Auto Repair and Service

Carmax Experiences Third Quarter Fiscal 2023 Outcomes


CarMax, Inc. (NYSE:KMX) right now reported outcomes for the third quarter ended November 30, 2022.


Highlights:

  • Internet revenues of $6.5 billion, down 23.7% in contrast with the prior yr third quarter.
  • Whole retail used items offered decreased 20.8%, whereas used unit gross sales in comparable shops had been down 22.4%; power in margin administration delivered strong gross revenue per retail used unit of $2,237, in keeping with the prior yr third quarter.
  • Whole wholesale items offered decreased 36.7%; regardless of a lower of $165 per unit from the report prior yr third quarter, wholesale gross revenue per unit remained sturdy at $966. Each quantity and margins had been impacted by steep market depreciation in addition to retail selectivity.
  • Purchased 238,000 autos from customers and sellers, down 39.8% versus final yr’s report third quarter, attributable to steep market depreciation and our response to intentionally sluggish buys.
  • CarMax Auto Finance (CAF) revenue of $152.2 million, down 8.3% from the prior yr third quarter attributable to compression within the internet curiosity margin proportion and a better provision for mortgage losses, primarily pushed by the enlargement of Tier 2 and Tier 3 originations inside CAF’s portfolio, partially offset by a rise in common managed receivables.
  • Accomplished the nationwide rollout of our industry-leading, multi-lender pre-qualification finance expertise.
  • SG&A of $591.7 million elevated 2.7% or $15.8 million from final yr’s third quarter. Within the prior yr’s third quarter, we obtained a $22.6 million settlement from a category motion lawsuit. Adjusting for that settlement, SG&A bills would have declined 1.1% year-over-year.
  • Took deliberate actions in response to the present market situations by decreasing SG&A, growing the combination of older retail autos offered, growing CAF charges, decreasing deliberate capital expenditures, and prudently managing our capital construction, together with pausing share buybacks.
  • Internet earnings per diluted share of $0.24, down from $1.63 a yr in the past.


CEO Commentary:

“In response to the continuing pressures throughout the used automotive {industry}, we have now taken deliberate steps to assist our enterprise for each the near-term and the long-term. We’re managing our enterprise prudently, and prioritizing initiatives that cut back prices, unlock working efficiencies, profitably develop market share and create higher experiences for our associates and prospects,” mentioned Invoice Nash, president and chief govt officer. “Because the market chief, we have now spent virtually thirty years constructing a diversified enterprise that may profitably navigate the ups and downs of the used automotive {industry}. We imagine we’re effectively positioned to successfully handle by way of this cycle.”


Third Quarter Enterprise Efficiency Overview:


Gross sales
. Mixed retail and wholesale used automobile unit gross sales had been 298,807, a lower of 28% from the prior yr’s third quarter. On-line retail gross sales(1) accounted for 12% of retail unit gross sales, in contrast with 9% within the third quarter of final yr. Income from on-line transactions(2), together with retail and wholesale unit gross sales, was $1.8 billion, or roughly 28% of internet revenues, a decline from 30% of internet revenues in final yr’s third quarter.

Whole retail used automobile unit gross sales declined 20.8% to 180,050 and comparable retailer used unit gross sales declined 22.4% from the prior yr’s third quarter. We imagine automobile affordability challenges continued to affect our third quarter unit gross sales efficiency, as headwinds stay attributable to widespread inflationary pressures, climbing rates of interest, and low shopper confidence. Exterior title information signifies that we gained market share on a year-to-date foundation by way of October, although we’ve seen some current lack of share. We’re centered on worthwhile market share good points that may be sustained for the long-term. Whole retail used automobile revenues decreased 19.1% in contrast with the prior yr’s third quarter, pushed by the lower in retail used items offered as the typical retail promoting worth was up $535 per unit or 1.9% in comparison with the prior yr.

Whole wholesale automobile unit gross sales decreased 36.7% to 118,757 versus the prior yr’s third quarter. Wholesale quantity was negatively impacted by the quickly altering market situations and retail selectivity, our resolution to shift some items from wholesale to retail to fulfill shopper demand for decrease priced autos. Whole wholesale revenues decreased 40.1% in contrast with the prior yr’s third quarter because of the lower in wholesale items offered and a lower within the common wholesale promoting worth by virtually $600 per unit, or 6.0%.

We purchased 238,000 autos from customers and sellers, down 39.8% versus final yr’s report third quarter attributable to steep market depreciation and our response to intentionally sluggish buys. 224,000 of those autos had been purchased from customers, down 41.6% over final yr’s report outcomes. The remaining 14,000 of those autos had been purchased by way of MaxOffer, our digital appraisal product for sellers, up 15.8% over final yr’s third quarter.

Different gross sales and revenues declined by 12.2% in contrast with the third quarter of fiscal 2022, representing a lower of $20.7 million. The lower was primarily pushed by a $14.8 million decline in prolonged safety plan (EPP) revenues reflecting the mixed results of the decline in retail unit gross sales, stronger margins, favorable year-over-year return reserve adjustment and steady penetration.


