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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CarMax Group | NYSE:KMX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.19 | -0.28% | 67.78 | 69.19 | 67.02 | 68.01 | 1,788,644 | 01:00:00 |
VIRGINIA
|
|
54-1821055
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
12800 TUCKAHOE CREEK PARKWAY, RICHMOND, VIRGINIA
|
23238
|
(Address of principal executive offices)
|
(Zip Code)
|
Yes
x
|
|
No
¨
|
Yes
x
|
|
No
¨
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
|
Emerging growth company
¨
|
Yes
¨
|
|
No
x
|
Class
|
|
Outstanding as of September 29, 2017
|
Common Stock, par value $0.50
|
|
182,330,049
|
|
Page
No.
|
||
PART I.
|
FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Financial Statements:
|
|
|
|
|
|
|
|
Consolidated Statements of Earnings (Unaudited) –
|
|
|
|
Three and Six Months Ended August 31, 2017 and 2016
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Unaudited) –
|
|
|
|
Three and Six Months Ended August 31, 2017 and 2016
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) –
|
|
|
|
August 31, 2017 and February 28, 2017
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (Unaudited) –
|
|
|
|
Six Months Ended August 31, 2017 and 2016
|
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
|
|
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and
|
|
|
|
Results of Operations
|
|
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
|
|
|
|
Item 4.
|
Controls and Procedures
|
|
|
|
|
|
PART II.
|
OTHER INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
|
|
|
|
|
|
Item 1A.
|
Risk Factors
|
|
|
|
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
Item 6.
|
Exhibits
|
|
|
|
|
|
SIGNATURES
|
|||
|
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||||
(In thousands except per share data)
|
2017
|
%
(1)
|
|
2016
|
%
(1)
|
|
2017
|
%
(1)
|
|
2016
|
%
(1)
|
||||||||||||
SALES AND OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Used vehicle sales
|
$
|
3,694,200
|
|
84.2
|
|
|
$
|
3,300,814
|
|
82.6
|
|
|
$
|
7,537,573
|
|
84.4
|
|
|
$
|
6,729,788
|
|
82.8
|
|
Wholesale vehicle sales
|
547,767
|
|
12.5
|
|
|
560,402
|
|
14.0
|
|
|
1,101,157
|
|
12.3
|
|
|
1,128,143
|
|
13.9
|
|
||||
Other sales and revenues
|
144,673
|
|
3.3
|
|
|
136,032
|
|
3.4
|
|
|
290,244
|
|
3.3
|
|
|
265,703
|
|
3.3
|
|
||||
NET SALES AND OPERATING REVENUES
|
4,386,640
|
|
100.0
|
|
|
3,997,248
|
|
100.0
|
|
|
8,928,974
|
|
100.0
|
|
|
8,123,634
|
|
100.0
|
|
||||
Cost of sales
|
3,782,635
|
|
86.2
|
|
|
3,451,886
|
|
86.4
|
|
|
7,676,031
|
|
86.0
|
|
|
7,005,635
|
|
86.2
|
|
||||
GROSS PROFIT
|
604,005
|
|
13.8
|
|
|
545,362
|
|
13.6
|
|
|
1,252,943
|
|
14.0
|
|
|
1,117,999
|
|
13.8
|
|
||||
CARMAX AUTO FINANCE INCOME
|
107,936
|
|
2.5
|
|
|
95,969
|
|
2.4
|
|
|
217,299
|
|
2.4
|
|
|
196,727
|
|
2.4
|
|
||||
Selling, general and administrative expenses
|
405,062
|
|
9.2
|
|
|
366,126
|
|
9.2
|
|
|
808,565
|
|
9.1
|
|
|
746,356
|
|
9.2
|
|
||||
Interest expense
|
16,836
|
|
0.4
|
|
|
13,904
|
|
0.3
|
|
|
33,674
|
|
0.4
|
|
|
24,992
|
|
0.3
|
|
||||
Other income
|
(189
|
)
|
—
|
|
|
(435
|
)
|
—
|
|
|
(282
|
)
|
—
|
|
|
(1,051
|
)
|
—
|
|
||||
Earnings before income taxes
|
290,232
|
|
6.6
|
|
|
261,736
|
|
6.5
|
|
|
628,285
|
|
7.0
|
|
|
544,429
|
|
6.7
|
|
||||
Income tax provision
|
108,808
|
|
2.5
|
|
|
99,374
|
|
2.5
|
|
|
235,159
|
|
2.6
|
|
|
206,707
|
|
2.5
|
|
||||
NET EARNINGS
|
$
|
181,424
|
|
4.1
|
|
|
$
|
162,362
|
|
4.1
|
|
|
$
|
393,126
|
|
4.4
|
|
|
$
|
337,722
|
|
4.2
|
|
WEIGHTED AVERAGE COMMON SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
182,868
|
|
|
|
191,539
|
|
|
|
|
184,034
|
|
|
|
|
192,534
|
|
|
||||||
Diluted
|
184,696
|
|
|
|
193,623
|
|
|
|
|
185,778
|
|
|
|
|
194,437
|
|
|
||||||
NET EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
$
|
0.99
|
|
|
|
$
|
0.85
|
|
|
|
|
$
|
2.14
|
|
|
|
|
$
|
1.75
|
|
|
||
Diluted
|
$
|
0.98
|
|
|
|
$
|
0.84
|
|
|
|
|
$
|
2.12
|
|
|
|
|
$
|
1.74
|
|
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
2017
|
|
2016
|
||||||||
NET EARNINGS
|
$
|
181,424
|
|
|
$
|
162,362
|
|
$
|
393,126
|
|
|
$
|
337,722
|
|
Other comprehensive (loss) income, net of taxes:
|
|
|
|
|
|
|
||||||||
Net change in retirement benefit plan unrecognized actuarial losses
|
275
|
|
|
248
|
|
549
|
|
|
497
|
|
||||
Net change in cash flow hedge unrecognized losses
|
(1,673
|
)
|
|
(5
|
)
|
(3,621
|
)
|
|
3,117
|
|
||||
Other comprehensive (loss) income, net of taxes
|
(1,398
|
)
|
|
243
|
|
(3,072
|
)
|
|
3,614
|
|
||||
TOTAL COMPREHENSIVE INCOME
