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CarMax Reports Record Second Quarter Fiscal 2021 Results

·13 mins read

CarMax, Inc. (NYSE:KMX), the nation’s largest and most profitable retailer of used cars, today reported record results for the second quarter ended August 31, 2020.

Highlights:

  • Completed the roll out of our omni-channel offerings giving us the largest addressable market in the used car industry.

  • Net sales and operating revenues increased 3.3% to $5.37 billion.

  • Total used units increased 3.9%; used unit sales in comparable stores rose 1.2%.

  • Total wholesale units increased 5.1%; wholesale gross profit per unit up $158 or 17.0%, to $1,086.

  • CarMax Auto Finance (CAF) income increased 29.0% to $147.2 million.

  • Net earnings increased 27.0% to $296.7 million, and net earnings per diluted share increased 27.9% to $1.79.

  • Resuming store openings, with 8 to 10 new stores planned in fiscal year 2022.

CEO Commentary:

"We are very pleased to report record revenues and profitability this quarter," said Bill Nash, president and chief executive officer. "The talent and commitment of our associates as well as the diversity of our business model allowed us to capitalize on the improved market environment to deliver a record quarter."

"In addition to our strong financial performance, we also completed the roll out of our omni-channel offerings," added Nash. "Consumers want to customize their own journey, and CarMax gives its customers the option to seamlessly do as much, or as little, online and in-person as they want. No other used car retailer is in the position to deliver this iconic experience the way CarMax can."

Nash concluded by stating, "I am confident our omni-channel experience, which gives us the largest addressable market within the used car industry, and our diversified business model will drive profitable sales growth and market share gains for years to come."

Second Quarter Business Performance Review:

Sales. Total used vehicle unit sales increased 3.9%, including a 1.2% increase in comparable store used unit sales compared with the prior year’s second quarter. Positive comparable used unit sales in both July and August more than offset the high single digit negative comps experienced in June. Comparable store sales performance reflected strong conversion, continued support from financing, growth in web initiated selling opportunities, and solid execution by our associates in our stores and our customer experience centers. A strengthening used car selling environment also benefited the quarter, and though inventory was a headwind to sales, we returned to targeted inventory levels in September.

Total wholesale vehicle unit sales increased 5.1% compared with the second quarter of fiscal 2020. Our wholesale sales benefited from a record appraisal buy rate, partially offset by lower appraisal traffic. Additionally, wholesale unit sales benefited from an extra auction day in the quarter.

Other sales and revenues declined 7.2% compared with the second quarter of fiscal 2020, reflecting a decrease in other revenues and an increase in net third-party finance fees, partially offset by growth in extended protection plan (EPP) net revenues. EPP revenues grew 5.4% largely due to our growth in used unit sales. In addition, we recognized $8.2 million in EPP profit sharing revenue in the current quarter compared with $6.5 million recognized in the prior year’s second quarter.

Gross Profit. Total gross profit increased 8.5% versus last year’s second quarter to $752.1 million. Used vehicle gross profit rose 5.4%, reflecting the increase in total used unit sales and strong execution, which contributed to used vehicle gross profit per unit of $2,214 compared with $2,183 in the prior year’s quarter. Wholesale vehicle gross profit increased 23.0% versus the prior year’s quarter. The wholesale profit growth reflected the increased volume, robust appreciation in the market, and execution by our teams. These factors drove wholesale vehicle gross profit to $1,086 per unit from $928 in the prior year quarter. By the end of the quarter, depreciation had returned to the market. Other gross profit increased 5.8%, reflecting increases in EPP revenues and service department profits, somewhat offset by the increase in net third-party finance fees for the quarter.

SG&A. Compared with the second quarter of fiscal 2020, SG&A expenses increased 2.0% to $490.2 million. SG&A per used unit was $2,256, down $44 year-over-year. Factors leading to the increase included (i) the 7% increase in our store base since the beginning of last year’s second quarter (representing the addition of 14 stores); (ii) a $12.4 million increase in stock-based compensation expense; (iii) a 7.7% increase in advertising expenses; and (iv) continued spend in omni-channel and core strategic initiatives. SG&A leverage in the quarter was primarily due to the actions taken during the early stages of the Coronavirus pandemic, including aligning staffing and other overhead costs to the business and pausing our store expansion. Lower self-insured loss and litigation-related expenses also contributed to SG&A leverage in the quarter.

