EX-99.1 2 q2fy24earningsrelease.htm EX-99.1 Document



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CARMAX REPORTS SECOND QUARTER FISCAL 2024 RESULTS



Richmond, Va., September 28, 2023 – CarMax, Inc. (NYSE:KMX) today reported results for the second quarter ended August 31, 2023.

Highlights:

Net revenues were $7.1 billion, down 13.1% compared with the prior year second quarter.

Retail used unit sales decreased 7.4% and comparable store used unit sales declined 9.0% from the prior year’s second quarter; wholesale units declined 11.2% from the prior year’s second quarter.

Delivered strong margins in retail and wholesale; gross profit per retail used unit of $2,251, similar to last year’s second quarter, and gross profit per wholesale unit of $963, an increase of $82 per unit despite steep market depreciation.

SG&A of $585.7 million decreased 12.1% or $80.3 million from last year’s second quarter, driven primarily by continued cost management efforts.

Bought 292,000 vehicles from consumers and dealers, down 14.9% versus last year’s second quarter as volume was impacted by steep market depreciation.

CarMax Auto Finance (CAF) income of $135.0 million, down 26.2% from the prior year second quarter due to compression in the net interest margin percentage and a higher provision for loan losses, partially offset by an increase in average managed receivables. CAF’s total interest margin percentage was 6.1%, in line with this year’s first quarter.

Net earnings per diluted share of $0.75 versus $0.79 a year ago.

Intend to resume share repurchases in the third quarter of this year.


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CEO Commentary:

“We continue to drive sequential improvements in our business despite persistent widespread pressures across the used car industry. Through deliberate steps we are taking to control what we can, we delivered strong retail and wholesale gross profit per unit, reduced SG&A, and stabilized CAF’s net interest margin,” said Bill Nash, president and chief executive officer. “We celebrate our 30th anniversary this month, a testimony to the enduring strength of our brand. CarMax revolutionized the used car industry by offering integrity, honesty and transparency in every interaction. Looking ahead, we are once again revolutionizing the industry with a uniquely personalized car-buying experience that will further differentiate us in the used market and positions us to deliver additional growth.”


Second Quarter Business Performance Review:

Sales. Combined retail and wholesale used vehicle unit sales were 342,662, a decrease of 9.0% from the prior year’s second quarter. Online retail sales(1) accounted for 14% of retail unit sales, compared with 11% in the second quarter of last year. Revenue from online transactions(2), including retail and wholesale unit sales, was $2.2 billion, or approximately 31% of net revenues, up from 30% in last year’s second quarter.

Total retail used vehicle unit sales declined 7.4% to 200,825 compared to the prior year’s second quarter. Comparable store used unit sales declined 9.0% from the prior year’s second quarter, a sequential improvement from the year-over-year declines in the second half of last year and this year’s first quarter. We believe vehicle affordability challenges continued to impact our second quarter unit sales performance, as headwinds remained due to widespread inflationary pressures, higher interest rates, tightened lending standards and prolonged low consumer confidence. Total retail used vehicle revenues decreased 11.0% compared with the prior year’s second quarter, driven by the decrease in retail used units sold as well as a decrease in average retail selling price, which declined approximately $1,200 per unit, or 4.0%.

Total wholesale vehicle unit sales decreased 11.2% to 141,837 versus the prior year’s second quarter, a sequential improvement from the year-over-year declines in the second half of last year and this year’s first quarter. Total wholesale revenues decreased 21.8% compared with the prior year’s second quarter due to a decrease in the average wholesale selling price of approximately $1,300 per unit or 12.3% and the decrease in wholesale units sold.

We bought 292,000 vehicles from consumers and dealers, down 14.9% versus last year’s second quarter as volume was impacted by steep market depreciation. Of these vehicles, 273,000 were bought from consumers and 19,000 were bought through dealers, a decrease of 15.5% and 5.3%, respectively, from last year’s results.