|
$
|
180,026
|
|
|
$
|
162,605
|
|
$
|
390,054
|
|
|
$
|
341,336
|
|
|
Six Months Ended August 31
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings
|
$
|
393,126
|
|
|
$
|
337,722
|
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
88,078
|
|
|
83,013
|
|
||
Share-based compensation expense
|
36,585
|
|
|
60,561
|
|
||
Provision for loan losses
|
61,465
|
|
|
62,349
|
|
||
Provision for cancellation reserves
|
34,488
|
|
|
35,893
|
|
||
Deferred income tax provision
|
2,271
|
|
|
6,728
|
|
||
Other
|
1,013
|
|
|
302
|
|
||
Net decrease (increase) in:
|
|
|
|
||||
Accounts receivable, net
|
52,655
|
|
|
37,594
|
|
||
Inventory
|
28,794
|
|
|
13,226
|
|
||
Other current assets
|
(1,063
|
)
|
|
(16,993
|
)
|
||
Auto loan receivables, net
|
(637,719
|
)
|
|
(656,835
|
)
|
||
Other assets
|
83
|
|
|
732
|
|
||
Net increase (decrease) in:
|
|
|
|
||||
Accounts payable, accrued expenses and other
|
|
|
|
||||
current liabilities and accrued income taxes
|
66,939
|
|
|
52,946
|
|
||
Other liabilities
|
(45,618
|
)
|
|
(50,247
|
)
|
||
NET CASH PROVIDED BY (USED IN) OPERAT
ING ACTIVITIES
|
81,097
|
|
|
(33,009
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(155,110
|
)
|
|
(214,587
|
)
|
||
Proceeds from disposal of property and equipment
|
96
|
|
|
2
|
|
||
Increase in restricted cash from collections on auto loan receivables
|
(23,923
|
)
|
|
(36,834
|
)
|
||
Increase in restricted cash in reserve accounts
|
(11,409
|
)
|
|
(7,114
|
)
|
||
Release of restricted cash from reserve accounts
|
8,396
|
|
|
2,434
|
|
||
Purchases of money market securities, net
|
(2,132
|
)
|
|
(3,439
|
)
|
||
Purchases of trading securities
|
(1,344
|
)
|
|
(2,863
|
)
|
||
Sales of trading securities
|
370
|
|
|
244
|
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
(185,056
|
)
|
|
(262,157
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Increase (decrease) in short-term debt, net
|
209
|
|
|
(67
|
)
|
||
Proceeds from issuances of long-term debt
|
1,552,000
|
|
|
1,310,800
|
|
||
Payments on long-term debt
|
(1,689,000
|
)
|
|
(1,225,800
|
)
|
||
Cash paid for debt issuance costs
|
(7,623
|
)
|
|
(9,009
|
)
|
||
Payments on finance and capital lease obligations
|
(4,475
|
)
|
|
(5,916
|
)
|
||
Issuances of non-recourse notes payable
|
4,987,000
|
|
|
4,844,000
|
|
||
Payments on non-recourse notes payable
|
(4,425,923
|
)
|
|
(4,107,206
|
)
|
||
Repurchase and retirement of common stock
|
(344,785
|
)
|
|
(266,025
|
)
|
||
Equity issuances
|
23,905
|
|
|
33,026
|
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
91,308
|
|
|
573,803
|
|
||
(Decrease) increase in cash and cash equivalents
|
(12,651
|
)
|
|
278,637
|
|
||
Cash and cash equivalents at beginning of year
|
38,416
|
|
|
37,394
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
25,765
|
|
|
$
|
316,031
|
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||||||||
(In millions)
|
2017
|
|
%
(1)
|
|
2016
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
2016
|
|
%
(1)
|
||||||||||||
Interest margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest and fee income
|
$
|
213.6
|
|
|
7.7
|
|
|
$
|
190.2
|
|
|
7.6
|
|
|
$
|
420.3
|
|
|
7.7
|
|
|
$
|
374.3
|
|
|
7.6
|
|
Interest expense
|
(52.2
|
)
|
|
(1.9
|
)
|
|
(41.8
|
)
|
|
(1.7
|
)
|
|
(101.2
|
)
|
|
(1.8
|
)
|
|
(81.2
|
)
|
|
(1.6
|
)
|
||||
Total interest margin
|
161.4
|
|
|
5.8
|
|
|
148.4
|
|
|
5.9
|
|
|
319.1
|
|
|
5.8
|
|
|
293.1
|
|
|
5.9
|
|
||||
Provision for loan losses
|
(32.9
|
)
|
|
(1.2
|
)
|
|
(35.7
|
)
|
|
(1.4
|
)
|
|
(61.5
|
)
|
|
1.1
|
|
|
(62.3
|
)
|
|
(1.3
|
)
|
||||
Total interest margin after provision for loan losses
|
128.5
|
|
|
4.6
|
|
|
112.7
|
|
|
4.5
|
|
|
257.6
|
|
|
4.7
|
|
|
230.8
|
|
|
4.7
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Payroll and fringe benefit expense
|
(8.8
|
)
|
|
(0.3
|
)
|
|
(7.7
|
)
|
|
(0.3
|
)
|
|
(17.3
|
)
|
|
(0.3
|
)
|
|
(15.4
|
)
|
|
(0.3
|
)
|
||||
Other direct expenses
|
(11.8
|
)
|
|
(0.4
|
)
|
|
(9.0
|
)
|
|
(0.4
|
)
|
|
(23.0
|
)
|
|
(0.4
|
)
|
|
(18.7
|
)
|
|
(0.4
|
)
|
||||
Total direct expenses
|
(20.6
|
)
|
|
(0.7
|
)
|
|
(16.7
|
)
|
|
(0.7
|
)
|
|
(40.3
|
)
|
|
(0.7
|
)
|
|
(34.1
|
)
|
|
(0.7
|
)
|
||||
CarMax Auto Finance income
|
$
|
107.9
|
|
|
3.9
|
|
|
$
|
96.0
|
|
|
3.8
|
|
|
$
|
217.3
|
|
|
4.0
|
|
|
$
|
196.7
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total average managed receivables
|
$
|
11,112.0
|
|
|
|
|
|
$
|
10,049.8
|
|
|
|
|
|
$
|
10,970.8
|
|
|
|
|
$
|
9,897.4
|
|
|
|
(1)
|
Annualized percentage of total average managed receivables.