CarMax Auto Finance.(1) Compared with last year’s second quarter, CAF income increased 29.0% to $147.2 million, primarily reflecting a decrease in the provision for loan losses to $26.0 million from $45.5 million in the prior year quarter, plus an increase in net interest margin and average managed receivables. Our loan loss experience in the second quarter was favorable to the expectations we set at the end of the first quarter, which resulted in the lower provision. As of August 31, 2020, the allowance for loan losses of $432.5 million was 3.23% of ending managed receivables, down from 3.32% as of May 31, 2020.

CAF’s total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, improved to 6.0% of average managed receivables from 5.7% in the prior year’s second quarter, due to lower funding costs. After the effect of 3-day payoffs, CAF financed 42.6% of units sold in the current quarter, slightly up from 42.2% in the prior year’s second quarter.

Share Repurchase Activity. We paused our share repurchase program during the first quarter, and no shares were purchased during the second quarter of fiscal 2021. As of August 31, 2020, we had $1.51 billion remaining available for repurchase under the outstanding authorization.

Revolving Credit Facility. Subsequent to the end of the second quarter, we paid down the outstanding $575.8 million balance on our revolver with cash on hand.

Store Openings. In the first quarter of fiscal 2021, we paused our store expansion strategy. We are resuming new store growth and anticipate opening between 8 and 10 stores in fiscal 2022.

(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 Information
Amounts and percentage calculations may not total due to rounding.

Sales Components

Three Months Ended August 31

Six Months Ended August 31

(In millions)

2020

2019

Change

2020

2019

Change

Used vehicle sales

$

4,389.2

$

4,346.3

1.0

%

$

7,175.4

$

8,887.0

(19.3

)%

Wholesale vehicle sales

819.1

678.3

20.8

%

1,161.9

1,340.7

(13.3

)%

Other sales and revenues:

Extended protection plan revenues

119.4

113.3

5.4

%

192.8

224.6

(14.2

)%

Third-party finance fees, net

(15.4

)

(10.3

)

(49.6

)%

(26.2

)

(25.8

)

(1.4

)%

Other

59.9

73.6

(18.6

)%

97.0

141.0

(31.2

)%

Total other sales and revenues

163.9

176.6

(7.2

)%

263.6

339.8

(22.4

)%

Total net sales and operating revenues

$

5,372.2

$

5,201.2

3.3

%

$

8,600.9

$

10,567.5

(18.6

)%

Unit Sales

Three Months Ended August 31

Six Months Ended August 31

2020

2019

Change

2020

2019

Change

Used vehicles

217,330

209,091

3.9

%

352,358

433,359

(18.7

)%

Wholesale vehicles

132,980

126,513

5.1

%

196,275

247,281

(20.6

)%

Average Selling Prices

Three Months Ended August 31

Six Months Ended August 31

2020

2019

Change

2020

2019

Change

Used vehicles

$

19,991

$

20,581

(2.9

)%

$

20,127

$

20,306

(0.9

)%

Wholesale vehicles

$

5,891

$

5,090

15.7

%

$

5,639

$

5,150

9.5

%

Vehicle Sales Changes

Three Months Ended August 31

Six Months Ended August 31

2020

2019

2020

2019

Used vehicle units

3.9

%

6.2

%

(18.7

)%

9.6

%

Used vehicle revenues

1.0

%

9.3

%

(19.3

)%

11.1

%

Wholesale vehicle units

5.1

%

4.7

%

(20.6

)%

5.6

%

Wholesale vehicle revenues

20.8

%

8.0

%

(13.3

)%

7.6

%

Comparable Store Used Vehicle Sales Changes (1)

