CarMax, Inc. (NYSE:KMX) today reported results for the second
quarter ended August 31, 2016.
- Net sales and operating revenues
increased 2.9% to $4.00 billion.
- Used unit sales in comparable stores
increased 3.1%.
- Total used unit sales rose 7.0%.
- Total wholesale unit sales declined
1.3%.
- CarMax Auto Finance (CAF) income
declined 2.4% to $96.0 million.
- Net earnings declined
$9.9 million, or 5.7%, to $162.4 million, while net earnings
per diluted share rose 2.4% to $0.84. Net earnings for this year’s
second quarter was reduced by $6.8 million, net of tax, or
$0.04 per diluted share, related to the modification of equity
awards held by our recently retired chief executive officer. As
previously disclosed, net earnings for last year’s second quarter
was increased by $6.4 million, net of tax, or $0.03 per diluted
share, related to a change in timing of our recognition of
reconditioning overhead costs.
Second Quarter Business Performance
Review
Sales. Total used vehicle
unit sales grew 7.0% and comparable store used unit sales rose 3.1%
versus the prior year’s second quarter. The comparable store sales
performance reflected a solid increase in conversion that was
partially offset by a decrease in store traffic. Our sales
performance included a reduction in the Tier 3 sales mix to 9.5% of
used unit sales from 13.7% in the prior year’s second quarter. Tier
3 sales represent those financed by our Tier 3 third-party finance
providers (those to whom we pay a fee) and those in CAF’s Tier 3
loan origination activity. For the non-Tier 3 customer base,
comparable store used unit sales rose 8.1%.
Wholesale vehicle unit sales declined 1.3% versus the second
quarter of fiscal 2016. Compared with the second quarter of last
year, we had a calendar shift that resulted in one fewer Monday
auction date, and the majority of our wholesale auctions are held
on Mondays. Excluding the effect of the calendar shift, we estimate
this year’s wholesale vehicle units would have increased 1.4%
versus last year’s quarter.
Other sales and revenues declined 4.8% compared with the second
quarter of fiscal 2016, primarily reflecting a decrease in new
vehicle sales due to the disposal of two of our four new car
franchises during fiscal 2016. Extended protection plan (EPP)
revenues increased 17.1%, reflecting the growth in our used unit
sales and pricing changes. In addition, last year’s EPP revenues
were reduced by an increase in estimated cancellation reserves. Net
third-party finance fees improved by 43.3%, primarily due to the
reduced proportion of our sales attributable to Tier 3 finance
providers.
Gross Profit. Total gross
profit increased 4.6% versus last year’s second quarter, to
$545.4 million. Used vehicle gross profit rose 6.7%, driven by
the 7.0% increase in total used unit sales. Used vehicle gross
profit per unit was consistent at $2,160 versus $2,166 in the prior
year period. Wholesale vehicle gross profit declined 9.7% versus
the prior year’s quarter, reflecting the 1.3% decline in wholesale
unit sales and a decrease in wholesale vehicle gross profit per
unit to $870 from $951. Other gross profit increased 13.6%,
primarily reflecting the improvement in EPP revenues and net
third-party finance fees, partially offset by the effect of the
$10.4 million favorable adjustment to service department gross
profits recorded in last year’s second quarter. This adjustment
resulted from a change in timing of our recognition of
reconditioning overhead costs. The decrease in new vehicle sales
did not significantly affect other gross profit.
SG&A. Compared with the
second quarter of fiscal 2016, SG&A expenses increased 10.7% to
$366.1 million. The growth reflected the 11% increase in
our store base since the beginning of last year’s second quarter
(representing the addition of 16 stores) and a $17.7 million
increase in share-based compensation expense, partially offset by a
$9.7 million year-over-year decrease in the accrual for the
company’s incentive pay. This year’s second quarter share-based
compensation expense included $10.9 million related to a
modification by the Board of Directors of certain equity awards
previously granted to our recently retired chief executive officer.
