CarMax Reports Third Quarter Fiscal 2024 Results

12/21/23 6:50:00 AM ET

$KMX

Retail-Auto Dealers and Gas Stations

Consumer Discretionary

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CarMax, Inc. (NYSE:KMX) today reported results for the third quarter ended November 30, 2023.

Highlights:

Net revenues were $6.1 billion, down 5.5% compared with the prior year third quarter.
Retail used unit sales decreased 2.9% and comparable store used unit sales declined 4.1% from the prior year's third quarter; strong gross profit per retail used unit of $2,277, in line with last year's third quarter.
Wholesale units increased 7.7% from the prior year's third quarter; strong gross profit per wholesale unit of $961, in line with last year's third quarter.
Bought 250,000 vehicles from consumers and dealers, up 5.1% versus last year's third quarter.
- 228,000 of these vehicles were purchased from consumers, up 1.6% over last year's third quarter.
- 22,000 of these vehicles were purchased through dealers, up 61.7% from last year's third quarter.
SG&A of $560.0 million decreased 5.4% or $31.8 million from last year's third quarter, driven primarily by continued cost management efforts.
CarMax Auto Finance (CAF) income of $148.7 million, down 2.3% from the prior year third quarter due to compression in the net interest margin percentage, partially offset by a lower provision for loan losses and an increase in average managed receivables.
Net earnings per diluted share of $0.52 versus $0.24 a year ago.
Resumed share repurchases in the third quarter.

CEO Commentary:

"Our third quarter performance reflects the continued efforts of the team that have resulted in several quarters of sequential improvements across key components of our business, despite the persistent widespread pressures in the used car industry," said Bill Nash, president and chief executive officer. "Key results this quarter include year-over-year growth in wholesale units, further SG&A reductions, a strengthened credit mix in CAF's portfolio, strong retail and wholesale gross profit per unit, and year-over-year growth in profitability. In addition, we continue to be encouraged by the positive impact that our omni-channel investments are having on our business. Some of those benefits include incremental retail customers, web traffic growth and enhanced vehicle sourcing."

Third Quarter Business Performance Review:

Sales. Combined retail and wholesale used vehicle unit sales were 302,666, an increase of 1.3% from the prior year's third quarter. Online retail sales⁽¹⁾ accounted for 14% of retail unit sales, compared with 12% in the third quarter of last year. Revenue from online transactions⁽²⁾, including retail and wholesale unit sales, was $1.9 billion, or approximately 31% of net revenues, up from 28% in last year's third quarter.

Total retail used vehicle unit sales declined 2.9% to 174,766 compared to the prior year's third quarter. Comparable store used unit sales declined 4.1% from the prior year's third quarter. We believe vehicle affordability challenges continued to impact our third quarter unit sales performance, with ongoing headwinds due to widespread inflationary pressures, higher interest rates, tightened lending standards and low consumer confidence. Total retail used vehicle revenues decreased 7.2% compared with the prior year's third quarter, driven by the decrease in average retail selling price, which declined approximately $1,300 per unit, or 4.6%, as well as the decrease in retail used units sold.

Total wholesale vehicle unit sales increased 7.7% to 127,900 versus the prior year's third quarter. Total wholesale revenues increased 1.1% compared with the prior year's third quarter due to an increase in wholesale units sold, partially offset by a decrease in the average wholesale selling price of approximately $600 per unit or 6.7%.

We bought 250,000 vehicles from consumers and dealers, up 5.1% versus last year's third quarter. Of these vehicles, 228,000 were bought from consumers and 22,000 were bought through dealers, an increase of 1.6% and 61.7%, respectively, from last year's results.

Gross Profit. Total gross profit was $612.9 million, up 6.3% versus last year's third quarter. Retail used vehicle gross profit declined 1.2%, primarily reflecting the decline in retail unit sales. Retail gross profit per used unit was $2,277, in line with last year's third quarter.

Wholesale vehicle gross profit increased 7.2% versus the prior year's quarter, reflecting higher wholesale unit volume. Gross profit per unit was $961, in line with last year's third quarter.

Other gross profit increased 55.4% largely reflecting a $33.4 million year-over-year improvement in service gross profit driven by the efficiency and cost coverage measures that we have put in place.

