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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 | |
---|---|---|---|---|---|---|---|---|
0.67 | 0.98% | 68.71 | 70.34 | 68.65 | 69.43 | 1,860,155 | 22:03:11 |
VIRGINIA
|
54-1821055
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
12800 TUCKAHOE CREEK PARKWAY, RICHMOND, VIRGINIA
|
23238
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.50
|
KMX
|
New York Stock Exchange
|
Yes
x
|
|
No
¨
|
Yes
x
|
|
No
¨
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
|
|
|
Emerging growth company
¨
|
Yes
¨
|
|
No
x
|
Class
|
|
Outstanding as of 6/30/2019
|
Common Stock, par value $0.50
|
|
165,586,114
|
|
Page
No.
|
||
PART I.
|
FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Financial Statements:
|
|
|
|
|
|
|
|
Consolidated Statements of Earnings (Unaudited) –
|
|
|
|
Three Months Ended May 31, 2019 and 2018
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Unaudited) –
|
|
|
|
Three Months Ended May 31, 2019 and 2018
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) –
|
|
|
|
May 31, 2019 and February 28, 2019
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (Unaudited) –
|
|
|
|
Three Months Ended May 31, 2019 and 2018
|
|
|
|
|
|
|
|
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 May 31
|
|||||||||
(In thousands except per share data)
|
2019
|
%
(1)
|
|
2018
|
%
(1)
|
|||||
SALES AND OPERATING REVENUES:
|
|
|
|
|
|
|||||
Used vehicle sales
|
$
|
4,540,657
|
|
84.6
|
|
|
$
|
4,021,047
|
|
83.9
|
Wholesale vehicle sales
|
662,449
|
|
12.3
|
|
|
617,651
|
|
12.9
|
||
Other sales and revenues
|
163,212
|
|
3.0
|
|
|
153,894
|
|
3.2
|
||
NET SALES AND OPERATING REVENUES
|
5,366,318
|
|
100.0
|
|
|
4,792,592
|
|
100.0
|
||
COST OF SALES:
|
|
|
|
|
|
|||||
Used vehicle cost of sales
|
4,043,824
|
|
75.4
|
|
|
3,581,609
|
|
74.7
|
||
Wholesale vehicle cost of sales
|
536,490
|
|
10.0
|
|
|
502,945
|
|
10.5
|
||
Other cost of sales
|
43,621
|
|
0.8
|
|
|
46,698
|
|
1.0
|
||
TOTAL COST OF SALES
|
4,623,935
|
|
86.2
|
|
|
4,131,252
|
|
86.2
|
||
GROSS PROFIT
|
742,383
|
|
13.8
|
|
|
661,340
|
|
13.8
|
||
CARMAX AUTO FINANCE INCOME
|
115,959
|
|
2.2
|
|
|
115,593
|
|
2.4
|
||
Selling, general and administrative expenses
|
489,660
|
|
9.1
|
|
|
438,234
|
|
9.1
|
||
Interest expense
|
17,784
|
|
0.3
|
|
|
18,052
|
|
0.4
|
||
Other (income) expense
|
(359
|
)
|
—
|
|
|
963
|
|
—
|
||
Earnings before income taxes
|
351,257
|
|
6.5
|
|
|
319,684
|
|
6.7
|
||
Income tax provision
|
84,513
|
|
1.6
|
|
|
81,028
|
|
1.7
|
||
NET EARNINGS
|
$
|
266,744
|
|
5.0
|
|
|
$
|
238,656
|
|
5.0
|
WEIGHTED AVERAGE COMMON SHARES:
|
|
|
|
|
|
|||||
Basic
|
166,324
|
|
|
|
178,139
|
|
|
|||
Diluted
|
167,643
|
|
|
|
179,421
|
|
|
|||
NET EARNINGS PER SHARE:
|
|
|
|
|
|
|||||
Basic
|
$
|
1.60
|
|
|
|
$
|
1.34
|
|
|
|
Diluted
|
$
|
1.59
|
|
|
|
$
|
1.33
|
|
|
|
Three Months Ended May 31
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
NET EARNINGS
|
$
|
266,744
|
|
|
$
|
238,656
|
|
Other comprehensive loss, net of taxes
|
|
|
|
||||
Net change in retirement benefit plan unrecognized actuarial losses
|
355
|
|
|
369
|
|
||
Net change in cash flow hedge unrecognized losses
|
(13,551
|
)
|
|
(1,102
|
)
|
||
Other comprehensive loss, net of taxes
|
(13,196
|
)
|
|
(733
|
)
|
||
TOTAL COMPREHENSIVE INCOME
|
$
|
253,548
|
|
|
$
|
237,923
|
|
|
Three Months Ended May 31
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Used vehicle sales
|
$
|
4,540.7
|
|
|
$
|
4,021.0
|
|
Wholesale vehicle sales
|
662.4
|
|
|
617.7
|
|
||
Other sales and revenues:
|
|
|
|
||||
Extended protection plan revenues
|
111.3
|
|
|
100.1
|
|
||
Third-party finance fees, net
|
(15.5
|
)
|
|
(14.5
|
)
|
||
Service revenues
|
34.0
|
|
|
36.5
|
|
||
Other
|
33.4
|
|
|
31.8
|
|
||
Total other sales and revenues
|
163.2
|
|
|
153.9
|
|
||
Total net sales and operating revenues
|
$
|
5,366.3
|
|
|
$
|
4,792.6
|
|
|
Three Months Ended May 31
|
||||||||||||
(In millions)
|
2019
|
|
%
(1)
|
|
2018
|
|
%
(1)
|
||||||
Interest margin:
|
|
|
|
|
|
|
|
||||||
Interest and fee income
|
$
|
266.2
|
|
|
8.4
|
|
|
$
|
232.3
|
|
|
7.9
|
|
Interest expense
|
(87.4
|
)
|
|
(2.8
|
)
|
|
(63.8
|
)
|
|
(2.2
|
)
|
||
Total interest margin
|
178.8
|
|
|
5.6
|
|
|
168.5
|
|
|
5.7
|
|
||
Provision for loan losses
|
(38.2
|
)
|
|
(1.2
|
)
|
|
(30.9
|
)
|
|
(1.0
|
)
|
||
Total interest margin after provision for loan losses
|
140.6
|
|
|
4.4
|
|
|
137.6
|
|
|
4.7
|
|
||
|
|
|
|
|
|
|
|
||||||
Direct expenses:
|
|
|
|
|
|
|
|
||||||
Payroll and fringe benefit expense
|
(10.1
|
)
|
|
(0.3
|
)
|
|
(9.6
|
)
|
|
(0.3
|
)
|
||
Other direct expenses
|
(14.5
|
)
|
|
(0.5
|
)
|
|
(12.4
|
)
|
|
(0.4
|
)
|
||
Total direct expenses
|
(24.6
|
)
|
|
(0.8
|
)
|
|
(22.0
|
)
|
|
(0.7
|
)
|
||
CarMax Auto Finance income
|
$
|
116.0
|
|
|
3.7
|
|
|
$
|
115.6
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
||||||
Total average managed receivables
|
$
|
12,707.3
|
|
|
|
|
|
$
|
11,775.4
|
|
|
|
|
(1)
|
Annualized percentage of total average managed receivables.