Three Months Ended August 31

Six Months Ended August 31

2020

2019

2020

2019

Used vehicle units

1.2

%

3.2

%

(21.0

)%

6.3

%

Used vehicle revenues

(1.6

)%

6.3

%

(21.6

)%

7.9

%

(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 31

Six Months Ended August 31

2020

2019

2020

2019

CAF (2)

45.7

%

46.8

%

42.8

%

46.5

%

Tier 2 (3)

22.3

%

19.7

%

24.7

%

20.0

%

Tier 3 (4)

11.1

%

9.6

%

12.4

%

10.6

%

Other (5)

20.9

%

23.9

%

20.1

%

22.9

%

Total

100.0

%

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 3 loan originations, which represent less than 1% of total used units sold.

(3)

Third-party finance providers who generally pay us a fee or to whom no fee is paid.

(4)

Third-party finance providers to whom we pay a fee.

(5)

Represents customers arranging their own financing and customers that do not require financing.

Selected Operating Ratios

Three Months Ended August 31

Six Months Ended August 31

(In millions)

2020

% (1)

2019

% (1)

2020

% (1)

2019

% (1)

Net sales and operating revenues

$

5,372.2

100.0

$

5,201.2

100.0

$

8,600.9

100.0

$

10,567.5

100.0

Gross profit

$

752.1

14.0

$

693.5

13.3

$

1,106.3

12.9

$

1,435.8

13.6

CarMax Auto Finance income

$

147.2

2.7

$

114.1

2.2

$

198.1

2.3

$

230.1

2.2

Selling, general, and administrative expenses

$

490.2

9.1

$

480.8

9.2

$

863.9

10.0

$

970.5

9.2

Interest expense

$

22.5

0.4

$

21.1

0.4

$

46.4

0.5

$

38.9

0.4

Earnings before income taxes

$

388.3

7.2

$

305.5

5.9

$

392.5

4.6

$

656.8

6.2

Net earnings

$

296.7

5.5

$

233.6

4.5

$

301.7

3.5

$

500.3

4.7

(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)

2020

2019

Change

2020

2019

Change

Used vehicle gross profit

$

481.2

$

456.4

5.4

%

$

742.7

$

953.2

(22.1

)%

Wholesale vehicle gross profit

144.4

117.4

23.0

%

206.3

243.3

(15.2

)%

Other gross profit

126.5

119.7

5.8

%

157.3

239.3

(34.2

)%

Total

$

752.1

$

693.5

8.5

%

$

1,106.3

$

1,435.8

(22.9

)%

Gross Profit per Unit

Three Months Ended August 31

Six Months Ended August 31

2020

2019

2020

2019

$ per unit(1)

%(2)

$ per unit(1)

%(2)

$ per unit(1)

%(2)

$ per unit(1)

%(2)

Used vehicle gross profit

$

2,214

11.0

$

2,183

10.5

$

2,108

10.4

$

2,200

10.7

Wholesale vehicle gross profit

$

1,086

17.6

$

928

17.3

$

1,051

17.8

$

984

18.1

Other gross profit

$

583

77.3

$

572

67.8

$

447

59.7

$

552

70.4

Total gross profit

$

3,461

14.0

$

3,317

13.3

$

3,140

12.9

$

3,313

13.6

(1)

Calculated as category gross profit divided by its respective units sold, except the other and total categories, which are divided by total 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)

2020

2019

Change

2020

2019

Change

Compensation and benefits:

Compensation and benefits, excluding share-based compensation expense

$

239.3

$

227.5

5.2

%

$

430.5

$

457.4

(5.9

)%

Share-based compensation expense

34.3

21.9

56.6

%

58.0

62.8

(7.7

)%

Total compensation and benefits (1)

$

273.6

$

249.4

9.7

%

$

488.5

$

520.2

(6.1

)%

Store occupancy costs

101.1

96.7

4.5

%

195.7

193.3

1.2

%

Advertising expense

50.5

46.8

7.7

%

85.0

88.8

(4.3

)%

Other overhead costs (2)

65.0

87.9

(26.0

)%

94.7

168.2

(43.7

)%

Total SG&A expenses

$

490.2

$

480.8

2.0

%

$

863.9

$

970.5

(11.0

)%

SG&A per used unit

$

2,256

$

2,300

$

(44

)

$

2,452

$

2,239

$

213

(1)

Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.

