CarMax Inc. Reports Q3 Fiscal Year 2024 Results

Ticker: KMX · Form: 10-Q · Filed: 2024-01-05T00:00:00.000Z

Sentiment: mixed

Topics: CarMax, KMX, 10-Q, Used Cars, Wholesale

TL;DR

<b>CarMax reported a 1.4% decrease in total net sales to $5.99 billion for Q3 FY24, driven by lower used vehicle sales, though wholesale and other revenues saw increases.</b>

AI Summary

CARMAX INC (KMX) filed a Quarterly Report (10-Q) with the SEC on January 5, 2024. Total net sales and operating revenues for the third quarter of fiscal year 2024 were $5.99 billion, a decrease of 1.4% compared to $6.08 billion in the prior year period. Used vehicle sales decreased 3.7% to $4.77 billion in Q3 FY24, compared to $4.95 billion in Q3 FY23. Wholesale vehicle sales increased 10.5% to $1.03 billion in Q3 FY24, compared to $933.2 million in Q3 FY23. Other sales and revenues increased 10.1% to $189.2 million in Q3 FY24, compared to $171.8 million in Q3 FY23. Diluted earnings per share (EPS) for Q3 FY24 were $0.50, compared to $0.77 in the prior year period.

Why It Matters

For investors and stakeholders tracking CARMAX INC, this filing contains several important signals. The decline in used vehicle sales suggests potential headwinds in consumer demand or market saturation within the used car market. The increase in wholesale vehicle sales indicates CarMax is potentially leveraging its inventory more effectively through wholesale channels, possibly to offset declining retail sales.

Risk Assessment

Risk Level: medium — CARMAX INC shows moderate risk based on this filing. The company's financial performance is sensitive to fluctuations in the automotive market, as evidenced by the 3.7% decrease in used vehicle sales in the latest quarter.

Analyst Insight

Investors should monitor CarMax's strategies for addressing the decline in used vehicle sales and capitalizing on the growth in wholesale operations.

Revenue Breakdown

SegmentRevenueGrowth
Used Vehicles4,770,000,000-3.7%
Wholesale Vehicles1,030,000,00010.5%
Other189,200,00010.1%

Key Numbers

Key Players & Entities

Forward-Looking Statements

FAQ

When did CARMAX INC file this 10-Q?

CARMAX INC filed this Quarterly Report (10-Q) with the SEC on January 5, 2024.

What is a 10-Q filing?

A 10-Q is a quarterly financial report with unaudited financials, management discussion, and interim business updates. This particular 10-Q was filed by CARMAX INC (KMX).

Where can I read the original 10-Q filing from CARMAX INC?

You can access the original filing directly on the SEC's EDGAR system. The filing is publicly available and includes all exhibits and attachments submitted by CARMAX INC.

What are the key takeaways from CARMAX INC's 10-Q?

CARMAX INC filed this 10-Q on January 5, 2024. Key takeaways: Total net sales and operating revenues for the third quarter of fiscal year 2024 were $5.99 billion, a decrease of 1.4% compared to $6.08 billion in the prior year period.. Used vehicle sales decreased 3.7% to $4.77 billion in Q3 FY24, compared to $4.95 billion in Q3 FY23.. Wholesale vehicle sales increased 10.5% to $1.03 billion in Q3 FY24, compared to $933.2 million in Q3 FY23..

Is CARMAX INC a risky investment based on this filing?

Based on this 10-Q, CARMAX INC presents a moderate-risk profile. The company's financial performance is sensitive to fluctuations in the automotive market, as evidenced by the 3.7% decrease in used vehicle sales in the latest quarter.

What should investors do after reading CARMAX INC's 10-Q?

Investors should monitor CarMax's strategies for addressing the decline in used vehicle sales and capitalizing on the growth in wholesale operations. The overall sentiment from this filing is mixed.

Filing Stats: 4,613 words · 18 min read · ~15 pages · Grade level 10.8 · Accepted 2024-01-05 10:43:38

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements: Consolidated Statements of Earnings (Unaudited) – Three and Nine Months Ended November 30, 2023 and 2022 3 Consolidated Statements of Comprehensive Income (Unaudited) – Three and Nine Months Ended November 30, 2023 and 2022 4 Consolidated Balance Sheets (Unaudited) – November 30, 2023 and February 28, 2023 5 Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended November 30, 2023 and 2022 6 Consolidated Statements of Shareholders' Equity (Unaudited) – Three and Nine Months Ended November 30, 2023 and 2022 7