Other sales and revenues declined by 5.7% compared with the second quarter of fiscal 2023, representing a decrease of $9.7 million. The decrease was primarily driven by an $8.1 million decline in extended protection plan (EPP) revenues reflecting the effect of the decline in retail unit sales.

Gross Profit. Total gross profit was $696.8 million, down 5.5% versus last year’s second quarter. Retail used vehicle gross profit declined 8.7%, primarily reflecting the decline in retail unit sales. Retail gross profit per used unit was $2,251, in line with last year’s second quarter.

Wholesale vehicle gross profit decreased 2.9% versus the prior year’s quarter, reflecting lower wholesale unit volume. Gross profit per unit was $963, an increase of $82 per unit versus last year’s second quarter, despite steep market depreciation.

Other gross profit increased 6.4% largely reflecting a $19.6 million year-over-year improvement in service gross profit driven by the efficiency and cost coverage measures that we have put in place. Partially offsetting the service improvement was a decline in EPP profit, as discussed above.

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SG&A. Compared with the second quarter of fiscal 2023, SG&A expenses decreased 12.1% to $585.7 million. This reduction reflects the continuation of our cost and efficiency efforts that we implemented a year ago. This quarter delivered strong decreases in costs related to staffing, non-CAF uncollectible receivables, advertising, and our level of spend for our technology platforms and strategic initiatives. The change in SG&A was also impacted to a lesser degree by favorable timing in our advertising and technology spend that will impact the back half of this year. Partially offsetting these items was an increase in stock-based compensation expense. SG&A as a percent of gross profit decreased to 84.1% in the second quarter compared to 90.4% in the prior year’s second quarter.

CarMax Auto Finance.(3) CAF income decreased 26.2% to $135.0 million, driven by the decline in CAF’s net interest margin percentage and a $14.3 million year-over-year increase in the provision for loan losses, which outweighed the growth in CAF’s average managed receivables. This quarter’s provision was $89.8 million compared to $75.5 million in the prior year’s second quarter.

As of August 31, 2023, the allowance for loan losses was 3.08% of ending managed receivables, down from 3.11% as of May 31, 2023. The decrease in the allowance percentage primarily reflected the effect of the previously disclosed tightening of CAF’s underwriting standards, partially offset by CAF’s modest additional investment in the Tier 2 business and unfavorable performance within the existing portfolio.

CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was 6.1% of average managed receivables, consistent with this year’s first quarter but down from 7.3% in the prior year’s second quarter, as increases in our customer rates were more than offset by the rising cost of funds. After the effect of 3-day payoffs, CAF financed 42.8% of units sold in the current quarter, up from 41.2% in the prior year’s second quarter. CAF’s weighted average contract rate was 11.1% in the quarter, up from 9.4% in the second quarter last year.

Share Repurchase Activity. During the second quarter of fiscal 2024, we did not repurchase any shares of common stock pursuant to our share repurchase program. As of August 31, 2023, we had $2.45 billion remaining available for repurchase under the outstanding authorization. While we paused the repurchase of our common stock during the third quarter of fiscal 2023, we intend to resume share repurchases in the third quarter of this year.



(1)    An online retail unit sale is defined as a sale where the customer completes all four of these major transactional activities remotely: reserving the vehicle; financing the vehicle, if needed; trading-in or opting out of a trade in; and creating a remote sales order.
(2)    Revenue from online transactions is defined as revenue from retail sales that qualify for an online retail sale, as well as any EPP and third-party finance contribution, wholesale sales where the winning bid was an online bid, and all revenue earned by Edmunds.
(3)    Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.
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Supplemental Financial Information
Amounts and percentage calculations may not total due to rounding.