SG&A. Compared with the third quarter of fiscal 2023, SG&A expenses decreased 5.4% to $560.0 million. This reduction reflects the continuation of our cost and efficiency efforts that we implemented a year ago. This quarter delivered decreases in costs related to staffing, non-CAF uncollectible receivables and a reduced level of spend for our technology platforms. Partially offsetting these items was an increase in advertising and stock-based compensation expense. SG&A as a percent of gross profit decreased by 11.2 percentage points to 91.4% as compared to the prior year's third quarter.

CarMax Auto Finance.⁽³⁾ CAF income decreased 2.3% to $148.7 million, driven by the decline in CAF's net interest margin percentage, which outweighed a $17.4 million year-over-year decrease in the provision for loan losses and the growth in CAF's average managed receivables. This quarter's provision was $68.3 million compared to $85.7 million in the prior year's third quarter.

As of November 30, 2023, the allowance for loan losses was 2.92% of ending managed receivables, down from 3.08% as of August 31, 2023. The decrease in the allowance percentage primarily reflected the effect of the previously disclosed tightening of CAF's underwriting standards.

CAF's total interest margin percentage, which represents the spread between interest and fees charged to consumers and our funding costs, was 5.9% of average managed receivables, down slightly from this year's second quarter and down from 6.7% in the prior year's third quarter, as increases in our customer rates were more than offset by the rising cost of funds. Year-over-year performance was also negatively impacted by the mark-to-market effects of our derivative instruments not designated as hedges for accounting purposes. After the effect of 3-day payoffs, CAF financed 44.0% of units sold in the current quarter, down from 44.4% in the prior year's third quarter. CAF's weighted average contract rate was 11.3% in the quarter, up from 9.8% in the third quarter last year.

Share Repurchase Activity. During the third quarter of fiscal year 2024, we resumed our share repurchase program after a pause initiated during the third quarter of fiscal year 2023. We repurchased 648,500 shares of common stock for $41.9 million in the quarter. As of November 30, 2023, we had $2.41 billion remaining available for repurchase under the outstanding authorization.

Location Openings. During the fourth quarter of fiscal year 2024, we will open four stores including two in the New York metro market and one in each of the Los Angeles and Chicago metro markets. We will also open our first stand-alone reconditioning center in the Atlanta metro market.

⁽¹⁾	An online retail unit sale is defined as a sale where the customer completes all four of these major transactional activities remotely: reserving the vehicle; financing the vehicle, if needed; trading-in or opting out of a trade in; and creating a remote sales order.
⁽²⁾	Revenue from online transactions is defined as revenue from retail sales that qualify for an online retail sale, as well as any EPP and third-party finance contribution, wholesale sales where the winning bid was an online bid, and all revenue earned by Edmunds.
⁽³⁾	Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.

Supplemental Financial Information

Amounts and percentage calculations may not total due to rounding.

Sales Components

	Three Months Ended November 30							Nine Months Ended November 30
(In millions)	2023			2022		Change		2023			2022		Change
Used vehicle sales	$	4,832.1		$	5,204.6	(7.2	)%	$	16,424.7		$	18,503.2	(11.2	)%
Wholesale vehicle sales		1,165.2			1,152.2	1.1	%		4,001.5			4,959.1	(19.3	)%
Other sales and revenues:
Extended protection plan revenues		90.8			91.8	(1.0	)%		303.8			318.1	(4.5	)%
Third-party finance (fees)/income, net		(1.2	)		1.0	(227.5	)%		(2.4	)		7.1	(133.7	)%
Advertising & subscription revenues ⁽¹⁾		36.7			33.3	10.4	%		101.6			101.9	(0.3	)%
Other		25.0			23.1	7.8	%		80.2			73.1	9.8	%
Total other sales and revenues		151.3			149.2	1.4	%		483.2			500.2	(3.4	)%
Total net sales and operating revenues	$	6,148.5		$	6,506.0	(5.5	)%	$	20,909.4		$	23,962.4	(12.7	)%

⁽¹⁾Excludes intersegment revenues that have been eliminated in consolidation.