As a result of the modification, Mr. Folliard was effectively
provided retirement treatment under the terms of the awards,
notwithstanding the fact that he was not yet 55 years old. No
changes were made to the original vesting schedules, termination
dates or strike prices of his awards. SG&A per used unit was
$2,187 in the current quarter, up $74 year-over-year. The increase
in share-based compensation expense increased SG&A per unit by
$102.
CarMax Auto
Finance.(1) Compared with last year’s second
quarter, CAF income declined 2.4% to $96.0 million. The
decline was due to an increase in the provision for loan losses and
a lower total interest margin percentage, partially offset by the
effects of the growth in average managed receivables. The increase
in the provision for loan losses reflected the combined effects of
some unfavorable loss experience in the current year’s quarter and
the growth in managed receivables. Average managed receivables grew
11.7% to $10.05 billion. The total interest margin, which
reflects the spread between interest and fees charged to consumers
and our funding costs, declined to 5.9% of average managed
receivables from 6.2% in last year’s second quarter. The total
interest margin has now been at 5.9% for three consecutive
quarters. The allowance for loan losses as a percentage of ending
managed receivables was 1.08% as of August 31, 2016, compared
with 0.96% as of August 31, 2015, and 1.05% as of May 31,
2016.
During the second quarter of fiscal 2017, we entered into a new
$100 million warehouse facility that will be used to fund CAF’s
Tier 3 loan origination activity. This facility has a one year
term, expiring August 1, 2017.
Interest Expense. Interest
expense rose to $13.9 million in the second quarter of fiscal 2017
from $7.5 million in the prior year’s quarter. The increase
reflected the combination of planned higher average outstanding
debt levels in fiscal 2017 as part of our capital structure
strategy, as well as growth in our finance and capital lease
obligations, which resulted from the extension of select store
leases beyond their original term.
Store Openings. During the
second quarter of fiscal 2017, we opened three stores, including
two stores in new markets (El Paso, Texas, and Bristol, Tennessee)
and one in an existing market (our third store in Boston,
Massachusetts). Subsequent to the end of the quarter, we entered
the Boise, Idaho, market with one store.
Share Repurchase Activity.
During the second quarter of fiscal 2017, we repurchased 2.4
million shares of common stock for $125.8 million pursuant to
our share repurchase program. As of August 31, 2016, we had
$1.89 billion remaining available for repurchase under the
program.
(1)
Although CAF benefits from certain
indirect overhead expenditures, we have not allocated indirect
costs to CAF to avoid making subjective allocation decisions.
Supplemental Financial
InformationAmounts and percentage calculations may not
total due to rounding.
Sales Components
Three Months Ended August 31 Six
Months Ended August 31 (In millions)
2016
2015 Change 2016
2015 Change Used vehicle sales $ 3,300.8
$ 3,150.2 4.8 % $ 6,729.8 $ 6,442.9 4.5
% Wholesale vehicle sales 560.4 591.8 (5.3 )% 1,128.1 1,168.4 (3.4
)% Other sales and revenues: Extended protection plan revenues 75.1
64.1 17.1 % 151.3 135.8 11.4 % Third-party finance fees, net (8.3 )
(14.6 ) 43.3 % (20.2 ) (31.6 ) 36.0 % Other (1) 69.2
93.4 (25.9 )%
134.6 184.3 (27.0 )% Total other
sales and revenues 136.0 142.9
(4.8 )% 265.7
288.5 (7.9 )% Total net sales and operating revenues
$ 3,997.2 $ 3,884.9 2.9 %
$ 8,123.6 $ 7,899.8 2.8 %
(1)
Includes service department and new
vehicle sales. In the fourth quarter of fiscal 2016, we
reclassified new vehicle sales to other sales and revenues and no
longer present new vehicle sales. Prior period amounts have been
revised for this new presentation.