Sales Components
Three Months Ended August 31Six Months Ended August 31
(In millions)20232022Change20232022Change
Used vehicle sales$5,591.1 $6,284.1 (11.0)%$11,592.6 $13,298.6 (12.8)%
Wholesale vehicle sales1,322.0 1,690.3 (21.8)%2,836.3 3,806.8 (25.5)%
Other sales and revenues:
Extended protection plan revenues101.7 109.8 (7.3)%212.9 226.3 (5.9)%
Third-party finance (fees)/income, net(1.5)2.7 (154.4)%(1.2)6.1 (118.9)%
Advertising & subscription revenues (1)
33.5 34.3 (2.3)%64.9 68.7 (5.5)%
Other27.0 23.6 14.2 %55.3 49.9 10.7 %
Total other sales and revenues160.7 170.4 (5.7)%331.9 351.0 (5.4)%
Total net sales and operating revenues$7,073.8 $8,144.8 (13.1)%$14,760.9 $17,456.4 (15.4)%

(1)    Excludes intersegment revenues that have been eliminated in consolidation.

Unit Sales
Three Months Ended August 31Six Months Ended August 31
20232022Change20232022Change
Used vehicles200,825216,939(7.4)%418,749457,889(8.5)%
Wholesale vehicles141,837159,677(11.2)%302,885345,984(12.5)%


Average Selling Prices
Three Months Ended August 31Six Months Ended August 31
20232022Change20232022Change
Used vehicles$27,500 $28,657 (4.0)%$27,374 $28,755 (4.8)%
Wholesale vehicles$8,923 $10,179 (12.3)%$8,977 $10,619 (15.5)%


Vehicle Sales Changes
Three Months Ended August 31Six Months Ended August 31
2023202220232022
Used vehicle units(7.4)%(6.4)%(8.5)%(8.9)%
Used vehicle revenues(11.0)%2.9 %(12.8)%8.5 %
Wholesale vehicle units(11.2)%(15.1)%(12.5)%(6.4)%
Wholesale vehicle revenues(21.8)%(0.7)%(25.5)%23.8 %







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Comparable Store Used Vehicle Sales Changes (1)
Three Months Ended August 31Six Months Ended August 31
2023202220232022
Used vehicle units(9.0)%(8.3)%(10.3)%(10.6)%
Used vehicle revenues(12.5)%0.4 %(14.4)%6.0 %


(1)    Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods.


Used Vehicle Financing Penetration by Channel (Before the Impact of 3-day Payoffs) (1)
Three Months Ended August 31Six Months Ended August 31
2023202220232022
CAF (2)
46.4 %44.8 %45.9 %44.0 %
Tier 2 (3)
18.1 %21.6 %19.3 %23.5 %
Tier 3 (4)
6.4 %6.0 %6.6 %6.6 %
Other (5)
29.1 %27.6 %28.2 %25.9 %
Total100.0 %100.0 %100.0 %100.0 %

(1)     Calculated as used vehicle units financed for respective channel as a percentage of total used units sold.
(2)    Includes CAF's Tier 2 and Tier 3 loan originations, which represent less than 2% 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.


Selected Operating Ratios
Three Months Ended August 31Six Months Ended August 31
(In millions)2023
% (1)
2022
% (1)
2023
% (1)
2022
% (1)
Net sales and operating revenues$7,073.8 100.0 $8,144.8 100.0 $14,760.9 100.0 $17,456.4 100.0 
Gross profit$696.8 9.8 $737.1 9.1 $1,514.2 10.3 $1,612.5 9.2 
CarMax Auto Finance income$135.0 1.9 $182.9 2.2 $272.3 1.8 $387.3 2.2 
Selling, general, and administrative expenses
$585.7 8.3 $666.0 8.2 $1,145.5 7.8 $1,322.8 7.6 
Interest expense$31.6 0.4 $32.7 0.4 $62.1 0.4 $61.5 0.4 
Earnings before income taxes$158.3 2.2 $167.6 2.1 $465.5 3.2 $504.2 2.9 
Net earnings$118.6 1.7 $125.9 1.5 $346.9 2.4 $378.2 2.2 



(1)Calculated as a percentage of net sales and operating revenues.