|
|
As of August 31
|
|
As of February 28
|
||||
(In millions)
|
2017
|
|
2017
|
||||
Term securitizations
|
$
|
8,885.4
|
|
|
$
|
8,784.7
|
|
Warehouse facilities
|
2,061.0
|
|
|
1,624.0
|
|
||
Overcollateralization
(1)
|
241.8
|
|
|
211.4
|
|
||
Other managed receivables
(2)
|
64.6
|
|
|
61.2
|
|
||
Total ending managed receivables
|
11,252.8
|
|
|
10,681.3
|
|
||
Accrued interest and fees
|
46.9
|
|
|
38.5
|
|
||
Other
|
2.1
|
|
|
(0.1
|
)
|
||
Less allowance for loan losses
|
(129.5
|
)
|
|
(123.6
|
)
|
||
Auto loan receivables, net
|
$
|
11,172.3
|
|
|
$
|
10,596.1
|
|
(1)
|
Represents receivables restricted as excess collateral for the warehouse facilities and term securitizations.
|
(2)
|
Other managed receivables includes receivables not funded through the warehouse facilities or term securitizations.
|
|
As of August 31
|
|
As of February 28
|
||||||||
(In millions)
|
2017
(1)
|
|
%
(2)
|
|
2017
(1)
|
|
%
(2)
|
||||
A
|
$
|
5,513.2
|
|
|
49.0
|
|
$
|
5,223.4
|
|
|
48.9
|
B
|
3,986.6
|
|
|
35.4
|
|
3,739.4
|
|
|
35.0
|
||
C and other
|
1,753.0
|
|
|
15.6
|
|
1,718.5
|
|
|
16.1
|
||
Total ending managed receivables
|
$
|
11,252.8
|
|
|
100.0
|
|
$
|
10,681.3
|
|
|
100.0
|
(1)
|
Classified based on credit grade assigned when customers were initially approved for financing.
|
(2)
|
Percent of total ending managed receivables.
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||||||||||
(In millions)
|
2017
|
|
%
(1)
|
|
2016
|
|
%
(1)
|
2017
|
|
%
(1)
|
|
2016
|
|
%
(1)
|
||||||||
Balance as of beginning of period
|
$
|
129.8
|
|
|
1.18
|
|
$
|
104.0
|
|
|
1.05
|
$
|
123.6
|
|
|
1.16
|
|
$
|
94.9
|
|
|
0.99
|
Charge-offs
|
(60.4
|
)
|
|
|
|
(55.9
|
)
|
|
|
(114.5
|
)
|
|
|
|
(101.7
|
)
|
|
|
||||
Recoveries
|
27.2
|
|
|
|
|
25.9
|
|
|
|
58.9
|
|
|
|
|
54.2
|
|
|
|
||||
Provision for loan losses
|
32.9
|
|
|
|
|
35.7
|
|
|
|
61.5
|
|
|
|
|
62.3
|
|
|
|
||||
Balance as of end of period
|
$
|
129.5
|
|
|
1.15
|
|
$
|
109.7
|
|
|
1.08
|
$
|
129.5
|
|
|
1.15
|
|
$
|
109.7
|
|
|
1.08
|
(1)
|
Percent
of total ending managed receivables.
|
|
As of August 31
|
|
As of February 28
|
||||||||
(In millions)
|
2017
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
||||
Total ending managed receivables
|
$
|
11,252.8
|
|
|
100.0
|
|
$
|
10,681.3
|
|
|
100.0
|
Delinquent loans:
|
|
|
|
|
|
|
|
||||
31-60 days past due
|
$
|
239.4
|
|
|
2.1
|
|
$
|
211.0
|
|
|
2.0
|
61-90 days past due
|
115.1
|
|
|
1.0
|
|
93.5
|
|
|
0.9
|
||
Greater than 90 days past due
|
30.5
|
|
|
0.3
|
|
26.5
|
|
|
0.2
|
||
Total past due
|
$
|
385.0
|
|
|
3.4
|
|
$
|
331.0
|
|
|
3.1
|
(1)
|
Percent of total ending managed receivables.
|
|
As of August 31, 2017
|
|
As of February 28, 2017
|
||||||||||||
(In thousands)
|
Assets
(1)
|
|
Liabilities
(2)
|
|
Assets
(1)
|
|
Liabilities
(2)
|
||||||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
233
|
|
|
$
|
(4,388
|
)
|
|
$
|
2,997
|
|
|
$
|
(509
|
)
|
(1)
|
Reported in other current assets on the consolidated balance sheets.
|
(2)
|
Reported in accounts payable on the consolidated balance sheets.
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
|
August 31
|
August 31
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
2017
|
|
2016
|
||||||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
||||||||
Loss recognized in AOCL
(1)
|
$
|
(3,712
|
)
|
|
$
|
(3,129
|
)
|
$
|
(7,938
|
)
|
|
$
|
(798
|
)
|
Loss reclassified from AOCL into CAF income
(1)
|
$
|
(952
|
)
|
|
$
|
(3,120
|
)
|
$
|
(1,965
|
)
|
|
$
|
(5,933
|
)
|
(1)
|
Represents the effective portion.
|
Level 1
|
Inputs include unadjusted quoted prices in active markets for identical assets or liabilities that we can access at the measurement date.
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets in active markets, quoted prices from identical or similar assets in inactive markets and observable inputs such as interest rates and yield curves.
|
Level 3
|
Inputs that are significant to the measurement that are not observable in the market and include management's judgments about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk).