|
|
As of May 31
|
|
As of February 28
|
||||
(In millions)
|
2019
|
|
2019
|
||||
Asset-backed term funding
|
$
|
10,298.3
|
|
|
$
|
10,273.4
|
|
Warehouse facilities
|
2,178.0
|
|
|
1,877.0
|
|
||
Overcollateralization
(1)
|
291.9
|
|
|
273.3
|
|
||
Other managed receivables
(2)
|
91.2
|
|
|
86.5
|
|
||
Total ending managed receivables
|
12,859.4
|
|
|
12,510.2
|
|
||
Accrued interest and fees
|
56.7
|
|
|
49.6
|
|
||
Other
|
8.2
|
|
|
6.9
|
|
||
Less allowance for loan losses
|
(147.0
|
)
|
|
(138.2
|
)
|
||
Auto loan receivables, net
|
$
|
12,777.3
|
|
|
$
|
12,428.5
|
|
(1)
|
Represents receivables restricted as excess collateral for the non-recourse funding vehicles.
|
(2)
|
Other managed receivables includes receivables not funded through the non-recourse funding vehicles.
|
|
As of May 31
|
|
As of February 28
|
||||||||
(In millions)
|
2019
(1)
|
|
%
(2)
|
|
2019
(1)
|
|
%
(2)
|
||||
A
|
$
|
6,385.2
|
|
|
49.7
|
|
$
|
6,225.6
|
|
|
49.8
|
B
|
4,641.0
|
|
|
36.1
|
|
4,488.2
|
|
|
35.9
|
||
C and other
|
1,833.2
|
|
|
14.2
|
|
1,796.4
|
|
|
14.3
|
||
Total ending managed receivables
|
$
|
12,859.4
|
|
|
100.0
|
|
$
|
12,510.2
|
|
|
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 May 31
|
||||||||||
(In millions)
|
2019
|
|
%
(1)
|
|
2018
|
|
%
(1)
|
||||
Balance as of beginning of period
|
$
|
138.2
|
|
|
1.10
|
|
$
|
128.6
|
|
|
1.11
|
Charge-offs
|
(65.9
|
)
|
|
|
|
(58.9
|
)
|
|
|
||
Recoveries
|
36.5
|
|
|
|
|
33.7
|
|
|
|
||
Provision for loan losses
|
38.2
|
|
|
|
|
30.9
|
|
|
|
||
Balance as of end of period
|
$
|
147.0
|
|
|
1.14
|
|
$
|
134.3
|
|
|
1.13
|
(1)
|
Percent
of total ending managed receivables.
|
|
As of May 31
|
|
As of February 28
|
||||||||
(In millions)
|
2019
|
|
%
(1)
|
|
2019
|
|
%
(1)
|
||||
Total ending managed receivables
|
$
|
12,859.4
|
|
|
100.0
|
|
$
|
12,510.2
|
|
|
100.0
|
Delinquent loans:
|
|
|
|
|
|
|
|
||||
31-60 days past due
|
$
|
276.7
|
|
|
2.2
|
|
$
|
276.5
|
|
|
2.2
|
61-90 days past due
|
124.0
|
|
|
1.0
|
|
141.4
|
|
|
1.1
|
||
Greater than 90 days past due
|
31.1
|
|
|
0.2
|
|
33.9
|
|
|
0.3
|
||
Total past due
|
$
|
431.8
|
|
|
3.4
|
|
$
|
451.8
|
|
|
3.6
|
(1)
|
Percent of total ending managed receivables.