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Gross Profit (1)
Three Months Ended August 31Six Months Ended August 31
(In millions)20232022Change20232022Change
Used vehicle gross profit$452.1 $495.0 (8.7)%$966.7 $1,058.5 (8.7)%
Wholesale vehicle gross profit136.6 140.7 (2.9)%304.4 332.3 (8.4)%
Other gross profit108.1 101.4 6.4 %243.1 221.7 9.6 %
Total$696.8 $737.1 (5.5)%$1,514.2 $1,612.5 (6.1)%





(1)    Amounts are net of intercompany eliminations.


Gross Profit per Unit (1)
Three Months Ended August 31Six Months Ended August 31
2023202220232022
$ per unit(2)
%(3)
$ per unit(2)
%(3)
$ per unit(2)
%(3)
$ per unit(2)
%(3)
Used vehicle gross profit per unit$2,251 8.1 $2,282 7.9 $2,309 8.3 $2,312 8.0 
Wholesale vehicle gross profit per unit$963 10.3 $881 8.3 $1,005 10.7 $961 8.7 
Other gross profit per unit$538 67.2 $468 59.6 $580 73.2 $484 63.2 



(1)    Amounts are net of intercompany eliminations. Those eliminations had the effect of increasing used vehicle gross profit per unit and wholesale vehicle gross profit per unit and decreasing other gross profit per unit by immaterial amounts.
(2)    Calculated as category gross profit divided by its respective units sold, except the other category, which is divided by total used units sold.
(3)    Calculated as a percentage of its respective sales or revenue.


SG&A Expenses (1)

Three Months Ended August 31Six Months Ended August 31
(In millions)20232022Change20232022Change
Compensation and benefits:
Compensation and benefits, excluding share-based compensation expense
$305.7 $333.8 (8.4)%$636.4 $679.0 (6.3)%
Share-based compensation expense31.3 24.5 27.5 %66.6 46.8 42.4 %
Total compensation and benefits (2)
$337.0 $358.3 (5.9)%$703.0 $725.8 (3.1)%
Occupancy costs67.8 68.8 (1.6)%133.9 134.7 (0.6)%
Advertising expense66.3 82.9 (20.0)%138.2 171.8 (19.5)%
Other overhead costs (3)
114.6 156.0 (26.6)%170.4 290.5 (41.4)%
Total SG&A expenses$585.7 $666.0 (12.1)%$1,145.5 $1,322.8 (13.4)%
SG&A as a % of gross profit84.1 %90.4 %(6.3)%75.7 %82.0 %(6.3)%


(1)    Amounts are net of intercompany eliminations.
(2)    Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.
(3)    Includes IT expenses, non-CAF bad debt, preopening and relocation costs, insurance, charitable contributions, travel and other administrative expenses.


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Components of CAF Income and Other CAF Information
Three Months Ended August 31Six Months Ended August 31
(In millions)2023
% (1)
2022
% (1)
2023
% (1)
2022
% (1)
Interest margin:
Interest and fee income$416.9 9.6 $357.2 8.8 $817.4 9.5 $703.9 8.8 
Interest expense(152.0)(3.5)(62.5)(1.5)(294.6)(3.4)(111.3)(1.4)
Total interest margin264.9 6.1 294.7 7.3 522.8 6.1 592.6 7.4 
Provision for loan losses(89.8)(2.1)(75.5)(1.9)(170.7)(2.0)(133.3)(1.7)
Total interest margin after provision for loan losses
175.1 4.0 219.2 5.4 352.1 4.1 459.3 5.7 
Total direct expenses(40.2)(0.9)(36.3)(0.9)(79.8)(0.9)(71.9)(0.9)
CarMax Auto Finance income$135.0 3.1 $182.9 4.5 $272.3 3.2 $387.3 4.8 
Total average managed receivables$17,315.6 $16,176.2 $17,159.5 $15,996.6 
Net loans originated$2,197.2 $2,334.0 $4,537.6 $4,780.8 
Net penetration rate42.8 %41.2 %42.8 %40.2 %
Weighted average contract rate11.1 %9.4 %11.1 %9.2 %
Ending allowance for loan losses$538.0 $477.5 $538.0 $477.5 
Warehouse facility information:
Ending funded receivables
$4,419.6 $2,997.9 $4,419.6 $2,997.9 
Ending unused capacity
$1,180.4 $2,402.1 $1,180.4 $2,402.1 


(1)Annualized percentage of total average managed receivables.


