QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | ||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
Class | Outstanding as of June 29, 2020 | |
Common Stock, par value $0.50 |
Page No. | |||
PART I. | FINANCIAL INFORMATION | ||
Item 1. | Financial Statements: | ||
Consolidated Statements of Earnings (Unaudited) – | |||
Three Months Ended May 31, 2020 and 2019 | |||
Consolidated Statements of Comprehensive Income (Unaudited) – | |||
Three Months Ended May 31, 2020 and 2019 | |||
Consolidated Balance Sheets (Unaudited) – | |||
May 31, 2020 and February 29, 2020 | |||
Consolidated Statements of Cash Flows (Unaudited) – | |||
Three Months Ended May 31, 2020 and 2019 | |||
Consolidated Statements of Shareholders’ Equity (Unaudited) – | |||
Three Months Ended May 31, 2020 and 2019 | |||
Notes to Consolidated Financial Statements (Unaudited) | |||
Item 2. | Management’s Discussion and Analysis of Financial Condition and | ||
Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. | Controls and Procedures | ||
PART II. | OTHER INFORMATION | ||
Item 1. | Legal Proceedings | ||
Item 1A. | Risk Factors | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 6. | Exhibits | ||
SIGNATURES | |||
Three Months Ended May 31 | |||||||||||
(In thousands except per share data) | 2020 | %(1) | 2019 | %(1) | |||||||
SALES AND OPERATING REVENUES: | |||||||||||
Used vehicle sales | $ | $ | |||||||||
Wholesale vehicle sales | |||||||||||
Other sales and revenues | |||||||||||
NET SALES AND OPERATING REVENUES | |||||||||||
COST OF SALES: | |||||||||||
Used vehicle cost of sales | |||||||||||
Wholesale vehicle cost of sales | |||||||||||
Other cost of sales | |||||||||||
TOTAL COST OF SALES | |||||||||||
GROSS PROFIT | |||||||||||
CARMAX AUTO FINANCE INCOME | |||||||||||
Selling, general and administrative expenses | |||||||||||
Interest expense | |||||||||||
Other expense (income) | ( | ) | |||||||||
Earnings before income taxes | |||||||||||
Income tax provision | ( | ) | |||||||||
NET EARNINGS | $ | $ | |||||||||
WEIGHTED AVERAGE COMMON SHARES: | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
NET EARNINGS PER SHARE: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
NET EARNINGS | $ | $ | |||||
Other comprehensive loss, net of taxes: | |||||||
Net change in retirement benefit plan unrecognized actuarial losses | |||||||
Net change in cash flow hedge unrecognized losses | ( | ) | ( | ) | |||
Other comprehensive loss, net of taxes | ( | ) | ( | ) | |||
TOTAL COMPREHENSIVE (LOSS) INCOME | $ | ( | ) | $ |
As of May 31 | As of February 29 | ||||||
(In thousands except share data) | 2020 | 2020 | |||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash from collections on auto loans receivable | |||||||
Accounts receivable, net | |||||||
Inventory | |||||||
Other current assets | |||||||
TOTAL CURRENT ASSETS | |||||||
Auto loans receivable, net of allowance for loan losses of $437,213 and $157,796 as of May 31, 2020 and February 29, 2020, respectively | |||||||
Property and equipment, net of accumulated depreciation of $1,298,536 and $1,266,920 as of May 31, 2020 and February 29, 2020, respectively | |||||||
Deferred income taxes | |||||||
Operating lease assets | |||||||
Other assets | |||||||
TOTAL ASSETS | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses and other current liabilities | |||||||
Accrued income taxes | |||||||
Current portion of operating lease liabilities | |||||||
Short-term debt | |||||||
Current portion of long-term debt | |||||||
Current portion of non-recourse notes payable | |||||||
TOTAL CURRENT LIABILITIES | |||||||
Long-term debt, excluding current portion | |||||||
Non-recourse notes payable, excluding current portion | |||||||
Operating lease liabilities, excluding current portion | |||||||
Other liabilities | |||||||
TOTAL LIABILITIES | |||||||
Commitments and contingent liabilities | |||||||
SHAREHOLDERS’ EQUITY: | |||||||
Common stock, $0.50 par value; 350,000,000 shares authorized; 162,755,339 and 163,081,376 shares issued and outstanding as of May 31, 2020 and February 29, 2020, respectively | |||||||
Capital in excess of par value | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
TOTAL SHAREHOLDERS’ EQUITY | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
OPERATING ACTIVITIES: | |||||||
Net earnings | $ | $ | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Share-based compensation expense | |||||||
Provision for loan losses | |||||||
Provision for cancellation reserves | |||||||
Deferred income tax provision | |||||||
Other | |||||||
Net decrease (increase) in: | |||||||
Accounts receivable, net | |||||||
Inventory | ( | ) | |||||
Other current assets | ( | ) | ( | ) | |||
Auto loans receivable, net | ( | ) | |||||
Other assets | ( | ) | ( | ) | |||
Net (decrease) increase in: | |||||||
Accounts Payable, accrued expenses and other | |||||||
current liabilities and accrued income taxes | ( | ) | |||||
Other liabilities | ( | ) | ( | ) | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | |||||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from disposal of property and equipment | |||||||
Purchases of investments | ( | ) | ( | ) | |||
Sales of investments | |||||||
NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | |||
FINANCING ACTIVITIES: | |||||||
Increase (decrease) in short-term debt, net | ( | ) | |||||
Proceeds from issuances of long-term debt | |||||||
Payments on long-term debt | ( | ) | ( | ) | |||
Cash paid for debt issuance costs | ( | ) | ( | ) | |||
Payments on finance lease obligations | ( | ) | ( | ) | |||
Issuances of non-recourse notes payable | |||||||
Payments on non-recourse notes payable | ( | ) | ( | ) | |||
Repurchase and retirement of common stock | ( | ) | ( | ) | |||
Equity issuances | |||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | ( | ) | |||||
Increase in cash, cash equivalents, and restricted cash | |||||||
Cash, cash equivalents, and restricted cash at beginning of year | |||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | $ | |||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash from collections on auto loans receivable | |||||||
Restricted cash included in other assets | |||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | $ |
Three Months Ended May 31, 2020 | ||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||
Common | Capital in | Other | ||||||||||||||||||||
Shares | Common | Excess of | Retained | Comprehensive | ||||||||||||||||||
(In thousands) | Outstanding | Stock | Par Value | Earnings | Loss | Total | ||||||||||||||||
Balance as of February 29, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ( | ) | ( | ) | — | ( | ) | |||||||||||
Exercise of common stock options | — | — | ||||||||||||||||||||
Stock incentive plans, net shares issued | ( | ) | — | — | ( | ) | ||||||||||||||||
Adoption of CECL | — | — | — | ( | ) | — | ( | ) | ||||||||||||||
Balance as of May 31, 2020 | $ | $ | $ | $ | ( | ) | $ |
Three Months Ended May 31, 2019 | ||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||
Common | Capital in | Other | ||||||||||||||||||||
Shares | Common | Excess of | Retained | Comprehensive | ||||||||||||||||||
(In thousands) | Outstanding | Stock | Par Value | Earnings | Loss | Total | ||||||||||||||||
Balance as of February 28, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||
Repurchases of common stock | ( | ) | ( | ) | ( | ) | ( | ) | — | ( | ) | |||||||||||
Exercise of common stock options | — | — | ||||||||||||||||||||
Stock incentive plans, net shares issued | ( | ) | — | — | ( | ) | ||||||||||||||||
Balance as of May 31, 2019 | $ | $ | $ | $ | ( | ) | $ |
Three Months Ended May 31 | |||||||
(In millions) | 2020 | 2019 | |||||
Used vehicle sales | $ | $ | |||||
Wholesale vehicle sales | |||||||
Other sales and revenues: | |||||||
Extended protection plan revenues | |||||||
Third-party finance fees, net | ( | ) | ( | ) | |||
Service revenues | |||||||
Other | |||||||
Total other sales and revenues | |||||||
Total net sales and operating revenues | $ | $ |
Three Months Ended May 31 | |||||||||||||
(In millions) | 2020 | % (1) | 2019 | % (1) | |||||||||
Interest margin: | |||||||||||||
Interest and fee income | $ | $ | |||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total interest margin | |||||||||||||
Provision for loan losses | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total interest margin after provision for loan losses | |||||||||||||
Total other expense | ( | ) | ( | ) | |||||||||
Direct expenses: | |||||||||||||
Payroll and fringe benefit expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Other direct expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total direct expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||
CarMax Auto Finance income | $ | $ | |||||||||||
Total average managed receivables | $ | $ |
(1) |
As of May 31 | As of February 29 | ||||||
(In millions) | 2020 | 2020 | |||||
Asset-backed term funding | $ | $ | |||||
Warehouse facilities | |||||||
Overcollateralization (1) | |||||||
Other managed receivables (2) | |||||||
Total ending managed receivables | |||||||
Accrued interest and fees | |||||||
Other | ( | ) | |||||
Less: allowance for loan losses | ( | ) | ( | ) | |||
Auto loans receivable, net | $ | $ |
(1) | Represents receivables restricted as excess collateral for the non-recourse funding vehicles. |
(2) | Other managed receivables includes receivables not funded through the non-recourse funding vehicles. |
As of May 31, 2020 | |||||||||||||||||||||||||||||
Fiscal Year of Origination (1) | |||||||||||||||||||||||||||||
(In millions) | 2021 | 2020 | 2019 | 2018 | 2017 | Prior to 2017 | Total | % (2) | |||||||||||||||||||||
A | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
B | |||||||||||||||||||||||||||||
C and other | |||||||||||||||||||||||||||||
Total ending managed receivables | $ | $ | $ | $ | $ | $ | $ |
As of February 29 | |||||
(In millions) | 2020 (1) | % (2) | |||
A | $ | ||||
B | |||||
C and other | |||||
Total ending managed receivables | $ |
(1) | Classified based on credit grade assigned when customers were initially approved for financing. |
(2) | Percent of total ending managed receivables. |
Three Months Ended May 31 | |||||||||||
(In millions) | 2020 | % (1) | 2019 (2) | % (1) | |||||||
Balance as of beginning of period | $ | $ | |||||||||
Adoption of CECL | — | ||||||||||
Adjusted balance as of beginning of period | |||||||||||
Charge-offs | ( | ) | ( | ) | |||||||
Recoveries (3) | |||||||||||
Provision for loan losses | |||||||||||
Balance as of end of period | $ | $ |
(1) | Percent of total ending managed receivables. |
(2) | The comparative information has not been restated and continues to be reported under the accounting guidance in effect during fiscal 2020. |
(3) | Net of costs incurred to recover vehicle. |
As of May 31, 2020 | |||||||||||||||||
Major Credit Grade | |||||||||||||||||
(In millions) | A | B | C & Other | Total | % (1) | ||||||||||||
Current | $ | $ | $ | $ | |||||||||||||
Delinquent loans: | |||||||||||||||||
31-60 days past due | |||||||||||||||||
61-90 days past due | |||||||||||||||||
Greater than 90 days past due | |||||||||||||||||
Total past due | |||||||||||||||||
Total ending managed receivables | $ | $ | $ | $ |
As of February 29 | |||||
(In millions) | 2020 | % (1) | |||
Total ending managed receivables | $ | ||||
Delinquent loans: | |||||
31-60 days past due | $ | ||||
61-90 days past due | |||||
Greater than 90 days past due | |||||
Total past due | $ |
(1) |
Level 1 | Inputs include unadjusted quoted prices in active markets for identical assets or liabilities that we can access at the measurement date. |
Level 2 | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets in active markets, quoted prices from identical or similar assets in inactive markets and observable inputs such as interest rates and yield curves. |
Level 3 | Inputs that are significant to the measurement that are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). |
As of May 31, 2020 | |||||||||||
(In thousands) | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Money market securities | $ | $ | $ | ||||||||
Mutual fund investments | |||||||||||
Total assets at fair value | $ | $ | $ | ||||||||
Percent of total assets at fair value | % | % | % | ||||||||
Percent of total assets | % | % | % | ||||||||
Liabilities: | |||||||||||