|
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 May 31, 2019
|
||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market securities
|
$
|
415,713
|
|
|
$
|
—
|
|
|
$
|
415,713
|
|
Mutual fund investments
|
21,329
|
|
|
—
|
|
|
21,329
|
|
|||
Derivative instruments
|
—
|
|
|
593
|
|
|
593
|
|
|||
Total assets at fair value
|
$
|
437,042
|
|
|
$
|
593
|
|
|
$
|
437,635
|
|
|
|
|
|
|
|
||||||
Percent of total assets at fair value
|
99.9
|
%
|
|
0.1
|
%
|
|
100.0
|
%
|
|||
Percent of total assets
|
2.2
|
%
|
|
—
|
%
|
|
2.2
|
%
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
(13,213
|
)
|
|
$
|
(13,213
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
(13,213
|
)
|
|
$
|
(13,213
|
)
|
|
|
|
|
|
|
||||||
Percent of total liabilities
|
—
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
As of February 28, 2019
|
||||||||||
(In thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market securities
|
$
|
372,448
|
|
|
$
|
—
|
|
|
$
|
372,448
|
|
Mutual fund investments
|
19,263
|
|
|
—
|
|
|
19,263
|
|
|||
Derivative instruments
|
—
|
|
|
1,844
|
|
|
1,844
|
|
|||
Total assets at fair value
|
$
|
391,711
|
|
|
$
|
1,844
|
|
|
$
|
393,555
|
|
|
|
|
|
|
|
||||||
Percent of total assets at fair value
|
99.5
|
%
|
|
0.5
|
%
|
|
100.0
|
%
|
|||
Percent of total assets
|
2.1
|
%
|
|
—
|
%
|
|
2.1
|
%
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
(6,120
|
)
|
|
$
|
(6,120
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
(6,120
|
)
|
|
$
|
(6,120
|
)
|
|
|
|
|
|
|
||||||
Percent of total liabilities
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
(In thousands)
|
As of May 31, 2019
|
|
As of February 28, 2019
|
||||
Carrying value
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Fair value
|
$
|
513,199
|
|
|
$
|
488,590
|
|
|
Three Months Ended May 31
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Balance as of beginning of period
|
$
|
102.8
|
|
|
$
|
105.2
|
|
Cancellations
|
(18.8
|
)
|
|
(16.6
|
)
|
||
Provision for future cancellations
|
25.5
|
|
|
20.1
|
|
||
Balance as of end of period
|
$
|
109.5
|
|
|
$
|
108.7
|
|
(In thousands)
|
|
As of May 31
|
|
As of February 28
|
||||
Debt Description
(1)
|
Maturity Date
|
2019
|
|
2019
|
||||
Revolving credit facility
(2)
|
August 2020
|
$
|
274,371
|
|
|
$
|
366,529
|
|
Term loan
(3)
|
August 2020
|
300,000
|
|
|
300,000
|
|
||
3.86% Senior notes
|
April 2023
|
100,000
|
|
|
100,000
|
|
||
4.17% Senior notes
|
April 2026
|
200,000
|
|
|
200,000
|
|
||
4.27% Senior notes
|
April 2028
|
200,000
|
|
|
200,000
|
|
||
Financing obligations
|
Various dates through February 2059
|
516,029
|
|
|
495,626
|
|
||
Non-recourse notes payable
|
Various dates through October 2025
|
12,893,596
|
|
|
12,535,405
|
|
||
Total debt
|
|
14,483,996
|
|
|
14,197,560
|
|
||
Less: current portion
|
|
(432,342
|
)
|
|
(396,350
|
)
|
||
Less: unamortized debt issuance costs
|
|
(23,940
|
)
|
|
(24,676
|
)
|
||
Long-term debt, net
|
|
$
|
14,027,714
|
|
|
$
|
13,776,534
|
|
(1)
|
Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.
|
(2)
|
Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. In June 2019, the credit facility was amended to increase the credit limit to
$1.45 billion
and extend the maturity date to June 2024.
|
(3)
|
Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. In June 2019, the term loan was amended to extend the maturity date to June 2024.
|
(in billions)
|
Capacity
|
||
Warehouse facilities
|
|
||
August 2019 expiration
|
$
|
1.40
|
|
September 2019 expiration
|
0.15
|
|
|
February 2020 expiration
|
1.95
|
|
|
Combined warehouse facility limit
|
$
|
3.50
|
|
Unused capacity
|
$
|
1.32
|
|
|
|
||
Non-recourse notes payable outstanding:
|
|
||
Warehouse facilities
|
$
|
2.18
|
|
Asset-backed term funding transactions
|
10.71
|
|
|
Non-recourse notes payable
|
$
|
12.89
|
|
|
Three Months Ended
|
||||||
|
May 31
|
||||||
|
2019
|
|
2018
|
||||
Number of shares repurchased
(in thousands)
|
2,953.1
|
|
|
3,307.6
|
|
||
Average cost per share
|
$
|
69.35
|
|
|
$
|
62.69
|
|
Available for repurchase, as of end of period
(in millions)
|
$
|
1,909.1
|
|
|
$
|
809.5
|
|
|
Three Months Ended
|
||||||
|
May 31
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Cost of sales
|
$
|
2,825
|
|
|
$
|
1,291
|
|
CarMax Auto Finance income
|
1,805
|
|
|
1,197
|
|
||
Selling, general and administrative expenses