|
|
As of August 31, 2017
|
||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market securities
|
$
|
346,842
|
|
|
$
|
—
|
|
|
$
|
346,842
|
|
Mutual fund investments
|
18,496
|
|
|
—
|
|
|
18,496
|
|
|||
Derivative instruments
|
—
|
|
|
233
|
|
|
233
|
|
|||
Total assets at fair value
|
$
|
365,338
|
|
|
$
|
233
|
|
|
$
|
365,571
|
|
|
|
|
|
|
|
||||||
Percent of total assets at fair value
|
99.9
|
%
|
|
0.1
|
%
|
|
100.0
|
%
|
|||
Percent of total assets
|
2.2
|
%
|
|
—
|
%
|
|
2.2
|
%
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
(4,388
|
)
|
|
$
|
(4,388
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
(4,388
|
)
|
|
$
|
(4,388
|
)
|
|
|
|
|
|
|
||||||
Percent of total liabilities
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
As of February 28, 2017
|
||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market securities
|
$
|
397,994
|
|
|
$
|
—
|
|
|
$
|
397,994
|
|
Mutual fund investments
|
16,519
|
|
|
—
|
|
|
16,519
|
|
|||
Derivative instruments
|
—
|
|
|
2,997
|
|
|
2,997
|
|
|||
Total assets at fair value
|
$
|
414,513
|
|
|
$
|
2,997
|
|
|
$
|
417,510
|
|
|
|
|
|
|
|
||||||
Percent of total assets at fair value
|
99.3
|
%
|
|
0.7
|
%
|
|
100.0
|
%
|
|||
Percent of total assets
|
2.5
|
%
|
|
—
|
%
|
|
2.6
|
%
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
(509
|
)
|
|
$
|
(509
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
(509
|
)
|
|
$
|
(509
|
)
|
|
|
|
|
|
|
||||||
Percent of total liabilities
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
(In thousands)
|
As of August 31, 2017
|
|
As of February 28, 2017
|
||||
Carrying value
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Fair value
|
$
|
519,348
|
|
|
$
|
499,518
|
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||
(In millions)
|
2017
|
|
2016
|
2017
|
|
2016
|
||||||||
Balance as of beginning of period
|
$
|
109.0
|
|
|
$
|
112.5
|
|
$
|
108.2
|
|
|
$
|
110.2
|
|
Cancellations
|
(16.6
|
)
|
|
(16.4
|
)
|
(32.9
|
)
|
|
(32.8
|
)
|
||||
Provision for future cancellations
|
17.4
|
|
|
17.2
|
|
34.5
|
|
|
35.9
|
|
||||
Balance as of end of period
|
$
|
109.8
|
|
|
$
|
113.3
|
|
$
|
109.8
|
|
|
$
|
113.3
|
|
|
Three Months Ended August 31
|
||||||||||||||||||||||
|
Pension Plan
|
|
Restoration Plan
|
|
Total
|
||||||||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Net pension expense
|
$
|
52
|
|
|
$
|
84
|
|
|
$
|
117
|
|
|
$
|
120
|
|
|
$
|
169
|
|
|
$
|
204
|
|
|
Six Months Ended August 31
|
||||||||||||||||||||||
|
Pension Plan
|
|
Restoration Plan
|
|
Total
|
||||||||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Net pension expense
|
$
|
104
|
|
|
$
|
166
|
|
|
$
|
234
|
|
|
$
|
240
|
|
|
$
|
338
|
|
|
$
|
406
|
|
|
As of August 31
|
|
As of February 28
|
||||
(In thousands)
|
2017
|
|
2017
|
||||
Revolving credit facility
|
$
|
18,271
|
|
|
$
|
155,062
|
|
Term loan
|
300,000
|
|
|
300,000
|
|
||
3.86% Senior notes due 2023
|
100,000
|
|
|
100,000
|
|
||
4.17% Senior notes due 2026
|
200,000
|
|
|
200,000
|
|
||
4.27% Senior notes due 2028
|
200,000
|
|
|
200,000
|
|
||
Finance and capital lease obligations
|
502,502
|
|
|
496,136
|
|
||
Non-recourse notes payable
|
11,303,502
|
|
|
10,742,425
|
|
||
Total debt
|
12,624,275
|
|
|
12,193,623
|
|
||
Less: current portion
|
(366,690
|
)
|
|
(343,266
|
)
|
||
Less: unamortized debt issuance costs
|
(23,581
|
)
|
|
(23,919
|
)
|
||
Long-term debt, net
|
$
|
12,234,004
|
|
|
$
|
11,826,438
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 31
|
|
August 31
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Number of shares repurchased
(in thousands)
|
2,453.1
|
|
|
2,365.2
|
|
|
5,487.8
|
|
|
4,934.7
|
|
||||
Average cost per share
|
$
|
63.78
|
|
|
$
|
53.18
|
|
|
$
|
61.69
|
|
|
$
|
52.25
|
|
Available for repurchase, as of end of period
(in millions)
|
$
|
1,251.8
|
|
|
$
|
1,890.2
|
|
|
$
|
1,251.8
|
|
|
$
|
1,890.2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 31
|
|
August 31
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of sales
|
$
|
1,076
|
|
|
$
|
1,054
|
|
|
$
|
1,303
|
|
|
$
|
2,414
|
|
CarMax Auto Finance income
|
848
|
|
|
747
|
|
|
1,668
|
|
|
1,651
|
|
||||
Selling, general and administrative expenses
|
16,316
|
|
|
27,679
|
|
|
34,409
|
|
|
57,262
|
|
||||
Share-based compensation expense, before income taxes
|
$
|
18,240
|
|
|
$
|
29,480
|
|
|
$
|
37,380
|
|
|
$
|
61,327
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 31
|
|
August 31
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Nonqualified stock options
|
$
|
5,916
|
|
|
$
|
15,090
|
|
|
$
|
16,286
|
|
|
$
|
28,221
|
|