Derivative instruments designated as hedges | $ | $ | ( | ) | $ | ( | ) | ||||
Derivative instruments not designated as hedges | ( | ) | ( | ) | |||||||
Total liabilities at fair value | $ | $ | ( | ) | $ | ( | ) | ||||
Percent of total liabilities | % | % | % |
As of February 29, 2020 | |||||||||||
(In thousands) | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Money market securities | $ | $ | $ | ||||||||
Mutual fund investments | |||||||||||
Total assets at fair value | $ | $ | $ | ||||||||
Percent of total assets at fair value | % | % | % | ||||||||
Percent of total assets | % | % | % | ||||||||
Liabilities: | |||||||||||
Derivative instruments designated as hedges | $ | $ | ( | ) | $ | ( | ) | ||||
Total liabilities at fair value | $ | $ | ( | ) | $ | ( | ) | ||||
Percent of total liabilities | % | % | % |
(In thousands) | As of May 31, 2020 | As of February 29, 2020 | |||||
Carrying value | $ | $ | |||||
Fair value | $ | $ |
Three Months Ended May 31 | |||||||
(In millions) | 2020 | 2019 | |||||
Balance as of beginning of period | $ | $ | |||||
Cancellations | ( | ) | ( | ) | |||
Provision for future cancellations | |||||||
Balance as of end of period | $ | $ |
(In thousands) | As of May 31 | As of February 29 | ||||||
Debt Description (1) | Maturity Date | 2020 | 2020 | |||||
Revolving credit facility (2) | June 2024 | $ | $ | |||||
Term loan | June 2024 | |||||||
3.86% Senior notes | April 2023 | |||||||
4.17% Senior notes | April 2026 | |||||||
4.27% Senior notes | April 2028 | |||||||
Financing obligations | Various dates through February 2059 | |||||||
Non-recourse notes payable | Various dates through May 2027 | |||||||
Total debt | ||||||||
Less: current portion | ( | ) | ( | ) | ||||
Less: unamortized debt issuance costs | ( | ) | ( | ) | ||||
Long-term debt, net | $ | $ |
(1) | Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually. |
(2) | Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. |
(In billions) | Capacity | ||
Warehouse facilities: | |||
August 2020 expiration | $ | ||
September 2020 expiration | |||
February 2021 expiration | |||
Combined warehouse facility limit | $ | ||
Unused capacity | $ | ||
Non-recourse notes payable outstanding: | |||
Warehouse facilities | $ | ||
Asset-backed term funding transactions | |||
Non-recourse notes payable | $ |
Three Months Ended | |||||||
May 31 | |||||||
2020 | 2019 | ||||||
Number of shares repurchased (in thousands) | |||||||
Average cost per share | $ | $ | |||||
Available for repurchase, as of end of period (in millions) | $ | $ |
(B) | Stock Incentive Plans |
Three Months Ended | |||||||
May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Cost of sales | $ | $ | |||||
CarMax Auto Finance income | |||||||
Selling, general and administrative expenses | |||||||
Share-based compensation expense, before income taxes | $ | $ |
Three Months Ended | |||||||
May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Nonqualified stock options | $ | $ | |||||
Cash-settled restricted stock units (RSUs) | |||||||
Stock-settled market stock units (MSUs) | |||||||
Other share-based incentives: | |||||||
Stock-settled performance stock units (PSUs) | |||||||
Restricted stock (RSAs) | |||||||
Stock-settled deferred stock units (DSUs) | |||||||
Employee stock purchase plan | |||||||
Total other share-based incentives | $ | $ | |||||
Share-based compensation expense, before income taxes | $ | $ |
As of May 31, 2020 | ||||||
Weighted Average | ||||||
Unrecognized | Remaining | |||||
Compensation | Recognition Life | |||||
(Costs in millions) | Costs | (Years) | ||||
Nonqualified stock options | $ | |||||
Stock-settled market stock units | ||||||
Other share-based incentives: | ||||||
Stock-settled performance stock units | ||||||
Stock-settled deferred stock units | — | |||||
Restricted stock | ||||||
Total other share-based incentives | ||||||
Total | $ |
Weighted | ||||||||||||
Weighted | Average | |||||||||||
Average | Remaining | Aggregate | ||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||
(Shares and intrinsic value in thousands) | Shares | Price | Life (Years) | Value | ||||||||
Outstanding as of February 29, 2020 | $ | |||||||||||
Options granted | $ | |||||||||||
Options exercised | ( | ) | $ | |||||||||
Options forfeited or expired | ( | ) | $ | |||||||||
Outstanding as of May 31, 2020 | $ | $ | ||||||||||
Exercisable as of May 31, 2020 | $ | $ |
Three Months Ended May 31 | |||||||
2020 | 2019 | ||||||
Options granted | |||||||
Weighted average grant date fair value per share | $ | $ | |||||
Cash received from options exercised (in millions) | $ | $ | |||||
Intrinsic value of options exercised (in millions) | $ | $ | |||||
Realized tax benefits (in millions) | $ | $ |
Three Months Ended May 31 | |||||||||||
2020 | 2019 | ||||||||||
Dividend yield | % | % | |||||||||
Expected volatility factor (1) | % | - | % | % | - | % | |||||
Weighted average expected volatility | % | % | |||||||||
Risk-free interest rate (2) | % | - | % | % | - | % | |||||
Expected term (in years) (3) |
(1) | Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the implied volatility derived from the market prices of traded options on our stock. |
(2) | Based on the U.S. Treasury yield curve at the time of grant. |
(3) | Represents the estimated number of years that options will be outstanding prior to exercise. |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 29, 2020 | $ | |||||
Stock units granted | $ | |||||
Stock units vested and converted | ( | ) | $ | |||
Stock units cancelled | ( | ) | $ | |||
Outstanding as of May 31, 2020 | $ |
Three Months Ended May 31 | |||||||
2020 | 2019 | ||||||
Stock units granted | |||||||
Initial weighted average grant date fair value per share | $ | $ | |||||
Payments (before payroll tax withholdings) upon vesting (in millions) | $ | $ | |||||
Realized tax benefits (in millions) | $ | $ |
As of May 31, 2020 | |||||||
(In thousands) | Minimum (1) | Maximum (1) | |||||
Fiscal 2022 | $ | $ | |||||
Fiscal 2023 | |||||||
Fiscal 2024 | |||||||
Total expected cash settlements | $ | $ |
(1) | Net of estimated forfeitures. |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 29, 2020 | $ | |||||
Stock units granted | $ | |||||
Stock units vested and converted | ( | ) | $ | |||
Stock units cancelled | ( | ) | $ | |||
Outstanding as of May 31, 2020 | $ |
Three Months Ended May 31 | |||||||
2020 | 2019 | ||||||
Stock units granted | |||||||
Weighted average grant date fair value per share | $ | $ | |||||
Realized tax benefits (in millions) | $ | $ |
Three Months Ended | |||||||
May 31 | |||||||
(In thousands except per share data) | 2020 | 2019 | |||||
Net earnings | $ | $ | |||||
Weighted average common shares outstanding | |||||||
Dilutive potential common shares: | |||||||
Stock options | |||||||
Stock-settled stock units and awards | |||||||
Weighted average common shares and dilutive potential common shares | |||||||
Basic net earnings per share | $ | $ | |||||
Diluted net earnings per share | $ | $ |
Total | |||||||||||
Net | Net | Accumulated | |||||||||
Unrecognized | Unrecognized | Other | |||||||||
Actuarial | Hedge | Comprehensive | |||||||||
(In thousands, net of income taxes) | Losses | Losses | Loss | ||||||||
Balance as of February 29, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive loss before reclassifications | ( | ) | ( | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||
Balance as of May 31, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Retirement Benefit Plans: | |||||||
Actuarial loss amortization reclassifications recognized in net pension expense: | |||||||
Cost of sales | $ | $ | |||||
CarMax Auto Finance income | |||||||
Selling, general and administrative expenses | |||||||
Total amortization reclassifications recognized in net pension expense | |||||||
Tax expense | ( | ) | ( | ) | |||
Amortization reclassifications recognized in net pension expense, net of tax | |||||||
Net change in retirement benefit plan unrecognized actuarial losses, net of tax | |||||||
Cash Flow Hedges (Note 5): | |||||||
Changes in fair value | ( | ) | ( | ) | |||
Tax benefit | |||||||
Changes in fair value, net of tax | ( | ) | ( | ) | |||
Reclassifications to CarMax Auto Finance income | ( | ) | |||||
Tax (expense) benefit | ( | ) | |||||
Reclassification of hedge losses (gains), net of tax | ( | ) | |||||
Net change in cash flow hedge unrecognized losses, net of tax | ( | ) | ( | ) | |||
Total other comprehensive income loss, net of tax | $ | ( | ) | $ | ( | ) |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Operating lease cost (1) | $ | $ | |||||
Finance lease cost: | |||||||
Depreciation of lease assets | |||||||
Interest on lease liabilities | |||||||
Total finance lease cost | |||||||
Total lease cost | $ | $ |
As of May 31 | As of February 29 | |||||||
(In thousands) | Classification | 2020 | 2020 | |||||
Assets: | ||||||||
Operating lease assets | Operating lease assets | $ | $ | |||||
Finance lease assets | Property and equipment, net (1) | |||||||
Total lease assets | $ | $ | ||||||
Liabilities: | ||||||||
Current: | ||||||||
Operating leases | Current portion of operating lease liabilities | $ | $ | |||||
Finance leases | Accrued expenses and other current liabilities | |||||||
Long-term: | ||||||||
Operating leases | Operating lease liabilities, excluding current portion | |||||||
Finance leases | Other liabilities | |||||||
Total lease liabilities | $ | $ |
As of May 31 | As of February 29 | ||||
Lease Term and Discount Rate | 2020 | 2020 | |||
Weighted Average Remaining Lease Term (in years) | |||||
Operating leases | |||||
Finance leases | |||||
Weighted Average Discount Rate | |||||
Operating leases | % | % | |||
Finance leases | % | % |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating leases | $ | $ | |||||
Operating cash flows from finance leases | $ | $ | |||||
Financing cash flows from finance leases | $ | $ | |||||
Lease assets obtained in exchange for lease obligations: | |||||||
Operating leases | $ | $ | |||||
Finance leases | $ | $ |
As of May 31, 2020 | |||||||
(In thousands) | Operating Leases (1) | Finance Leases (1) | |||||
Fiscal 2021, remaining | $ | $ | |||||
Fiscal 2022 | |||||||
Fiscal 2023 | |||||||
Fiscal 2024 | |||||||
Fiscal 2025 | |||||||
Thereafter | |||||||
Total lease payments | |||||||
Less: interest | ( | ) | ( | ) | |||
Present value of lease liabilities | $ | $ |
Three Months Ended May 31 | |||||||
(In thousands) | 2020 | 2019 | |||||
Non-cash investing and financing activities: | |||||||
(Decrease) increase in accrued capital expenditures | $ | ( | ) | $ | |||
Increase in financing obligations | $ | $ |
Net Sales and Operating Revenues | Gross Profit |
(Dollars in millions except per share or per unit data) | Three Months Ended May 31, 2020 | Change from Three Months Ended May 31, 2019 | ||||
Income statement information | ||||||
Net sales and operating revenues | $ | 3,228.8 | (39.8 | )% | ||
Gross profit | $ | 354.2 | (52.3 | )% | ||
CAF income | $ | 51.0 | (56.1 | )% | ||
Selling, general and administrative expenses | $ | 373.7 | (23.7 | )% | ||
Net earnings | $ | 5.0 | (98.1 | )% | ||
Unit sales information | ||||||
Used unit sales | 135,028 | (39.8 | )% | |||
Change in used unit sales in comparable stores | (41.8 | )% | N/A | |||
Wholesale unit sales | 63,295 | (47.6 | )% | |||
Per unit information | ||||||
Used gross profit per unit | $ | 1,937 | (12.6 | )% | ||
Wholesale gross profit per unit | $ | 978 | (6.2 | )% | ||
SG&A per used vehicle unit | $ | 2,768 | 26.8 | % | ||
Per share information | ||||||
Net earnings per diluted share | $ | 0.03 | (98.1 | )% |
• | Delivering a customer-driven, omni-channel buying and selling experience that is a unique and powerful integration of our in-store and online capabilities. |
• | Opening stores in new markets and expanding our presence in existing markets. |
• | Hiring and developing an engaged and skilled workforce. |
• | Improving efficiency in our stores and our logistics operations to drive out waste. |
• | Leveraging data and advanced analytics to continuously improve the customer experience as well as our processes and systems. |
Three Months Ended May 31 | ||||||||||
(In millions) | 2020 | 2019 | Change | |||||||
Used vehicle sales | $ | 2,786.2 | $ | 4,540.7 | (38.6 | )% | ||||
Wholesale vehicle sales | 342.9 | 662.4 | (48.2 | )% | ||||||
Other sales and revenues: | ||||||||||
Extended protection plan revenues | 73.4 | 111.3 | (34.1 | )% | ||||||
