) posted earnings per share of 76 cents in the first quarter of
fiscal 2015, ended May 31, 2014, increasing 18.8% from 64 cents a
year ago. Earnings surpassed the Zacks Consensus Estimate of 66
Net sales and operating revenues in the quarter rose 13.3% to $3.75
billion, also outdoing the Zacks Consensus Estimate of $3.57
billion. The year-over-year improvement in revenues was mainly due
to increase in used vehicle sales, new vehicle sales and wholesale
Used vehicle revenues appreciated 13.3% to $3.06 billion in the
quarter, driven by higher unit sales. Unit sales of used vehicles
increased 9.8% to 150,528 vehicles and their average selling price
increased 3.2% to $20,173. Comparable-store used vehicle unit sales
rose 3.4% in the quarter. The improvement was attributable to
improved footfall in stores.
New vehicle revenues improved 33.1% to $69.8 million due to higher
unit sales. Unit sales of new vehicles increased 33.2% to 2,597
vehicles, while average selling price decreased 0.1% to $26,761.
Wholesale vehicle revenues rose 11.1% to $545.2 million. Unit sales
increased 9.9% to 97,098 vehicles. Average selling price of
wholesale vehicles climbed 1.2% year over year to $5,450.
Other sales and revenues rose 13% to $74.8 million due to
improvement in net third-party finance fees, driven by reduction in
the percentage of sales financed by third-party sub prime
providers. The increase was, however, partially offset by decline
in extended protection plan revenues including extended service
plan (ESP) and guaranteed asset protection revenues. Slash in
revenues from this business was due to increase in the cancellation
reserves for the underlying products and decline in the ESP
Gross profit increased 12% to $501.7 million from $448.1 million in
the year-ago quarter.
CarMax Auto Finance (CAF)
CAF reported an 8.7% increase in income to $94.6 million from $87
million in last year's quarter. The improvement was primarily
driven by an increase in average managed receivables, partly offset
by a lower total interest margin rate.
During the first quarter of fiscal 2015, CarMax opened four stores.
Three stores were opened in new markets - Rochester, NY; Dothan,
AL; and Spokane, WA. The fourth store was opened in the existing
market of Harrisburg/Lancaster, PA. Subsequent to the end of the
quarter, the company opened its first store in the Madison, WI
market. The company intends to open 13 used car superstores in
fiscal 2015 and 10-15 superstores in each of the next two fiscal
Share Repurchase Program
During the first quarter of fiscal 2015, CarMax spent $174.1
million to repurchase 3.8 million shares under its existing share
repurchase program. As of May 31, 2014, the company had remaining
authorization of $1.11 billion under its repurchase program.
CarMax had cash and cash equivalents of $532.2 million as of May
31, 2014, down from $725.3 million as of May 31, 2013. Total debt
(including financing and capital lease obligations, and
non-recourse notes payable) rose to $7.96 billion as of May 31,
2014 from $6.72 billion as of May 31, 2013.
In the first 3 months of fiscal 2015, CarMax had a cash outflow of
$209.1 million from operations compared with $77.6 million in the
prior year. Capital expenditures increased to $53.7 million from
$42.1 million in the first 3 months of fiscal 2014. The company
estimates capital expenditure in fiscal 2015 to be around $325
), another prominent player in the automotive replacement parts and
accessories industry along with CarMax, reported a 16.4% rise in
earnings per share to $8.46 for the third quarter of fiscal 2014
(ended May 10, 2014). Earnings were in line with the Zacks
CarMax currently retains a Zacks Rank #3 (Hold). Stocks from the
same industry that warrant a look include
Pep Boys - Manny, Moe & Jack
U.S. Auto Parts Network, Inc.
). Both these companies carry a Zacks Rank #2 (Buy).
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US AUTO PARTS (PRTS): Free Stock Analysis
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