(2)

Includes IT expenses, preopening and relocation costs, insurance, non-CAF bad debt, travel, 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)

2020

% (1)

2019

% (1)

2020

% (1)

2019

% (1)

Interest margin:

Interest and fee income

$

280.1

8.5

$

275.7

8.5

$

562.6

8.5

$

541.9

8.4

Interest expense

(81.3

)

(2.5

)

(90.6

)

(2.8

)

(165.9

)

(2.5

)

(178.0

)

(2.8

)

Total interest margin

198.8

6.0

185.1

5.7

396.7

6.0

363.9

5.7

Provision for loan losses

(26.0

)

(0.8

)

(45.5

)

(1.4

)

(148.0

)

(2.2

)

(83.7

)

(1.3

)

Total interest margin after provision for loan losses

172.8

5.2

139.6

4.3

248.7

3.7

280.2

4.4

Total other expense

(0.3

)

(2.2

)

Total direct expenses

(25.4

)

(0.8

)

(25.5

)

(0.8

)

(48.4

)

(0.7

)

(50.1

)

(0.8

)

CarMax Auto Finance income

$

147.2

4.5

$

114.1

3.5

$

198.1

3.0

$

230.1

3.6

Total average managed receivables

$

13,218.8

$

13,012.1

$

13,313.6

$

12,859.7

Net loans originated

$

1,790.6

$

1,772.6

$

2,782.9

$

3,598.9

Net penetration rate

42.6

%

42.2

%

40.1

%

41.8

%

Weighted average contract rate

8.2

%

8.6

%

8.3

%

8.7

%

Ending allowance for loan losses

$

432.5

$

150.4

$

432.5

$

150.4

Warehouse facility information:

Ending funded receivables

$

2,253.7

$

2,265.0

$

2,253.7

$

2,265.0

Ending unused capacity

$

1,246.3

$

1,235.0

$

1,246.3

$

1,235.0

(1)

Annualized percentage of total average managed receivables.

Earnings Highlights

Three Months Ended August 31

Six Months Ended August 31

(In millions except per share data)

2020

2019

Change

2020

2019

Change

Net earnings

$

296.7

$

233.6

27.0

%

$

301.7

$

500.3

(39.7

)%

Diluted weighted average shares outstanding

165.6

167.3

(1.0

)%

164.6

167.5

(1.7

)%

Net earnings per diluted share

$

1.79

$

1.40

27.9

%

$

1.83

$

2.99

(38.8

)%

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, September 24, 2020. 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 4959887. 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 21, 2020, or via telephone (for approximately one week) by dialing 1-855-859-2056 (or 1-404-537-3406 for international access) and entering the conference ID 4959887.

Third Quarter Fiscal 2021 Earnings Release Date

We currently plan to release results for the third quarter ending November 30, 2020, on Tuesday, December 22, 2020, 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 November 2020.

About CarMax

CarMax, the nation’s largest retailer of used cars, 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. CarMax also provides a variety of vehicle delivery methods, including home delivery, contactless curbside pickup and appointments in its stores. During the fiscal year ending February 29, 2020, CarMax sold more than 830,000 used cars and more than 465,000 wholesale vehicles at its in-store auctions. CarMax has 220 stores, over 25,000 Associates, and is proud to have been recognized for 16 consecutive years as one of the Fortune 100 Best Companies to Work For®. For more information, visit www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release about our future business plans, operations, challenges, opportunities or prospects, including without limitation any statements or factors regarding expected operating capacity, sales, market share, margins, expenses, liquidity, capital expenditures, debt obligations, tax rates 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," "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:

  • 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 general or regional U.S. economic conditions.

  • Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.

  • Changes in the competitive landscape and/or our failure to successfully adjust to such changes.

  • Events that damage our reputation or harm the perception of the quality of our brand.

  • Our inability to realize the benefits associated with our omni-channel initiatives.

  • Our inability to recruit, develop and retain associates and maintain positive associate relations.