Third-party finance fees, net | (10.7 | ) | (15.5 | ) | 30.7 | % | ||||
Other | 37.0 | 67.4 | (45.0 | )% | ||||||
Total other sales and revenues | 99.7 | 163.2 | (38.9 | )% | ||||||
Total net sales and operating revenues | $ | 3,228.8 | $ | 5,366.3 | (39.8 | )% |
Three Months Ended May 31 | ||||||||
2020 | 2019 | Change | ||||||
Used vehicles | 135,028 | 224,268 | (39.8 | )% | ||||
Wholesale vehicles | 63,295 | 120,768 | (47.6 | )% |
Three Months Ended May 31 | ||||||||||
2020 | 2019 | Change | ||||||||
Used vehicles | $ | 20,346 | $ | 20,050 | 1.5 | % | ||||
Wholesale vehicles | $ | 5,110 | $ | 5,213 | (2.0 | )% |
Three Months Ended May 31 (1) | |||||
2020 | 2019 | ||||
Used vehicle units | (41.8 | )% | 9.5 | % | |
Used vehicle revenues | (40.8 | )% | 9.4 | % |
(1) | Stores are added to the comparable store base beginning in their fourteenth full month of operation. We do not remove renovated stores from our comparable store base. 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. |
Three Months Ended May 31 | |||||
2020 | 2019 | ||||
Used vehicle units | (39.8 | )% | 13.0 | % | |
Used vehicle revenues | (38.6 | )% | 12.9 | % | |
Wholesale vehicle units | (47.6 | )% | 6.6 | % | |
Wholesale vehicle revenues | (48.2 | )% | 7.3 | % |
Three Months Ended May 31 (1) | |||||
2020 | 2019 | ||||
CAF (2) | 38.2 | % | 46.2 | % | |
Tier 2 (3) | 28.5 | % | 20.3 | % | |
Tier 3 (4) | 14.5 | % | 11.5 | % | |
Other (5) | 18.8 | % | 22.0 | % | |
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 3 loan originations, which represent less than 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. |
Three Months Ended May 31 | |||||
2020 | 2019 | ||||
Used car stores, beginning of period | 216 | 203 | |||
Store openings | 4 | 3 | |||
Used car stores, end of period | 220 | 206 |
Three Months Ended May 31 | ||||||||||
(In millions) | 2020 | 2019 | Change | |||||||
Used vehicle gross profit | $ | 261.5 | $ | 496.8 | (47.4 | )% | ||||
Wholesale vehicle gross profit | 61.9 | 126.0 | (50.8 | )% | ||||||
Other gross profit | 30.8 | 119.6 | (74.3 | )% | ||||||
Total | $ | 354.2 | $ | 742.4 | (52.3 | )% |
Three Months Ended May 31 | |||||||||||
2020 | 2019 | ||||||||||
$ per unit(1) | %(2) | $ per unit(1) | %(2) | ||||||||
Used vehicle gross profit | $ | 1,937 | 9.4 | $ | 2,215 | 10.9 | |||||
Wholesale vehicle gross profit | $ | 978 | 18.1 | $ | 1,043 | 19.0 | |||||
Other gross profit | $ | 228 | 30.8 | $ | 533 | 73.3 | |||||
Total gross profit | $ | 2,623 | 11.0 | $ | 3,310 | 13.8 |
(1) | Calculated as category gross profit divided by its respective units sold, except the other and total categories, which are divided by total used units sold. |
(2) | Calculated as a percentage of its respective sales or revenue. |
Three Months Ended May 31 | |||||||||||
(In millions except per unit data) | 2020 | 2019 | Change | ||||||||
Compensation and benefits: | |||||||||||
Compensation and benefits, excluding share-based compensation expense | $ | 191.2 | $ | 230.0 | (16.8 | )% | |||||
Share-based compensation expense | 23.7 | 40.9 | (42.2 | )% | |||||||
Total compensation and benefits (1) | $ | 214.9 | $ | 270.9 | (20.7 | )% | |||||
Store occupancy costs | 94.6 | 96.6 | (2.1 | )% | |||||||
Advertising expense | 34.5 | 41.9 | (17.6 | )% | |||||||
Other overhead costs (2) | 29.7 | 80.3 | (63.0 | )% | |||||||
Total SG&A expenses | $ | 373.7 | $ | 489.7 | (23.7 | )% | |||||
SG&A per used vehicle unit (3) | $ | 2,768 | $ | 2,183 | $ | 585 |
(1) | Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales. See Note 10 for details of share-based compensation expense by grant type. |
(2) | Includes IT expenses, preopening and relocation costs, insurance, non-CAF bad debt, travel, charitable contributions and other administrative expenses. |
(3) | Calculated as total SG&A expenses divided by total used vehicle units. |
• | $40.3 million one-time benefit, representing our receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with vehicles containing Takata airbags. |
• | $17.2 million decrease in share-based compensation expense. The decrease in share-based compensation expense was primarily related to cash-settled restricted stock units, as the expense associated with these units was primarily driven by the change in the company's stock price during the relevant periods. |
• | $7.4 million decrease in advertising expense in response to COVID-19. We expect that our advertising expense for the remainder of the year, on a per unit basis, will be comparable to the per unit expense in fiscal 2020, dependent on sales performance. |
Three Months Ended May 31 | |||||||||||||
(In millions) | 2020 | % (1) | 2019 | % (1) | |||||||||
Interest margin: | |||||||||||||
Interest and fee income | $ | 282.5 | 8.4 | $ | 266.2 | 8.4 | |||||||
Interest expense | (84.6 | ) | (2.5 | ) | (87.4 | ) | (2.8 | ) | |||||
Total interest margin | $ | 197.9 | 5.9 | $ | 178.8 | 5.6 | |||||||
Provision for loan losses | $ | (122.0 | ) | (3.6 | ) | $ | (38.2 | ) | (1.2 | ) | |||
CarMax Auto Finance income | $ | 51.0 | 1.5 | $ | 116.0 | 3.7 |
(1) | Annualized percentage of total average managed receivables. |
Three Months Ended May 31 | |||||||
2020 | 2019 | ||||||
Net loans originated (in millions) | $ | 992.3 | $ | 1,826.3 | |||
Vehicle units financed | 48,696 | 92,958 | |||||
Net penetration rate (1) | 36.1 | % | 41.4 | % | |||
Weighted average contract rate | 8.4 | % | 8.9 | % | |||
Weighted average credit score (2) | 707 | 704 | |||||
Weighted average loan-to-value (LTV) (3) | 93.1 | % | 94.4 | % | |||
Weighted average term (in months) | 66.1 | 66.3 |
(1) | Vehicle units financed as a percentage of total used units sold. |
(2) | The credit scores represent FICO® scores and reflect only receivables with obligors that have a FICO® score at the time of application. The FICO® score with respect to any receivable with co-obligors is calculated as the average of each obligor’s FICO® score at the time of application. FICO® scores are not a significant factor in our primary scoring model, which relies on information from credit bureaus and other application information as discussed in Note 4. FICO® is a federally registered servicemark of Fair Isaac Corporation. |
(3) | LTV represents the ratio of the amount financed to the total collateral value, which is measured as the vehicle selling price plus applicable taxes, title and fees. |
As of and for the Three Months Ended May 31 | |||||||
(In millions) | 2020 | 2019 | |||||
Total ending managed receivables | $ | 13,171.9 | $ | 12,859.4 | |||
Total average managed receivables | $ | 13,408.5 | $ | 12,707.3 | |||
Allowance for loan losses (1) | $ | 437.2 | $ | 147.0 | |||
Allowance for loan losses as a percentage of ending managed receivables | 3.32 | % | 1.14 | % | |||
Net credit losses on managed receivables | $ | 44.6 | $ | 29.4 | |||
Annualized net credit losses as a percentage of total average managed receivables | 1.33 | % | 0.93 | % | |||
Past due accounts as a percentage of ending managed receivables | 2.48 | % | 3.36 | % | |||
Average recovery rate (2) | 47.3 | % | 49.2 | % |
(1) | The allowance for loan losses as of May 31, 2020, includes a $202.0 million increase as a result of our adoption of CECL during the first quarter of fiscal 2021. |
(2) | The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions. While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 60%, and it is primarily affected by the wholesale market environment. |
• | CAF Income (Decrease of $65.0 million, or 56.1%) |
◦ | The decrease in CAF income for the first quarter of fiscal 2021 reflects an increase in the provision for loan losses, partially offset by improvement in the total interest margin percentage. |
◦ | The decline in net loan originations in the first quarter of fiscal 2021 resulted from our used vehicle sales decline as well as a decline in CAF’s penetration rate. |
◦ | The decrease in CAF's penetration rate reflected the combined effects of a shift in customer credit mix, adjustments to CAF's credit policies made in response to COVID-19 and testing of loan routing to our third-party providers. |
• | Provision for Loan Losses (Increased to $122.0 million from $38.2 million) |
◦ | The increase in the provision for loan losses included an increase of $84.0 million in our estimate of lifetime losses on existing loans, which was an approximately 25% increase in our loss expectations, largely resulting from COVID-19 turmoil and worsening economic factors. |
◦ | The remaining $38.0 million largely reflected our estimate of lifetime losses on originations in the first quarter of fiscal 2021. |
◦ | In connection with our adoption of CECL during the first quarter of fiscal 2021, we recorded a $202.0 million increase in the allowance for loan losses on the first quarter opening balance sheet, with a corresponding decrease of $153.3 million, net of tax, in retained earnings. |
• | Total interest margin (Increased to 5.9% of average managed receivables from 5.6%) |
◦ | The increase in the total interest margin percentage was the result of lower funding costs. |
Three Months Ended May 31 | |||||||
(In millions) | 2020 | 2019 | |||||
Net cash provided by operating activities | $ | 1,249.6 | $ | 43.2 | |||
Add: Net (payments on) issuances of non-recourse notes payable (1) | (438.3 | ) | 358.2 | ||||
Adjusted net cash provided by operating activities | $ | 811.3 | $ | 401.4 |
(1) | Calculated using the gross issuances less payments on non-recourse notes payable as disclosed on the consolidated statements of cash flows. |
(In thousands) | As of May 31 | As of February 29 | |||||
Debt Description (1) | Maturity Date | 2020 | 2020 | ||||
Revolving credit facility (2) | June 2024 | $ | 370,086 | $ | 452,740 | ||
Term loan | June 2024 | 300,000 | 300,000 | ||||
3.86% Senior notes | April 2023 | 100,000 | 100,000 | ||||
4.17% Senior notes | April 2026 | 200,000 | 200,000 | ||||
4.27% Senior notes | April 2028 | 200,000 | 200,000 | ||||
Financing obligations | Various dates through February 2059 | 535,078 | 536,739 | ||||
Non-recourse notes payable | Various dates through May 2027 | 13,174,982 | 13,613,272 | ||||
Total debt (3) | 14,880,146 | 15,402,751 | |||||
Cash and cash equivalents | $ | 658,022 | $ | 58,211 |
(1) | Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually. |
(2) | Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. |
(3) | Total debt excludes unamortized debt issuance costs. See Note 9 for additional information. |
• | The effect and consequences of COVID-19 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. |
• | 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. |
• | 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 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 investments. |
• | 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. |
Approximate | ||||||||||||||
Dollar Value | ||||||||||||||
Total Number | of Shares that | |||||||||||||
Total Number | Average | of Shares Purchased | May Yet Be | |||||||||||
of Shares | Price Paid | as Part of Publicly | Purchased Under | |||||||||||
Period | Purchased | per Share | Announced Program | the Program | ||||||||||
March 1 - 31, 2020 | 515,500 | $ | 78.96 | 515,500 | $ | 1,511,635,075 | ||||||||
April 1 - 30, 2020 | — | $ | — | — | $ | 1,511,635,075 | ||||||||
May 1 - 31, 2020 | — | $ | — | — | $ | 1,511,635,075 | ||||||||
Total | 515,500 | 515,500 |
CarMax, Inc. Bylaws, as amended and restated April 28, 2020, filed as Exhibit 3.1 to CarMax’s Current Report on Form 8-K, filed May 1, 2020. | |
CarMax, Inc. 2002 Stock Incentive Plan, as amended and restated June 23, 2020, filed as Exhibit 10.1 to CarMax’s Current Report on Form 8-K, filed June 25, 2020. | |
Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith. | |
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith. | |
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. | |
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. | |
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101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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CARMAX, INC. | |
By: | /s/ William D. Nash |
William D. Nash | |
President and | |
Chief Executive Officer | |
By: | /s/ Enrique N. Mayor-Mora |
Enrique N. Mayor-Mora | |
Senior Vice President and | |
Chief Financial Officer |
Date: | July 1, 2020 | By: | /s/ William D. Nash |
William D. Nash | |||
