1:12 PM, Jun 22, 2018 — CarMax Inc (KMX) shares surged to a record after the company reported better-than-expected financial results on Friday.
The auto retailer reported fiscal first-quarter net profit of $1.33 a share, up from $1.13 share a year earlier and higher than the $1.21 consensus provided by Capital IQ. Net sales for the quarter ended May 31 were $4.79 billion, up from $4.54 billion reported for the same period last year, topping the $4.60 billion Street estimate.
Quarterly used vehicle sales rose 4.6% year-over-year to $4 billion. Wholesale vehicle sales jumped 12% to $617.7 million. Sales of extended protection plans gained 9% to $100.1 million, the company said. Used unit sales in comparable stores declined 2.3% while total used unit sales rose 1.6%.
“The comparable store sales performance primarily reflected lower store traffic, partially offset by improved conversion, as well as a tough comparison as we lapped our strongest prior year performance,” said Bill Nash, president and chief executive officer. “While our comparable store unit sales performance improved significantly from the February 2018 quarter, we believe macro pricing factors still had some effect on our first quarter sales.”
Shares were up 13% on Friday.
CarMax Auto Finance income increased 5.7% to $115.6 million, reflecting an 8.7% increase in averaged manageable receivables and a slightly lower interest margin. Loan loss provisions totaled $30.9 million, or 1.1% of average managed receivables, the company said. The allowance for loan losses as a percentage of ending managed receivables remained relatively stable at 1.13% as of May 31 compared with 1.18% a year earlier.
Gross profit increase almost 2% to $661.3 million, and used-car profit rose 1.7%. Profit per unit was steady at $2,215 versus $2,212 in the same quarter a year earlier. Wholesale vehicle gross profit increased 9.6% versus the prior year’s quarter, driven by a comparable increase in wholesale unit sales.
SG&A expenses, however, rose 8.6% to $438.2 million partly due to a 10% increase in store base since the start of last year’s first quarter, which represents an 18 additional stores, and an $8.9 million increase in stock-based compensation expenses.
“We also continued to update our technology platforms and support our core strategic initiatives as part of our focus on improving the customer experience,” the company said. SG&A costs per used unit was $2,209 in the current quarter, up $143 year-over-year, largely reflecting the deleverage associated with the decline in comparable store used unit sales. Stock-based compensation expenses increased SG&A per unit by $43.
CarMax said during the first quarter it opened three stores total in Dallas, Miami and Greenville, North Carolina. Subsequent to the end of the quarter, it opened its second store in Albuquerque.
Companies: CarMax Inc
Price: 80.28 Price Change: +9.23 Percent Change: +12.99