Gross Revenue
. Whole gross revenue was $576.7 million, down 31.1% versus final yr’s third quarter. Retail used automobile gross revenue declined 20.8%, reflecting the decline in retail unit gross sales. Retail gross revenue per used unit was $2,237, in keeping with the prior yr.

Wholesale automobile gross revenue decreased 46.0% versus the prior yr’s quarter, reflecting decrease wholesale unit quantity and gross revenue per unit, which declined $165 to $966. Gross revenue per unit was impacted by steep market depreciation in addition to retail selectivity.

Different gross revenue declined 49.0% largely reflecting a discount in service division margins and EPP revenues. Service margins declined primarily attributable to continued deleverage ensuing from the discount in retail unit gross sales and by our resolution to take care of technician staffing by way of the present cycle.


SG&A
. In contrast with the third quarter of fiscal 2022, SG&A bills elevated 2.7% to $591.7 million. Within the prior yr’s third quarter, we obtained a $22.6 million settlement from a category motion lawsuit. Adjusting for that settlement, SG&A bills would have declined 1.1% year-over-year. This discount displays deliberate steps to additional cut back prices by managing workers ranges by way of attrition in our shops and CECs, limiting hiring and contractor utilization in our company places of work, and aligning advertising and marketing spend to gross sales. Compensation and advantages additionally included a lower in share-based compensation, which largely mirrored modifications within the firm’s share worth. Whole SG&A bills included will increase in investments to advance our know-how platforms and strategic initiatives in addition to progress associated prices. SG&A as a % of gross revenue was 102.6%, versus 68.8% within the prior yr’s third quarter, which was primarily pushed by the 31.1% lower in gross margin {dollars}, and doesn’t replicate the run-rate of the actions we took to cut back prices throughout the quarter.


CarMax Auto Finance
.(3) CAF revenue decreased 8.3% to $152.2 million, pushed by the decline in CAF’s internet curiosity margin proportion and a $9.5 million year-over-year enhance within the provision for mortgage losses, which outweighed the expansion in CAF’s common managed receivables. This quarter’s provision was $85.7 million in comparison with $76.2 million final yr.

As of November 30, 2022, the allowance for mortgage losses was 2.95% of ending managed receivables, up from 2.92% as of August 30, 2022. The rise within the allowance proportion primarily mirrored the impact of the beforehand disclosed enlargement of Tier 2 and Tier 3 originations inside CAF’s portfolio.

CAF’s complete curiosity margin proportion, which represents the unfold between curiosity and charges charged to customers and our funding prices, was 6.7% of common managed receivables, down from 7.2% within the prior yr’s third quarter as will increase in our buyer charges had been offset by the rising value of funds. After the impact of 3-day payoffs, CAF financed 44.4% of items offered within the present quarter up from 41.2% within the second quarter and from 42.2% within the prior yr’s third quarter. CAF’s weighted common contract charge elevated to 9.8% within the quarter up from 8.3% within the third quarter final yr.


Share Repurchase Exercise
. Given third quarter efficiency and continued market uncertainties, we’re taking a conservative strategy to our capital construction. Accordingly, we have now paused our share repurchases. Throughout the third quarter of fiscal 2023, we repurchased 30,000 shares of frequent inventory for $2.6 million pursuant to our share repurchase program earlier than pausing further purchases. As of November 30, 2022, we had $2.45 billion remaining out there for repurchase beneath the excellent authorization. We stay dedicated to returning capital again to shareholders over time and should resume share repurchases sooner or later at any time relying upon market situations and our capital wants, amongst different components.


Retailer Openings
. Throughout the third quarter of fiscal 2023, we opened one new retail location in Oceanside, California. In fiscal 2023, we plan to open a complete of ten new areas throughout the nation. For fiscal 2024, we’re planning new retailer progress of 5 areas; nonetheless, we are able to increase our plans if market situations change.


Fiscal 2023 Capital Spending Outlook.
We anticipate capital expenditures will finish the fiscal yr at roughly $450 million versus our earlier estimate of $500 million.

 (1)

A web-based retail unit sale is outlined as a sale the place the shopper completes all 4 of those main transactional actions remotely: reserving the automobile; financing the automobile, if wanted; trading-in or opting out of a commerce in; and making a distant gross sales order.

 (2)

Income from on-line transactions is outlined as income from retail gross sales that qualify for an internet retail sale, in addition to any EPP and third-party finance contribution, wholesale gross sales the place the successful bid was an internet bid, and all income earned by Edmunds.

 (3)

Though CAF advantages from sure oblique overhead expenditures, we have now not allotted oblique prices to CAF to keep away from making subjective allocation selections.


Supplemental Monetary Data


Quantities and proportion calculations could not complete attributable to rounding.