|
40,893
|
|
|
26,977
|
|
||
Share-based compensation expense, before income taxes
|
$
|
45,523
|
|
|
$
|
29,465
|
|
|
Three Months Ended
|
||||||
|
May 31
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Nonqualified stock options
|
$
|
11,842
|
|
|
$
|
11,115
|
|
Cash-settled restricted stock units (RSUs)
|
26,113
|
|
|
12,354
|
|
||
Stock-settled market stock units (MSUs)
|
4,409
|
|
|
4,636
|
|
||
Other share-based incentives:
|
|
|
|
||||
Stock-settled performance stock units (PSUs)
|
2,209
|
|
|
406
|
|
||
Restricted stock (RSAs)
|
—
|
|
|
487
|
|
||
Stock-settled deferred stock units (DSUs)
|
452
|
|
|
—
|
|
||
Employee stock purchase plan
|
498
|
|
|
467
|
|
||
Total other share-based incentives
|
$
|
3,159
|
|
|
$
|
1,360
|
|
Share-based compensation expense, before income taxes
|
$
|
45,523
|
|
|
$
|
29,465
|
|
|
As of May 31, 2019
|
||||
|
|
|
Weighted Average
|
||
|
Unrecognized
|
|
Remaining
|
||
|
Compensation
|
|
Recognition Life
|
||
(Costs in millions)
|
Costs
|
|
(Years)
|
||
Nonqualified stock options
|
$
|
59.0
|
|
|
2.8
|
Stock-settled market stock units
|
21.4
|
|
|
1.9
|
|
Other share-based incentives:
|
|
|
|
||
Stock-settled performance stock units
|
2.4
|
|
|
0.1
|
|
Stock-settled deferred stock units
|
0.2
|
|
|
1.9
|
|
Total other share-based incentives
|
2.6
|
|
|
1.6
|
|
Total
|
$
|
83.0
|
|
|
2.5
|
|
|
|
|
|
Weighted
|
|
|
|||||
|
|
|
Weighted
|
|
Average
|
|
|
|||||
|
|
|
Average
|
|
Remaining
|
|
Aggregate
|
|||||
|
Number of
|
|
Exercise
|
|
Contractual
|
|
Intrinsic
|
|||||
(Shares and intrinsic value in thousands)
|
Shares
|
|
Price
|
|
Life (Years)
|
|
Value
|
|||||
Outstanding as of February 28, 2019
|
7,869
|
|
|
$
|
57.96
|
|
|
|
|
|
|
|
Options granted
|
1,575
|
|
|
78.61
|
|
|
|
|
|
|
||
Options exercised
|
(727
|
)
|
|
45.76
|
|
|
|
|
|
|
||
Options forfeited or expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding as of May 31, 2019
|
8,717
|
|
|
$
|
62.71
|
|
|
4.7
|
|
$
|
136,236
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable as of May 31, 2019
|
4,488
|
|
|
$
|
58.98
|
|
|
3.7
|
|
$
|
86,617
|
|
|
Three Months Ended May 31
|
||||||
|
2019
|
|
2018
|
||||
Options granted
|
1,574,735
|
|
|
1,720,387
|
|
||
Weighted average grant date fair value per share
|
$
|
22.08
|
|
|
$
|
18.71
|
|
Cash received from options exercised
(in millions)
|
$
|
33.3
|
|
|
$
|
9.1
|
|
Intrinsic value of options exercised
(in millions)
|
$
|
19.4
|
|
|
$
|
4.2
|
|
Realized tax benefits
(in millions)
|
$
|
5.3
|
|
|
$
|
1.2
|
|
|
Three Months Ended May 31
|
||||||||||
|
2019
|
|
2018
|
||||||||
Dividend yield
|
|
|
|
0.0
|
%
|
|
|
|
|
0.0
|
%
|
Expected volatility factor
(1)
|
27.3
|
%
|
-
|
29.5
|
%
|
|
29.0
|
%
|
-
|
31.4
|
%
|
Weighted average expected volatility
|
|
|
|
29.3
|
%
|
|
|
|
|
29.1
|
%
|
Risk-free interest rate
(2)
|
2.3
|
%
|
-
|
2.4
|
%
|
|
1.7
|
%
|
-
|
2.9
|
%
|
Expected term (in years)
(3)
|
|
|
|
4.6
|
|
|
|
|
|
4.6
|
|
(1)
|
Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the implied volatility derived from the market prices of traded options on our stock.
|
(2)
|
Based on the U.S. Treasury yield curve at the time of grant.
|
(3)
|
Represents the estimated number of years that options will be outstanding prior to exercise.
|
|
|
|
Weighted
|
|||
|
|
|
Average
|
|||
|
Number of
|
|
Grant Date
|
|||
(Units in thousands)
|
Units
|
|
Fair Value
|
|||
Outstanding as of February 28, 2019
|
1,609
|
|
|
$
|
58.00
|
|
Stock units granted
|
563
|
|
|
$
|
78.61
|
|
Stock units vested and converted
|
(491
|
)
|
|
$
|
51.66
|
|
Stock units cancelled
|
(31
|
)
|
|
$
|
61.05
|
|
Outstanding as of May 31, 2019
|
1,650
|
|
|
$
|
66.86
|
|
|
Three Months Ended May 31
|
||||||
|
2019
|
|
2018
|
||||
Stock units granted
|
562,586
|
|
|
628,547
|
|
||
Initial weighted average grant date fair value per share
|
$
|
78.61
|
|
|
$
|
63.04
|
|
Payments (before payroll tax withholdings) upon vesting
(in millions)
|
$
|
36.5
|
|
|
$
|
20.0
|
|
Realized tax benefits
(in millions)
|
$
|
10.0
|
|
|
$
|
5.6
|
|
|
As of May 31, 2019
|
||||||
(In thousands)
|
Minimum
(1)
|
|
Maximum
(1)
|
||||
Fiscal 2021
|
$
|
26,783
|
|
|
$
|
71,420
|
|
Fiscal 2022
|
21,645
|
|
|
57,721
|
|
||
Fiscal 2023
|
23,835
|
|
|
63,561
|
|
||
Total expected cash settlements
|
$
|
72,263
|
|
|
$
|
192,702
|
|
(1)
|
Net of estimated forfeitures.