Unit Sales
Three Months Ended
August 31 Six Months Ended August 31
2016 2015 Change
2016 2015 Change Used vehicles
167,412 156,516 7.0 % 338,488 321,026 5.4 % Wholesale vehicles
105,108 106,522 (1.3 )% 208,570 208,152 0.2 %
Average Selling Prices
Three Months Ended
August 31 Six Months Ended August 31
2016 2015 Change
2016 2015 Change Used vehicles $
19,530 $ 19,983 (2.3 )% $ 19,696 $ 19,915 (1.1 )% Wholesale
vehicles $ 5,119 $ 5,336 (4.1 )% $ 5,193 $ 5,391 (3.7 )%
Vehicle Sales Changes
Three Months EndedAugust
31
Six Months EndedAugust
31
2016 2015 2016
2015 Used vehicle units 7.0 % 9.2 % 5.4 % 9.2 % Used
vehicle revenues 4.8 % 7.9 % 4.5 % 7.7 % Wholesale vehicle
units (1.3 )% 8.7 % 0.2 % 6.7 % Wholesale vehicle revenues (5.3 )%
11.6 % (3.4 )% 8.6 %
Comparable Store Used Vehicle Sales
Changes (1)
Three Months EndedAugust
31
Six Months EndedAugust
31
2016 2015 2016
2015 Used vehicle units 3.1 % 4.6 % 1.6 % 4.8 % Used
vehicle revenues 0.9 % 3.3 % 0.6 % 3.3 %
(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.
Selected Operating
Ratios
Three
Months Ended August 31 Six Months Ended August 31 (In
millions)
2016 % (1)
2015
% (1)
2016 % (1)
2015 % (1) Net sales and operating revenues $
3,997.2 100.0 $ 3,884.9 100.0 $ 8,123.6 100.0 $ 7,899.8 100.0 Gross
profit $ 545.4 13.6 $ 521.4 13.4 $ 1,118.0 13.8 $ 1,065.2 13.5
CarMax Auto Finance income $ 96.0 2.4 $ 98.3 2.5 $ 196.7 2.4 $
207.4 2.6
Selling, general, and administrative
expenses
$ 366.1 9.2 $ 330.8 8.5 $ 746.4 9.2 $ 680.6 8.6 Interest expense $
13.9 0.3 $ 7.5 0.2 $ 25.0 0.3 $ 14.6 0.2 Earnings before income
taxes $ 261.7 6.5 $ 279.8 7.2 $ 544.4 6.7 $ 575.8 7.3 Net earnings
$ 162.4 4.1 $ 172.2 4.4 $ 337.7 4.2 $ 354.2 4.5
(1)
Calculated as a percentage of net sales
and operating revenues.
Gross Profit
Three Months Ended
August 31 Six Months Ended August 31 (In millions)
2016 2015 Change
2016 2015 Change Used vehicle
gross profit $ 361.7 $ 338.9 6.7 % $ 738.3 $ 700.8 5.3 % Wholesale
vehicle gross profit 91.5 101.3 (9.7 )% 194.4 206.2 (5.7 )% Other
gross profit 92.2 81.2 13.6 %
185.3 158.2 17.1 % Total
$ 545.4 $ 521.4 4.6 % $ 1,118.0 $
1,065.2 5.0 %
Gross Profit per Unit
Three Months Ended August 31 Six
Months Ended August 31 2016
2015 2016 2015 $
per unit(1) %(2) $ per unit(1) %(2) $
per unit(1) %(2) $ per unit(1) %(2) Used
vehicle gross profit $ 2,160 11.0 $ 2,166 10.8
$ 2,181 11.0 $ 2,183 10.9 Wholesale vehicle
gross profit $ 870 16.3 $ 951 17.1 $ 932 17.2 $ 990 17.6 Other
gross profit $ 551 67.8 $ 519 56.8 $ 547 69.7 $ 493 54.8 Total
gross profit $ 3,258 13.6 $ 3,331 13.4 $ 3,303 13.8 $ 3,318 13.5
(1)
Calculated as category gross profit
divided by each category’s respective units sold, except the other
and total categories, which are calculated by dividing their
respective gross profit by used units sold.
(2)
Calculated as a percentage of its
respective sales or revenue.