President and Chief Executive Officer |
Date: | July 1, 2020 | By: | /s/ Enrique N. Mayor-Mora |
Enrique N. Mayor-Mora | |||
Senior Vice President and | |||
Chief Financial Officer |
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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
NET EARNINGS | $ 4,978 | $ 266,744 |
Other comprehensive loss, net of taxes: | ||
Net change in retirement benefit plan unrecognized actuarial losses | 728 | 355 |
Net change in cash flow hedge unrecognized losses | (16,062) | (13,551) |
Other comprehensive income (loss), net of taxes | (15,334) | (13,196) |
TOTAL COMPREHENSIVE (LOSS) INCOME | $ (10,356) | $ 253,548 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.5 | $ 0.5 |
Common Stock, Shares Authorized | 350,000,000 | 350,000,000 |
Common Stock, Shares, Issued | 162,755,339 | 163,081,376 |
Common stock, shares outstanding | 162,755,339 | 163,081,376 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 1,298,536 | $ 1,266,920 |
Financing Receivable, Allowance for Credit Loss | $ 437,213 | $ 157,796 |
Background |
3 Months Ended |
---|---|
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Accounting Policies [Text Block] | Background Business. CarMax, Inc. (“we,” “our,” “us,” “CarMax” and “the company”), including its wholly owned subsidiaries, is the nation’s largest retailer of used vehicles. We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”). Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax. We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process. Our omni-channel experience provides the majority of our customers with multiple options to interact with us throughout their car-buying journeys, including our mobile apps; carmax.com; over the phone or online with a centralized customer experience consultant; or, in-person at one of our attractive, modern sales facilities. We offer customers a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) and guaranteed asset protection (“GAP”); and vehicle repair service. Vehicles purchased through the appraisal process that do not meet our retail standards are sold to licensed dealers through on-site or virtual wholesale auctions. Basis of Presentation and Use of Estimates. The accompanying interim unaudited consolidated financial statements include the accounts of CarMax and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such interim consolidated financial statements reflect all normal recurring adjustments considered necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accounting policies followed in the presentation of our interim financial results are consistent with those included in the company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2020 (the “2020 Annual Report”), with the exception of those related to recent accounting pronouncements adopted in the current fiscal year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our 2020 Annual Report. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. In particular, the novel coronavirus (“COVID-19”) pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates including, but not limited to, our allowance for loan losses, inventory valuations, fair value measurements, downward adjustments to investments in equity securities, asset impairment charges, the effectiveness of the company’s hedging instruments, deferred tax valuation allowances, cancellation reserves, actuarial losses on our retirement benefit plans and discount rate assumptions. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Amounts and percentages may not total due to rounding. Recent Accounting Pronouncements. Adopted in the Current Period. In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (ASU 2016-13 or “CECL”) related to the measurement of credit losses on financial instruments. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We have designed an allowance for loan loss methodology to comply with these new requirements, which has been adopted for our fiscal year beginning March 1, 2020 using the modified retrospective approach. The adoption of this pronouncement resulted in the recognition of a $202.0 million increase in the allowance for loan losses on our opening consolidated balance sheet as of March 1, 2020, with a corresponding net-of-tax $153.3 million reduction in retained earnings. The increase in the allowance for loan losses on the opening balance sheet is primarily the result of extending the loan loss forecast period from 12 months to the entire lifetime of the loan portfolio. We expect this new methodology could increase volatility in our quarterly provision for loan losses. This volatility is driven by estimating loan losses over a longer forecast period and the incorporation of economic adjustment factors, including changes in U.S. unemployment rates and the National Automobile Dealers Association ("NADA") used vehicle price index, and such volatility could be significant. We have implemented testing of the effectiveness of our new allowance for loan loss methodology, as well as relevant controls and governance structure. In August 2018, the FASB issued an accounting pronouncement (FASB ASU 2018-14) related to disclosure requirements for defined benefit plans. The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans. We adopted this pronouncement for our fiscal year beginning March 1, 2020, and it did not have a material effect on our consolidated financial statements. In October 2018, the FASB issued an accounting pronouncement (FASB ASU 2018-17) related to related party guidance for variable interest entities. We adopted this pronouncement for our fiscal year beginning March 1, 2020, and it did not have a material effect on our consolidated financial statements. In March 2020, the FASB issued an accounting pronouncement (FASB ASU 2020-04) related to reference rate reform. The pronouncement provides optional guidance for a limited period of time to ease the potential burden of accounting for reference rate reform. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022. We expect to utilize this optional guidance but do not expect it to have a material effect on our consolidated financial statements.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] | Revenue We recognize revenue when control of the good or service has been transferred to the customer, generally either at the time of sale or upon delivery to a customer. Our contracts have a fixed contract price and revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We collect sales taxes and other taxes from customers on behalf of governmental authorities at the time of sale. These taxes are accounted for on a net basis and are not included in net sales and operating revenues or cost of sales. We generally expense sales commissions when incurred because the amortization period would have been less than one year. These costs are recorded within selling, general and administrative expenses. We do not have any significant payment terms as payment is received at or shortly after the point of sale. Disaggregation of Revenue
Used Vehicle Sales. Revenue from the sale of used vehicles is recognized upon transfer of control of the vehicle to the customer. As part of our customer service strategy, we guarantee the retail vehicles we sell with a 7-day, money-back guarantee. We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities. We also guarantee the used vehicles we sell with a 90-day/4,000 mile limited warranty. These warranties are deemed assurance-type warranties and accounted for as warranty obligations. See Note 15 for additional information on this warranty and its related obligation. Wholesale Vehicle Sales. Wholesale vehicles are sold at our auctions, and revenue from the sale of these vehicles is recognized upon transfer of control of the vehicle to the customer. Dealers also pay a fee to us based on the sale price of the vehicles they purchase. This fee is recognized as revenue at the time of sale. While we provide condition disclosures on each wholesale vehicle sold, the vehicles are subject to a limited right of return. We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities. EPP Revenues. We also sell ESP and GAP products on behalf of unrelated third parties, who are primarily responsible for fulfilling the contract, to customers who purchase a retail vehicle. The ESPs we currently offer on all used vehicles provide coverage up to 60 months (subject to mileage limitations), while GAP covers the customer for the term of their finance contract. We recognize revenue, on a net basis, at the time of sale. We also record a reserve, or refund liability, for estimated contract cancellations. The reserve for cancellations is evaluated for each product and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Our risk related to contract cancellations is limited to the revenue that we receive. Cancellations fluctuate depending on the volume of EPP sales, customer financing default or prepayment rates, and shifts in customer behavior, including those related to changes in the coverage or term of the product. The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities. See Note 7 for additional information on cancellation reserves. We are contractually entitled to receive profit-sharing revenues based on the performance of the ESPs administered by third parties. These revenues are a form of variable consideration included in EPP revenues to the extent that it is probable that it will not result in a significant revenue reversal. An estimate of the amount to which we expect to be entitled, subject to various constraints, is recognized upon satisfying the performance obligation of selling the ESP. These constraints include factors that are outside of the company’s influence or control and the length of time until settlement. We apply the expected value method, utilizing historical claims and cancellation data from CarMax customers, as well as external data and other qualitative assumptions. This estimate is reassessed each reporting period with changes reflected in other sales and revenues on our consolidated statements of earnings and other assets on our consolidated balance sheets. As of May 31, 2020 and February 29, 2020, no long-term contract asset was recognized related to cumulative profit-sharing payments to which we expect to be entitled. Third-Party Finance Fees. Customers applying for financing who are not approved or are conditionally approved by CAF are generally evaluated by other third-party finance providers. These providers generally either pay us or are paid a fixed, pre-negotiated fee per contract. We recognize these fees at the time of sale. Service Revenues. Service revenue consists of labor and parts income related to vehicle repair service, including repairs of vehicles covered under an ESP we sell or warranty program. Service revenue is recognized at the time the work is completed. |
CarMax Auto Finance |
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CarMax Auto Finance Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CarMax Auto Finance | CarMax Auto Finance CAF provides financing to qualified retail customers purchasing vehicles from CarMax. CAF provides us the opportunity to capture additional profits, cash flows and sales while managing our reliance on third-party finance sources. Management regularly analyzes CAF’s operating results by assessing profitability, the performance of the auto loans receivable, including trends in credit losses and delinquencies, and CAF direct expenses. This information is used to assess CAF’s performance and make operating decisions, including resource allocation. We typically use securitizations or other funding arrangements to fund loans originated by CAF. CAF income primarily reflects the interest and fee income generated by the auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated loan losses and direct CAF expenses. CAF income does not include any allocation of indirect costs. Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions. Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses. In addition, except for auto loans receivable, which are disclosed in Note 4, CAF assets are not separately reported nor do we allocate assets to CAF because such allocation would not be useful to management in making operating decisions. Components of CAF Income
(1) Annualized percentage of total average managed receivables.