Cash-settled restricted stock units (RSUs)
|
9,785
|
|
|
9,085
|
|
|
12,903
|
|
|
21,461
|
|
||||
Stock-settled market stock units (MSUs)
|
2,543
|
|
|
3,698
|
|
|
6,164
|
|
|
7,348
|
|
||||
Stock-settled performance stock units (PSUs)
|
(863
|
)
|
|
199
|
|
|
490
|
|
|
2,332
|
|
||||
Employee stock purchase plan
|
381
|
|
|
355
|
|
|
795
|
|
|
765
|
|
||||
Restricted stock awards (RSAs)
|
478
|
|
|
1,053
|
|
|
742
|
|
|
1,200
|
|
||||
Share-based compensation expense, before income taxes
|
$
|
18,240
|
|
|
$
|
29,480
|
|
|
$
|
37,380
|
|
|
$
|
61,327
|
|
|
Six Months Ended August 31, 2017
|
|||||||||||||||
|
Equity Classified
|
|
Liability Classified
|
|||||||||||||
(Shares/units in thousands)
|
Options
|
MSUs
|
PSUs
|
RSAs
|
|
RSUs
|
||||||||||
Outstanding as of February 28, 2017
|
7,753
|
|
504
|
|
149
|
|
50
|
|
|
1,406
|
|
|||||
Granted
|
1,932
|
|
159
|
|
74
|
|
29
|
|
|
628
|
|
|||||
Exercised or vested and converted
|
(621
|
)
|
(223
|
)
|
—
|
|
(28
|
)
|
|
(463
|
)
|
|||||
Cancelled
|
(18
|
)
|
(5
|
)
|
—
|
|
—
|
|
|
(58
|
)
|
|||||
Outstanding as of August 31, 2017
|
9,046
|
|
435
|
|
223
|
|
51
|
|
|
1,513
|
|
|||||
|
|
|
|
|
|
|
||||||||||
Weighted average grant date fair value per share/unit:
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
||||||||||
Granted
|
$
|
16.11
|
|
$
|
73.59
|
|
$
|
58.38
|
|
$
|
62.35
|
|
|
$
|
58.39
|
|
Ending outstanding
|
$
|
15.48
|
|
$
|
73.72
|
|
$
|
60.10
|
|
$
|
58.06
|
|
|
$
|
59.34
|
|
|
|
|
|
|
|
|
||||||||||
|
As of August 31, 2017
|
|
|
|||||||||||||
Unrecognized compensation (
in mil
lions
)
|
$
|
47.6
|
|
$
|
15.0
|
|
$
|
3.9
|
|
$
|
2.1
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
|
August 31
|
August 31
|
||||||||||||
(In thousands except per share data)
|
2017
|
|
2016
|
2017
|
|
2016
|
||||||||
Net earnings
|
$
|
181,424
|
|
|
$
|
162,362
|
|
$
|
393,126
|
|
|
$
|
337,722
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
182,868
|
|
|
191,539
|
|
184,034
|
|
|
192,534
|
|
||||
Dilutive potential common shares:
|
|
|
|
|
|
|
||||||||
Stock options
|
1,465
|
|
|
1,599
|
|
1,337
|
|
|
1,423
|
|
||||
Stock-settled stock units and awards
|
363
|
|
|
485
|
|
407
|
|
|
480
|
|
||||
Weighted average common shares and dilutive potential common shares
|
184,696
|
|
|
193,623
|
|
185,778
|
|
|
194,437
|
|
||||
|
|
|
|
|
|
|
||||||||
Basic net earnings per share
|
$
|
0.99
|
|
|
$
|
0.85
|
|
$
|
2.14
|
|
|
$
|
1.75
|
|
Diluted net earnings per share
|
$
|
0.98
|
|
|
$
|
0.84
|
|
$
|
2.12
|
|
|
$
|
1.74
|
|
|
|
|
|
|
Total
|
||||||
|
Net
|
|
|
|
Accumulated
|
||||||
|
Unrecognized
|
|
Net
|
|
Other
|
||||||
|
Actuarial
|
|
Unrecognized
|
|
Comprehensive
|
||||||
(In thousands, net of income taxes)
|
Losses
|
|
Hedge Losses
|
|
Loss
|
||||||
Balance as of February 28, 2017
|
$
|
(55,521
|
)
|
|
$
|
(1,034
|
)
|
|
$
|
(56,555
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(4,813
|
)
|
|
(4,813
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
549
|
|
|
1,192
|
|
|
1,741
|
|
|||
Other comprehensive income (loss)
|
549
|
|
|
(3,621
|
)
|
|
(3,072
|
)
|
|||
Balance as of August 31, 2017
|
$
|
(54,972
|
)
|
|
$
|
(4,655
|
)
|
|
$
|
(59,627
|
)
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Retirement Benefit Plans (Note 9):
|
|
|
|
|
|
|
|
||||||||
Actuarial loss amortization reclassifications recognized in net pension expense:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
187
|
|
|
$
|
160
|
|
|
$
|
372
|
|
|
$
|
317
|
|
CarMax Auto Finance income
|
11
|
|
|
9
|
|
|
22
|
|
|
18
|
|
||||
Selling, general and administrative expenses
|
255
|
|
|
217
|
|
|
513
|
|
|
438
|
|
||||
Total amortization reclassifications recognized in net pension expense
|
453
|
|
|
386
|
|
|
907
|
|
|
773
|
|
||||
Tax expense
|
(178
|
)
|
|
(138
|
)
|
|
(358
|
)
|
|
(276
|
)
|
||||
Amortization reclassifications recognized in net pension expense, net of tax
|
275
|
|
|
248
|
|
|
549
|
|
|
497
|
|
||||
Net change in retirement benefit plan unrecognized actuarial losses, net of tax
|
275
|
|
|
248
|
|
|
549
|
|
|
497
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash Flow Hedges (Note 5):
|
|
|
|
|
|
|
|
||||||||
Effective portion of changes in fair value
|
(3,712
|
)
|
|
(3,129
|
)
|
|
(7,938
|
)
|
|
(798
|
)
|
||||
Tax benefit
|
1,461
|
|
|
1,231
|
|
|
3,125
|
|
|
315
|
|
||||
Effective portion of changes in fair value, net of tax
|
(2,251
|
)
|
|
(1,898
|
)
|
|
(4,813
|
)
|
|
(483
|
)
|
||||
Reclassifications to CarMax Auto Finance income
|
952
|
|
|
3,120
|
|
|
1,965
|
|
|
5,933
|
|
||||
Tax expense
|
(374
|
)
|
|
(1,227
|
)
|
|
(773
|
)
|
|
(2,333
|