SG&A Expenses
Three Months Ended
August 31 Six Months Ended August 31 (In millions)
2016 2015 Change
2016 2015 Change
Compensation and benefits (1)
$ 199.3 $ 180.3 10.5 % $ 415.9 $ 382.1 8.8 % Store occupancy costs
75.1 68.6 9.5 % 146.8 133.9 9.6 % Advertising expense 34.5 34.8
(0.9 )% 69.3 68.5 1.2 % Other overhead costs (2) 57.2
47.1 21.4 % 114.4
96.1 19.0 % Total SG&A expenses $
366.1 $ 330.8 10.7 % $ 746.4 $
680.6 9.7 % SG&A per used unit $ 2,187 $ 2,113 $
74 $ 2,205 $ 2,120 $ 85
(1)
Excludes compensation and benefits related
to reconditioning and vehicle repair service, which are included in
cost of sales.
(2)
Includes IT expenses, insurance, non-CAF
bad debt, travel, preopening and relocation costs, charitable
contributions and other administrative expenses.
Components of CAF Income and Other CAF
Information
Three
Months Ended August 31 Six Months Ended August 31 (In
millions)
2016 % (1)
2015
% (1)
2016 % (1)
2015 % (1) Interest margin: Interest and fee
income
$ 190.2 7.6 $ 169.8 7.6
$ 374.3
7.6 $ 334.6 7.6 Interest expense
(41.8
) (1.7 ) (30.8 ) (1.4 )
(81.2 ) (1.6 ) (58.8 )
(1.3 ) Total interest margin
148.4 5.9 139.0 6.2
293.1 5.9 275.8 6.2 Provision for loan losses
(35.7 ) (1.4 ) (25.6 )
(1.1 )
(62.3 ) (1.3 )
(39.2 ) (0.9 )
Total interest margin after provision for
loan losses
112.7 4.5 113.4 5.1
230.8 4.7 236.6 5.4 Total
other expense
— — (0.1 ) —
— — (0.1 ) —
Total direct expenses
(16.7 )
(0.7 ) (15.0 ) (0.7 )
(34.1 ) (0.7 ) (29.1 )
(0.7 ) CarMax Auto Finance income
$ 96.0
3.8 $ 98.3 4.4
$ 196.7 4.0 $
207.4 4.7 Total average managed
receivables
$ 10,049.8 $ 8,993.9
$
9,897.4 $ 8,829.3 Net loans originated
$
1,435.3 $ 1,323.5
$ 2,878.7 $ 2,688.1 Net CAF
penetration rate
45.3 % 43.3 %
44.6 %
43.0 % Weighted average contract rate
7.4 % 7.2 %
7.5 % 7.3 % Ending allowance for loan losses
$ 109.7 $ 87.8
$ 109.7 $ 87.8
Warehouse facility information: Ending funded receivables
$
1,697.0 $ 1,243.0
$ 1,697.0 $ 1,243.0 Ending
unused capacity
$ 1,103.0 $ 1,257.0
$
1,103.0 $ 1,257.0
(1)
Percentage of total average managed
receivables (quarterly amounts are annualized).
Earnings Highlights
Three Months Ended
August 31 Six Months Ended August 31 (In millions except
per share data)
2016 2015
Change 2016 2015
Change Net earnings $ 162.4 $ 172.2 (5.7 )% $ 337.7 $ 354.2
(4.7 )% Diluted weighted average shares outstanding 193.6 209.6
(7.6 )% 194.4 210.6 (7.7 )% Net earnings per diluted share $ 0.84 $
0.82 2.4 % $ 1.74 $ 1.68 3.6 %
Planned Store Openings
We currently plan to open the following stores within 12 months
from August 31, 2016:
Location Television
Market
MarketStatus
Planned Opening Date Meridian, Idaho (1) Boise New Q3
Fiscal 2017 Maple Shade, New Jersey Philadelphia Existing Q3 Fiscal
2017 Daytona Beach, Florida Orlando/Daytona Beach Existing Q3
Fiscal 2017 Kentwood, Michigan Grand Rapids/Kalamazoo New Q3 Fiscal
2017 Fremont, California San Francisco/Oakland/San Jose Existing Q3
Fiscal 2017 Santa Rosa, California San Francisco/Oakland/San Jose
Existing Q3 Fiscal 2017 Palmdale, California Los Angeles Existing
Q4 Fiscal 2017 Murrieta, California Los Angeles Existing Q4 Fiscal
2017 Mobile, Alabama Mobile/Pensacola New Q4 Fiscal 2017 Albany,
New York Albany New Q4 Fiscal 2017 Puyallup, Washington
Seattle/Tacoma New Q1 Fiscal 2018 Lynnwood, Washington
Seattle/Tacoma Existing Q1 Fiscal 2018 Pensacola, Florida
Mobile/Pensacola Existing Q1 Fiscal 2018 Waterbury, Connecticut
Hartford/New Haven Existing Q2 Fiscal 2018 San Jose, California San
Francisco/Oakland/San Jose Existing Q2 Fiscal 2018 Salisbury,
Maryland Salisbury New Q2 Fiscal 2018
(1)
Store opened in September 2016.