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Auto Loan Receivables |
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Loans and Leases Receivable, Net Amount [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Auto Loan Receivables | Auto Loans Receivable Auto loans receivable include amounts due from customers related to retail vehicle sales financed through CAF and are presented net of an allowance for estimated loan losses. We generally use warehouse facilities to fund auto loans receivable originated by CAF until we elect to fund them through an asset-backed term funding transaction, such as a term securitization or alternative funding arrangement. We recognize transfers of auto loans receivable into the warehouse facilities and asset-backed term funding transactions (together, “non-recourse funding vehicles”) as secured borrowings, which result in recording the auto loans receivable and the related non-recourse notes payable on our consolidated balance sheets. The majority of the auto loans receivable serve as collateral for the related non-recourse notes payable of $13.17 billion as of May 31, 2020 and $13.61 billion as of February 29, 2020. See Note 9 for additional information on non-recourse notes payable. Interest income and expenses related to auto loans are included in CAF income. Interest income on auto loans receivable is recognized when earned based on contractual loan terms. All loans continue to accrue interest until repayment or charge-off. When a charge-off occurs, accrued interest is written off by reversing interest income. Direct costs associated with loan originations are not considered material, and thus, are expensed as incurred. See Note 3 for additional information on CAF income. Auto Loans Receivable, Net
Credit Quality. When customers apply for financing, CAF’s proprietary scoring models rely on the customers’ credit history and certain application information to evaluate and rank their risk. We obtain credit histories and other credit data that includes information such as number, age, type of and payment history for prior or existing credit accounts. The application information that is used includes income, collateral value and down payment. The scoring models yield credit grades that represent the relative likelihood of repayment. Customers with the highest probability of repayment are A-grade customers. Customers assigned a lower grade are determined to have a lower probability of repayment. For loans that are approved, the credit grade influences the terms of the agreement, such as the required loan-to-value ratio and interest rate. After origination, credit grades are generally not updated. CAF uses a combination of the initial credit grades and historical performance to monitor the credit quality of the auto loans receivable on an ongoing basis. We validate the accuracy of the scoring models periodically. Loan performance is reviewed on a recurring basis to identify whether the assigned grades adequately reflect the customers’ likelihood of repayment. Ending Managed Receivables by Major Credit Grade
Allowance for Loan Losses. The allowance for loan losses at May 31, 2020 represents the net credit losses expected over the remaining contractual life of our managed receivables. The allowance for loan losses is determined using a net loss timing curve, primarily based on the composition of the portfolio of managed receivables and historical gross loss and recovery trends. For receivables that have less than 18 months of performance history, the net loss estimate takes into account the credit grades of the receivables and historical losses by credit grade to supplement actual loss data in estimating future performance. Once the receivables have 18 months of performance history, the net loss estimate reflects actual loss experience of those receivables to date, along with forward loss curves, to predict future performance. The forward loss curves are constructed using historical performance data and show the average timing of losses over the course of a receivable’s life. The output of the net loss timing curve is adjusted to take into account reasonable and supportable forecasts about the future. Specifically, the change in U.S. unemployment rates and the NADA used vehicle price index are used to predict changes in gross loss and recovery rate, respectively. An economic adjustment factor is developed to capture the relationship between changes in these forecasts and changes in gross loss and recovery rates. This factor is applied to the output of the net loss timing curve for the reasonable and supportable forecast period of two years. After the end of this two year period, the impact of the economic factor is phased out of the allowance for loan loss calculation on a straight-line basis over a period of 12 months. We periodically consider whether the use of alternative metrics would result in improved model performance and revise the models when appropriate. The provision for loan losses is the periodic expense of maintaining an adequate allowance. Allowance for Loan Losses
As discussed in Note 1, we adopted CECL during the first quarter of fiscal 2021. The adoption of this pronouncement resulted in the recognition of a $202.0 million increase in the allowance for loan losses as of March 1, 2020, with a corresponding net-of-tax decrease of $153.3 million in retained earnings. During the first quarter of fiscal 2021, we recorded a provision for loan losses of $122.0 million. The provision included an $84.0 million increase in our estimate of lifetime losses on existing loans, largely resulting from worsening economic factors in response to COVID-19. In particular, the U.S. unemployment rate rose significantly during the quarter. This rate is used in loss prediction to incorporate how current and forecasted economic conditions impact customer hardship, or ability to pay. Changes in the NADA used vehicle price index were not significant. The remaining $38.0 million of provision recorded in the first quarter of fiscal 2021 largely reflected our estimate of lifetime losses on originations made during the current quarter. Past Due Receivables. An account is considered delinquent when the related customer fails to make a substantial portion of a scheduled payment on or before the due date. In general, accounts are charged-off on the last business day of the month during which the earliest of the following occurs: the receivable is 120 days or more delinquent as of the last business day of the month, the related vehicle is repossessed and liquidated, or the receivable is otherwise deemed uncollectible. For purposes of determining impairment, auto loans are evaluated collectively, as they represent a large group of smaller-balance homogeneous loans, and therefore, are not individually evaluated for impairment. Past Due Receivables
(1) Percent of total ending managed receivables.
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Derivative Instruments And Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments And Hedging Activities | Derivative Instruments and Hedging Activities We use derivatives to manage certain risks arising from both our business operations and economic conditions, particularly with regard to issuances of debt. Primary exposures include LIBOR and other rates used as benchmarks in our securitizations and other debt financing. We enter into derivative instruments to manage exposures related to the future known receipt or payment of uncertain cash amounts, the values of which are impacted by interest rates, and generally designate these derivative instruments as cash flow hedges for accounting purposes. In certain cases, we may choose not to designate a derivative instrument as a cash flow hedge for accounting purposes due to uncertainty around the probability that future hedged transactions will occur. Our derivative instruments are used to manage (i) differences in the amount of our known or expected cash receipts and our known or expected cash payments principally related to the funding of our auto loans receivable, and (ii) exposure to variable interest rates associated with our term loan. For the derivatives associated with our non-recourse funding vehicles that are designated as cash flow hedges, the changes in fair value are initially recorded in accumulated other comprehensive loss (“AOCL”). For the majority of these derivatives, the amounts are subsequently reclassified into CAF income in the period that the hedged forecasted transaction affects earnings, which occurs as interest expense is recognized on those future issuances of debt. During the next 12 months, we estimate that an additional $22.8 million will be reclassified in AOCL as a decrease to CAF income. Changes in fair value related to derivatives that have not been designated as cash flow hedges for accounting purposes are recognized in the income statement in the period in which the change occurs. For the three months ended May 31, 2020, we recognized a loss of $1.9 million in CAF income representing these changes in fair value. As of May 31, 2020 and February 29, 2020, we had interest rate swaps outstanding with a combined notional amount of $1.96 billion and $2.62 billion, respectively, that were designated as cash flow hedges of interest rate risk. As of May 31, 2020, we had an interest rate swap outstanding with a notional amount of $0.40 billion that was not designated as a cash flow hedge. See Note 6 for discussion of fair values of financial instruments and Note 12 for the effect on comprehensive income.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market or, if none exists, the most advantageous market, for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value should be based on assumptions that market participants would use, including a consideration of nonperformance risk. We assess the inputs used to measure fair value using the three-tier hierarchy. The hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market.
Our fair value processes include controls that are designed to ensure that fair values are appropriate. Such controls include model validation, review of key model inputs, analysis of period-over-period fluctuations and reviews by senior management. Valuation Methodologies Money Market Securities. Money market securities are cash equivalents, which are included in cash and cash equivalents, restricted cash from collections on auto loans receivable and other assets. They consist of highly liquid investments with original maturities of three months or less and are classified as Level 1. Mutual Fund Investments. Mutual fund investments consist of publicly traded mutual funds that primarily include diversified equity investments in large-, mid- and small-cap domestic and international companies or investment grade debt securities. The investments, which are included in other assets, are held in a rabbi trust established to fund informally our executive deferred compensation plan and are classified as Level 1. Derivative Instruments. The fair values of our derivative instruments are included in either other current assets, other assets, accounts payable or other liabilities. Our derivatives are not exchange-traded and are over-the-counter customized derivative instruments. All of our derivative exposures are with highly rated bank counterparties. We measure derivative fair values assuming that the unit of account is an individual derivative instrument and that derivatives are sold or transferred on a stand-alone basis. We estimate the fair value of our derivatives using quotes determined by the derivative counterparties and third-party valuation services. Quotes from third-party valuation services and quotes received from bank counterparties project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates and the contractual terms of the derivative instruments. The models do not require significant judgment and model inputs can typically be observed in a liquid market; however, because the models include inputs other than quoted prices in active markets, all derivatives are classified as Level 2. Our derivative fair value measurements consider assumptions about counterparty and our own nonperformance risk. We monitor counterparty and our own nonperformance risk and, in the event that we determine that a party is unlikely to perform under terms of the contract, we would adjust the derivative fair value to reflect the nonperformance risk. Items Measured at Fair Value on a Recurring Basis
Fair Value of Financial Instruments The carrying value of our cash and cash equivalents, accounts receivable, other restricted cash deposits and accounts payable approximates fair value due to the short-term nature and/or variable rates associated with these financial instruments. Auto loans receivable are presented net of an allowance for estimated loan losses. We believe that the carrying value of our revolving credit facility and term loan approximates fair value due to the variable rates associated with these obligations. The fair value of our senior unsecured notes, which are not carried at fair value on our consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices. The carrying value and fair value of the senior unsecured notes as of May 31, 2020 and February 29, 2020, respectively, are as follows:
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Cancellation Reserves |
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Cancellation Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation Reserves | Cancellation Reserves We recognize revenue for EPP products, on a net basis, at the time of sale. We also record a reserve, or refund liability, for estimated contract cancellations. Cancellations of these services may result from early termination by the customer, or default or prepayment on the finance contract. The reserve for cancellations is evaluated for each product and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Cancellation Reserves
The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities. As of May 31, 2020 and February 29, 2020, the current portion of cancellation reserves was $62.9 million and $63.5 million, respectively.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We had $29.1 million of gross unrecognized tax benefits as of May 31, 2020, and $30.9 million as of February 29, 2020. There were no significant changes to the gross unrecognized tax benefits as reported for the year ended February 29, 2020.