Earnings Highlights
Three Months Ended August 31Six Months Ended August 31
(In millions except per share data)20232022Change20232022Change
Net earnings$118.6 $125.9 (5.8)%$346.9 $378.2 (8.3)%
Diluted weighted average shares outstanding
159.2 160.2 (0.6)%158.9 161.0 (1.3)%
Net earnings per diluted share$0.75 $0.79 (5.1)%$2.18 $2.35 (7.2)%



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Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, September 28, 2023. Domestic investors may access the call at 1-800-274-8461 (international callers dial 1-203-518-9814). The conference I.D. for both domestic and international callers is 3171396. A live webcast of the call will be available on our investor information home page at investors.carmax.com.

A replay of the webcast will be available on the company’s website at investors.carmax.com through December 20, 2023, or via telephone (for approximately one week) by dialing 1-800-677-7085 (or 1-402-220-0665 for international access) and entering the conference ID 3171396.


Third Quarter Fiscal 2024 Earnings Release Date

We currently plan to release results for the third quarter ending November 30, 2023, on Thursday, December 21, 2023, before the opening of trading on the New York Stock Exchange. We plan to host a conference call for investors at 9:00 a.m. ET on that date. Information on this conference call will be available on our investor information home page at investors.carmax.com in early December 2023.


About CarMax

CarMax, the nation’s largest retailer of used autos, revolutionized the automotive retail industry by driving integrity, honesty and transparency in every interaction. The company offers a truly personalized experience with the option for customers to do as much, or as little, online and in-store as they want. During the fiscal year ended February 28, 2023, CarMax sold approximately 810,000 used vehicles and 590,000 wholesale vehicles at its auctions. In addition, CarMax Auto Finance originated nearly $9 billion in receivables during fiscal 2023, adding to its nearly $17 billion portfolio. CarMax has over 240 stores, more than 30,000 associates, and is proud to have been recognized for 19 consecutive years as one of the Fortune 100 Best Companies to Work For®. CarMax is committed to making a positive impact on people, communities and the environment. Learn more in the 2023 Responsibility Report. For more information, visit www.carmax.com.


Forward-Looking Statements

We caution readers that the statements contained in this release that are not statements of historical fact, including statements about our future business plans, operations, challenges, opportunities or prospects, including without limitation any statements or factors regarding expected operating capacity, sales, inventory, market share, financial targets, revenue, margins, expenses, liquidity, loan originations, capital expenditures, share repurchase plans, debt obligations or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “positioned,” “predict,” “should,” “target,” “will” and other similar expressions, whether in the negative or affirmative. Such forward-looking statements are based upon management’s current knowledge, expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:
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Changes in the competitive landscape and/or our failure to successfully adjust to such changes.
Changes in general or regional U.S. economic conditions, including inflationary pressures, climbing interest rates and the potential impact of Russia’s invasion of Ukraine.
Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
Events that damage our reputation or harm the perception of the quality of our brand.
Significant changes in prices of new and used vehicles.
A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.
Our inability to realize the benefits associated with our omni-channel initiatives and strategic investments.
Factors related to geographic and sales growth, including the inability to effectively manage our growth.
Our inability to recruit, develop and retain associates and maintain positive associate relations.
The loss of key associates from our store, regional or corporate management teams or a significant increase in labor costs.
Changes in economic conditions or other factors that result in greater credit losses for CAF’s portfolio of auto loans receivable than anticipated.
The failure or inability to realize the benefits associated with our strategic transactions.
The effect and consequences of the Coronavirus public health crisis on matters including U.S. and local economies; our business operations and continuity; the availability of corporate and consumer financing; the health and productivity of our associates; the ability of third-party providers to continue uninterrupted service; and the regulatory environment in which we operate.
Changes in consumer credit availability provided by our third-party finance providers.
Changes in the availability of extended protection plan products from third-party providers.
The performance of the third-party vendors we rely on for key components of our business.
Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
The failure or inability to adequately protect our intellectual property.
The occurrence of severe weather events.
Factors related to the geographic concentration of our stores.
Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer, associate or corporate information.
The failure of or inability to sufficiently enhance key information systems.
Factors related to the regulatory and legislative environment in which we operate.
The effect of various litigation matters.
The volatility in the market price for our common stock.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, and our quarterly or current reports as filed with or furnished to the U.S. Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investors.carmax.com. Requests for information may also be made to the Investor Relations Department by email to investor_relations@carmax.com or by calling (804) 747-0422 x7865. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