Gross sales Elements

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands)

 

2022

 

 

2021

 

Change

 

 

2022

 

 

2021

 

 

Change

Used automobile gross sales

$

5,204.6

 

$

6,435.6

 

(19.1

) %

 

$

18,503.2

 

$

18,697.3

 

 

(1.0

) %

Wholesale automobile gross sales

 

1,152.2

 

 

1,922.3

 

(40.1

) %

 

 

4,959.1

 

 

4,998.2

 

 

(0.8

) %

Different gross sales and revenues:

 

 

 

 

 

 

 

 

 

 

 

Prolonged safety plan revenues

 

91.8

 

 

106.6

 

(13.9

) %

 

 

318.1

 

 

353.8

 

 

(10.1

) %

Third-party finance revenue/(charges), internet

 

1.0

 

 

1.6

 

(38.2

) %

 

 

7.1

 

 

(0.3

)

 

2,825.4

%

Promoting & subscription revenues (1)

 

33.3

 

 

33.3

 

(0.2

) %

 

 

101.9

 

 

67.9

 

 

50.2

%

Different

 

23.1

 

 

28.4

 

(18.6

) %

 

 

73.1

 

 

96.8

 

 

(24.4

) %

Whole different gross sales and revenues

 

149.2

 

 

169.9

 

(12.2

) %

 

 

500.2

 

 

518.2

 

 

(3.5

) %

Whole internet gross sales and working revenues

$

6,506.0

 

$

8,527.8

 

(23.7

) %

 

$

23,962.4

 

$

24,213.7

 

 

(1.0

) %


(1)

Excludes intersegment revenues which were eradicated in consolidation. 


Unit Gross sales

 

Three Months Ended November 30

 

9 Months Ended November 30

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Used autos

180,050

 

227,424

 

(20.8

) %

 

637,939

 

730,020

 

(12.6

) %

Wholesale autos

118,757

 

187,630

 

(36.7

) %

 

464,741

 

557,117

 

(16.6

) %


Common Promoting Costs

 

Three Months Ended November 30

 

9 Months Ended November 30

 

 

2022

 

 

2021

 

Change

 

 

2022

 

 

2021

 

Change

Used autos

$

28,530

 

$

27,995

 

1.9

%

 

$

28,692

 

$

25,380

 

13.0

%

Wholesale autos

$

9,294

 

$

9,890

 

(6.0

) %

 

$

10,280

 

$

8,634

 

19.1

%


Automobile Gross sales Adjustments

 

Three Months Ended November 30

 

9 Months Ended November 30

 

2022

2021

 

2022

2021

Used automobile items

(20.8

) %

16.9

%

 

(12.6

) %

33.5

%

Used automobile revenues

(19.1

) %

52.9

%

 

(1.0

) %

64.2

%

 

 

 

 

 

 

Wholesale automobile items

(36.7

) %

48.5

%

 

(16.6

) %

72.7

%

Wholesale automobile revenues

(40.1

) %

132.1

%

 

(0.8

) %

151.1

%


Comparable Retailer Used Automobile Gross sales Adjustments

(1)

 

Three Months Ended November 30

 

9 Months Ended November 30

 

2022

2021

 

2022

2021

Used automobile items

(22.4

) %

15.8

%

 

(14.3

) %

32.5

%

Used automobile revenues

(21.0

) %

51.4

%

 

(3.2

) %

63.4

%


(1)
 

Shops are added to the comparable retailer base starting of their fourteenth full month of operation. Comparable retailer calculations embrace outcomes for a set of shops that had been included in our comparable retailer base in each the present and corresponding prior yr durations.


Used Automobile Financing Penetration by Channel (Earlier than the Affect of 3-day Payoffs)

(1)

 

Three Months Ended November 30

 

9 Months Ended November 30

 

2022

 

2021

 

2022

 

2021

CAF (2)

47.3

%

 

46.1

%

 

44.9

%

 

46.6

%

Tier 2 (3)

20.5

%

 

22.2

%

 

22.6

%

 

22.2

%

Tier 3 (4)

6.1

%

 

6.5

%

 

6.4

%

 

8.0

%

Different (5)

26.1

%

 

25.2

%

 

26.1

%

 

23.2

%

Whole

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%


(1)

Calculated as used automobile items financed for respective channel as a proportion of complete used items offered.


(2)

Contains CAF’s Tier 2 and Tier 3 mortgage originations, which signify roughly 1% of complete used items offered.


(3)

Third-party finance suppliers who typically pay us a price or to whom no price is paid.


(4)

Third-party finance suppliers to whom we pay a price.


(5)

Represents prospects arranging their very own financing and prospects that don’t require financing.