)
|
||||
Reclassification of hedge losses, net of tax
|
578
|
|
|
1,893
|
|
|
1,192
|
|
|
3,600
|
|
||||
Net change in cash flow hedge unrecognized losses, net of tax
|
(1,673
|
)
|
|
(5
|
)
|
|
(3,621
|
)
|
|
3,117
|
|
||||
Total other comprehensive (loss) income, net of tax
|
$
|
(1,398
|
)
|
|
$
|
243
|
|
|
$
|
(3,072
|
)
|
|
$
|
3,614
|
|
|
Six Months Ended August 31
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Decrease in accrued capital expenditures
|
$
|
(2,864
|
)
|
|
$
|
(11,589
|
)
|
Increase in finance and capital lease obligations
|
$
|
10,245
|
|
|
$
|
31,117
|
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||||||||
(In millions)
|
2017
|
|
2016
|
|
Change
|
2017
|
|
2016
|
|
Change
|
||||||||||
Used vehicle sales
|
$
|
3,694.2
|
|
|
$
|
3,300.8
|
|
|
11.9
|
%
|
$
|
7,537.6
|
|
|
$
|
6,729.8
|
|
|
12.0
|
%
|
Wholesale vehicle sales
|
547.8
|
|
|
560.4
|
|
|
(2.3
|
)%
|
1,101.2
|
|
|
1,128.1
|
|
|
(2.4
|
)%
|
||||
Other sales and revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Extended protection plan revenues
|
85.5
|
|
|
75.1
|
|
|
13.9
|
%
|
177.4
|
|
|
151.3
|
|
|
17.3
|
%
|
||||
Third-party finance fees, net
|
(11.6
|
)
|
|
(8.3
|
)
|
|
(40.3
|
)%
|
(23.0
|
)
|
|
(20.2
|
)
|
|
(14.0
|
)%
|
||||
Other
|
70.8
|
|
|
69.2
|
|
|
2.2
|
%
|
135.8
|
|
|
134.6
|
|
|
0.9
|
%
|
||||
Total other sales and revenues
|
144.7
|
|
|
136.0
|
|
|
6.4
|
%
|
290.2
|
|
|
265.7
|
|
|
9.2
|
%
|
||||
Total net sales and operating revenues
|
$
|
4,386.6
|
|
|
$
|
3,997.2
|
|
|
9.7
|
%
|
$
|
8,929.0
|
|
|
$
|
8,123.6
|
|
|
9.9
|
%
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||
Used vehicles
|
186,019
|
|
|
167,412
|
|
|
11.1
|
%
|
|
381,292
|
|
|
338,488
|
|
|
12.6
|
%
|
Wholesale vehicles
|
105,508
|
|
|
105,108
|
|
|
0.4
|
%
|
|
208,951
|
|
|
208,570
|
|
|
0.2
|
%
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
Used vehicles
|
$
|
19,667
|
|
|
$
|
19,530
|
|
|
0.7
|
%
|
|
$
|
19,570
|
|
|
$
|
19,696
|
|
|
(0.6
|
)%
|
Wholesale vehicles
|
$
|
4,957
|
|
|
$
|
5,119
|
|
|
(3.2
|
)%
|
|
$
|
5,034
|
|
|
$
|
5,193
|
|
|
(3.1
|
)%
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Used vehicle units
|
5.3
|
%
|
|
3.1
|
%
|
|
6.8
|
%
|
|
1.6
|
%
|
Used vehicle revenues
|
6.0
|
%
|
|
0.9
|
%
|
|
6.1
|
%
|
|
0.6
|
%
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Used vehicle units
|
11.1
|
%
|
|
7.0
|
%
|
|
12.6
|
%
|
|
5.4
|
%
|
Used vehicle revenues
|
11.9
|
%
|
|
4.8
|
%
|
|
12.0
|
%
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
||||
Wholesale vehicle units
|
0.4
|
%
|
|
(1.3
|
)%
|
|
0.2
|
%
|
|
0.2
|
%
|
Wholesale vehicle revenues
|
(2.3
|
)%
|
|
(5.3
|
)%
|
|
(2.4
|
)%
|
|
(3.4
|
)%
|
|
Three Months Ended August 31
(1)
|
|
Six Months Ended August 31
(1)
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
CAF
(2)
|
49.0
|
%
|
|
50.6
|
%
|
|
48.1
|
%
|
|
49.9
|
%
|
Tier 2
(3)
|
16.0
|
%
|
|
17.5
|
%
|
|
17.6
|
%
|
|
18.0
|
%
|
Tier 3
(4)
|
9.6
|
%
|
|
9.0
|
%
|
|
9.8
|
%
|
|
10.1
|
%
|
Other
(5)
|
25.4
|
%
|
|
22.9
|
%
|
|
24.5
|
%
|
|
22.0
|
%
|
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.
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Used car stores, beginning of period
|
176
|
|
|
160
|
|
|
173
|
|
|
158
|
|
Store openings
|
3
|
|
|
3
|
|
|
6
|
|
|
5
|
|
Used car stores, end of period
|
179
|
|
|
163
|
|
|
179
|
|
|
163
|
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||
(In millions)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
Used vehicle gross profit
|
$
|
405.1
|
|
|
$
|
361.7
|
|
|
12.0
|
%
|
|
$
|
837.1
|
|
|
$
|
738.3
|
|
|
13.4
|
%
|
Wholesale vehicle gross profit
|
100.3
|
|
|
91.5
|
|
|
9.6
|
%
|
|
204.9
|
|
|
194.4
|
|
|
5.4
|
%
|
||||
Other gross profit
|
98.6
|
|
|
92.2
|
|
|
6.9
|
%
|
|
210.9
|
|
|
185.3
|
|
|
13.8
|
%
|
||||
Total
|
$
|
604.0
|
|
|
$
|
545.4
|
|
|
10.8
|
%
|
|
$
|
1,252.9
|
|
|
$
|
1,118.0
|
|
|
12.1
|
%
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
|
$ per unit
(1)
|
|
%
(2)
|
|
$ per unit
(1)
|
|
%
(2)
|
|
$ per unit
(1)
|
|
%
(2)
|
|
$ per unit
(1)
|
|
%
(2)
|
||||||||
Used vehicle gross profit
|
$
|
2,178
|
|
|
11.0
|
|
$
|
2,160
|
|
|
11.0
|
|
$
|
2,195
|
|
|
11.1
|
|
$
|
2,181
|
|
|
11.0
|
Wholesale vehicle gross profit
|
$
|
950
|
|
|
18.3
|
|
$
|
870
|
|
|
16.3
|
|
$
|
981
|
|
|
18.6
|
|
$
|
932
|
|
|
17.2
|
Other gross profit
|
$
|
530
|
|
|
68.1
|
|
$
|
551
|
|
|
67.8
|
|
$
|
553
|
|
|
72.7
|
|
$
|
547
|
|
|
69.7
|
Total gross profit
|
$
|
3,247
|
|
|
13.8
|
|
$
|
3,258
|
|
|
13.6
|
|
$
|
3,286
|
|
|
14.0
|
|
$
|
3,303
|
|
|
13.8
|
(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.