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Contacts:

Investors:    
    David Lowenstein, Assistant Vice President, Investor Relations    
    investor_relations@carmax.com, (804) 747-0422 x7865

Media:
    pr@carmax.com, (855) 887-2915

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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

Three Months Ended August 31Six Months Ended August 31
(In thousands except per share data)2023
%(1)
2022
%(1)
2023
%(1)
2022
%(1)
SALES AND OPERATING REVENUES:
Used vehicle sales$5,591,143 79.0 $6,284,085 77.2 $11,592,614 78.5 $13,298,575 76.2 
Wholesale vehicle sales1,321,975 18.7 1,690,326 20.8 2,836,338 19.2 3,806,843 21.8 
Other sales and revenues160,718 2.3 170,392 2.1 331,947 2.2 351,006 2.0 
NET SALES AND OPERATING REVENUES7,073,836 100.0 8,144,803 100.0 14,760,899 100.0 17,456,424 100.0 
COST OF SALES:
Used vehicle cost of sales5,139,034 72.6 5,789,098 71.1 10,625,880 72.0 12,240,108 70.1 
Wholesale vehicle cost of sales1,185,359 16.8 1,549,669 19.0 2,531,897 17.2 3,474,519 19.9 
Other cost of sales52,678 0.7 68,891 0.8 88,967 0.6 129,261 0.7 
TOTAL COST OF SALES6,377,071 90.2 7,407,658 90.9 13,246,744 89.7 15,843,888 90.8 
GROSS PROFIT 696,765 9.8 737,145 9.1 1,514,155 10.3 1,612,536 9.2 
CARMAX AUTO FINANCE INCOME 134,987 1.9 182,869 2.2 272,345 1.8 387,342 2.2 
Selling, general, and administrative expenses
585,694 8.3 666,041 8.2 1,145,531 7.8 1,322,781 7.6 
Depreciation and amortization58,817 0.8 57,692 0.7 117,236 0.8 113,340 0.6 
Interest expense31,585 0.4 32,745 0.4 62,051 0.4 61,520 0.4 
Other income(2,630) (4,039)— (3,844) (1,940)— 
Earnings before income taxes158,286 2.2 167,575 2.1 465,526 3.2 504,177 2.9 
Income tax provision39,651 0.6 41,670 0.5 118,593 0.8 126,007 0.7 
NET EARNINGS $118,635 1.7 $125,905 1.5 $346,933 2.4 $378,170 2.2 
WEIGHTED AVERAGE COMMON SHARES:
Basic158,479 158,801 158,298 159,556 
Diluted159,238 160,218 158,900 161,015 
NET EARNINGS PER SHARE:
Basic$0.75 $0.79 $2.19 $2.37 
Diluted$0.75 $0.79 $2.18 $2.35 

(1)    Percents are calculated as a percentage of net sales and operating revenues and may not total due to rounding.