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt
Revolving Credit Facility. Borrowings under our $1.45 billion unsecured revolving credit facility (the “credit facility”) are available for working capital and general corporate purposes. We pay a commitment fee on unused portions of the available funds. Borrowings under the credit facility are either due “on demand” or at maturity depending on the type of borrowing. Borrowings with “on demand” repayment terms are presented as short-term debt, while amounts due at maturity are presented as long-term debt as no repayments are expected to be made within the next 12 months. As of May 31, 2020, the unused capacity of $1.08 billion was fully available to us. Term Loan. Borrowings under our $300 million term loan are available for working capital and general corporate purposes. The term loan was classified as long-term debt, as no repayments are scheduled to be made within the next 12 months. Senior Notes. Borrowings under our unsecured senior notes totaling $500 million are available for working capital and general corporate purposes. These notes were classified as long-term debt as no repayments are scheduled to be made within the next 12 months. Financing Obligations. Financing obligations relate to stores subject to sale-leaseback transactions that did not qualify for sale accounting. The financing obligations were structured at varying interest rates and generally have initial lease terms ranging from 15 to 20 years with payments made monthly. We have not entered into any new sale-leaseback transactions since fiscal 2009. In the event the agreements are modified or extended beyond their original term, the related obligation is adjusted based on the present value of the revised future payments, with a corresponding change to the assets subject to these transactions. Upon modification, the amortization of the obligation is reset, resulting in more of the payments being applied to interest expense in the initial years following the modification. Non-Recourse Notes Payable. The non-recourse notes payable relate to auto loans receivable funded through non-recourse funding vehicles. The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto loans receivable. The current portion of non-recourse notes payable represents principal payments that are due to be distributed in the following period. Notes payable related to our asset-backed term funding transactions accrue interest predominantly at fixed rates and have scheduled maturities through May 2027, but may mature earlier, depending upon the repayment rate of the underlying auto loans receivable. Information on our funding vehicles for non-recourse notes payable as of May 31, 2020, are as follows:
We generally enter into warehouse facility agreements for one-year terms and typically renew the agreements annually. The return requirements of warehouse facility investors could fluctuate significantly depending on market conditions. At renewal, the cost, structure and capacity of the facilities could change. These changes could have a significant impact on our funding costs. See Note 4 for additional information on the related auto loans receivable. Capitalized Interest. We capitalize interest in connection with the construction of certain facilities. For the three months ended May 31, 2020 and 2019, we capitalized interest of $0.9 million and $1.6 million, respectively. Financial Covenants. The credit facility, term loan and senior note agreements contain representations and warranties, conditions and covenants. We must also meet financial covenants in conjunction with certain financing obligations. The agreements governing our non-recourse funding vehicles contain representations and warranties, financial covenants and performance triggers. As of May 31, 2020, we were in compliance with all financial covenants and our non-recourse funding vehicles were in compliance with the related performance triggers.
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Stock and Stock-Based Incentive Plans Stock And Stock-Based Incentive Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock and Stock-Based Incentive Plans | Stock and Stock-Based Incentive Plans (A) Share Repurchase Program As of May 31, 2020, a total of $2.0 billion of board authorizations for repurchases of our common stock was outstanding, with no expiration date, of which $1.51 billion remained available for repurchase. Subsequent to the end of the fiscal year, our current stock repurchase program was suspended, although the repurchase authorization remains effective. Common Stock Repurchases
We maintain long-term incentive plans for management, certain employees and the nonemployee members of our board of directors ("board"). The plans allow for the granting of equity-based compensation awards, including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock- and cash-settled restricted stock units, stock grants or a combination of awards. To date, we have not awarded any incentive stock options. The majority of associates who receive share-based compensation awards primarily receive cash-settled restricted stock units. Senior management and other key associates receive awards of nonqualified stock options, stock-settled restricted stock units and/or restricted stock awards. Nonemployee directors receive awards of nonqualified stock options, stock grants, stock-settled restricted stock units and/or restricted stock awards. Excluding stock grants and stock-settled deferred stock units, all share-based compensation awards, including any associated dividend rights, are subject to forfeiture. Nonqualified Stock Options. Nonqualified stock options are awards that allow the recipient to purchase shares of our common stock at a fixed price. Stock options are granted at an exercise price equal to the fair market value of our common stock on the grant date. The stock options generally vest annually in equal amounts over four years. These options expire seven years after the date of the grant. Cash-Settled Restricted Stock Units. Also referred to as restricted stock units, or RSUs, these are awards that entitle the holder to a cash payment equal to the fair market value of a share of our common stock for each unit granted. For grants prior to fiscal 2021, conversion generally occurs at the end of a three-year vesting period. RSUs granted in fiscal 2021 vest annually in equal amounts over three years. However, the cash payment per RSU will not be greater than 200% or less than 75% of the fair market value of a share of our common stock on the grant date. The initial grant date fair values are based on the volume-weighted average price or closing price of our common stock on the grant dates. RSUs are liability-classified awards and do not have voting rights. Stock-Settled Market Stock Units. Also referred to as market stock units, or MSUs, these are restricted stock unit awards with market conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio is calculated by dividing the average closing price of our stock during the final 40 trading days of the three-year vesting period by our stock price on the grant date, with the resulting quotient capped at two. This quotient is then multiplied by the number of MSUs granted to yield the number of shares awarded. The grant date fair values are determined using a Monte-Carlo simulation and are based on the expected market price of our common stock on the vesting date and the expected number of converted common shares. MSUs do not have voting rights. Other Share-Based Incentives Stock-Settled Performance Stock Units. Also referred to as performance stock units, or PSUs, these are restricted stock unit awards with performance conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. For the fiscal 2018 grants, the conversion ratio is based on the company reaching certain target levels set by the board for cumulative three-year pretax diluted earnings per share at the end of the three-year period, with the resulting quotient subject to meeting a minimum 25% threshold and capped at 200%; based on the company's results for the three-year period, the board certified a performance adjustment factor of 119%. For the fiscal 2020 grants, the conversion ratio is based on the company reaching certain performance target levels set by the board of directors at the beginning of each one-year period, with the resulting quotients subject to meeting a minimum 25% threshold and capped at 200%. These quotients are then multiplied by the number of PSUs granted to yield the number of shares awarded. For the first-year period, these targets were based on annual pretax diluted earnings per share excluding any unrealized gains or losses on equity investments in private companies. The board certified a performance adjustment factor of 117% for the first-year period. For the second- and third-year periods, the remaining awarded 42,099 PSUs do not qualify as grants under ASC 718 as mutual understanding of the target performance levels are either not fully set or have not been set. The grant date fair values are based on the volume-weighted average prices of our common stock on the grant dates. PSUs do not have voting rights. No PSUs were awarded in fiscal 2021. As of May 31, 2020, 21,053 granted units were outstanding at a weighted average grant date fair value per share of $78.61. Stock-Settled Deferred Stock Units. Also referred to as deferred stock units, or DSUs, these are restricted stock unit awards granted to non-employee members of our board of directors that are converted into one share of common stock for each unit granted. Conversion occurs at the end of the one-year vesting period unless the director has exercised the option to defer conversion until separation of service to the company. The grant date fair values are based on the volume-weighted average prices of our common stock on the grant dates. DSUs have no voting rights. As of May 31, 2020, 38,730 units were outstanding at a weighted average grant date fair value of $80.19. Restricted Stock Awards. Restricted stock awards, or RSAs, are awards of our common stock that are subject to specified restrictions that generally lapse after a one- to three-year period from the date of the grant. The grant date fair values are based on the volume-weighted average prices of our common stock on the grant dates. Participants holding restricted stock are entitled to vote on matters submitted to holders of our common stock for a vote. As of May 31, 2020, there were 4,517 shares outstanding at a grant date value of $88.54. (C) Share-Based Compensation Composition of Share-Based Compensation Expense
Composition of Share-Based Compensation Expense – By Grant Type
Unrecognized Share-Based Compensation Expense – By Grant Type
We recognize compensation expense for stock options, MSUs, PSUs, DSUs and RSAs on a straight-line basis (net of estimated forfeitures) over the requisite service period, which is generally the vesting period of the award. The PSU expense is adjusted for any change in management’s assessment of the performance target level that is probable of being achieved. The variable expense associated with RSUs is recognized over their vesting period (net of estimated forfeitures) and is calculated based on the volume-weighted average price or closing price of our common stock on the last trading day of each reporting period. The total costs for matching contributions for our employee stock purchase plan are included in share-based compensation expense. There were no capitalized share-based compensation costs as of or for the three months ended May 31, 2020 or 2019. Stock Option Activity
Stock Option Information
For stock options, the fair value of each award is estimated as of the date of grant using a binomial valuation model. In computing the value of the option, the binomial model considers characteristics of fair-value option pricing that are not available for consideration under a closed-form valuation model (for example, the Black-Scholes model), such as the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life and the probability of termination or retirement of the option holder. For this reason, we believe that the binomial model provides a fair value that is more representative of actual experience and future expected experience than the value calculated using a closed-form model. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the recipients of share-based awards. Assumptions Used to Estimate Option Values
Cash-Settled Restricted Stock Unit Activity
Cash-Settled Restricted Stock Unit Information
Expected Cash Settlement Range Upon Restricted Stock Unit Vesting
Stock-Settled Market Stock Unit Activity
Stock-Settled Market Stock Unit Information
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Net Earnings Per Share | Net Earnings Per Share Basic net earnings per share is computed by dividing net earnings available for basic common shares by the weighted average number of shares of common stock outstanding. Diluted net earnings per share is computed by dividing net earnings available for diluted common shares by the sum of weighted average number of shares of common stock outstanding and dilutive potential common stock. Diluted net earnings per share is calculated using the “if-converted” treasury stock method. Basic and Dilutive Net Earnings Per Share Reconciliations
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Accumulated Other Comprehensive Loss |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in Accumulated Other Comprehensive Loss By Component
Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss
Changes in the funded status of our retirement plans and changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in accumulated other comprehensive loss. The cumulative balances are net of deferred taxes of $54.3 million as of May 31, 2020 and $48.8 million as of February 29, 2020.
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Leases (Notes) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure [Text Block] | Leases Our leases primarily consist of operating and finance leases related to retail stores, office space, land and equipment. We also have stores subject to sale-leaseback transactions that did not qualify for sale accounting and are accounted for as financing obligations. For more information on these financing obligations see Note 9. The initial term for real property leases is typically 5 to 20 years. For equipment leases, the initial term generally ranges from 3 to 8 years. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 20 years or more. We include options to renew (or terminate) in our lease term, and as part of our right-of-use ("ROU") assets and lease liabilities, when it is reasonably certain that we will exercise that option. ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We include variable lease payments in the initial measurement of ROU assets and lease liabilities only to the extent they depend on an index or rate. Changes in such indices or rates are accounted for in the period the change occurs, and do not result in the remeasurement of the ROU asset or liability. We are also responsible for payment of certain real estate taxes, insurance and other expenses on our leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. We generally account for non-lease components, such as maintenance, separately from lease components. For certain equipment leases, we apply a portfolio approach to account for the lease assets and liabilities. Our lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The components of lease expense were as follows:
(1) Includes short-term leases and variable lease costs, which are immaterial. Supplemental balance sheet information related to leases was as follows:
(1) Finance lease assets are recorded net of accumulated depreciation of $10.8 million as of May 31, 2020 and $9.1 million as of February 29, 2020. Lease term and discount rate information related to leases was as follows:
Supplemental cash flow information related to leases was as follows:
Maturities of lease liabilities were as follows:
(1) Lease payments exclude $112.1 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Supplemental Cash Flow Information |
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May 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | Supplemental Cash Flow Information Supplemental disclosures of cash flow information:
See Note 13 for supplemental cash flow information related to leases.
