) profit remained flat year over year at $111.6 million or 48 cents
per share in the second quarter of fiscal 2013 ended on August 31,
2012. However, it missed the Zacks Consensus Estimate of 52 cents
The profits included favorable impacts from increased retail
sales, which were offset by higher selling, general and
administrative (SG&A) costs associated with the company's store
The company's net sales and operating revenues for the quarter
increased 6.6% to $2.76 billion from $2.59 billion in the second
quarter of fiscal 2012. Revenues also surpassed the Zacks Consensus
Estimate of $2.74 billion.
Revenues from used vehicle sales improved 8.8% to $2.2 billion
in the reported quarter. The increase in used vehicles revenues was
attributable to higher unit sales. Unit sales went up 8.3% to
111,316 units and average selling price marginally increased to
Revenues from new vehicle sales escalated 31% to $61.4 million,
driven by a rise in sales volume. Unit sales surged 30.8% to 2,352
vehicles and average selling price scaled up marginally to
Revenues from wholesale vehicles declined 4.5% to $437.1
million, mainly due to a fall in unit sales volume. Unit sales
decreased 2.5% to 82,771 units and average selling price decreased
2% to $5,133 during the quarter.
Revenues from Others slipped 1% to $67.6 million. Revenues from
extended service plan (ESP) increased 17.7% to $52.9 million,
driven by improvement in retail vehicle sales and increase in
higher ESP penetration.
Revenues from service department climbed 2.9% to $26.8 million.
However, revenues from third-party finance fees fell significantly
by $9.2 million during the quarter.
Gross profit increased 3.9% to $368.0 million from $354.3
million in the corresponding quarter last year. The growth in
profit was attributable to higher profits from used vehicle, which
was more than offset by reduction in profits from the new and
wholesale business. Total gross profit per retail unit was $3,237,
up 13.3% from $3,386 in the second quarter of fiscal 2012.
SG&A increased 11% to $254.7 million. The increase was
attributable to the opening of eight new stores and increase in
growth-related costs, including pre-opening, relocation expenses
and other related costs. SG&A per used unit rose 2% to $2,241
in the quarter.
CarMax Auto Finance
(CAF) income improved 19% to $75.7 million from $63.8 million in
the second quarter of the prior year. The growth in CAF income was
due to a 14% increase in average managed receivables to $5.25
CarMax plans to open 10 superstores in fiscal 2013. In the
second quarter of fiscal 2013, the company has opened 3 used car
superstores; 2 in Ft. Myers, Florida, and the other in Nashville,
CarMax had cash and cash equivalents of $458.6 million as of
August 31, 2012, up significantly from $181.9 million as of August
31, 2011. Total debt (including financing and capital lease
obligations, and non-recourse notes) rose to $5.3 billion as of
August 31, 2012 from $4.5 billion as of August 31, 2011.
During the first half of fiscal 2013, CarMax had a cash outflow
from operating activities of $285.9 million, up significantly from
$75.9 million in the prior year. Capital expenditure amounted to
$103.9 million compared to $80.2 million in the year-ago
CarMax is one of the largest retailers of used vehicles. The
company pioneered the used car superstore concept with the
inauguration of its first store in 1993. It operated around 113
used car superstores in 56 markets as of August 31, 2012.
AUTONATION INC (AN): Free Stock Analysis Report
CARMAX GP (CC) (KMX): Free Stock Analysis
PENSKE AUTO GRP (PAG): Free Stock Analysis
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CarMax, which competes with
Penske Automotive Group
), maintains a Zacks #3 Rank, which translates into a short-term (1
to 3 months) Hold rating. Currently, we have a long-term Neutral
recommendation on its shares.