CarMax, Inc. (NYSE:KMX) Q3 2025 Earnings Conference Call December 19, 2024 9:00 AM ET Company Participants David Lowenstein - Assistant Vice President, Investor Relations Bill Nash - President and Chief Executive Officer Enrique Mayor-Mora - Executive Vice President and Chief Financial Officer Jon Daniels - Senior Vice President, CarMax Auto Finance Operations Conference Call Participants Brian Nagel - Oppenheimer Sharon Zackfia - William Blair John Murphy - Bank of America Seth Basham - Wedbush Securities ...

Financial Performance - Total gross profit reached $677.6 million, an increase of 10.6% year-over-year, driven by unit volumes and strong unit margin performance [4]. - Net earnings per diluted share were $0.81, reflecting a significant increase of 55.8% from $0.52 a year ago [6]. - Net earnings for the three months ended November 30, 2024, were $125.4 million, compared to $82.0 million in the same period of 2023, marking a significant increase of 53.0% [34]. - Diluted net earnings per share increased by 55.8% to $0.81 from $0.52 year-over-year for the three months ended November 30, 2024 [44]. - Total net sales and operating revenues were $6,223.4 million, a 1.2% increase from the prior year's third quarter [25]. - Total net sales and operating revenues for the three months ended November 30, 2024, were $6.2 billion, compared to $6.1 billion for the same period last year, reflecting a growth of 1.2% [56]. Vehicle Sales - Retail used unit sales increased by 5.4% to 184,243 units, while comparable store used unit sales rose by 4.3% [11]. - Used vehicle sales reached $4.89 billion, accounting for 78.6% of total revenues, compared to $4.83 billion in the prior year [56]. - Wholesale vehicle sales were $1.17 billion, representing 18.8% of total revenues, slightly up from $1.17 billion in the previous year [56]. - The company purchased 270,000 vehicles from consumers and dealers, marking a 7.9% increase compared to the previous year [4]. - CarMax sold approximately 770,000 used vehicles and 550,000 wholesale vehicles at its auctions during the fiscal year ended February 29, 2024 [49]. CarMax Auto Finance - CarMax Auto Finance (CAF) income increased by 7.6% to $159.9 million, attributed to growth in net interest margin percentage and average managed receivables [5]. - CarMax Auto Finance income for the three months ended November 30, 2024, was $159.9 million, a rise from $148.7 million in the same period of 2023, reflecting a growth of 7.9% [34]. - The total interest margin after provision for loan losses for the three months ended November 30, 2024, was $203.4 million, up from $188.4 million in the same period of 2023 [43]. - The net penetration rate for CarMax Auto Finance was 43.1% for the three months ended November 30, 2024, slightly down from 44.0% in the same period of 2023 [43]. - The company originated over $8 billion in receivables during fiscal 2024, contributing to a total portfolio exceeding $17 billion [49]. Expenses and Costs - SG&A expenses increased by 2.8% to $575.8 million, but SG&A as a percent of gross profit decreased by 640 basis points to 85.0% [16]. - Selling, general, and administrative (SG&A) expenses for the three months ended November 30, 2024, totaled $575.8 million, a 2.8% increase from $560.0 million in the same period of 2023 [41]. - The company reported a provision for loan losses of $266,406, an increase from $238,952, indicating a rise of about 11.1% [63]. Assets and Liabilities - Total current assets decreased to $4,818,636 from $5,109,950, a decline of approximately 6% year-over-year [61]. - Total liabilities decreased slightly to $21,085,916 from $21,128,885, a reduction of approximately 0.2% [61]. - Cash, cash equivalents, and restricted cash at the end of the period were $975,836, down from $1,260,076, a decrease of about 22.5% [63]. - Auto loans receivable, net increased to $17,412,940 from $17,081,891, representing a growth of approximately 1.9% [61]. - Total shareholders' equity increased to $6,211,210 from $6,044,365, reflecting a growth of approximately 2.8% [61]. Capital Expenditures - Capital expenditures for the period were $340,322, slightly lower than $355,442 in the previous period [63]. - The current portion of long-term debt decreased significantly to $15,020 from $312,744, a reduction of approximately 95% [61]. Online Sales - Online retail sales accounted for 15% of retail unit sales, with revenue from online transactions totaling $2.0 billion, approximately 32% of net revenues [14]. Vehicle Pricing - The average retail selling price for used vehicles declined by approximately $1,100 per unit, or 3.9% [11]. - Used vehicle gross profit for the three months ended November 30, 2024, increased by 6.8% to $424.8 million compared to $397.9 million in the same period of 2023 [36]. - The company reported a gross profit per unit for used vehicles of $2,306 for the three months ended November 30, 2024, an increase from $2,277 in the same period of 2023 [40]. - Gross profit for the three months ended November 30, 2024, was $677.6 million, a 10.9% margin compared to $612.9 million and a 10.0% margin in the same period last year [56].

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they beli ...

In its upcoming report, CarMax (KMX) is predicted by Wall Street analysts to post quarterly earnings of $0.61 per share, reflecting an increase of 17.3% compared to the same period last year. Revenues are forecasted to be $5.99 billion, representing a year-over-year decrease of 2.6%.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 2.3% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this p ...