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Contingent Liabilities |
3 Months Ended |
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May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | Contingent Liabilities Litigation. CarMax entities are defendants in four proceedings asserting wage and hour claims with respect to CarMax sales consultants and non-exempt employees in California. The asserted claims include failure to pay minimum wage, provide meal periods and rest breaks, pay statutory/contractual wages, reimburse for work-related expenses and provide accurate itemized wage statements; unfair competition; and Private Attorney General Act claims. On September 4, 2015, Craig Weiss et al., v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of California, County of Placer. The Weiss lawsuit seeks civil penalties, fines, cost of suit, and the recovery of attorneys’ fees. On June 29, 2016, Ryan Gomez et al. v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of the State of California, Los Angeles. The Gomez lawsuit seeks declaratory relief, unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees. On October 31, 2017, Joshua Sabanovich v. CarMax Superstores California, LLC et. al., a putative class action, was filed in the Superior Court of California, County of Stanislaus. The Sabanovich lawsuit seeks unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees. On November 21, 2018, Derek McElhannon et al v. CarMax Auto Superstores California, LLC and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in Superior Court of California, County of Alameda. On February 1, 2019, the McElhannon lawsuit was removed to the U.S. District Court, Northern District of California, San Francisco Division. The lawsuit was remanded back to the Superior Court of California, County of Alameda on June 4, 2019. The McElhannon lawsuit seeks unspecified damages, restitution, statutory and/or civil penalties, interest, cost and attorneys’ fees. CarMax has reached a memorandum of understanding and expects to finalize a global agreement settling the Weiss, Gomez and McElhannon lawsuits on a class basis. Once final, the settlement agreement will be submitted for approval to the Superior Court of California, County of Placer as part of the Weiss lawsuit. In anticipation of the consolidation of claims under the global settlement agreement, on March 11, 2020, the Gomez and McElhannon lawsuits were dismissed, as the claims of the plaintiffs will be addressed in the global settlement. The monetary settlement under this agreement is for an immaterial amount that has been fully accrued. The Sabanovich lawsuit is not included in the global settlement agreement. Based upon our evaluation of information currently available, we believe that the ultimate resolution of the foregoing proceedings will not have a material adverse effect, either individually or in the aggregate, on our financial condition, results of operations or cash flows. As previously reported, the company has cooperated with representatives from multiple California municipality district attorney offices in an inquiry by those offices into the handling, storage and disposal of certain types of hazardous waste at our store locations in those municipalities. CarMax and the district attorney offices have reached a settlement agreement, which was entered and approved by the Superior Court of California, County of Orange on June 8, 2020. The settlement includes an immaterial monetary payment covering penalties, costs, and supplemental environmental projects as well as certain injunctive relief. The company is a class member in a consolidated and settled class action lawsuit (In re: Takata Airbag Product Liability Litigation (U.S. District Court, Southern District of Florida)) against Toyota, Mazda, Subaru, BMW, Honda, Nissan and Ford related to the economic loss associated with defective Takata airbags installed as original equipment in certain model vehicles from model years 2000-2018. On April 10, 2020, we were informed that CarMax would receive $40.3 million in net recoveries from the Toyota, Mazda, Subaru, BMW, Honda and Nissan settlement funds. On April 15, 2020, we received that amount in settlement of this matter and recorded the gain. CarMax remains a class member for the Ford settlement fund. We are unable to make a reasonable estimate of the amount or range of gain that could result from CarMax’s participation in the Ford settlement fund. We are involved in various other legal proceedings in the normal course of business. Based upon our evaluation of information currently available, we believe that the ultimate resolution of any such proceedings will not have a material adverse effect, either individually or in the aggregate, on our financial condition, results of operations or cash flows. Other Matters. In accordance with the terms of real estate lease agreements, we generally agree to indemnify the lessor from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities and repairs to leased property upon termination of the lease. Additionally, in accordance with the terms of agreements entered into for the sale of properties, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of the sale, including environmental liabilities and liabilities resulting from the breach of representations or warranties made in accordance with the agreements. We do not have any known material environmental commitments, contingencies or other indemnification issues arising from these arrangements. As part of our customer service strategy, we guarantee the used vehicles we retail with a 90-day/4,000 mile limited warranty. A vehicle in need of repair within this period will be repaired free of charge. As a result, each vehicle sold has an implied liability associated with it. Accordingly, based on historical trends, we record a provision for estimated future repairs during the guarantee period for each vehicle sold. The liability for this guarantee was $14.9 million as of May 31, 2020, and $10.5 million as of February 29, 2020, and is included in accrued expenses and other current liabilities.
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Background Basis of Accounting (Policies) |
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May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | Business. CarMax, Inc. (“we,” “our,” “us,” “CarMax” and “the company”), including its wholly owned subsidiaries, is the nation’s largest retailer of used vehicles. We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”). Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax. We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process. Our omni-channel experience provides the majority of our customers with multiple options to interact with us throughout their car-buying journeys, including our mobile apps; carmax.com; over the phone or online with a centralized customer experience consultant; or, in-person at one of our attractive, modern sales facilities. We offer customers a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) and guaranteed asset protection (“GAP”); and vehicle repair service. Vehicles purchased through the appraisal process that do not meet our retail standards are sold to licensed dealers through on-site or virtual wholesale auctions. |
Basis of Presentation | Basis of Presentation and Use of Estimates. The accompanying interim unaudited consolidated financial statements include the accounts of CarMax and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such interim consolidated financial statements reflect all normal recurring adjustments considered necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accounting policies followed in the presentation of our interim financial results are consistent with those included in the company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2020 (the “2020 Annual Report”), with the exception of those related to recent accounting pronouncements adopted in the current fiscal year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our 2020 Annual Report.
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Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. In particular, the novel coronavirus (“COVID-19”) pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates including, but not limited to, our allowance for loan losses, inventory valuations, fair value measurements, downward adjustments to investments in equity securities, asset impairment charges, the effectiveness of the company’s hedging instruments, deferred tax valuation allowances, cancellation reserves, actuarial losses on our retirement benefit plans and discount rate assumptions. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Amounts and percentages may not total due to rounding. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. Adopted in the Current Period. In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (ASU 2016-13 or “CECL”) related to the measurement of credit losses on financial instruments. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We have designed an allowance for loan loss methodology to comply with these new requirements, which has been adopted for our fiscal year beginning March 1, 2020 using the modified retrospective approach. The adoption of this pronouncement resulted in the recognition of a $202.0 million increase in the allowance for loan losses on our opening consolidated balance sheet as of March 1, 2020, with a corresponding net-of-tax $153.3 million reduction in retained earnings. The increase in the allowance for loan losses on the opening balance sheet is primarily the result of extending the loan loss forecast period from 12 months to the entire lifetime of the loan portfolio. We expect this new methodology could increase volatility in our quarterly provision for loan losses. This volatility is driven by estimating loan losses over a longer forecast period and the incorporation of economic adjustment factors, including changes in U.S. unemployment rates and the National Automobile Dealers Association ("NADA") used vehicle price index, and such volatility could be significant. We have implemented testing of the effectiveness of our new allowance for loan loss methodology, as well as relevant controls and governance structure. In August 2018, the FASB issued an accounting pronouncement (FASB ASU 2018-14) related to disclosure requirements for defined benefit plans. The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans. We adopted this pronouncement for our fiscal year beginning March 1, 2020, and it did not have a material effect on our consolidated financial statements. In October 2018, the FASB issued an accounting pronouncement (FASB ASU 2018-17) related to related party guidance for variable interest entities. We adopted this pronouncement for our fiscal year beginning March 1, 2020, and it did not have a material effect on our consolidated financial statements. In March 2020, the FASB issued an accounting pronouncement (FASB ASU 2020-04) related to reference rate reform. The pronouncement provides optional guidance for a limited period of time to ease the potential burden of accounting for reference rate reform. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022. We expect to utilize this optional guidance but do not expect it to have a material effect on our consolidated financial statements.
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Revenue (Tables) |
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Disaggregation of Revenue | Disaggregation of Revenue
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CarMax Auto Finance (Tables) |
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CarMax Auto Finance Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of CarMax Auto Finance Income | Components of CAF Income
(1) Annualized percentage of total average managed receivables.
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Auto Loan Receivables (Tables) |
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Loans and Leases Receivable, Net Amount [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Auto Loan Receivables, Net | Auto Loans Receivable, Net
(2) Other managed receivables includes receivables not funded through the non-recourse funding vehicles.
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Ending Managed Receivables By Major Credit Grade | Ending Managed Receivables by Major Credit Grade
(2) Percent of total ending managed receivables.
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Allowance For Loan Losses | Allowance for Loan Losses
(3) Net of costs incurred to recover vehicle.
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Past Due Receivables | Past Due Receivables
(1) Percent of total ending managed receivables.
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Items Measured At Fair Value On A Recurring Basis | Items Measured at Fair Value on a Recurring Basis
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] |
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Cancellation Reserves (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cancellation Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Cancellation Reserves Accrual | Cancellation Reserves
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Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Debt | Debt
(2) Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing.
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Schedule of Funding Vehicles [Table Text Block] |
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Stock and Stock-Based Incentive Plans (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Repurchases | Common Stock Repurchases
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Composition of Share-Based Compensation Expense | Composition of Share-Based Compensation Expense
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Composition Of Share-Based Compensation Expense - By Grant Type | Composition of Share-Based Compensation Expense – By Grant Type
Unrecognized Share-Based Compensation Expense – By Grant Type
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Share-based Payment Arrangement, Option, Activity [Table Text Block] | Stock Option Activity
Stock Option Information
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Assumptions Used to Estimate Option Values
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Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block] | Cash-Settled Restricted Stock Unit Activity
Cash-Settled Restricted Stock Unit Information
Stock-Settled Market Stock Unit Activity
Stock-Settled Market Stock Unit Information
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Expected Cash Settlement Range Upon Cash Settled Restricted Stock Unit Vesting [Table Text Block] | Expected Cash Settlement Range Upon Restricted Stock Unit Vesting
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Net Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic And Dilutive Net Earnings Per Share Reconciliations | Basic and Dilutive Net Earnings Per Share Reconciliations
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Accumulated Other Comprehensive Loss (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes In Accumulated Other Comprehensive Loss By Component | Changes in Accumulated Other Comprehensive Loss By Component
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Changes In And Reclassifications Out Of Accumulated Other Comprehensive Loss | Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] |
(1) Includes short-term leases and variable lease costs, which are immaterial. |
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Supplemental Balance Sheet Disclosures [Text Block] |
(1) Finance lease assets are recorded net of accumulated depreciation of $10.8 million as of May 31, 2020 and $9.1 million as of February 29, 2020.