|
|
Three Months Ended August 31
|
|
Six Months Ended August 31
|
||||||||||||||||||||
(In millions except per unit data)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Compensation and benefits
(1)
|
$
|
218.2
|
|
|
$
|
199.3
|
|
|
9.5
|
%
|
|
$
|
440.6
|
|
|
$
|
415.9
|
|
|
6.0
|
%
|
||
Store occupancy costs
|
85.2
|
|
|
75.1
|
|
|
13.4
|
%
|
|
164.9
|
|
|
146.8
|
|
|
12.3
|
%
|
||||||
Advertising expense
|
39.6
|
|
|
34.5
|
|
|
14.8
|
%
|
|
77.8
|
|
|
69.3
|
|
|
12.3
|
%
|
||||||
Other overhead costs
(2)
|
62.1
|
|
|
57.2
|
|
|
8.4
|
%
|
|
125.3
|
|
|
114.4
|
|
|
9.5
|
%
|
||||||
Total SG&A expenses
|
$
|
405.1
|
|
|
$
|
366.1
|
|
|
10.6
|
%
|
|
$
|
808.6
|
|
|
$
|
746.4
|
|
|
8.3
|
%
|
||
SG&A per used vehicle unit
(3)
|
$
|
2,178
|
|
|
$
|
2,187
|
|
|
$
|
(9
|
)
|
|
$
|
2,121
|
|
|
$
|
2,205
|
|
|
$
|
(84
|
)
|
(1)
|
Excludes compensation and benefits related to reconditioning and vehicle repair service, which
are
included in cost of sales. See Note 11 for details of share-based compensation expense by grant type.
|
(2)
|
Includes IT expenses, preopening and relocation costs, insurance, travel, non-CAF bad debt, charitable contributions and other administrative expenses.
|
(3)
|
Calculated as total SG&A expenses divided by total used vehicle units.
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||||||||||||||
(In millions)
|
2017
|
|
%
(1)
|
|
|
2016
|
|
%
(1)
|
|
2017
|
|
%
(1)
|
|
|
2016
|
|
%
(1)
|
|
||||||||
Interest margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest and fee income
|
$
|
213.6
|
|
|
7.7
|
|
|
$
|
190.2
|
|
|
7.6
|
|
$
|
420.3
|
|
|
7.7
|
|
|
$
|
374.3
|
|
|
7.6
|
|
Interest expense
|
(52.2
|
)
|
|
(1.9
|
)
|
|
(41.8
|
)
|
|
(1.7
|
)
|
(101.2
|
)
|
|
(1.8
|
)
|
|
(81.2
|
)
|
|
(1.6
|
)
|
||||
Total interest margin
|
$
|
161.4
|
|
|
5.8
|
|
|
$
|
148.4
|
|
|
5.9
|
|
$
|
319.1
|
|
|
5.8
|
|
|
$
|
293.1
|
|
|
5.9
|
|
Provision for loan losses
|
$
|
(32.9
|
)
|
|
(1.2
|
)
|
|
$
|
(35.7
|
)
|
|
(1.4
|
)
|
$
|
(61.5
|
)
|
|
1.1
|
|
|
$
|
(62.3
|
)
|
|
(1.3
|
)
|
CarMax Auto Finance income
|
$
|
107.9
|
|
|
3.9
|
|
|
$
|
96.0
|
|
|
3.8
|
|
$
|
217.3
|
|
|
4.0
|
|
|
$
|
196.7
|
|
|
4.0
|
|
(1)
|
Annualized percentage of total average managed receivables.
|
|
Three Months Ended August 31
|
Six Months Ended August 31
|
||||||||||||
|
2017
|
|
2016
|
2017
|
|
2016
|
||||||||
Net loans originated
(in millions)
|
$
|
1,542.2
|
|
|
$
|
1,435.3
|
|
$
|
3,088.3
|
|
|
$
|
2,878.7
|
|
Vehicle units financed
|
80,976
|
|
|
75,898
|
|
162,763
|
|
|
150,982
|
|
||||
Net penetration rate
(1)
|
43.5
|
%
|
|
45.3
|
%
|
42.7
|
%
|
|
44.6
|
%
|
||||
Weighted average contract rate
|
7.6
|
%
|
|
7.4
|
%
|
7.7
|
%
|
|
7.5
|
%
|
||||
Weighted average credit score
(2)
|
709
|
|
|
706
|
|
707
|
|
|
705
|
|
||||
Weighted average loan-to-value (LTV)
(3)
|
95.2
|
%
|
|
95.2
|
%
|
95.0
|
%
|
|
94.8
|
%
|
||||
Weighted average term
(in months)
|
65.8
|
|
|
65.8
|
|
65.8
|
|
|
65.9
|
|
(1)
|
Vehicle units financed as a percentage of total used units sold.
|
(2)
|
The credit scores represent FICO® scores and reflect only receivables with obligors that have a FICO® score at the time of application. The FICO® score with respect to any receivable with co-obligors is calculated as the average of each obligor’s FICO® score at the time of application. FICO® scores are not a significant factor in our primary scoring model, which relies on information from credit bureaus and other application information as discussed in
Note 4. FICO® is a federally registered servicemark of Fair Isaac Corporation.
|
(3)
|
LTV represents the ratio of the amount financed to the total collateral value, which is measured as the vehicle selling price plus applicable taxes, title and fees.
|
|
As of and for the Three Months Ended
August 31 |
|
As of and for the Six Months Ended
August 31 |
||||||||||||
(In millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total ending managed receivables
|
$
|
11,252.8
|
|
|
$
|
10,197.8
|
|
|
$
|
11,252.8
|
|
|
$
|
10,197.8
|
|
Total average managed receivables
|
$
|
11,112.0
|
|
|
$
|
10,049.8
|
|
|
$
|
10,970.8
|
|
|
$
|
9,897.4
|
|
Allowance for loan losses
(1)
|
$
|
129.5
|
|
|
$
|
109.7
|
|
|
$
|
129.5
|
|
|
$
|
109.7
|
|
Allowance for loan losses as a percentage of ending managed receivables
|
1.15
|
%
|
|
1.08
|
%
|
|
1.15
|
%
|
|
1.08
|
%
|
||||
Net credit losses on managed receivables
|
$
|
33.2
|
|
|
$
|
30.0
|
|
|
$
|
55.6
|
|
|
$
|
47.5
|
|
Annualized net credit losses as a percentage of total average managed receivables
|
1.19
|
%
|
|
1.20
|
%
|
|
1.01
|
%
|
|
0.96
|
%
|
||||
Past due accounts as a percentage of ending managed receivables
|
3.42
|
%
|
|
3.24
|
%
|
|
3.42
|
%
|
|
3.24
|
%
|
||||
Average recovery rate
(2)
|
45.7
|
%
|
|
48.4
|
%
|
|
46.7
|
%
|
|
49.2
|
%
|
(1)
|
The allowance for loan losses represents an estimate of the amount of net losses inherent in our portfolio of managed receivables as of the applicable reporting date and anticipated to occur during the following 12 months.
