 |
% |
Unit Sales
|
|
Three Months Ended |
Six Months Ended |
||||||||||
|
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August 31 |
August 31 |
||||||||||
|
|
2013 |
2012 |
2013 |
2012 |
||||||||
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Used vehicles |
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134,854 |
|
|
111,316 |
|
|
272,008 |
|
|
223,607 |
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New vehicles |
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2,187 |
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|
2,352 |
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4,136 |
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4,459 |
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Wholesale vehicles |
|
91,243 |
|
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82,771 |
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|
179,599 |
|
|
166,312 |
|
-more-
Average Selling Prices
|
|
Three Months Ended |
Six Months Ended |
||||||||||
|
|
August 31 |
August 31 |
||||||||||
|
|
2013 |
2012 |
2013 |
2012 |
||||||||
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Used vehicles |
$ |
19,428 |
|
$ |
19,494 |
|
$ |
19,485 |
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$ |
19,389 |
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New vehicles |
$ |
27,313 |
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$ |
25,982 |
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$ |
27,066 |
|
$ |
26,073 |
|
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Wholesale vehicles |
$ |
5,044 |
|
$ |
5,133 |
|
$ |
5,213 |
|
$ |
5,292 |
|
Selected Operating Ratios
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||||||
|
|
August 31 |
August 31 |
||||||||||||||||||
|
(In millions) |
2013 |
% (1) |
2012 |
% (1) |
2013 |
% (1) |
2012 |
% (1) |
||||||||||||
|
Net sales and operating revenues |
$ |
3,245.6 |
|
100.0 |
|
$ |
2,758.0 |
|
100.0 |
|
$ |
6,556.6 |
|
100.0 |
|
$ |
5,532.4 |
|
100.0 |
|
|
Gross profit |
$ |
434.7 |
|
13.4 |
|
$ |
368.0 |
|
13.3 |
|
$ |
882.8 |
|
13.5 |
|
$ |
749.9 |
|
13.6 |
|
|
CarMax Auto Finance income |
$ |
84.4 |
|
2.6 |
|
$ |
75.7 |
|
2.7 |
|
$ |
171.4 |
|
2.6 |
|
$ |
150.9 |
|
2.7 |
|
|
Selling, general, and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses |
$ |
283.2 |
|
8.7 |
|
$ |
254.7 |
|
9.2 |
|
$ |
573.4 |
|
8.7 |
|
$ |
508.3 |
|
9.2 |
|
|
Interest expense |
$ |
7.8 |
|
0.2 |
|
$ |
8.2 |
|
0.3 |
|
$ |
15.6 |
|
0.2 |
|
$ |
16.3 |
|
0.3 |
|
|
Earnings before income taxes |
$ |
227.1 |
|
7.0 |
|
$ |
181.1 |
|
6.6 |
|
$ |
464.4 |
|
7.1 |
|
$ |
376.7 |
|
6.8 |
|
|
Net earnings |
$ |
140.3 |
|
4.3 |
|
$ |
111.6 |
|
4.0 |
|
$ |
286.9 |
|
4.4 |
|
$ |
232.4 |
|
4.2 |
|
(1) Calculated as the ratio of the applicable amount to net sales and operating revenues.