Chosen Working Ratios

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands)

2022
%

(1)

 

2021
%

(1)

 

2022
%

(1)

 

2021
%

(1)

Internet gross sales and working revenues

$

6,506.0

100.0

 

$

8,527.8

100.0

 

$

23,962.4

100.0

 

$

24,213.7

100.0

Gross revenue

$

576.7

8.9

 

$

836.6

9.8

 

$

2,189.2

9.1

 

$

2,576.6

10.6

CarMax Auto Finance revenue

$

152.2

2.3

 

$

166.0

1.9

 

$

539.5

2.3

 

$

607.7

2.5

Promoting, basic, and administrative bills

$

591.7

9.1

 

$

575.9

6.8

 

$

1,914.5

8.0

 

$

1,704.3

7.0

Curiosity expense

$

30.2

0.5

 

$

24.3

0.3

 

$

91.7

0.4

 

$

67.2

0.3

Earnings earlier than revenue taxes

$

50.0

0.8

 

$

356.0

4.2

 

$

554.2

2.3

 

$

1,291.1

5.3

Internet earnings

$

37.6

0.6

 

$

269.4

3.2

 

$

415.8

1.7

 

$

991.5

4.1


(1)

Calculated as a proportion of internet gross sales and working revenues.


Gross Revenue

(1)

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Used automobile gross revenue

$

402.8

 

$

508.4

 

(20.8

) %

 

$

1,461.3

 

$1,611.9

 

(9.3

) %

Wholesale automobile gross revenue

 

114.7

 

 

212.2

 

(46.0

) %

 

 

447.0

 

587.0

 

(23.9

) %

Different gross revenue

 

59.2

 

 

116.0

 

(49.0

) %

 

 

280.9

 

377.7

 

(25.6

) %

Whole

$

576.7

 

$

836.6

 

(31.1

) %

 

$

2,189.2

 

$2,576.6

 

(15.0

) %


(1)

Quantities are internet of intercompany eliminations.


Gross Revenue per Unit

(1)

 

Three Months Ended November 30

 

9 Months Ended November 30

 

2022

2021

 

2022

2021

 

$ per unit(2)

%(3)

$ per unit(2)

%(3)

 

$ per unit(2)

%(3)

$ per unit(2)

%(3)

Used automobile gross revenue

$

2,237

7.7

$

2,235

7.9

 

$

2,291

7.9

$

2,208

8.6

Wholesale automobile gross revenue

$

966

10.0

$

1,131

11.0

 

$

962

9.0

$

1,054

11.7

Different gross revenue

$

329

39.7

$

510

68.3

 

$

440

56.2

$

517

72.9

 (1)

Quantities are internet of intercompany eliminations. These eliminations had the impact of accelerating used automobile gross revenue per unit and wholesale automobile gross revenue per unit and reducing different gross revenue per unit by immaterial quantities.

 (2)

Calculated as class gross revenue divided by its respective items offered, besides the opposite class, which is split by complete used items offered.

 (3)

Calculated as a proportion of its respective gross sales or income.


SG&A Bills

(1)

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Compensation and advantages:

 

 

 

 

 

 

 

 

 

 

 

Compensation and advantages, excluding share-based compensation expense

$

306.2

 

 

$

308.3

 

 

(0.7

) %

 

$

985.2

 

 

$

891.8

 

 

10.5

%

Share-based compensation expense

 

17.2

 

 

 

33.3

 

 

(48.4

) %

 

 

64.0

 

 

 

100.5

 

 

(36.3

) %

Whole compensation and advantages (2)

$

323.4

 

 

$

341.6

 

 

(5.3

) %

 

$

1,049.2

 

 

$

992.3

 

 

5.7

%

Occupancy prices

 

70.1

 

 

 

59.3

 

 

18.2

%

 

 

204.8

 

 

 

165.0

 

 

24.2

%

Promoting expense

 

58.7

 

 

 

76.1

 

 

(22.9

) %

 

 

230.5

 

 

 

233.6

 

 

(1.3

) %

Different overhead prices (3)

 

139.5

 

 

 

98.9

 

 

41.0

%

 

 

430.0

 

 

 

313.4

 

 

37.2

%

Whole SG&A bills

$

591.7

 

 

$

575.9

 

 

2.7

%

 

$

1,914.5

 

 

$

1,704.3

 

 

12.3

%

SG&A as % of gross revenue

 

102.6

%

 

 

68.8

%

 

33.8

%

 

 

87.5

%

 

 

66.1

%

 

21.4

%


(1)

Quantities are internet of intercompany eliminations.


(2)

Excludes compensation and advantages associated to reconditioning and automobile restore service, that are included in value of gross sales.


(3)

Contains IT bills, non-CAF dangerous debt, insurance coverage, preopening and relocation prices, charitable contributions, journey and different administrative bills.