Unit Sales

	Three Months Ended November 30				Nine Months Ended November 30
	2023	2022	Change		2023	2022	Change
Used vehicles	174,766	180,050	(2.9	)%	593,515	637,939	(7.0	)%
Wholesale vehicles	127,900	118,757	7.7	%	430,785	464,741	(7.3	)%

Average Selling Prices

	Three Months Ended November 30						Nine Months Ended November 30
	2023		2022		Change		2023		2022		Change
Used vehicles	$	27,228	$	28,530	(4.6	)%	$	27,331	$	28,692	(4.7	)%
Wholesale vehicles	$	8,674	$	9,294	(6.7	)%	$	8,887	$	10,280	(13.6	)%

Vehicle Sales Changes

	Three Months Ended November 30				Nine Months Ended November 30
	2023		2022		2023		2022
Used vehicle units	(2.9	)%	(20.8	)%	(7.0	)%	(12.6	)%
Used vehicle revenues	(7.2	)%	(19.1	)%	(11.2	)%	(1.0	)%

Wholesale vehicle units	7.7	%	(36.7	)%	(7.3	)%	(16.6	)%
Wholesale vehicle revenues	1.1	%	(40.1	)%	(19.3	)%	(0.8	)%

Comparable Store Used Vehicle Sales Changes ⁽¹⁾

	Three Months Ended November 30				Nine Months Ended November 30
	2023		2022		2023		2022
Used vehicle units	(4.1	)%	(22.4	)%	(8.5	)%	(14.3	)%
Used vehicle revenues	(8.3	)%	(21.0	)%	(12.7	)%	(3.2	)%

⁽¹⁾

Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods.

Used Vehicle Financing Penetration by Channel (Before the Impact of 3-day Payoffs)⁽¹⁾

	Three Months Ended November 30				Nine Months Ended November 30
	2023		2022		2023		2022
CAF ⁽²⁾	46.5	%	47.3	%	46.1	%	44.9	%
Tier 2⁽³⁾	18.0	%	20.5	%	18.9	%	22.6	%
Tier 3⁽⁴⁾	6.9	%	6.1	%	6.7	%	6.4	%
Other⁽⁵⁾	28.6	%	26.1	%	28.3	%	26.1	%
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 2 and Tier 3 loan originations, which represent less than 2% of total used units sold.
⁽³⁾	Third-party finance providers who generally pay us a fee or to whom no fee is paid.
⁽⁴⁾	Third-party finance providers to whom we pay a fee.
⁽⁵⁾	Represents customers arranging their own financing and customers that do not require financing.

Selected Operating Ratios

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2023		% ⁽¹⁾	2022		% ⁽¹⁾	2023		% ⁽¹⁾	2022		% ⁽¹⁾
Net sales and operating revenues	$	6,148.5	100.0	$	6,506.0	100.0	$	20,909.4	100.0	$	23,962.4	100.0
Gross profit	$	612.9	10.0	$	576.7	8.9	$	2,127.0	10.2	$	2,189.2	9.1
CarMax Auto Finance income	$	148.7	2.4	$	152.2	2.3	$	421.0	2.0	$	539.5	2.3
Selling, general, and administrative expenses	$	560.0	9.1	$	591.7	9.1	$	1,705.5	8.2	$	1,914.5	8.0
Interest expense	$	31.3	0.5	$	30.2	0.5	$	93.3	0.4	$	91.7	0.4
Earnings before income taxes	$	110.6	1.8	$	50.0	0.8	$	576.1	2.8	$	554.2	2.3
Net earnings	$	82.0	1.3	$	37.6	0.6	$	428.9	2.1	$	415.8	1.7

⁽¹⁾	Calculated as a percentage of net sales and operating revenues.

Gross Profit⁽¹⁾

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2023		2022		Change		2023		2022		Change
Used vehicle gross profit	$	397.9	$	402.8	(1.2	)%	$	1,364.6	$	1,461.3	(6.6	)%
Wholesale vehicle gross profit		122.9		114.7	7.2	%		427.3		447.0	(4.4	)%
Other gross profit		92.1		59.2	55.4	%		335.1		280.9	19.2	%
Total	$	612.9	$	576.7	6.3	%	$	2,127.0	$	2,189.2	(2.8	)%

⁽¹⁾

Amounts are net of intercompany eliminations.

Gross Profit per Unit⁽¹⁾

	Three Months Ended November 30						Nine Months Ended November 30
	2023			2022			2023			2022
	$ per unit⁽²⁾		%⁽³⁾	$ per unit⁽²⁾		%⁽³⁾	$ per unit⁽²⁾		%⁽³⁾	$ per unit⁽²⁾		%⁽³⁾
Used vehicle gross profit per unit	$	2,277	8.2	$	2,237	7.7	$	2,299	8.3	$	2,291	7.9
Wholesale vehicle gross profit per unit	$	961	10.5	$	966	10.0	$	992	10.7	$	962	9.0
Other gross profit per unit	$	527	60.9	$	329	39.7	$	564	69.3	$	440	56.2

⁽¹⁾	Amounts are net of intercompany eliminations. Those eliminations had the effect of increasing used vehicle gross profit per unit and wholesale vehicle gross profit per unit and decreasing other gross profit per unit by immaterial amounts.
⁽²⁾	Calculated as category gross profit divided by its respective units sold, except the other category, which is divided by total used units sold.
⁽³⁾	Calculated as a percentage of its respective sales or revenue.