|
(2)
|
The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions. The annual recovery rate has ranged from a low of 42% to a high of 60%, and it is primarily affected by changes in the wholesale market pricing environment.
|
Location
|
Television Market
|
Metropolitan Statistical Area
|
Planned Opening Date
|
Langhorne, Pennsylvania
(1)
|
Philadelphia
|
Philadelphia
|
Q3 Fiscal 2018
|
Tyler, Texas
(1)
|
Tyler/Longview
(2)
|
Tyler
|
Q3 Fiscal 2018
|
Las Vegas, Nevada
|
Las Vegas
|
Las Vegas
|
Q3 Fiscal 2018
|
Colma, California
|
San Francisco/Oakland/San Jose
|
San Francisco/Oakland
|
Q3 Fiscal 2018
|
Renton, Washington
|
Seattle/Tacoma
|
Seattle/Tacoma
|
Q3 Fiscal 2018
|
Myrtle Beach, South Carolina
|
Myrtle Beach/Florence
(2)
|
Myrtle Beach
|
Q4 Fiscal 2018
|
South Portland, Maine
|
Portland/Auburn
(2)
|
Portland
|
Q4 Fiscal 2018
|
Manchester, New Hampshire
|
Boston
|
Manchester
|
Q4 Fiscal 2018
|
Golden, Colorado
|
Denver
|
Denver/Aurora
|
Q4 Fiscal 2018
|
Winterville, North Carolina
|
Greenville/New Bern/Washington
(2)
|
Greenville
|
Q1 Fiscal 2019
|
McKinney, Texas
|
Dallas/Ft. Worth
|
Dallas/Ft. Worth
|
Q1 Fiscal 2019
|
Jensen Beach, Florida
|
Miami/Ft. Lauderdale/W. Palm Beach
|
Port St. Lucie
|
Q1 Fiscal 2019
|
Santa Fe, New Mexico
|
Albuquerque/Santa Fe
|
Santa Fe
|
Q2 Fiscal 2019
|
Warner Robins, Georgia
|
Macon
(2)
|
Warner Robins
|
Q2 Fiscal 2019
|
Norman, Oklahoma
|
Oklahoma City
|
Oklahoma City
|
Q2 Fiscal 2019
|
(1)
|
Store opened subsequent to
August 31, 2017
and prior to the filing of this Form 10-Q.
|
(2)
|
Represents new television market as of planned store opening date.
|
|
Six Months Ended August 31
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Net cash provided by (used in) operating activities
(1)
|
$
|
81.1
|
|
|
$
|
(33.0
|
)
|
Add: Net issuances of non-recourse notes payable
(2)
|
561.1
|
|
|
736.8
|
|
||
Adjusted net cash provided by operating activities
|
$
|
642.2
|
|
|
$
|
703.8
|
|
(1)
|
In connection with our adoption of FASB ASU 2016-09 during the current fiscal year, cash flows related to excess tax benefits from share-based payment arrangements are now classified as operating activities, rather than financing activities, in the consolidated statements of cash flows. Prior period amounts have been reclassified to conform to the current year's presentation.
|
(2)
|
Calculated using the gross issuances less payments on non-recourse notes payable as disclosed on the consolidated statements of cash flows.
|
|
As of August 31
|
|
As of February 28
|
||||
(In thousands)
|
2017
|
|
2017
|
||||
Borrowings under revolving credit facility
|
$
|
18,271
|
|
|
$
|
155,062
|
|
Other long-term debt
|
800,000
|
|
|
800,000
|
|
||
Finance and capital lease obligations
|
502,502
|
|
|
496,136
|
|
||
Non-recourse notes payable
|
11,303,502
|
|
|
10,742,425
|
|
||
Total debt
(1)
|
$
|
12,624,275
|
|
|
$
|
12,193,623
|
|
Cash and cash equivalents
|
$
|
25,765
|
|
|
$
|
38,416
|
|
(1)
|
Total debt excludes unamortized debt issuance costs. See Note 10 for additional information.
|
•
|
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.
|
•
|
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 loan receivables 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 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.
|
•
|
The performance of third-party vendors we rely on for key components of our business.
|
•
|
Factors related to seasonal fluctuations in our business.
|
•
|
The occurrence of severe weather events.
|
•
|
Factors related to the geographic concentration of our stores.
|
|
|
|
|
|
|
|
|
Approximate
|
||||||
|
|
|
|
|
|
|
|
Dollar Value
|
||||||
|
|
|
|
|
|
Total Number
|
|
of Shares that
|
||||||
|
|
Total Number
|
|
Average
|
|
of Shares Purchased
|
|
May Yet Be
|
||||||
|
|
of Shares
|
|
Price Paid
|
|
as Part of Publicly
|
|
Purchased Under
|
||||||
Period
|
|
Purchased
|
|
per Share
|
|
Announced Program
|
|
the Program
|
||||||
June 1 - 30, 2017
|
|
843,779
|
|
|
$
|
61.68
|
|
|
843,779
|
|
|
$
|
1,356,229,223
|
|
July 1 - 31, 2017
|
|
744,346
|
|
|
$
|
64.91
|
|
|
744,346
|
|
|
$
|
1,307,914,504
|
|
August 1 - 31, 2017
|
|
864,959
|
|
|
$
|
64.87
|
|
|
864,959
|
|
|
$
|
1,251,807,541
|
|
Total
|
|
2,453,084
|
|
|
|
|
2,453,084
|
|
|
|
|
|
CARMAX, INC.
|
|
|
|
|
|
By:
|
/s/ William D. Nash
|
|
William D. Nash
|
|
President and
|
|
Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Thomas W. Reedy
|
|
Thomas W. Reedy
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
1 Year CarMax Chart |
1 Month CarMax Chart |
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