Gross Profit
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
|
August 31 |
August 31 |
||||||||||||||||
|
(In millions) |
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||||
|
Used vehicle gross profit |
$ |
293.2 |
|
$ |
241.8 |
|
|
21.2 |
% |
$ |
597.1 |
|
$ |
491.2 |
|
|
21.6 |
% |
|
New vehicle gross profit |
|
1.2 |
|
|
1.6 |
|
|
(23.8) |
% |
|
2.3 |
|
|
3.2 |
|
|
(28.1) |
% |
|
Wholesale vehicle gross profit |
|
77.5 |
|
|
75.1 |
|
|
3.3 |
% |
|
164.0 |
|
|
157.0 |
|
|
4.5 |
% |
|
Other gross profit |
|
62.9 |
|
|
49.5 |
|
|
27.0 |
% |
|
119.5 |
|
|
98.6 |
|
|
21.2 |
% |
|
Total |
$ |
434.7 |
|
$ |
368.0 |
|
|
18.1 |
% |
$ |
882.8 |
|
$ |
749.9 |
|
|
17.7 |
% |
Gross Profit per Unit
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||||||
|
|
August 31 |
August 31 |
||||||||||||||||||
|
|
2013 |
2012 |
2013 |
2012 |
||||||||||||||||
|
|
$ per unit(1) |
%(2) |
|
$ per unit(1) |
%(2) |
|
$ per unit(1) |
%(2) |
|
$ per unit(1) |
%(2) |
|
||||||||
|
Used vehicle gross profit |
$ |
2,174 |
|
11.1 |
|
$ |
2,172 |
|
11.0 |
|
$ |
2,195 |
|
11.2 |
|
$ |
2,197 |
|
11.2 |
|
|
New vehicle gross profit |
$ |
554 |
|
2.0 |
|
$ |
676 |
|
2.6 |
|
$ |
553 |
|
2.0 |
|
$ |
713 |
|
2.7 |
|
|
Wholesale vehicle gross profit |
$ |
849 |
|
16.3 |
|
$ |
907 |
|
17.2 |
|
$ |
913 |
|
17.0 |
|
$ |
944 |
|
17.3 |
|
|
Other gross profit |
$ |
459 |
|
88.4 |
|
$ |
436 |
|
73.3 |
|
$ |
433 |
|
87.0 |
|
$ |
432 |
|
75.9 |
|
|
Total gross profit |
$ |
3,172 |
|
13.4 |
|
$ |
3,237 |
|
13.3 |
|
$ |
3,197 |
|
13.5 |
|
$ |
3,288 |
|
13.6 |
|
(1) Calculated as category gross profit divided by its respective units sold, except the other and total categories, which are divided by total retail units sold.
(2) Calculated as a percentage of its respective sales or revenue.
-more-
SG&A Expenses
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
|
August 31 |
August 31 |
||||||||||||||
|
(In millions) |
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
|
Compensation and benefits (1) |
$ |
160.9 |
|
$ |
139.7 |
|
15.2 |
% |
$ |
333.0 |
|
$ |
283.1 |
|
17.6 |
% |
|
Store occupancy costs |
|
54.5 |
|
|
50.9 |
|
7.1 |
% |
|
107.0 |
|
|
98.7 |
|
8.4 |
% |
|
Advertising expense |
|
26.5 |
|
|
28.5 |
|
(7.2) |
% |
|
53.6 |
|
|
54.2 |
|
(1.1) |
% |
|
Other overhead costs (2) |
|
41.3 |
|
|
35.6 |
|
16.3 |
% |
|
79.8 |
|
|
72.3 |
|
10.5 |
% |
|
Total SG&A expenses |
$ |
283.2 |
|
$ |
254.7 |
|
11.2 |
% |
$ |
573.4 |
|
$ |
508.3 |
|
12.8 |
% |
(1) Excludes compensation and benefits related to reconditioning and vehicle repair service, which is included in cost of sales.
(2) Includes IT expenses, insurance, non-CAF bad debt, travel, preopening and relocation costs, charitable contributions and other administrative expenses.
Components of CAF Income and Other CAF Information
|
|
|
Three Months Ended August 31 |
Six Months Ended August 31 |
||||||||||||||||||
|
(In millions) |
|
|
2013 |
|
% (1) |
|
|
2012 |
|
% (1) |
|
|
2013 |
|
% (1) |
|
|
2012 |
|
% (1) |
|
|
Interest margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee income |
|
$ |
137.2 |
|
8.4 |
|
$ |
123.5 |
|
9.4 |
|
$ |
270.7 |
|
8.5 |
|
$ |
243.8 |
|
9.4 |
|
|
Interest expense |
|
|
(22.6) |
|
(1.4) |
|
|
(23.9) |
|
(1.8) |
|
|
(45.4) |
|
(1.4) |
|
|
(49.0) |
|
(1.9) |
|
|
Total interest margin |
|
|
114.6 |
|
7.0 |
|
|
99.6 |
|
7.6 |
|
|
225.3 |
|
7.1 |
|
|
194.8 |
|
7.5 |
|
|
Provision for loan losses |
|
|
(18.0) |
|
(1.1) |
|
|
(12.9) |
|
(1.0) |
|
|
(29.3) |
|
(0.9) |
|
|
(22.1) |
|
(0.9) |