Normal construction, permitting or other scheduling delays could
shift the opening dates of any of these stores into a later period.
We plan to open 15 stores in fiscal 2017 and between 13 and 16
stores in fiscal 2018. We currently estimate capital expenditures
will total approximately $450 million in fiscal 2017.
Conference Call
Information
We will host a conference call for investors at 9:00 a.m. ET
today, September 21, 2016. Domestic investors may access the call
at 1-888-298-3261 (international callers dial 1-706-679-7457). The
conference I.D. for both domestic and international callers is
24693784. A live webcast of the call will be available on our
investor information home page at investors.carmax.com.
A webcast replay of the call will be available at
investors.carmax.com through December 19, 2016. A telephone replay
also will be available through September 28, 2016, and may be
accessed by dialing 1-855-859-2056 (international callers dial
1-404-537-3406). The conference I.D. for both domestic and
international callers is 24693784.
Third Quarter Fiscal 2017 Earnings
Release Date
We currently plan to release results for the third quarter
ending November 30, 2016, on Tuesday, December 20, 2016,
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 2016.
About CarMax
CarMax is the nation’s largest retailer of used cars and
operates more than 160 stores in 38 states nationwide. CarMax
revolutionized the auto industry by delivering the honest,
transparent and high-integrity car buying experience customers want
and deserve. For more than 20 years, CarMax has made car buying
more ethical, fair and stress-free by offering a no-haggle,
no-hassle experience and an incredible selection of vehicles.
CarMax makes selling your car easy too, by offering no-obligation
appraisals good for seven days. At CarMax, we’ll buy your car even
if you don’t buy ours®. CarMax has more than 22,000 associates
nationwide and for 12 consecutive years has been named as one of
the Fortune 100 Best Companies to Work For®. During the
twelve months ended February 29, 2016, the company retailed 619,936
used vehicles and sold 394,437 wholesale vehicles at its in-store
auctions. For more information, access the CarMax website at
www.carmax.com.
Forward-Looking
Statements
We caution readers that the statements contained in this release
about our future business plans, operations, opportunities or
prospects, including without limitation any statements or factors
regarding expected sales, margins, expenses, capital expenditures,
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 use of words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“outlook,” “plan,” “predict,” “should,” “will” and other similar
expressions, whether in the negative or affirmative. Such
forward-looking statements are based upon management’s current
knowledge and assumptions about future events and involve risks and
uncertainties that could cause actual results to differ materially
from anticipated results. Among the factors that could cause actual
results and outcomes to differ materially from those contained in
the forward-looking statements are the following:
- Changes in 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.
- 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 consumer credit availability
provided by our third-party financing providers.
- Changes in the availability of extended
protection plan products from third-party providers.
- 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 or associate information.
- 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.
- Factors related to the regulatory and
legislative environment in which we operate.
- Factors related to geographic growth,
including the inability to acquire or lease suitable real estate at
favorable terms or to effectively manage our growth.
- The failure of key information
systems.
- The effect of various litigation
matters.
- 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.
- Factors related to seasonal
fluctuations in our business.
- The occurrence of severe weather
events.
- Factors related to the geographic
concentration of our stores.