SG&A Expenses⁽¹⁾

	Three Months Ended November 30								Nine Months Ended November 30
(In millions)	2023			2022			Change		2023			2022			Change
Compensation and benefits:
Compensation and benefits, excluding share-based compensation expense	$	286.3		$	306.2		(6.5	)%	$	922.7		$	985.2		(6.3	)%
Share-based compensation expense		19.9			17.2		15.7	%		86.5			64.0		35.2	%
Total compensation and benefits⁽²⁾	$	306.2		$	323.4		(5.3	)%	$	1,009.2		$	1,049.2		(3.8	)%
Occupancy costs		70.3			70.1		0.2	%		204.2			204.8		(0.3	)%
Advertising expense		63.3			58.7		7.9	%		201.5			230.5		(12.6	)%
Other overhead costs⁽³⁾		120.2			139.5		(13.9	)%		290.6			430.0		(32.4	)%
Total SG&A expenses	$	560.0		$	591.7		(5.4	)%	$	1,705.5		$	1,914.5		(10.9	)%
SG&A as a % of gross profit		91.4	%		102.6	%	(11.2	)%		80.2	%		87.5	%	(7.3	)%

⁽¹⁾	Amounts are net of intercompany eliminations.
⁽²⁾	Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.
⁽³⁾	Includes IT expenses, non-CAF bad debt, preopening and relocation costs, insurance, charitable contributions, travel and other administrative expenses.

Components of CAF Income and Other CAF Information

	Three Months Ended November 30										Nine Months Ended November 30
(In millions)	2023			% ⁽¹⁾		2022			% ⁽¹⁾		2023			% ⁽¹⁾		2022			% ⁽¹⁾
Interest margin:
Interest and fee income	$	426.9		9.8		$	365.4		8.8		$	1,244.3		9.6		$	1,069.3		8.8
Interest expense		(170.2	)	(3.9	)		(88.8	)	(2.1	)		(464.8	)	(3.6	)		(200.1	)	(1.6	)
Total interest margin		256.7		5.9			276.6		6.7			779.5		6.0			869.2		7.2
Provision for loan losses		(68.3	)	(1.6	)		(85.7	)	(2.1	)		(239.0	)	(1.8	)		(219.0	)	(1.8	)
Total interest margin after provision for loan losses		188.4		4.3			190.9		4.6			540.5		4.2			650.2		5.4
Total direct expenses		(39.7	)	(0.9	)		(38.8	)	(0.9	)		(119.5	)	(0.9	)		(110.7	)	(0.9	)
CarMax Auto Finance income	$	148.7		3.4		$	152.2		3.7		$	421.0		3.2		$	539.5		4.4

Total average managed receivables	$	17,508.9				$	16,540.2				$	17,276.0				$	16,177.8
Net loans originated	$	1,953.4				$	2,147.2				$	6,491.0				$	6,928.0
Net penetration rate		44.0	%				44.4	%				43.1	%				41.4	%
Weighted average contract rate		11.3	%				9.8	%				11.1	%				9.4	%

Ending allowance for loan losses	$	511.9				$	491.0				$	511.9				$	491.0

Warehouse facility information:
Ending funded receivables	$	4,529.6				$	3,420.9				$	4,529.6				$	3,420.9
Ending unused capacity	$	1,070.4				$	1,979.1				$	1,070.4				$	1,979.1

⁽¹⁾ Annualized percentage of total average managed receivables.

Earnings Highlights

	Three Months Ended November 30						Nine Months Ended November 30
(In millions except per share data)	2023		2022		Change		2023		2022		Change
Net earnings	$	82.0	$	37.6	118.2	%	$	428.9	$	415.8	3.2	%
Diluted weighted average shares outstanding		158.8		158.5	0.2	%		158.9		160.2	(0.8	)%
Net earnings per diluted share	$	0.52	$	0.24	116.7	%	$	2.70	$	2.60	3.8	%

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, December 21, 2023. Domestic investors may access the call at 1-800-274-8461 (international callers dial 1-203-518-9814). The conference I.D. for both domestic and international callers is 3171396. A live webcast of the call will be available on our investor information home page at investors.carmax.com.

