) declined 9.4% to $48.08 on Dec 20, 2013 post the announcement
of the results for the third quarter of fiscal 2014 (ended Nov
30, 2013). The company posted earnings per share of 47 cents in
the third quarter of fiscal 2014 ended Nov 30, 2013, increasing
14.6% from 41 cents a year ago.
Reported earnings missed the Zacks Consensus Estimate by a
penny. Net earnings increased 12.4% to $106.5 million from $94.7
million a year ago.
Net sales and operating revenues in the quarter rose 13% to $2.9
billion, missing the Zacks Consensus Estimate of $3.1 billion.
The year-over-year improvement in revenues was mainly due to
increases in used vehicle sales and new vehicle sales.
Used vehicle revenues appreciated 15.9% to $2.4 billion in the
quarter, driven by higher unit sales. Unit sales of used vehicles
increased 15.4% to 122,065 vehicles and their average selling
price increased to $19,469 from $19,344. Comparable store used
vehicle unit sales rose 10% in the quarter. The improvement was
attributable to better execution in stores, favorable consumer
credit environment and improved store traffic.
New vehicle revenues rose 9.6% to $50.1 million due to higher
unit sales. Unit sales of new vehicles increased 6.6% to 1,818
vehicles, while average selling price increased to $27,428 from
Wholesale vehicle revenues grew 2.2% to $437.3 million. Unit
sales increased 3.8% to vehicles due to increase in store base.
Average selling price of wholesale vehicles decreased 1.7% year
over year to $5,123. Other sales and revenues decreased 5.2% to
Gross profit increased 10.6% to $381.7 million from $345.2
million in the year-ago quarter. The improvement was driven by
higher gross profit earned from the used vehicle and new vehicle
CarMax Auto Finance (CAF)
CAF reported a 15.7% increase in income to $83.9 million from
$72.5 million in last year's quarter. The improvement was
primarily driven by a 24% increase in average managed receivables
to $6.81 billion, partly offset by a decline in total interest
During the third quarter of fiscal 2014, CarMax opened three
stores, one in Jackson, Tennessee, one in Brandywine, Maryland,
and the last one in St. Louis, Missouri. The Maryland store is
the company's eighth store in the Baltimore/Washington, D.C.
Subsequent to the end of the quarter, the company opened a second
store in St. Louis and opened two stores in Philadelphia,
Pennsylvania. The company intends to open 10-15 superstores in
each of the next two fiscal years.
Share Repurchase Program
During the third quarter of fiscal 2014, CarMax spent $14.8
million to repurchase 0.3 million shares under its existing share
repurchase program. As of Nov 30, 2013, the company had $400
million remaining under the program.
CarMax had cash and cash equivalents of $664.8 million as of Nov
30, 2013, up from $445.1 million as of Nov 30, 2012. Short-term
debt rose to $1.3 billion as of Nov 30, 2013 from $706 million as
of Nov 30, 2012.
In the first nine months of fiscal 2014, CarMax had a cash
outflow of $493.1 million compared with $499.2 million in the
prior year. Capital expenditures increased to $212.9 million from
$184.9 million in the same period in fiscal 2012. CarMax
estimates capital expenditure in fiscal 2014 to be around $300
We appreciate CarMax's focus on the used-car market and its
aggressive store expansion strategy, which helps it to outperform
the industry. However, increasing competition poses a threat to
the company's earnings. The company operates in the automotive
retail industry with the likes of
Penske Automotive Group, Inc.
Lithia Motors Inc.
). Currently, CarMax carries a Zacks Rank #3 (Hold) on its
AUTONATION INC (AN): Free Stock Analysis
CARMAX GP (CC) (KMX): Free Stock Analysis
LITHIA MOTORS (LAD): Free Stock Analysis
PENSKE AUTO GRP (PAG): Free Stock Analysis
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