Elements of CAF Revenue and Different CAF Data

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands)

2022

%

(1)

2021

%

(1)

 

2022

%

(1)

2021

%

(1)

Curiosity margin:

 

 

 

 

 

 

 

 

 

Curiosity and price revenue

$

365.4

 

8.8

 

$

330.0

 

8.6

 

 

$

1,069.3

 

8.8

 

$

964.4

 

8.7

 

Curiosity expense

 

(88.8

)

(2.1

)

 

(53.6

)

(1.4

)

 

 

(200.1

)

(1.6

)

 

(180.0

)

(1.6

)

Whole curiosity margin

 

276.6

 

6.7

 

 

276.4

 

7.2

 

 

 

869.2

 

7.2

 

 

784.4

 

7.1

 

Provision for mortgage losses

 

(85.7

)

(2.1

)

 

(76.2

)

(2.0

)

 

 

(219.0

)

(1.8

)

 

(87.3

)

(0.8

)

Whole curiosity margin after provision for mortgage losses

 

190.9

 

4.6

 

 

200.2

 

5.2

 

 

 

650.2

 

5.4

 

 

697.1

 

6.3

 

Whole direct bills

 

(38.8

)

(0.9

)

 

(34.3

)

(0.9

)

 

 

(110.7

)

(0.9

)

 

(89.4

)

(0.8

)

CarMax Auto Finance revenue

$

152.2

 

3.7

 

$

166.0

 

4.3

 

 

$

539.5

 

4.4

 

$

607.7

 

5.5

 

 

 

 

 

 

 

 

 

 

 

Whole common managed receivables

$

16,540.2

 

 

$

15,288.8

 

 

 

$

16,177.8

 

 

$

14,706.9

 

 

Internet loans originated

$

2,147.2

 

 

$

2,420.3

 

 

 

$

6,928.0

 

 

$

7,276.1

 

 

Internet penetration charge

 

44.4

%

 

 

42.2

%

 

 

 

41.4

%

 

 

43.0

%

 

Weighted common contract charge

 

9.8

%

 

 

8.3

%

 

 

 

9.4

%

 

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

Ending allowance for mortgage losses

$

491.0

 

 

$

426.5

 

 

 

$

491.0

 

 

$

426.5

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse facility data:

 

 

 

 

 

 

 

 

 

Ending funded receivables

$

3,420.9

 

 

$

3,155.9

 

 

 

$

3,420.9

 

 

$

3,155.9

 

 

Ending unused capability

$

1,979.1

 

 

$

1,669.1

 

 

 

$

1,979.1

 

 

$

1,669.1

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized proportion of complete common managed receivables.


Earnings Highlights

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds of thousands besides per share information)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Internet earnings

$

37.6

 

$

269.4

 

(86.1

) %

 

$

415.8

 

$

991.5

 

(58.1

) %

Diluted weighted common shares excellent

 

158.5

 

 

164.9

 

(3.8

) %

 

 

160.2

 

 

165.6

 

(3.3

) %

Internet earnings per diluted share

$

0.24

 

$

1.63

 

(85.3

) %

 

$

2.60

 

$

5.99

 

(56.6

) %


Convention Name Data

We’ll host a convention name for buyers at 9:00 a.m. ET right now, December 22, 2022. Home buyers could entry the decision at 1-800-274-8461 (worldwide callers dial 1-203-518-9814). The convention I.D. for each home and worldwide callers is 3170513. A dwell webcast of the decision might be out there on our investor data house web page at buyers.carmax.com.

A replay of the webcast might be out there on the corporate’s web site at buyers.carmax.com by way of April 10, 2023, or by way of phone (for about one week) by dialing 1-800-723-0532 (or 1-402-220-2655 for worldwide entry) and coming into the convention ID 3170513.


Fourth Quarter Fiscal 2023 Earnings Launch Date

We at the moment plan to launch outcomes for the fourth quarter ending February 28, 2023, on Tuesday, April 11, 2023, earlier than the opening of buying and selling on the New York Inventory Change. We plan to host a convention name for buyers at 9:00 a.m. ET on that date. Data on this convention name might be out there on our investor data house web page at buyers.carmax.com in March 2023.


About CarMax

CarMax, the nation’s largest retailer of used autos, revolutionized the automotive retail {industry} by driving integrity, honesty and transparency in each interplay. The corporate presents a very customized expertise with the choice for purchasers to do as a lot, or as little, on-line and in-store as they need. CarMax additionally supplies a wide range of automobile supply strategies, together with house supply, categorical pickup and appointments in its shops. Throughout the fiscal yr ended February 28, 2022, CarMax offered roughly 924,000 used autos and 706,000 wholesale autos at its auctions. As well as, CarMax Auto Finance originated greater than $9 billion in receivables throughout fiscal 2022, including to its practically $16 billion portfolio. CarMax has greater than 230 shops, greater than 30,000 associates, and is proud to have been acknowledged for 18 consecutive years as one of many Fortune 100 Finest Corporations to Work For®. CarMax is dedicated to creating a constructive affect on individuals, communities and the atmosphere. Study extra within the 2022 Accountability Report. For extra data, go to www.carmax.com.