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Other Lease Disclosures [Table Text Block] |
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Schedule Of Future Minimum Lease Obligations [Table Text Block] |
(1) Lease payments exclude $112.1 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Supplemental Cash Flow Information Supplemental Cash Flow Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow, Supplemental Disclosures [Text Block] |
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Background (Narrative) (Details) $ in Millions |
3 Months Ended | |
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May 31, 2020
USD ($)
segment
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Mar. 01, 2020
USD ($)
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Reportable segments | segment | 2 | |
Accounting Standards Update 2016-13 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 153.3 | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 202.0 |
Revenue (Narrative) (Details) - USD ($) $ in Millions |
May 31, 2020 |
Feb. 29, 2020 |
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Revenue from Contract with Customer [Abstract] | ||
Receivables, Long-term Contracts or Programs | $ 0.0 | $ 0.0 |
Auto Loan Receivables Auto Loan Receivables (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
May 31, 2020 |
May 31, 2019 |
Mar. 01, 2020 |
Feb. 29, 2020 |
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Accounts, Notes, Loans and Financing Receivables [Line Items] | ||||
Non-Recourse Debt | $ 13,174,982 | $ 13,613,272 | ||
Provision for loan losses | 122,000 | $ 38,200 | ||
Accounting Standards Update 2016-13 [Member] | ||||
Accounts, Notes, Loans and Financing Receivables [Line Items] | ||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 202,000 | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 153,300 | |||
COVID-19 impacts [Member] | ||||
Accounts, Notes, Loans and Financing Receivables [Line Items] | ||||
Provision for loan losses | 84,000 | |||
Current Period Originations [Member] | ||||
Accounts, Notes, Loans and Financing Receivables [Line Items] | ||||
Provision for loan losses | $ 38,000 |
Auto Loan Receivables (Auto Loan Receivables, Net) (Details) - USD ($) $ in Thousands |
May 31, 2020 |
Mar. 01, 2020 |
Feb. 29, 2020 |
May 31, 2019 |
Feb. 28, 2019 |
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Total ending managed receivables | $ 13,171,900 | $ 13,617,800 | |||
Accrued interest and fees | 64,800 | 56,200 | |||
Other | (4,900) | 35,500 | |||
Less: allowance for loan losses | (437,213) | $ (359,800) | (157,796) | $ (147,000) | $ (138,200) |
Auto loans receivable, net | 12,794,622 | 13,551,711 | |||
Asset-backed term funding | |||||
Total ending managed receivables | 10,795,300 | 11,007,100 | |||
Warehouse facilities | |||||
Total ending managed receivables | 1,949,700 | 2,181,700 | |||
Overcollateralization | |||||
Total ending managed receivables | 291,000 | 289,000 | |||
Other managed receivables | |||||
Total ending managed receivables | $ 135,900 | $ 140,000 |
Auto Loan Receivables (Allowance For Loan Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||||
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May 31, 2020 |
May 31, 2019 |
May 31, 2020 |
Mar. 01, 2020 |
Feb. 29, 2020 |
May 31, 2019 |
Feb. 28, 2019 |
|
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||||
Balance as of beginning of period | $ 157,796 | $ 138,200 | |||||
Financing Receivable, Allowance for Credit Loss | 437,213 | 147,000 | $ 437,213 | $ 359,800 | $ 157,796 | $ 147,000 | $ 138,200 |
Charge-offs | (70,700) | (65,900) | |||||
Recoveries (3) | 26,100 | 36,500 | |||||
Provision for loan losses | 122,000 | 38,200 | |||||
Balance as of end of period | 437,213 | $ 147,000 | |||||
Allowance For Loan Losses, percent | |||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||||
Item as percent of total ending managed receivables | 3.32% | 2.64% | 1.16% | 1.14% | 1.10% | ||
Accounting Standards Update 2016-13 [Member] | |||||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 202,000 |
Derivative Instruments And Hedging Activities (Narrative) (Details) - Interest Rate Swaps - Cash Flow Hedging - USD ($) $ in Millions |
3 Months Ended | |
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May 31, 2020 |
Feb. 29, 2020 |
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Designated As Hedging Instrument | ||
Derivative [Line Items] | ||
Additional reclassification from AOCL to CAF income within the next 12 months | $ 22.8 | |
Derivative, Notional Amount | 1,960.0 | $ 2,620.0 |
Not Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | 1.9 | |
Derivative, Notional Amount | $ 400.0 |
Fair Value Measurements Fair Value Measurements (Schedule of Carrying Values and Estimated Fair Values of Debt Instruments) (Details) - USD ($) $ in Thousands |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Senior Notes | $ 500,000 | $ 500,000 |
Debt Instrument, Fair Value Disclosure | $ 523,181 | $ 546,197 |
Cancellation Reserves (Narrative) (Details) - USD ($) $ in Millions |
May 31, 2020 |
Feb. 29, 2020 |
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Cancellation Reserves [Abstract] | ||
Cancellation reserves, current portion | $ 62.9 | $ 63.5 |
Cancellation Reserves (Schedule Of Cancellation Reserves Accrual) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance as of beginning of period | $ 117.9 | $ 102.8 |
Cancellations | (14.8) | (18.8) |
Provision for future cancellations | 13.6 | 25.5 |
Balance as of end of period | $ 116.7 | $ 109.5 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Federal Income Tax Note | ||
Unrecognized tax benefits, gross | $ 29.1 | $ 30.9 |
Debt (Schedule Of Debt) (Details) - USD ($) $ in Thousands |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term Debt | $ 14,416,180 | $ 14,944,055 |
Financing Obligations | 535,078 | 536,739 |
Non-Recourse Debt | 13,174,982 | 13,613,272 |
Total debt | 14,880,146 | 15,402,751 |
Less: current portion | (439,885) | (433,456) |
Unamortized Debt Issuance Expense | (24,081) | (25,240) |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 370,086 | 452,740 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 300,000 | 300,000 |
3.86% senior notes dues 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 100,000 | 100,000 |
4.17% senior notes due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 200,000 | 200,000 |
4.27% senior notes due 2028 [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 200,000 | $ 200,000 |
Debt (Schedule of Funding Vehicles) (Details) - USD ($) $ in Thousands |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Schedule of Funding Vehicles [Line Items] | ||
Non-Recourse Debt | $ 13,174,982 | $ 13,613,272 |
Warehouse Facility One | ||
Schedule of Funding Vehicles [Line Items] | ||
Warehouse Facilities Maximum Borrowing Capacity | 1,400,000 | |
Warehouse Facility Three | ||
Schedule of Funding Vehicles [Line Items] | ||
Warehouse Facilities Maximum Borrowing Capacity | 150,000 | |
Warehouse Facility Two | ||
Schedule of Funding Vehicles [Line Items] | ||
Warehouse Facilities Maximum Borrowing Capacity | 1,950,000 | |
Warehouse Facilities [Member] | ||
Schedule of Funding Vehicles [Line Items] | ||
Warehouse Facilities Maximum Borrowing Capacity | 3,500,000 | |
Debt Instrument, Unused Borrowing Capacity, Amount | 1,550,000 | |
Non-Recourse Debt | 1,950,000 | |
Asset-backed term funding transactions | ||
Schedule of Funding Vehicles [Line Items] | ||
Non-Recourse Debt | $ 11,220,000 |
Debt (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
May 31, 2020 |
May 31, 2019 |
Feb. 29, 2020 |
|
Debt Instrument [Line Items] | |||
Outstanding Balance | $ 14,416,180 | $ 14,944,055 | |
Non-recourse notes payable | 13,174,982 | $ 13,613,272 | |
Capitalized interest | 900 | $ 1,600 | |
Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 1,450,000 | ||
Unused capacity | 1,080,000 | ||
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Outstanding Balance | 300,000 | ||
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Outstanding Balance | $ 500,000 | ||
Financing obligation | Minimum | |||
Debt Instrument [Line Items] | |||
Initial lease terms, in years | 15 years | ||
Financing obligation | Maximum | |||
Debt Instrument [Line Items] | |||
Initial lease terms, in years | 20 years |
Stock and Stock-Based Incentive Plans Stock and Stock-Based Incentive Plans (Schedule of Common Stock Repurchases) (Details) - Share Repurchase Program - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares repurchased | 515,500 | 2,953,100 |
Average Cost Per Share | $ 78.96 | $ 69.35 |
Available for repurchase, as of end of period | $ 1,511.6 | $ 1,909.1 |
Stock and Stock-Based Incentive Plans Stock And Stock-Based Incentive Plans (Composition of Share-Based Compensation Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense, before income taxes | $ 25,600 | $ 45,523 |
Cost of sales | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense, before income taxes | 679 | 2,825 |
Carmax Auto Finance Income | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense, before income taxes | 1,270 | 1,805 |
Selling, general and administrative expenses | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense, before income taxes | $ 23,651 | $ 40,893 |
Net Earnings Per Share (Basic And Dilutive Net Earnings Per Share Reconciliations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items] | ||
Net earnings | $ 4,978 | $ 266,744 |
Weighted average common shares outstanding, shares | 162,673 | 166,324 |
Weighted average common shares and dilutive potential common shares, shares | 163,537 | 167,643 |
Basic net earnings per share (in dollars per share) | $ 0.03 | $ 1.60 |
Diluted net earnings per share (in dollars per share) | $ 0.03 | $ 1.59 |
Stock options | ||
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items] | ||
Dilutive potential common shares, shares | 527 | 1,000 |
Stock-settled stock units and awards | ||
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items] | ||
Dilutive potential common shares, shares | 337 | 319 |
Net Earnings Per Share (Narrative) (Details) - shares |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Earnings Per Share [Abstract] | ||
Anti-dilutive securities not included in calculation of diluted net earnings per share | 4,258,269 | 3,083,172 |
Accumulated Other Comprehensive Loss (Narrative) (Details) - USD ($) $ in Millions |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Deferred tax | $ 54.3 | $ 48.8 |
Leases Narrative (Details) |
3 Months Ended |
---|---|
May 31, 2020 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease renewal term | 20 years |
Real Estate [Member] | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Real Estate [Member] | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 20 years |
Equipment [Member] | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 3 years |
Equipment [Member] | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 8 years |
Leases Components of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Leases [Abstract] | ||
Operating Lease, Cost | $ 14,384 | $ 14,555 |
Finance Lease, Right-of-Use Asset, Amortization | 1,655 | 1,098 |
Finance Lease, Interest Expense | 2,215 | 1,477 |
Finance Lease, Cost | 3,870 | 2,575 |
Lease, Cost | $ 18,254 | $ 17,130 |
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Leases [Abstract] | ||
Operating lease assets | $ 443,678 | $ 449,094 |
Finance Lease, Right-of-Use Asset | 75,412 | 75,320 |
Total lease assets | 519,090 | 524,414 |
Current portion of operating lease liabilities | 30,881 | 30,980 |
Finance Lease, Liability, Current | 5,442 | 5,066 |
Operating lease liabilities, excluding current portion | 435,325 | 440,671 |
Finance Lease, Liability, Noncurrent | 82,974 | 79,327 |
Total lease liabilities | 554,622 | 556,044 |
Finance Lease Accumulated Depreciation | $ 10,800 | $ 9,100 |
Lease Term and Discount Rate (Details) |
May 31, 2020
Rate
|
Feb. 29, 2020
Rate
|
---|---|---|
Leases [Abstract] | ||
Operating Lease, Weighted Average Remaining Lease Term | 19 years 10 months 17 days | 19 years 11 months 23 days |
Finance Lease, Weighted Average Remaining Lease Term | 13 years 3 months 21 days | 13 years 6 months 18 days |
Operating Lease, Weighted Average Discount Rate, Percent | 5.40% | 5.40% |
Finance Lease, Weighted Average Discount Rate, Percent | 10.84% | 10.32% |
Lease Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Leases [Abstract] | ||
Operating Lease, Payments | $ 14,217 | $ 14,370 |
Finance Lease, Interest Payment on Liability | 1,877 | 766 |
Finance Lease, Principal Payments | 1,370 | 745 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 2,335 | 21,629 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | $ 4,859 | $ 43,261 |
Supplemental Cash Flow Information Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 31, 2020 |
May 31, 2019 |
|
Supplemental Cash Flow Elements [Abstract] | ||
(Decrease) increase in accrued capital expenditures | $ (20,778) | $ 2,868 |
Increase in financing obligations | $ 0 | $ 22,000 |
Contingent Liabilities (Details) - USD ($) $ in Millions |
May 31, 2020 |
Feb. 29, 2020 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Former Gain Contingency, Recognized in Current Period | $ 40.3 | |
Liability associated with guarantee | $ 14.9 | $ 10.5 |
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