|
|
|
|
Weighted
|
|||
|
|
|
Average
|
|||
|
Number of
|
|
Grant Date
|
|||
(Units in thousands)
|
Units
|
|
Fair Value
|
|||
Outstanding as of February 28, 2019
|
509
|
|
|
$
|
74.36
|
|
Stock units granted
|
128
|
|
|
$
|
98.43
|
|
Stock units vested and converted
|
(148
|
)
|
|
$
|
63.97
|
|
Stock units cancelled
|
—
|
|
|
$
|
—
|
|
Outstanding as of May 31, 2019
|
489
|
|
|
$
|
83.83
|
|
|
Three Months Ended May 31
|
||||||
|
2019
|
|
2018
|
||||
Stock units granted
|
128,376
|
|
|
202,043
|
|
||
Weighted average grant date fair value per share
|
$
|
98.43
|
|
|
$
|
81.86
|
|
Realized tax benefits
(in millions)
|
$
|
3.8
|
|
|
$
|
1.4
|
|
|
Three Months Ended
|
||||||
|
May 31
|
||||||
(In thousands except per share data)
|
2019
|
|
2018
|
||||
Net earnings
|
$
|
266,744
|
|
|
$
|
238,656
|
|
|
|
|
|
||||
Weighted average common shares outstanding
|
166,324
|
|
|
178,139
|
|
||
Dilutive potential common shares:
|
|
|
|
||||
Stock options
|
1,000
|
|
|
925
|
|
||
Stock-settled stock units and awards
|
319
|
|
|
357
|
|
||
Weighted average common shares and dilutive potential common shares
|
167,643
|
|
|
179,421
|
|
||
|
|
|
|
||||
Basic net earnings per share
|
$
|
1.60
|
|
|
$
|
1.34
|
|
Diluted net earnings per share
|
$
|
1.59
|
|
|
$
|
1.33
|
|
|
|
|
|
|
Total
|
||||||
|
Net
|
|
Net
|
|
Accumulated
|
||||||
|
Unrecognized
|
|
Unrecognized
|
|
Other
|
||||||
|
Actuarial
|
|
Hedge Gains
|
|
Comprehensive
|
||||||
(In thousands, net of income taxes)
|
Losses
|
|
(Losses)
|
|
Loss
|
||||||
Balance as of February 28, 2019
|
$
|
(70,478
|
)
|
|
$
|
2,468
|
|
|
$
|
(68,010
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(13,200
|
)
|
|
(13,200
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
355
|
|
|
(351
|
)
|
|
4
|
|
|||
Other comprehensive income (loss)
|
355
|
|
|
(13,551
|
)
|
|
(13,196
|
)
|
|||
Balance as of May 31, 2019
|
$
|
(70,123
|
)
|
|
$
|
(11,083
|
)
|
|
$
|
(81,206
|
)
|
|
Three Months Ended May 31
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Retirement Benefit Plans:
|
|
|
|
||||
Actuarial loss amortization reclassifications recognized in net pension expense:
|
|
|
|
||||
Cost of sales
|
$
|
197
|
|
|
$
|
201
|
|
CarMax Auto Finance income
|
12
|
|
|
13
|
|
||
Selling, general and administrative expenses
|
259
|
|
|
273
|
|
||
Total amortization reclassifications recognized in net pension expense
|
468
|
|
|
487
|
|
||
Tax expense
|
(113
|
)
|
|
(118
|
)
|
||
Amortization reclassifications recognized in net pension expense, net of tax
|
355
|
|
|
369
|
|
||
Net change in retirement benefit plan unrecognized actuarial losses, net of tax
|
355
|
|
|
369
|
|
||
|
|
|
|
||||
Cash Flow Hedges (Note 5):
|
|
|
|
||||
Changes in fair value
|
(17,942
|
)
|
|
(387
|
)
|
||
Tax benefit
|
4,742
|
|
|
102
|
|
||
Changes in fair value, net of tax
|
(13,200
|
)
|
|
(285
|
)
|
||
Reclassifications to CarMax Auto Finance income
|
(477
|
)
|
|
(1,109
|
)
|
||
Tax benefit
|
126
|
|
|
292
|
|
||
Reclassification of hedge gains, net of tax
|
(351
|
)
|
|
(817
|
)
|
||
Net change in cash flow hedge unrecognized losses, net of tax
|
(13,551
|
)
|
|
(1,102
|
)
|
||
Total other comprehensive loss, net of tax
|
$
|
(13,196
|
)
|
|
$
|
(733
|
)
|
(In thousands)
|
Three Months Ended May 31, 2019
|
||
Operating lease cost
(1)
|
$
|
14,555
|
|
Finance lease cost:
|
|
||
Depreciation of lease assets
|
1,098
|
|
|
Interest on lease liabilities
|
1,477
|
|
|
Total finance lease cost
|
2,575
|
|
|
Total lease cost
|
$
|
17,130
|
|
(In thousands)
|
Classification
|
As of May 31, 2019
|
||
Assets:
|
|
|
||
Operating lease assets
|
Operating lease assets
|
$
|
466,380
|
|
Finance lease assets
|
Property and equipment, net
(1)
|
71,560
|
|
|
Total lease assets
|
|
$
|
537,940
|
|
Liabilities:
|
|
|
||
Current:
|
|
|
||
Operating leases
|
Current portion of operating lease liabilities
|
$
|
29,822
|
|
Finance leases
|
Accrued expenses and other current liabilities
|
3,357
|
|
|
Long-term:
|
|
|
||
Operating leases
|
Operating lease liabilities, excluding current portion
|
458,788
|
|
|
Finance leases
|
Other liabilities
|
71,717
|
|
|
Total lease liabilities
|
|
$
|
563,684
|
|
(In thousands)
|
Three Months Ended May 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
14,370
|
|
Operating cash flows from finance leases
|
766
|
|
|
Financing cash flows from finance leases
|
745
|