  • The loss of key associates from our store, regional or corporate management teams or a significant increase in labor costs.

  • Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer, associate or corporate information.

  • Significant changes in prices of new and used vehicles.

  • Changes in economic conditions or other factors that result in greater credit losses for CAF’s portfolio of auto loans receivable than anticipated.

  • A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.

  • Changes in consumer credit availability provided by our third-party finance providers.

  • Changes in the availability of extended protection plan products from third-party providers.

  • Factors related to the regulatory and legislative environment in which we operate.

  • Factors related to geographic and sales growth, including the inability to effectively manage our growth.

  • The failure of or inability to sufficiently enhance key information systems.

  • The performance of the third-party vendors we rely on for key components of our business.

  • The effect of various litigation matters.

  • Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.

  • The failure or inability to realize the benefits associated with our strategic investments.

  • The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to U.S. generally accepted accounting principles.

  • The volatility in the market price for our common stock.

  • The failure or inability to adequately protect our intellectual property.

  • The occurrence of severe weather events.

  • Factors related to the geographic concentration of our stores.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 29, 2020, 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.

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)

2020

% (1)

2019

% (1)

2020

% (1)

2019

% (1)

SALES AND OPERATING REVENUES:

Used vehicle sales

$

4,389,233

81.7

$

4,346,295

83.6

$

7,175,435

83.4

$

8,886,952

84.1

Wholesale vehicle sales

819,082

15.2

678,286

13.0

1,161,934

13.5

1,340,735

12.7

Other sales and revenues

163,851

3.0

176,570

3.4

263,579

3.1

339,782

3.2

NET SALES AND OPERATING REVENUES

5,372,166

100.0

5,201,151

100.0

8,600,948

100.0

10,567,469

100.0

COST OF SALES:

Used vehicle cost of sales

3,908,065

72.7

3,889,917

74.8

6,432,741

74.8

7,933,741

75.1

Wholesale vehicle cost of sales

674,712

12.6

560,906

10.8

955,634

11.1

1,097,396

10.4

Other cost of sales

37,246

0.7

56,875

1.1

106,247

1.2

100,496

1.0

TOTAL COST OF SALES

4,620,023

86.0

4,507,698

86.7

7,494,622

87.1

9,131,633

86.4

GROSS PROFIT

752,143

14.0

693,453

13.3

1,106,326

12.9

1,435,836

13.6

CARMAX AUTO FINANCE INCOME

147,195

2.7

114,131

2.2

198,145

2.3

230,090

2.2

Selling, general, and administrative expenses

490,208

9.1

480,831

9.2

863,924

10.0

970,491

9.2

Interest expense

22,469

0.4

21,073

0.4

46,427

0.5

38,857

0.4

Other (income) expense

(1,680

)

143

1,615

(216

)

Earnings before income taxes

388,341

7.2

305,537

5.9

392,505

4.6

656,794

6.2

Income tax provision

91,645

1.7

71,938

1.4

90,831

1.1

156,451

1.5

NET EARNINGS

$

296,696

5.5

$

233,599

4.5

$

301,674

3.5

$

500,343

4.7

WEIGHTED AVERAGE COMMON SHARES:

Basic

163,434

165,354

163,053

165,839

Diluted

165,623

167,272

164,580

167,458

NET EARNINGS PER SHARE:

Basic

$

1.82

$

1.41

$

1.85

$

3.02

Diluted

$

1.79

$

1.40

$

1.83

$

2.99

(1)

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

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of

August 31

February 29

August 31

(In thousands except share data)