Ahead-Wanting Statements

We warning readers that the statements contained on this launch that aren’t statements of historic truth, together with statements about our future enterprise plans, operations, challenges, alternatives or prospects, together with with out limitation any statements or components relating to anticipated working capability, gross sales, stock, market share, monetary targets, income, margins, bills, liquidity, mortgage originations, capital expenditures, debt obligations or earnings, are forward-looking statements made pursuant to the secure harbor provisions of the Personal Securities Litigation Reform Act of 1995. You possibly can establish these forward-looking statements by means of phrases equivalent to “anticipate,” “imagine,” “may,” “estimate,” “anticipate,” “intend,” “could,” “outlook,” “plan,” “positioned,” “predict,” “ought to,” “goal,” “will” and different related expressions, whether or not within the unfavourable or affirmative. Such forward-looking statements are based mostly upon administration’s present information, expectations and assumptions and contain dangers and uncertainties that would trigger precise outcomes to vary materially from anticipated outcomes. Among the many components that would trigger precise outcomes and outcomes to vary materially from these contained within the forward-looking statements are the next:

  • The impact and penalties of the Coronavirus public well being disaster on issues together with U.S. and native economies; our enterprise operations and continuity; the supply of company and shopper financing; the well being and productiveness of our associates; the power of third-party suppliers to proceed uninterrupted service; and the regulatory atmosphere by which we function.
  • Adjustments on the whole or regional U.S. financial situations, together with inflationary pressures, climbing rates of interest and the potential affect of Russia’s invasion of Ukraine.
  • Adjustments within the availability or value of capital and dealing capital financing, together with modifications associated to the asset-backed securitization market.
  • Adjustments within the aggressive panorama and/or our failure to efficiently regulate to such modifications.
  • Occasions that injury our status or hurt the notion of the standard of our model.
  • Our incapability to understand the advantages related to our omni-channel initiatives and strategic investments.
  • Our incapability to recruit, develop and retain associates and keep constructive affiliate relations.
  • The lack of key associates from our retailer, regional or company administration groups or a major enhance in labor prices.
  • Safety breaches or different occasions that end result within the misappropriation, loss or different unauthorized disclosure of confidential buyer, affiliate or company data.
  • Vital modifications in costs of latest and used autos.
  • Adjustments in financial situations or different components that end in better credit score losses for CAF’s portfolio of auto loans receivable than anticipated.
  • A discount within the availability of or entry to sources of stock or a failure to expeditiously liquidate stock.
  • Adjustments in shopper credit score availability offered by our third-party finance suppliers.
  • Adjustments within the availability of prolonged safety plan merchandise from third-party suppliers.
  • Elements associated to the regulatory and legislative atmosphere by which we function.
  • Elements associated to geographic and gross sales progress, together with the lack to successfully handle our progress.
  • The failure of or incapability to sufficiently improve key data programs.
  • The efficiency of the third-party distributors we depend on for key elements of our enterprise.
  • The impact of assorted litigation issues.
  • Hostile situations affecting a number of automotive producers, and producer remembers.
  • The failure or incapability to understand the advantages related to our strategic transactions.
  • The inaccuracy of estimates and assumptions used within the preparation of our monetary statements, or the impact of latest accounting necessities or modifications to U.S. typically accepted accounting rules.
  • The volatility available in the market worth for our frequent inventory.
  • The failure or incapability to adequately shield our mental property.
  • The prevalence of extreme climate occasions.
  • Elements associated to the geographic focus of our shops.

For extra particulars on components that would have an effect on expectations, see our Annual Report on Kind 10-Ok for the fiscal yr ended February 28, 2022, and our quarterly or present studies as filed with or furnished to the U.S. Securities and Change Fee. Our filings are publicly out there on our investor data house web page at buyers.carmax.com. Requests for data can also be made to the Investor Relations Division by e-mail to [email protected] or by calling (804) 747-0422 x7865. We undertake no obligation to replace or revise any forward-looking statements after the date they’re made, whether or not on account of new data, future occasions or in any other case.


CARMAX, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF EARNINGS


(UNAUDITED)

 

Three Months Ended November 30

 

9 Months Ended November 30

(In hundreds besides per share information)

2022

%(1)

2021

%(1)

 

2022

 

%(1)

 

2021

 

%(1)

SALES AND OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

Used automobile gross sales

$

5,204,584

 

80.0

$

6,435,590

 

75.5

 

 

$

18,503,159

 

 

77.2

 

$

18,697,300

 

 

77.2

 

Wholesale automobile gross sales

 

1,152,207

 

17.7

 

1,922,283

 

22.5

 

 

 

4,959,050

 

 

20.7

 

 

4,998,212

 

 

20.6

 

Different gross sales and revenues

 

149,165

 

2.3

 

169,886

 

2.0

 

 

 

500,171

 

 

2.1

 

 

518,205

 

 

2.1

 

NET SALES AND OPERATING REVENUES

 

6,505,956

 

100.0

 

8,527,759

 

100.0

 

 

 

23,962,380

 

 

100.0

 

 

24,213,717

 

 

100.0

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

 

Used automobile value of gross sales

 

4,801,790

 

73.8

 

5,927,237

 

69.5

 

 

 

17,041,898

 

 

71.1

 

 

17,085,416

 

 

70.6

 

Wholesale automobile value of gross sales

 