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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

As of
August 31February 28August 31
(In thousands except share data)202320232022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$521,098 $314,758 $56,772 
Restricted cash from collections on auto loans receivable534,792 470,889 533,253 
Accounts receivable, net271,874 298,783 402,452 
Inventory3,839,286 3,726,142 4,671,685 
Other current assets219,321 230,795 208,297 
TOTAL CURRENT ASSETS 5,386,371 5,041,367 5,872,459 
Auto loans receivable, net16,999,750 16,341,791 15,961,213 
Property and equipment, net3,538,683 3,430,914 3,312,605 
Deferred income taxes111,919 80,740 93,057 
Operating lease assets540,718 545,677 530,285 
Goodwill141,258 141,258 141,258 
Other assets581,462 600,989 559,666 
TOTAL ASSETS $27,300,161 $26,182,736 $26,470,543 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$932,068 $826,592 $928,749 
Accrued expenses and other current liabilities513,137 478,964 482,361 
Accrued income taxes103 — — 
Current portion of operating lease liabilities55,441 53,287 48,783 
Current portion of long-term debt312,230 111,859 112,504 
Current portion of non-recourse notes payable507,409 467,609 559,792 
TOTAL CURRENT LIABILITIES 2,320,388 1,938,311 2,132,189 
Long-term debt, excluding current portion1,608,724 1,909,361 2,511,417 
Non-recourse notes payable, excluding current portion16,475,698 15,865,776 15,534,801 
Operating lease liabilities, excluding current portion516,839 523,828 512,542 
Other liabilities372,853 332,383 365,367 
TOTAL LIABILITIES 21,294,502 20,569,659 21,056,316 
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000 shares authorized; 158,655,733 and 158,079,033 shares issued and outstanding as of August 31, 2023 and February 28, 2023, respectively79,328 79,040 79,022 
Capital in excess of par value1,777,707 1,713,074 1,684,408 
Accumulated other comprehensive income78,597 97,869 31,999 
Retained earnings4,070,027 3,723,094 3,618,798 
TOTAL SHAREHOLDERS’ EQUITY 6,005,659 5,613,077 5,414,227 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $27,300,161 $26,182,736 $26,470,543 

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CarMax, Inc.
Page 13 of 13
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended August 31
(In thousands)20232022
OPERATING ACTIVITIES:  
Net earnings$346,933 $378,170 
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization126,971 137,903 
Share-based compensation expense69,445 47,010 
Provision for loan losses170,672 133,343 
Provision for cancellation reserves45,199 59,208 
Deferred income tax (benefit) provision(24,845)800 
Other3,868 9,713 
Net decrease (increase) in:
Accounts receivable, net26,909 158,532 
Inventory(113,144)452,884 
Other current assets33,431 79,188 
Auto loans receivable, net(828,631)(804,855)
Other assets(6,668)(31,703)
Net increase (decrease) in:
Accounts payable, accrued expenses and other
  current liabilities and accrued income taxes132,566 (74,986)
Other liabilities(43,826)(65,618)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES(61,120)479,589 
INVESTING ACTIVITIES:  
Capital expenditures(210,167)(204,463)
Proceeds from disposal of property and equipment1,247 84 
Purchases of investments(3,236)(5,428)
Sales and returns of investments405 2,492 
NET CASH USED IN INVESTING ACTIVITIES(211,751)(207,315)
FINANCING ACTIVITIES:  
Proceeds from issuances of long-term debt134,600 2,412,900 
Payments on long-term debt(240,093)(3,057,565)
Cash paid for debt issuance costs(10,650)(10,240)
Payments on finance lease obligations(7,810)(9,883)
Issuances of non-recourse notes payable6,179,929 8,230,501 
Payments on non-recourse notes payable(5,532,403)(7,576,056)
Repurchase and retirement of common stock(4,143)(325,168)
Equity issuances27,534 13,282 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES546,964 (322,229)
Increase (decrease) in cash, cash equivalents, and restricted cash274,093 (49,955)
Cash, cash equivalents, and restricted cash at beginning of year951,004 803,618 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$1,225,097 $753,663 


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