A replay of the webcast will be available on the company's website at investors.carmax.com through April 10, 2024, or via telephone (for approximately one week) by dialing 1-800-374-1216 (or 1-402-220-0681 for international access) and entering the conference ID 3171396.

Fourth Quarter Fiscal 2024 Earnings Release Date

We currently plan to release results for the fourth quarter ending February 29, 2024, on Thursday, April 11, 2024, before the opening of trading on the New York Stock Exchange. We plan to host a conference call for investors at 9:00 a.m. ET on that date. Information on this conference call will be available on our investor information home page at investors.carmax.com in early April 2024.

About CarMax

CarMax, the nation's largest retailer of used autos, revolutionized the automotive retail industry by driving integrity, honesty and transparency in every interaction. The company offers a truly personalized experience with the option for customers to do as much, or as little, online and in-store as they want. During the fiscal year ended February 28, 2023, CarMax sold approximately 810,000 used vehicles and 590,000 wholesale vehicles at its auctions. In addition, CarMax Auto Finance originated nearly $9 billion in receivables during fiscal 2023, adding to its nearly $17 billion portfolio. CarMax has over 240 stores, more than 30,000 associates, and is proud to have been recognized for 19 consecutive years as one of the Fortune 100 Best Companies to Work For®. CarMax is committed to making a positive impact on people, communities and the environment. Learn more in the 2023 Responsibility Report. For more information, visit www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release that are not statements of historical fact, including statements about our future business plans, operations, challenges, opportunities or prospects, including without limitation any statements or factors regarding expected operating capacity, sales, inventory, market share, financial targets, revenue, margins, expenses, liquidity, loan originations, capital expenditures, share repurchase plans, debt obligations or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "positioned," "predict," "should," "target," "will" and other similar expressions, whether in the negative or affirmative. Such forward-looking statements are based upon management's current knowledge, expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:

Changes in the competitive landscape and/or our failure to successfully adjust to such changes.
Changes in general or regional U.S. economic conditions, including inflationary pressures, climbing interest rates and the potential impact of international events.
Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
Events that damage our reputation or harm the perception of the quality of our brand.
Significant changes in prices of new and used vehicles.
A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.
Our inability to realize the benefits associated with our omni-channel initiatives and strategic investments.
Factors related to geographic and sales growth, including the inability to effectively manage our growth.
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.
Changes in economic conditions or other factors that result in greater credit losses for CAF's portfolio of auto loans receivable than anticipated.
The failure or inability to realize the benefits associated with our strategic transactions.
The effect and consequences of the Coronavirus public health crisis on matters including U.S. and local economies; our business operations and continuity; the availability of corporate and consumer financing; the health and productivity of our associates; the ability of third-party providers to continue uninterrupted service; and the regulatory environment in which we operate.
Changes in consumer credit availability provided by our third-party finance providers.
Changes in the availability of extended protection plan products from third-party providers.
The performance of the third-party vendors we rely on for key components of our business.
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 failure or inability to adequately protect our intellectual property.
The occurrence of severe weather events.
Factors related to the geographic concentration of our stores.
Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer, associate or corporate information.
The failure of or inability to sufficiently enhance key information systems.
Factors related to the regulatory and legislative environment in which we operate.
The effect of various litigation matters.
The volatility in the market price for our common stock.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, and our quarterly or current reports as filed with or furnished to the U.S. Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investors.carmax.com. Requests for information may also be made to the Investor Relations Department by email to [email protected] or by calling (804) 747-0422 x7865. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

	Three Months Ended 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.

CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

		As of
		November 30		February 28		November 30
(In thousands except share data)		2023		2023		2022
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	605,375	$	314,758	$	688,618
	Restricted cash from collections on auto loans receivable		483,570		470,889		466,525
	Accounts receivable, net		212,406		298,783		246,794
	Inventory		3,638,946		3,726,142		3,414,937
	Other current assets		169,653		230,795		167,143
	TOTAL CURRENT ASSETS		5,109,950		5,041,367		4,984,017
	Auto loans receivable, net		17,081,891		16,341,791		16,240,832
	Property and equipment, net		3,623,697		3,430,914		3,375,001
	Deferred income taxes		121,219		80,740		87,262
	Operating lease assets		533,387		545,677		529,781
	Goodwill		141,258		141,258		141,258
	Other assets		561,848		600,989		580,790
	TOTAL ASSETS	$	27,173,250	$	26,182,736	$	25,938,941

LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
	Accounts payable	$	762,594	$	826,592	$	802,780
	Accrued expenses and other current liabilities		494,365		478,964		496,202
	Accrued income taxes		10,581		—		—
	Current portion of operating lease liabilities		56,410		53,287		51,215
	Current portion of long-term debt		312,744		111,859		112,708
	Current portion of non-recourse notes payable		446,544		467,609		474,147
	TOTAL CURRENT LIABILITIES		2,083,238		1,938,311		1,937,052
	Long-term debt, excluding current portion		1,605,638		1,909,361		1,903,223
	Non-recourse notes payable, excluding current portion		16,558,053		15,865,776		15,737,459
	Operating lease liabilities, excluding current portion		509,141		523,828		509,106
	Other liabilities		372,815		332,383		364,528
	TOTAL LIABILITIES		21,128,885		20,569,659		20,451,368

	Commitments and contingent liabilities
	SHAREHOLDERS' EQUITY:
	Common stock, $0.50 par value; 350,000,000 shares authorized; 158,021,407 and 158,079,033 shares issued and outstanding as of November 30, 2023 and February 28, 2023, respectively		79,011		79,040		79,010
	Capital in excess of par value		1,786,924		1,713,074		1,697,062
	Accumulated other comprehensive income		60,667		97,869		57,420
	Retained earnings		4,117,763		3,723,094		3,654,081
	TOTAL SHAREHOLDERS' EQUITY		6,044,365		5,613,077		5,487,573
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	27,173,250	$	26,182,736	$	25,938,941

CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended November 30
(In thousands)	2023			2022
OPERATING ACTIVITIES:
Net earnings	$	428,936		$	415,750
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		193,528			202,655
Share-based compensation expense		90,479			64,974
Provision for loan losses		238,952			218,967
Provision for cancellation reserves		62,587			79,924
Deferred income tax benefit		(28,290	)		(2,178	)
Other		8,534			8,879
Net decrease (increase) in:
Accounts receivable, net		86,377			314,190
Inventory		87,196			1,709,632
Other current assets		91,793			149,777
Auto loans receivable, net		(979,052	)		(1,170,098	)
Other assets		(8,775	)		(43,502	)
Net decrease in:
Accounts payable, accrued expenses and other
current liabilities and accrued income taxes		(60,365	)		(195,154	)
Other liabilities		(62,921	)		(91,739	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		148,979			1,662,077
INVESTING ACTIVITIES:
Capital expenditures		(355,442	)		(319,486	)
Proceeds from disposal of property and equipment		1,299			3,806
Purchases of investments		(4,641	)		(6,460	)
Sales and returns of investments		1,562			3,486
NET CASH USED IN INVESTING ACTIVITIES		(357,222	)		(318,654	)
FINANCING ACTIVITIES:
Proceeds from issuances of long-term debt		134,600			2,863,500
Payments on long-term debt		(242,989	)		(4,116,775	)
Cash paid for debt issuance costs		(15,576	)		(13,987	)
Payments on finance lease obligations		(12,177	)		(10,056	)
Issuances of non-recourse notes payable		9,099,929			11,351,696
Payments on non-recourse notes payable		(8,430,615	)		(10,581,076	)
Repurchase and retirement of common stock		(44,287	)		(333,814	)
Equity issuances		28,430			13,504
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		517,315			(827,008	)
Increase in cash, cash equivalents, and restricted cash		309,072			516,415
Cash, cash equivalents, and restricted cash at beginning of year		951,004			803,618
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	1,260,076		$	1,320,033

View source version on businesswire.com: https://www.businesswire.com/news/home/20231221202266/en/

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Date	Price Target	Rating	Analyst
3/20/2024	$99.00	Hold → Buy	Needham
3/19/2024	$80.00	Neutral	Mizuho
9/25/2023	$85.00 → $90.00	Neutral → Outperform	Wedbush
6/12/2023		Buy → Neutral	Northcoast
2/23/2023	$66.00	Hold	Truist
1/11/2023	$60.00	Neutral → Underweight	JP Morgan
1/5/2023		Buy → Hold	Argus
12/23/2022	$100.00 → $75.00	Outperform	Oppenheimer

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