1,037,534

 

15.9

 

1,710,103

 

20.1

 

 

 

4,512,053

 

 

18.8

 

 

4,411,175

 

 

18.2

 

Different value of gross sales

 

89,944

 

1.4

 

53,859

 

0.6

 

 

 

219,205

 

 

0.9

 

 

140,573

 

 

0.6

 

TOTAL COST OF SALES

 

5,929,268

 

91.1

 

7,691,199

 

90.2

 

 

 

21,773,156

 

 

90.9

 

 

21,637,164

 

 

89.4

 

GROSS PROFIT

 

576,688

 

8.9

 

836,560

 

9.8

 

 

 

2,189,224

 

 

9.1

 

 

2,576,553

 

 

10.6

 

CARMAX AUTO FINANCE INCOME

 

152,196

 

2.3

 

165,968

 

1.9

 

 

 

539,538

 

 

2.3

 

 

607,732

 

 

2.5

 

Promoting, basic, and administrative bills

 

591,727

 

9.1

 

575,930

 

6.8

 

 

 

1,914,508

 

 

8.0

 

 

1,704,285

 

 

7.0

 

Depreciation and amortization

 

57,377

 

0.9

 

54,428

 

0.6

 

 

 

170,717

 

 

0.7

 

 

157,107

 

 

0.6

 

Curiosity expense

 

30,150

 

0.5

 

24,303

 

0.3

 

 

 

91,670

 

 

0.4

 

 

67,247

 

 

0.3

 

Different revenue

 

(363

)

 

(8,094

)

(0.1

)

 

 

(2,303

)

 

 

 

(35,453

)

 

(0.1

)

Earnings earlier than revenue taxes

 

49,993

 

0.8

 

355,961

 

4.2

 

 

 

554,170

 

 

2.3

 

 

1,291,099

 

 

5.3

 

Revenue tax provision

 

12,413

 

0.2

 

86,523

 

1.0

 

 

 

138,420

 

 

0.6

 

 

299,638

 

 

1.2

 

NET EARNINGS

$

37,580

 

0.6

$

269,438

 

3.2

 

 

$

415,750

 

 

1.7

 

$

991,461

 

 

4.1

 

WEIGHTED AVERAGE COMMON SHARES:

 

 

 

 

 

 

 

 

 

 

 

 

Primary

 

158,003

 

 

 

162,006

 

 

 

 

159,044

 

 

 

 

 

162,710

 

 

 

Diluted

 

158,536

 

 

 

164,873

 

 

 

 

160,195

 

 

 

 

 

165,606

 

 

 

NET EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

Primary

$

0.24

 

 

$

1.66

 

 

 

$

2.61

 

 

 

 

$

6.09

 

 

 

Diluted

$

0.24

 

 

$

1.63

 

 

 

$

2.60

 

 

 

 

$

5.99

 

 

 


(1)

Percents are calculated as a proportion of internet gross sales and working revenues and should not complete attributable to rounding. 


CARMAX, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


(UNAUDITED)

 

 

As of

 

November 30

 

February 28

 

November 30

(In hundreds besides share information)

2022

 

2022

 

 

2021

 

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Money and money equivalents

$

688,618

 

$

102,716

 

 

$

62,598

 

 

Restricted money from collections on auto loans receivable

 

466,525

 

 

548,099

 

 

 

552,487

 

 

Accounts receivable, internet

 

246,794

 

 

560,984

 

 

 

563,135

 

 

Stock

 

3,414,937

 

 

5,124,569

 

 

 

4,659,460

 

 

Different present property

 

167,143

 

 

212,922

 

 

 

117,390

 

 

TOTAL CURRENT ASSETS 

 

4,984,017

 

 

6,549,290

 

 

 

5,955,070

 

 

Auto loans receivable, internet

 

16,240,832

 

 

15,289,701

 

 

 

15,167,170

 

 

Property and gear, internet

 

3,375,001

 

 

3,209,068

 

 

 

3,175,577

 

 

Deferred revenue taxes

 

87,262

 

 

120,931

 

 

 

134,382

 

 

Working lease property

 

529,781

 

 

537,357

 

 

 

543,645

 

 

Goodwill

 

141,258

 

 

141,258

 

 

 

141,258

 

 

Different property

 

580,790

 

490,659

 

 

 

458,117

 

 

TOTAL ASSETS

$

25,938,941

 

$

26,338,264

 

$

25,575,219

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

$

802,780

 

$

937,717

 

 

$

936,556

 

 

Accrued bills and different present liabilities

 

496,202

 

 

533,271

 

 

 

530,592

 

 

Accrued revenue taxes

 

 

 

 

 

 

518

 

 

Present portion of working lease liabilities

 

51,215

 

 

44,197

 

 

 

43,151

 

 

Present portion of long-term debt

 

112,708

 

 

11,203

 

 

 

10,889

 

 

Present portion of non-recourse notes payable

 

474,147

 

 

521,069

 

 

 