|
|
|
|
||
Lease assets obtained in exchange for lease obligations:
|
|||
Operating leases
|
21,629
|
|
|
Finance leases
|
43,261
|
|
|
As of May 31, 20
19
|
||||||
(In thousands)
|
Operating Leases
(1)
|
|
Finance Leases
(1)
|
||||
Fiscal 2020
, remaining
|
$
|
41,018
|
|
|
$
|
6,437
|
|
Fiscal 2021
|
52,938
|
|
|
12,032
|
|
||
Fiscal 2022
|
49,841
|
|
|
12,253
|
|
||
Fiscal 2023
|
47,416
|
|
|
12,450
|
|
||
Fiscal 202
4
|
46,295
|
|
|
15,085
|
|
||
Thereafter
|
621,894
|
|
|
95,087
|
|
||
Total lease pa
yments
|
859,402
|
|
|
153,344
|
|
||
Less: interest
|
(370,792
|
)
|
|
(78,270
|
)
|
||
Present value of lease liabilities
|
$
|
488,610
|
|
|
$
|
75,074
|
|
|
As of February 28, 2019
|
||||||
|
Capital
|
|
Operating Lease
|
||||
(In thousands)
|
Leases
(1)
|
|
Commitments
(1)
|
||||
Fiscal 2020
|
$
|
5,139
|
|
|
$
|
55,295
|
|
Fiscal 2021
|
6,055
|
|
|
52,142
|
|
||
Fiscal 2022
|
6,185
|
|
|
48,886
|
|
||
Fiscal 2023
|
6,288
|
|
|
46,235
|
|
||
Fiscal 2024
|
5,186
|
|
|
45,067
|
|
||
Fiscal 2025 and thereafter
|
11,445
|
|
|
595,047
|
|
||
Total minimum lease payments
|
40,298
|
|
|
$
|
842,672
|
|
|
Less amounts representing interest
|
(8,518
|
)
|
|
|
|||
Present value of net minimum lease payments
|
$
|
31,780
|
|
|
|
|
Three Months Ended May 31
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||
Increase in accrued capital expenditures
|
$
|
2,868
|
|
|
$
|
645
|
|
Increase in financing obligations
|
$
|
22,000
|
|
|
$
|
9,704
|
|
|
Net Sales and
Operating Revenues
|
Gross Profit
|
(Dollars in millions except per share or per unit data)
|
Three Months Ended May 31, 2019
|
|
Change from
Three Months Ended
May 31, 2018
|
|||
Income statement information
|
|
|
|
|||
Net sales and operating revenues
|
$
|
5,366.3
|
|
|
12.0
|
%
|
Gross profit
|
$
|
742.4
|
|
|
12.3
|
%
|
CAF income
|
$
|
116.0
|
|
|
0.3
|
%
|
Selling general and administrative expenses
|
$
|
489.7
|
|
|
11.7
|
%
|
Net earnings
|
$
|
266.7
|
|
|
11.8
|
%
|
Unit sales information
|
|
|
|
|||
Used unit sales
|
224,268
|
|
|
13.0
|
%
|
|
Change in used unit sales in comparable stores
|
9.5
|
%
|
|
N/A
|
|
|
Wholesale unit sales
|
120,768
|
|
|
6.6
|
%
|
|
Per unit information
|
|
|
|
|||
Used gross profit per unit
|
$
|
2,215
|
|
|
—
|
%
|
Wholesale gross profit per unit
|
$
|
1,043
|
|
|
3.1
|
%
|
SG&A per used vehicle unit
|
$
|
2,183
|
|
|
(1.2
|
)%
|
Per share information
|
|
|
|
|||
Net earnings per diluted share
|
$
|
1.59
|
|
|
19.5
|
%
|
•
|
Delivering a new customer-driven, omni-channel buying and selling experience that is a unique and powerful integration of our in-store and online capabilities.
|
•
|
Opening stores in new markets and expanding our presence in existing markets.
|
•
|
Hiring and developing an engaged and skilled workforce.
|
•
|
Improving efficiency in our stores and our logistics operations to drive out waste.
|
•
|
Leveraging data and advanced analytics to continuously improve our processes and systems.
|
|
Three Months Ended May 31
|
|||||||||
(In millions)
|
2019
|
|
2018
|
|
Change
|
|||||
Used vehicle sales
|
$
|
4,540.7
|
|
|
$
|
4,021.0
|
|
|
12.9
|
%
|
Wholesale vehicle sales
|
662.4
|
|
|
617.7
|
|
|
7.3
|
%
|
||
Other sales and revenues:
|
|
|
|
|
|
|
|
|
||
Extended protection plan revenues
|
111.3
|
|
|
100.1
|
|
|
11.2
|
%
|
||
Third-party finance fees, net
|
(15.5
|
)
|
|
(14.5
|
)
|
|
(7.0
|
)%
|
||
Other
|
67.4
|
|
|
68.3
|
|
|
(1.4
|
)%
|
||
Total other sales and revenues
|
163.2
|
|
|
153.9
|
|
|
6.1
|
%
|
||
Total net sales and operating revenues
|
$
|
5,366.3
|
|
|
$
|
4,792.6
|
|
|
12.0
|
%
|
|
Three Months Ended May 31
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||
Used vehicles
|
224,268
|
|
|
198,398
|
|
|
13.0
|
%
|
Wholesale vehicles
|
120,768
|
|
|
113,335
|
|
|
6.6
|
%
|
|
Three Months Ended May 31
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Used vehicles
|
$
|
20,050
|
|
|
$
|
20,067
|
|
|
(0.1
|
)%
|
Wholesale vehicles
|
$
|
5,213
|
|
|
$
|
5,205
|
|
|
0.2
|
%
|
|
Three Months Ended May 31
(1)
|
||||
|
2019
|
|
2018
|
||
Used vehicle units
|
9.5
|
%
|
|
(2.3
|
)%
|
Used vehicle revenues
|
9.4
|
%
|
|
0.6
|
%
|
(1)
|
Stores are added to the comparable store base beginning in their fourteenth full month of operation. We do not remove renovated stores from our comparable store base. 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.