For more details on factors that could affect expectations, see
our Annual Report on Form 10-K for the fiscal year ended February
29, 2016, 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 1-804-747-0422 ext.
4391. 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.
CARMAX, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended August 31 Six
Months Ended August 31 (In thousands except per share data)
2016
% (1)
2015 % (1)
2016
% (1)
2015 % (1)
SALES AND
OPERATING REVENUES:
Used vehicle sales
$ 3,300,814 82.6 $
3,150,220 81.1
$ 6,729,788 82.8 $ 6,442,878
81.6 Wholesale vehicle sales
560,402 14.0 591,774
15.2
1,128,143 13.9 1,168,399 14.8 Other sales and
revenues
136,032 3.4
142,919 3.7
265,703
3.3 288,524 3.7
NET
SALES AND OPERATING REVENUES 3,997,248 100.0
3,884,913 100.0
8,123,634 100.0 7,899,801 100.0 Cost
of sales
3,451,886 86.4
3,363,543 86.6
7,005,635
86.2 6,834,637 86.5
GROSS PROFIT 545,362 13.6 521,370 13.4
1,117,999 13.8 1,065,164 13.5
CARMAX AUTO FINANCE
INCOME 95,969 2.4 98,279 2.5
196,727
2.4 207,387 2.6 Selling, general and administrative expenses
366,126 9.2 330,784 8.5
746,356 9.2
680,563 8.6 Interest expense
13,904 0.3 7,450 0.2
24,992 0.3 14,553 0.2 Other (income) expense
(435 ) — 1,593
—
(1,051 ) —
1,634 — Earnings before income taxes
261,736 6.5 279,822 7.2
544,429 6.7
575,801 7.3 Income tax provision
99,374
2.5 107,594 2.8
206,707 2.5 221,599
2.8
NET EARNINGS $ 162,362
4.1 $ 172,228 4.4
$ 337,722 4.2 $ 354,202
4.5
WEIGHTED AVERAGE COMMON SHARES: Basic
191,539 207,249
192,534 207,969 Diluted
193,623 209,648
194,437 210,645
NET EARNINGS PER
SHARE: Basic
$ 0.85 $ 0.83
$ 1.75 $
1.70 Diluted
$ 0.84 $ 0.82
$ 1.74 $
1.68
(1)
Percents are calculated as a percentage of
net sales and operating revenues and may not equal totals due to
rounding.
CARMAX, INC. AND
SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
As of August 31
February 29 August 31 (In thousands except
share data)
2016
2016 (1)
2015 (1) (2)
ASSETS CURRENT ASSETS: Cash and cash equivalents
$ 316,031 $ 37,394 $ 100,477 Restricted cash from
collections on auto loan receivables
380,663 343,829 335,075
Accounts receivable, net
94,577 132,171 100,832 Inventory
1,918,803 1,932,029 1,911,549 Other current assets
45,273 26,358
45,459
TOTAL CURRENT ASSETS
2,755,347 2,471,781 2,493,392 Auto loan receivables, net
10,131,378 9,536,892 9,116,512 Property and equipment, net
2,326,178 2,161,698 2,016,520 Deferred income taxes
152,840 161,862 177,002 Other assets
138,589 127,678
127,497
TOTAL ASSETS $
15,504,332 $ 14,459,911 $
13,930,923
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable
$
486,943 $ 441,746 $ 453,864 Accrued expenses and other
current liabilities
246,053 245,909 226,371 Accrued income
taxes
205 2,029 1,169 Short-term debt
361 428 2,122
Current portion of finance and capital lease obligations
13,145 14,331 21,584 Current portion of non-recourse
notes payable
337,656
300,750 296,867
TOTAL CURRENT
LIABILITIES 1,084,363 1,005,193 1,001,977 Long-term
debt, excluding current portion
797,357 713,910 298,802
Finance and capital lease obligations, excluding current portion
427,273 400,323 357,825 Non-recourse notes payable,
excluding current portion
9,906,016 9,206,425 8,835,783
Other liabilities
226,978
229,274 225,552
TOTAL
LIABILITIES 12,441,987
11,555,125 10,719,939
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000 shares authorized;
191,079,104 and 194,712,234 shares issued and outstanding as of
August 31, 2016 and February 29, 2016, respectively
95,540
97,356 102,465 Capital in excess of par value
1,175,166
1,130,822 1,161,678 Accumulated other comprehensive loss
(66,582 ) (70,196 ) (66,149 ) Retained
earnings
1,858,221
1,746,804 2,012,990
TOTAL
SHAREHOLDERS’ EQUITY 3,062,345
2,904,786 3,210,984
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 15,504,332 $ 14,459,911
$ 13,930,923
(1)
In connection with our adoption of
Financial Accounting Standards Board (“FASB”) ASU 2015-3 during the
first quarter of fiscal 2017, debt issuance costs have been
reclassified from other assets to a reduction of the carrying
amount of the related debt liability. Prior period amounts have
been reclassified to conform to the current period’s
presentation.