535,146

 

 

TOTAL CURRENT LIABILITIES 

 

1,937,052

 

 

2,047,457

 

 

 

2,056,852

 

 

Lengthy-term debt, excluding present portion

 

1,903,223

 

 

3,255,304

 

 

 

2,602,598

 

 

Non-recourse notes payable, excluding present portion

 

15,737,459

 

 

14,919,715

 

 

 

14,856,266

 

 

Working lease liabilities, excluding present portion

 

509,106

 

 

523,269

 

 

 

529,821

 

 

Different liabilities

 

364,528

 

 

357,080

 

 

 

419,886

 

 

TOTAL LIABILITIES

 

20,451,368

 

 

21,102,825

 

 

 

20,465,423

 

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Widespread inventory, $0.50 par worth; 350,000,000 shares approved; 158,019,398 and 161,053,983 shares issued and excellent as of November 30, 2022 and February 28, 2022, respectively

 

79,010

 

 

80,527

 

 

 

80,936

 

 

Capital in extra of par worth

 

1,697,062

 

 

1,677,268

 

 

 

1,672,728

 

 

Collected different complete revenue (loss)

 

57,420

 

 

(46,422

)

 

 

(100,301

)

 

Retained earnings

 

3,654,081

 

 

3,524,066

 

 

 

3,456,433

 

 

TOTAL SHAREHOLDERS’ EQUITY

 

5,487,573

 

 

5,235,439

 

 

 

5,109,796

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

25,938,941

 

$

26,338,264

 

 

$

25,575,219


CARMAX, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)

 

9 Months Ended November 30

(In hundreds)

2022

 

2021

OPERATING ACTIVITIES:

 

 

 

Internet earnings

$

            415,750

 

 

$

            991,461

 

Changes to reconcile internet earnings to internet money offered by (utilized in) working actions:

 

 

 

Depreciation and amortization

 

              202,655

 

 

 

               200,819

 

Share-based compensation expense

 

                64,974

 

 

 

               108,962

 

Provision for mortgage losses

 

              218,967

 

 

 

                 87,342

 

Provision for cancellation reserves

 

                79,924

 

 

 

                 91,607

 

Deferred revenue tax (profit) provision

 

                 (2,178

)

 

 

                 19,564

 

Different

 

                   8,879

 

 

 

               (26,808

)

Internet lower (enhance) in:

 

 

 

Accounts receivable, internet

 

              314,190

 

 

 

             (290,346

)

Stock

 

           1,709,632

 

 

 

         (1,502,323

)

Different present property

 

              149,777

 

 

 

               (13,615

)

Auto loans receivable, internet

 

         (1,170,098

)

 

 

         (1,764,693

)

Different property

 

               (43,502

)

 

 

               (18,309

)

Internet (lower) enhance in:

 

 

 

Accounts payable, accrued bills and different

 

 

 

  present liabilities and accrued revenue taxes

 

            (195,154

)

 

 

               170,474

 

Different liabilities

 

               (91,739

)

 

 

             (136,780

)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

           1,662,077

 

 

 

         (2,082,645

)

INVESTING ACTIVITIES:

 

 

 

Capital expenditures

 

            (319,486

)

 

 

             (226,903

)

Proceeds from disposal of property and gear

 

                   3,806

 

 

 

                      260

 

Proceeds from sale of enterprise

 

                        —

 

 

 

                 12,284

 

Purchases of investments

 

                 (6,460

)

 

 

               (13,676

)

Gross sales and returns of investments

 

                   3,486

 

 

 

                 36,915

 

Enterprise acquisition, internet of money acquired

 

                        —

 

 

 

             (241,563

)

NET CASH USED IN INVESTING ACTIVITIES

 

            (318,654

)

 

 

             (432,683

)

FINANCING ACTIVITIES:

 

 

 

Proceeds from issuances of long-term debt

 

           2,863,500

 

 

 

           5,804,200

 

Funds on long-term debt

 

         (4,116,775

)

 

 

         (4,524,973

)

Money paid for debt issuance prices

 

               (13,987

)

 

 

               (14,473

)

Funds on finance lease obligations

 

               (10,056

)

 

 

                 (8,822

)

Issuances of non-recourse notes payable

 

         11,351,696

 

 

 

         11,217,298

 

Funds on non-recourse notes payable

 

       (10,581,076

)

 

 

         (9,565,649

)

Repurchase and retirement of frequent inventory

 

            (333,814

)

 

 

             (475,950

)

Fairness issuances

 

                13,504

 

 

 

                 76,310

 

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

            (827,008

)

 

 

           2,507,941

 

Improve (lower) in money, money equivalents, and restricted money

 

              516,415

 

 

 

                 (7,387

)

Money, money equivalents, and restricted money at starting of yr

 

              803,618

 

 

 

               771,947

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

$

         1,320,033

 

 

$

            764,560

 

Carmax Experiences Third Quarter Fiscal 2023 Outcomes

Supply: CarMax, Inc.

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