|
|
Three Months Ended May 31
|
||||
|
2019
|
|
2018
|
||
Used vehicle units
|
13.0
|
%
|
|
1.6
|
%
|
Used vehicle revenues
|
12.9
|
%
|
|
4.6
|
%
|
|
|
|
|
||
Wholesale vehicle units
|
6.6
|
%
|
|
9.6
|
%
|
Wholesale vehicle revenues
|
7.3
|
%
|
|
11.6
|
%
|
|
Three Months Ended May 31
(1)
|
||||
|
2019
|
|
2018
|
||
CAF
(2)
|
46.2
|
%
|
|
48.3
|
%
|
Tier 2
(3)
|
20.3
|
%
|
|
17.0
|
%
|
Tier 3
(4)
|
11.5
|
%
|
|
10.9
|
%
|
Other
(5)
|
22.0
|
%
|
|
23.8
|
%
|
Total
|
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 May 31
|
||||
|
2019
|
|
2018
|
||
Used car stores, beginning of period
|
203
|
|
|
188
|
|
Store openings
|
3
|
|
|
3
|
|
Used car stores, end of period
|
206
|
|
|
191
|
|
|
Three Months Ended May 31
|
|||||||||
(In millions)
|
2019
|
|
2018
|
|
Change
|
|||||
Used vehicle gross profit
|
$
|
496.8
|
|
|
$
|
439.4
|
|
|
13.1
|
%
|
Wholesale vehicle gross profit
|
126.0
|
|
|
114.7
|
|
|
9.8
|
%
|
||
Other gross profit
|
119.6
|
|
|
107.2
|
|
|
11.6
|
%
|
||
Total
|
$
|
742.4
|
|
|
$
|
661.3
|
|
|
12.3
|
%
|
|
Three Months Ended May 31
|
||||||||||
|
2019
|
|
2018
|
||||||||
|
$ per unit
(1)
|
|
%
(2)
|
|
$ per unit
(1)
|
|
%
(2)
|
||||
Used vehicle gross profit
|
$
|
2,215
|
|
|
10.9
|
|
$
|
2,215
|
|
|
10.9
|
Wholesale vehicle gross profit
|
$
|
1,043
|
|
|
19.0
|
|
$
|
1,012
|
|
|
18.6
|
Other gross profit
|
$
|
533
|
|
|
73.3
|
|
$
|
540
|
|
|
69.7
|
Total gross profit
|
$
|
3,310
|
|
|
13.8
|
|
$
|
3,333
|
|
|
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 May 31
|
||||||||||
(In millions except per unit data)
|
2019
|
|
2018
|
|
Change
|
||||||
Compensation and benefits
(1)
|
$
|
270.9
|
|
|
$
|
241.5
|
|
|
12.2
|
%
|
|
Store occupancy costs
|
96.6
|
|
|
87.8
|
|
|
10.0
|
%
|
|||
Advertising expense
|
41.9
|
|
|
38.5
|
|
|
8.8
|
%
|
|||
Other overhead costs
(2)
|
80.3
|
|
|
70.4
|
|
|
14.0
|
%
|
|||
Total SG&A expenses
|
$
|
489.7
|
|
|
$
|
438.2
|
|
|
11.7
|
%
|
|
SG&A per used vehicle unit
(3)
|
$
|
2,183
|
|
|
$
|
2,209
|
|
|
$
|
(26
|
)
|
(1)
|
Excludes compensation and benefits related to reconditioning and vehicle repair service, which
are
included in cost of sales. See Note 10 for details of share-based compensation expense by grant type.
|
(2)
|
Includes IT expenses, insurance, preopening and relocation costs, non-CAF bad debt, travel, charitable contributions and other administrative expenses.
|
(3)
|
Calculated as total SG&A expenses divided by total used vehicle units.
|
•
|
$13.9 million increase in share-based compensation expense, which increased SG&A per used unit by $46. The increase in share-based compensation expense was largely related to cash-settled restricted stock units, as the expense associated with these units was primarily driven by the change in the company's stock price during the relevant periods.
|
•
|
$9.9 million increase in other overhead costs, which included continued spending to advance our technology platforms and support our core and omni-channel strategic initiatives.
|
|
Three Months Ended May 31
|
||||||||||||
(In millions)
|
2019
|
|
%
(1)
|
|
|
2018
|
|
%
(1)
|
|
||||
Interest margin:
|
|
|
|
|
|
|
|
||||||
Interest and fee income
|
$
|
266.2
|
|
|
8.4
|
|
|
$
|
232.3
|
|
|
7.9
|
|
Interest expense
|
(87.4
|
)
|
|
(2.8
|
)
|
|
(63.8
|
)
|
|
(2.2
|
)
|
||
Total interest margin
|
$
|
178.8
|
|
|
5.6
|
|
|
$
|
168.5
|
|
|
5.7
|
|
Provision for loan losses
|
$
|
(38.2
|
)
|
|
(1.2
|
)
|
|
$
|
(30.9
|
)
|
|
(1.0
|
)
|
CarMax Auto Finance income
|
$
|
116.0
|
|
|
3.7
|
|
|
$
|
115.6
|
|
|
3.9
|
|
(1)
|
Annualized percentage of total average managed receivables.
|
|
Three Months Ended May 31
|
||||||
|
2019
|
|
2018
|
||||
Net loans originated
(in millions)
|
$
|
1,826.3
|
|
|
$
|
1,665.5
|
|
Vehicle units financed
|
92,958
|
|
|
85,097
|
|
||
Net penetration rate
(1)
|
41.4
|
%
|
|
42.9
|
%
|
||
Weighted average contract rate
|
8.9
|
%
|
|
8.4
|
%
|
||
Weighted average credit score
(2)
|
704
|
|
|
704
|
|
||
Weighted average loan-to-value (LTV)
(3)
|
94.4
|
%
|
|
94.9
|
%
|
||
Weighted average term
(in months)
|
66.3
|
|
|
66.1
|
|
(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
May 31 |
||||||
(In millions)
|
2019
|
|
2018
|
||||
Total ending managed receivables
|
$
|
12,859.4
|
|
|
$
|
11,925.0
|
|
Total average managed receivables
|
$
|
12,707.3
|
|
|
$
|
11,775.4
|
|
Allowance for loan losses
(1)
|
$
|
147.0
|
|
|
$
|
134.3
|
|
Allowance for loan losses as a percentage of ending managed receivables
|
1.14
|
%
|
|
1.13
|
%
|
||
Net credit losses on managed receivables
|
$
|
29.4
|
|
|
$
|
25.2
|
|
Annualized net credit losses as a percentage of total average managed receivables
|
0.93
|
%
|
|
0.85
|
%
|
||
Past due accounts as a percentage of ending managed receivables
|
3.36
|
%
|
|
3.16
|
%
|
||
Average recovery rate
(2)
|
49.2
|
%
|
|
47.7
|
%
|
(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. While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 60%, and it is primarily affected by the wholesale market environment.