(2)
In connection with our adoption of FASB
ASU 2015-17 during the fourth quarter of fiscal 2016, current
deferred tax assets have been reclassified to noncurrent assets.
Prior period amounts have been reclassified to conform to the
current period’s presentation.
CARMAX, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended August 31 (In thousands)
2016 2015 OPERATING ACTIVITIES:
Net earnings
$ 337,722 $ 354,202
Adjustments to reconcile net earnings to
net cash used in operating activities:
Depreciation and amortization
83,013 65,188 Share-based
compensation expense
60,561 33,506 Provision for loan losses
62,349 39,244 Provision for cancellation reserves
35,893 42,459 Deferred income tax provision (benefit)
6,728 (738 ) Other
302 1,810 Net decrease (increase)
in: Accounts receivable, net
37,594 36,858 Inventory
13,226 175,325 Other current assets
(16,993 )
(1,923 ) Auto loan receivables, net
(656,835 )
(720,252 ) Other assets
732 371 Net increase (decrease) in:
Accounts payable, accrued expenses and
other current liabilities and accrued income taxes
46,114 (58,705 ) Other liabilities
(50,247 ) (52,089 )
NET CASH USED IN
OPERATING ACTIVITIES (39,841 )
(84,744 )
INVESTING ACTIVITIES: Capital
expenditures
(214,587 ) (145,727 ) Proceeds from
sales of assets
2 1,419 Increase in restricted cash from
collections on auto loan receivables
(36,834 )
(40,953 ) Increase in restricted cash in reserve accounts
(7,114 ) (5,484 ) Release of restricted cash from
reserve accounts
2,434 1,643 Purchases of money market
securities, net
(3,439 ) (6,126 ) Purchases of
trading securities
(2,863 ) (4,355 ) Sales of trading
securities
244 101
NET CASH USED IN INVESTING ACTIVITIES
(262,157 ) (199,482 )
FINANCING
ACTIVITIES: (Decrease) increase in short-term debt, net
(67 ) 1,337 Proceeds from issuances of long-term debt
1,310,800 20,000 Payments on long-term debt
(1,225,800 ) (30,000 ) Cash paid for debt issuance
costs
(9,009 ) (2,981 ) Payments on finance and
capital lease obligations
(5,916 ) (9,741 ) Issuances
of non-recourse notes payable
4,844,000 5,106,805 Payments
on non-recourse notes payable
(4,107,206 ) (4,424,340
) Repurchase and retirement of common stock
(266,025
) (369,210 ) Equity issuances
33,026 37,157 Excess
tax benefits from share-based payment arrangements
6,832 28,070
NET CASH
PROVIDED BY FINANCING ACTIVITIES 580,635
357,097 Increase in cash and cash
equivalents
278,637 72,871 Cash and cash equivalents at
beginning of year
37,394
27,606
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 316,031 $ 100,477
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160921005408/en/
CarMax, Inc.Investors:Katharine Kenny, Vice President, Investor
Relations, (804) 935-4591Celeste Gunter, Manager, Investor
Relations, (804) 935-4597orMedia:pr@carmax.com, (855) 887-2915
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