CarMax Reports Record Second Quarter Results
CarMax, Inc. (NYSE:KMX) has reported record second quarter results for the quarter ended August 31, 2013. Highlights include:
- Net sales and operating revenues increased 18% to $3.25 billion.
- Used unit sales in comparable stores increased 16%.
- Total used unit sales rose 21%.
- Total wholesale unit sales increased 10%.
- CarMax Auto Finance (CAF) income increased 12% to $84.4 million.
- Net earnings grew 26% to $140.3 million. Net earnings per diluted share rose 29% to $0.62.
“We are very pleased with our continued strong sales and earnings growth,” said Tom Folliard, president and chief executive officer. “The improvement was driven by several contributors, including double-digit growth in used and wholesale unit sales and CAF income.”
Second Quarter Business Performance Review
Total used vehicle unit sales grew 21% and comparable store used units grew 16% versus the prior year’s second quarter. Comparable store used unit sales benefited from improved execution in our stores and an attractive consumer credit environment, as well as a modest increase in store traffic.
Wholesale vehicle unit sales grew 10% compared with last year’s quarter. Wholesale unit sales benefited from an increase in the appraisal buy rate and the growth in our store base.
Other sales and revenues increased 5% year-over-year, as an increase in extended service plan (ESP) revenues was largely offset by a reduction in net third-party finance fees. ESP revenues climbed 23%, reflecting both the increase in used unit sales and higher ESP penetration. Net third-party finance fees declined $9.2 million as the third-party subprime providers (those who purchase financings at a discount) originated 18% of used vehicle unit sales in the current quarter versus 15% in the prior year’s second quarter. We believe that attractive offers by our third-party providers continued to support the increase in subprime financings.
Total gross profit increased 18% to $434.7 million. Used vehicle gross profit rose 21%, consistent with the increase in used unit sales, and used vehicle gross profit per unit remained comparable to the prior year at $2,174. Wholesale vehicle gross profit increased 3%, as the 10% increase in wholesale unit sales was partially offset by a decrease in wholesale vehicle gross profit per unit, which declined $58 to $849. Other gross profit increased 27%, driven by stronger ESP and service department profits, partially offset by the reduction in net third-party finance fees.
Category: General Update
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