Notes to Consolidated Financial Statements (Unaudited) 9

Notes to Consolidated Financial Statements (Unaudited) 9

Management's Discussion and Analysis of Financial Condition and

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 29

Quantitative and Qualitative Disclosures About Market Risk 44

Item 3. Quantitative and Qualitative Disclosures About Market Risk 44

Controls and Procedures 45

Item 4. Controls and Procedures 45

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings 46

Item 1. Legal Proceedings 46

Risk Factors 46

Item 1A. Risk Factors 46

Unregistered Sales of Equity Securities and Use of Proceeds 46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46

Exhibits 47

Item 6. Exhibits 47 SIGNATURES 48 Page 2

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CARMAX, INC. AND SUBSIDIARIES Consolidated Statements of Earnings (Unaudited) Three Months Ended November 30 Nine Months Ended November 30 (In thousands except per share data) 2023 % (1) 2022 % (1) 2023 % (1) 2022 % (1) SALES AND OPERATING REVENUES: Used vehicle sales $ 4,832,077 78.6 $ 5,204,584 80.0 $ 16,424,691 78.6 $ 18,503,159 77.2 Wholesale vehicle sales 1,165,204 19.0 1,152,207 17.7 4,001,542 19.1 4,959,050 20.7 Other sales and revenues 151,257 2.5 149,165 2.3 483,204 2.3 500,171 2.1 NET SALES AND OPERATING REVENUES 6,148,538 100.0 6,505,956 100.0 20,909,437 100.0 23,962,380 100.0 COST OF SALES: Used vehicle cost of sales 4,434,165 72.1 4,801,790 73.8 15,060,045 72.0 17,041,898 71.1 Wholesale vehicle cost of sales 1,042,303 17.0 1,037,534 15.9 3,574,200 17.1 4,512,053 18.8 Other cost of sales 59,207 1.0 89,944 1.4 148,174 0.7 219,205 0.9 TOTAL COST OF SALES 5,535,675 90.0 5,929,268 91.1 18,782,419 89.8 21,773,156 90.9 GROSS PROFIT 612,863 10.0 576,688 8.9 2,127,018 10.2 2,189,224 9.1 CARMAX AUTO FINANCE INCOME 148,659 2.4 152,196 2.3 421,004 2.0 539,538 2.3 Selling, general and administrative expenses 559,962 9.1 591,727 9.1 1,705,493 8.2 1,914,508 8.0 Depreciation and amortization 60,623 1.0 57,377 0.9 177,859 0.9 170,717 0.7 Interest expense 31,265 0.5 30,150 0.5 93,316 0.4 91,670 0.4 Other income ( 886 ) — ( 363 ) — ( 4,730 ) — ( 2,303 ) — Earnings before income taxes 110,558 1.8 49,993 0.8 576,084 2.8 554,170 2.3 Income tax provision 28,555 0.5 12,413 0.2 147,148 0.7 138,420 0.6 NET EARNINGS $ 82,003 1.3 $ 37,580 0.6 $ 428,936 2.1 $ 415,750 1.7 WEIGHTED AVERAGE COMMON SHARES: Basic 158,446 158,003 158,347 159,044 Diluted 158,799 158,536 158,866 160,195 NET EARNINGS PER SHARE: Basic $ 0.52 $ 0.24 $ 2.71 $ 2.61 Diluted $ 0.52 $ 0.24 $ 2.70 $ 2.60 (1) Percents are calculated as a percentage of net sales and operating revenues and may not total due to rounding. See accompanying notes to cons

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements ( Unaudited ) 1. Background Business. CarMax, Inc. ("we," "our," "us," "CarMax" and "the company"), including its wholly owned subsidiaries, is the nation's largest retailer of used vehicles. We operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance ("CAF"). Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides financing to customers buying retail vehicles from CarMax. On June 1, 2021, we completed the acquisition of Edmunds Holding Company ("Edmunds"), which does not meet the quantitative thresholds to be considered a reportable segment. See Note 16 for additional information on our reportable segments. We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process. Our omni-channel platform, which gives us the largest addressable market in the used car industry, empowers our retail customers to buy a car on their terms – online, in-store or an integrated combination of both. We offer customers a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan ("EPP") products, which include extended service plans ("ESPs") and guaranteed asset protection ("GAP"); and vehicle repair service. Vehicles purchased through the appraisal process that do not meet our retail standards are sold to licensed dealers through on-site or virtual wholesale auctions. Basis of Presentation and Use of Estimates. The accompanying interim unaudited consolidated financial statements include the accounts of CarMax and our wholly ow

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