|
•
|
CAF Income (Increase of
$0.4 million
or
0.3%
)
|
◦
|
The increase in CAF income reflects an increase in average managed receivables, partially offset by an increase in the provision for loan losses as well as a slight decline in the total interest margin percentage.
|
◦
|
Average managed receivables grew
7.9%
to
$12.71 billion
in the
first
quarter of fiscal
2020
driven primarily by the rise in CAF loan originations in recent years.
|
◦
|
The growth in net loan originations in the
first
quarter of fiscal
2020
resulted from our used vehicle sales growth, partially offset by a decline in CAF's penetration rate, which was impacted by the credit mix of sales during the quarter.
|
•
|
Provision for Loan Losses (Increased to
$38.2 million
from
$30.9 million
)
|
◦
|
The increase in the provision for loan losses was primarily due to the growth in average managed receivables as well as an increase in the provision as a percentage of managed receivables.
|
◦
|
The allowance for loan losses as a percentage of ending managed receivables was
1.14%
as of
May 31, 2019
, compared with
1.13%
as of
May 31, 2018
, and 1.10% as of
February 28, 2019
.
|
◦
|
While net losses were modestly above expectations, they remained well within our long-term targeted performance range.
|
•
|
Total Interest Margin (Decreased to
5.6%
of averaged managed receivables from
5.7%
)
|
◦
|
The decline in total interest margin percentage was the result of a gradual compression of the spread between rates charged to consumers and our funding costs in recent years.
|
Location
|
Television Market
|
Metropolitan Statistical Area
|
Planned Opening Date
|
Pleasant Hill, California
|
San Francisco/Oakland/San Jose
|
San Francisco/Oakland
|
Q2 Fiscal 2020
|
Lubbock, Texas
|
Lubbock
(1)
|
Lubbock
|
Q2 Fiscal 2020
|
Scottsdale, Arizona
|
Phoenix
|
Phoenix/Mesa/Scottsdale
|
Q2 Fiscal 2020
|
Denton, Texas
|
Dallas/Ft. Worth
|
Dallas/Fort Worth/Arlington
|
Q3 Fiscal 2020
|
Palm Desert, California
|
Palm Springs
(1)
|
Riverside/San Bernardino/Ontario
|
Q3 Fiscal 2020
|
Bogart, Georgia
|
Atlanta
|
Athens/Clarke County
|
Q3 Fiscal 2020
|
Gulfport, Mississippi
|
Biloxi/Gulfport
(1)
|
Gulfport/Biloxi/Pascagoula
|
Q3 Fiscal 2020
|
Fort Wayne, Indiana
|
Fort Wayne
(1)
|
Fort Wayne
|
Q4 Fiscal 2020
|
Salem, Oregon
|
Portland
|
Salem
|
Q4 Fiscal 2020
|
Murfreesboro, Tennessee
|
Nashville
|
Nashville/Davidson/Murfreesboro
|
Q4 Fiscal 2020
|
Easton, Pennsylvania
|
Philadelphia
|
Allentown/Bethlehem/Easton
|
Q1 Fiscal 2021
|
Bradenton, Florida
|
Tampa
|
North Port/Sarasota/Bradenton
|
Q1 Fiscal 2021
|
Canoga Park, California
|
Los Angeles
|
Los Angeles
|
Q1 Fiscal 2021
|
Covington, Louisiana
|
New Orleans
|
New Orleans
|
Q1 Fiscal 2021
|
|
Three Months Ended May 31
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
43.2
|
|
|
$
|
230.8
|
|
Add: Net issuances of non-recourse notes payable
(1)
|
358.2
|
|
|
325.2
|
|
||
Adjusted net cash provided by operating activities
|
$
|
401.4
|
|
|
$
|
556.0
|
|
(1)
|
Calculated using the gross issuances less payments on non-recourse notes payable as disclosed on the consolidated statements of cash flows.
|
(In thousands)
|
|
As of May 31
|
As of February 28
|
||||
Debt Description
(1)
|
Maturity Date
|
2019
|
2019
|
||||
Revolving credit facility
(2)
|
August 2020
|
$
|
274,371
|
|
$
|
366,529
|
|
Term loan
(3)
|
August 2020
|
300,000
|
|
300,000
|
|
||
3.86% Senior notes
|
April 2023
|
100,000
|
|
100,000
|
|
||
4.17% Senior notes
|
April 2026
|
200,000
|
|
200,000
|
|
||
4.27% Senior notes
|
April 2028
|
200,000
|
|
200,000
|
|
||
Financing obligations
|
Various dates through February 2059
|
516,029
|
|
495,626
|
|
||
Non-recourse notes payable
|
Various dates through October 2025
|
12,893,596
|
|
12,535,405
|
|
||
Total debt
(4)
|
|
14,483,996
|
|
14,197,560
|
|
||
Cash and cash equivalents
|
|
$
|
42,197
|
|
$
|
46,938
|
|
(1)
|
Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.
|
(2)
|
Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. In June 2019, the credit facility was amended to increase the credit limit to $1.45 billion and extend the maturity date to June 2024.
|
(3)
|
Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing. In June 2019, the term loan was amended to extend the maturity date to June 2024.
|
(4)
|
Total debt excludes unamortized debt issuance costs. See Note 9 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.
|
•
|
Our inability to realize the benefits associated with our omni-channel initiatives.
|
•
|
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 volatility in the market price for our common stock.
|
•
|
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
|
||||||
March 1 - 31, 2019
|
|
1,339,768
|
|
|
$
|
61.33
|
|
|
1,339,768
|
|
|
$
|
2,031,743,325
|
|
April 1 - 30, 2019
|
|
726,048
|
|
|
$
|
74.48
|
|
|
726,048
|
|
|
$
|
1,977,669,617
|
|
May 1 - 31, 2019
|
|
887,238
|
|
|
$
|
77.28
|
|
|
887,238
|
|
|
$
|
1,909,108,277
|
|
Total
|
|
2,953,054
|
|
|
|
|
2,953,054
|
|
|
|
|
|
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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