|
|
Total interest margin after provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for loan losses |
|
|
96.6 |
|
5.9 |
|
|
86.7 |
|
6.6 |
|
|
196.0 |
|
6.2 |
|
|
172.7 |
|
6.7 |
|
|
Other income (loss) |
|
|
0.1 |
|
― |
|
|
(0.2) |
|
― |
|
|
0.1 |
|
― |
|
|
(0.2) |
|
― |
|
|
Total direct expenses |
|
|
(12.3) |
|
(0.7) |
|
|
(10.8) |
|
(0.8) |
|
|
(24.7) |
|
(0.8) |
|
|
(21.6) |
|
(0.8) |
|
|
CarMax Auto Finance income |
|
$ |
84.4 |
|
5.2 |
|
$ |
75.7 |
|
5.8 |
|
$ |
171.4 |
|
5.4 |
|
$ |
150.9 |
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average managed receivables |
|
$ |
6,516.3 |
|
|
|
$ |
5,245.4 |
|
|
|
$ |
6,334.4 |
|
|
|
$ |
5,160.3 |
|
|
|
|
Net loans originated |
|
$ |
1,088.0 |
|
|
|
$ |
822.4 |
|
|
|
$ |
2,208.2 |
|
|
|
$ |
1,609.2 |
|
|
|
|
Net CAF penetration rate |
|
|
41.4 |
% |
|
|
|
37.3 |
% |
|
|
|
41.4 |
% |
|
|
|
36.9 |
% |
|
|
|
Weighted average contract rate |
|
|
6.8 |
% |
|
|
|
8.1 |
% |
|
|
|
6.9 |
% |
|
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance for loan losses |
|
$ |
65.9 |
|
|
|
$ |
49.5 |
|
|
|
$ |
65.9 |
|
|
|
$ |
49.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse facility information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending funded receivables |
|
$ |
947.0 |
|
|
|
$ |
1,066.0 |
|
|
|
$ |
947.0 |
|
|
|
$ |
1,066.0 |
|
|
|
|
Ending unused capacity |
|
$ |
753.0 |
|
|
|
$ |
534.0 |
|
|
|
$ |
753.0 |
|
|
|
$ |
534.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Annualized percent of total average managed receivables.
-more-
Earnings Highlights
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
|
August 31 |
August 31 |
||||||||||||||||
|
(In millions except per share data) |
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||||
|
Net earnings |
$ |
140.3 |
|
$ |
111.6 |
|
|
25.7 |
% |
$ |
286.9 |
|
$ |
232.4 |
|
|
23.5 |
% |
|
Diluted weighted average shares outstanding |
|
227.6 |
|
|
231.7 |
|
|
(1.8) |
% |
|
228.1 |
|
|
231.7 |
|
|
(1.6) |
% |
|
Net earnings per diluted share |
$ |
0.62 |
|
$ |
0.48 |
|
|
29.2 |
% |
$ |
1.26 |
|
$ |
1.00 |
|
|
26.0 |
% |
Planned Superstore Openings
We currently plan to open the following superstores within 12 months from August 31, 2013:
|
|
|
|
|
|
Location |
Television Market |
Market Status |
Planned Opening Date |
|
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 |
|
Rochester, New York |
Rochester |
New |
Q1 Fiscal 2015 |
|
Dothan, Alabama |
Dothan |
New |
Q1 Fiscal 2015 |
|
Mechanicsburg, Pennsylvania |
Mechanicsburg |
Existing |
Q1 Fiscal 2015 |
|
Spokane, Washington |
Spokane |
New |
Q1 Fiscal 2015 |
|
Madison, Wisconsin |
Madison |
New |
Q2 Fiscal 2015 |
|
Fort Worth, Texas |
Dallas |
Existing |
Q2 Fiscal 2015 |
|
Reno, Nevada |
Reno |
New |
Q2 Fiscal 2015 |
|
Lynchburg, Virginia |
Roanoke/Lynchburg |
New |
Q2 Fiscal 2015 |
|
Milwaukie, Oregon |
Portland |
New |
Q2 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, 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.
-more-
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. |
-more-
|
· |
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.
Contacts:
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
General Media:
Trina Lee, Director, Public Relations, (855) 887-2915
Catherine Gryp, Manager, Public Relations, (855) 887-2915
-more-
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.
-more-
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 |
|
-more-
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 |
|
# # #