2020

2020

2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

711,561

$

58,211

$

40,737

Restricted cash from collections on auto loans receivable

520,876

481,043

483,374

Accounts receivable, net

203,155

191,090

141,091

Inventory

2,824,959

2,846,416

2,604,750

Other current assets

67,308

86,927

114,987

TOTAL CURRENT ASSETS

4,327,859

3,663,687

3,384,939

Auto loans receivable, net

13,013,106

13,551,711

13,065,959

Property and equipment, net

3,044,773

3,069,102

2,981,260

Deferred income taxes

133,749

89,842

66,048

Operating lease assets

444,158

449,094

456,449

Other assets

282,661

258,746

185,599

TOTAL ASSETS

$

21,246,306

$

21,082,182

$

20,140,254

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

683,715

$

737,144

$

628,507

Accrued expenses and other current liabilities

350,185

331,738

301,503

Accrued income taxes

64,734

1,389

1,389

Current portion of operating lease liabilities

31,616

30,980

30,066

Short-term debt

838

40

915

Current portion of long-term debt

10,005

9,251

10,762

Current portion of non-recourse notes payable

457,849

424,165

423,562

TOTAL CURRENT LIABILITIES

1,598,942

1,534,707

1,396,704

Long-term debt, excluding current portion

1,896,784

1,778,672

1,689,079

Non-recourse notes payable, excluding current portion

12,900,984

13,165,384

12,695,050

Operating lease liabilities, excluding current portion

435,113

440,671

448,640

Other liabilities

431,923

393,873

299,224

TOTAL LIABILITIES

17,263,746

17,313,307

16,528,697

Commitments and contingent liabilities

SHAREHOLDERS’ EQUITY:

Common stock, $0.50 par value; 350,000,000 shares authorized; 164,162,253 and 163,081,376 shares issued and outstanding as of August 31, 2020 and February 29, 2020, respectively

82,081

81,541

82,442

Capital in excess of par value

1,460,300

1,348,988

1,313,290

Accumulated other comprehensive loss

(160,426

)

(150,071

)

(91,630

)

Retained earnings

2,600,605

2,488,417

2,307,455

TOTAL SHAREHOLDERS’ EQUITY

3,982,560

3,768,875

3,611,557

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

21,246,306

$

21,082,182

$

20,140,254

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended August 31

(In thousands)

2020

2019

OPERATING ACTIVITIES:

Net earnings

$

301,674

$

500,343

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

Depreciation and amortization

118,967

103,468

Share-based compensation expense

62,794

68,887

Provision for loan losses

147,977

83,693

Provision for cancellation reserves

35,678

45,471

Deferred income tax provision

8,598

3,812

Other

5,098

3,718

Net (increase) decrease in:

Accounts receivable, net

(12,065

)

(1,241

)

Inventory

21,457

(85,295

)

Other current assets

19,691

(48,452

)

Auto loans receivable, net

188,601

(721,165

)

Other assets

(6,586

)

15,421

Net increase (decrease) in:

Accounts Payable, accrued expenses and other current liabilities and accrued income taxes

24,912

(26,632

)

Other liabilities

(27,020

)

(67,484

)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

889,776

(125,456

)

INVESTING ACTIVITIES:

Capital expenditures

(91,998

)

(171,347

)

Proceeds from disposal of property and equipment

826

3

Purchases of investments

(2,566

)

(8,244

)

Sales of investments

1,381

720

NET CASH USED IN INVESTING ACTIVITIES

(92,357

)

(178,868

)

FINANCING ACTIVITIES:

Increase (decrease) in short-term debt, net

798

(214

)

Proceeds from issuances of long-term debt

1,542,500

3,293,500

Payments on long-term debt

(1,425,084

)

(3,284,866

)

Cash paid for debt issuance costs

(8,037

)

(10,862

)

Payments on finance lease obligations

(2,880

)

(1,694

)

Issuances of non-recourse notes payable

4,798,000

5,748,000

Payments on non-recourse notes payable

(5,028,898

)

(5,141,901

)

Repurchase and retirement of common stock

(54,151

)

(341,929

)

Equity issuances

91,724

86,521

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(86,028

)

346,555

Increase in cash, cash equivalents, and restricted cash

711,391

42,231

Cash, cash equivalents, and restricted cash at beginning of year

656,390

595,377

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

$

1,367,781

$

637,608

View source version on businesswire.com: https://www.businesswire.com/news/home/20200924005227/en/

Contacts

Investors:
Stacy Frole, Vice President, Investor Relations
investor_relations@carmax.com, (804) 747-0422 x7865

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