Core Viewpoint - CarMax (KMX) is anticipated to report a year-over-year increase in earnings despite a decline in revenues for the quarter ending November 2024, with the consensus outlook indicating a significant factor that could influence its stock price in the near term [1][2]. Earnings Expectations - The earnings report is scheduled for release on December 19, 2024, and could lead to a stock price increase if the reported figures exceed expectations; conversely, a miss could result in a decline [2]. - The consensus estimate for quarterly earnings is projected at $0.61 per share, reflecting a year-over-year increase of 17.3% [3]. - Revenues are expected to be $5.99 billion, representing a decrease of 2.6% compared to the same quarter last year [4]. Estimate Revisions - The consensus EPS estimate has been revised 2.25% higher in the last 30 days, indicating a reassessment by analysts regarding the company's earnings prospects [5]. - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the consensus estimate, resulting in an Earnings ESP of -2.17%, indicating a bearish outlook from analysts [11][12]. Earnings Surprise Prediction - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with a positive Earnings ESP being a strong predictor of an earnings beat, particularly when combined with a favorable Zacks Rank [7][9]. - CarMax currently holds a Zacks Rank of 2, which complicates the prediction of an earnings beat given the negative Earnings ESP [12]. Historical Performance - In the last reported quarter, CarMax was expected to post earnings of $0.86 per share but delivered $0.85, resulting in a surprise of -1.16% [13]. - Over the past four quarters, CarMax has only beaten consensus EPS estimates once [14]. Conclusion - While CarMax does not appear to be a strong candidate for an earnings beat, investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].

RICHMOND, VA, Dec. 03, 2024 (GLOBE NEWSWIRE) -- The Golden State Valkyries and CarMax (NYSE: KMX), the nation’s largest retailer of used cars, today announced CarMax as a Founding Partner of the team and the official used car retailer of the Valkyries. The partnership will be rooted in community impact, with a dedicated focus on Bay Area youth, and will bring fans closer to the team through exclusive behind-the-scenes content and special access moments throughout the year. “CarMax has a proven focus on crea ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the ...

CarMax Today KMX CarMax $77.29 -0.92 (-1.18%) 52-Week Range $59.66 ▼ $88.22 P/E Ratio 30.19 Price Target $78.92 Add to Watchlist Shares of CarMax Inc. NYSE: KMX jumped by over 15.3% in a single day following the company's latest quarterly earnings release. Investors in the know are already aware of what is happening to the car market, particularly the divergences between used cars and new cars. This divergence drives stocks like CarMax into a potential profit cycle today. Similar trends can be seen in parts ...

Financial Performance - CarMax reported net sales and operating revenues of $7,013.5 million for the second quarter of fiscal 2025, a decrease of 0.9% compared to the same period in fiscal 2024[108]. - Gross profit for the second quarter was $760.5 million, reflecting a 9.1% increase year-over-year[108]. - For the first six months of fiscal 2025, total net sales and operating revenues decreased by 4.3% to $14,126.9 million compared to $14,760.9 million in the prior year[122]. - In the second quarter of fiscal 2025, used vehicle sales increased by 1.5% to $5,677.1 million, while wholesale vehicle sales decreased by 12.7% to $1,154.5 million[122]. - Other sales and revenues increased by 13.2% in the second quarter of fiscal 2025, driven by a 19.3% increase in extended protection plan revenues[135]. Vehicle Sales and Inventory - Used vehicle unit sales reached 211,020 in the second quarter, a 5.1% increase from the prior year[108]. - The company purchased approximately 300,000 vehicles in the second quarter, up 2.9% year-over-year, with over 70% self-sufficiency rate[116]. - Used vehicle unit sales increased by 5.1% in the second quarter of fiscal 2025, totaling 211,020 units sold[123]. - Average selling prices for used vehicles decreased by 4.6% to $26,245 in the second quarter of fiscal 2025, reflecting lower vehicle acquisition costs[125]. - Total inventory as of August 31, 2024, was $3.40 billion, a decrease of $280.3 million from the start of the fiscal year[168]. CarMax Auto Finance (CAF) - CarMax Auto Finance (CAF) income decreased by 14.4% to $115.6 million in the second quarter, with CAF financing 42.6% of retail used vehicle unit sales[104]. - The provision for loan losses was $112.6 million in Q2 of fiscal 2025, reflecting an increase of $52.2 million in lifetime loss estimates, nearly an 11% rise in loss expectations[161]. - The net penetration rate for CAF was 42.0% in Q2 of fiscal 2025, down from 42.8% in the prior year[158]. - CAF's managed portfolio aims for cumulative net losses in the 2% to 2.5% range over the life of the loans[150]. - CAF has expanded its asset-backed securitization program to include higher prime and non-prime issuances, enhancing funding capacity[153]. Store Expansion and Operations - The company opened two new stores and a standalone reconditioning center in Richland, Mississippi, with plans to open three additional stores and one auction facility by the end of the fiscal year[120]. - As of August 31, 2024, the company operated used car stores in 109 U.S. television markets, covering approximately 85% of the U.S. population[119]. - The company ended the second quarter of fiscal 2025 with 247 used car stores, an increase from 241 stores at the end of the same period in the previous year[130]. - The company maintains a multi-year pipeline of sites to support store and capacity growth, with 164 of 247 used car stores located on owned sites[171]. Cost Management and Efficiency - CarMax aims to achieve a mid-70% range for SG&A as a percentage of gross profit on an annual basis, requiring low-single-digit gross profit growth[117]. - The company is focused on enhancing logistics efficiency, expecting to drive savings of approximately $200 per retail unit over the next one to two years[115]. - SG&A expenses increased by $24.9 million, or 4.2%, in Q3 2025, primarily due to a $15.6 million rise in compensation and benefits[146]. Debt and Cash Flow - Total debt as of August 31, 2024, was $18.71 billion, with cash and cash equivalents at $524.67 million[173]. - Net cash used in investing activities totaled $215.5 million, slightly up from $211.8 million in fiscal 2024, with capital expenditures of $213.1 million compared to $210.2 million in the prior year[171]. - Net cash used in financing activities was $283.1 million, a decrease from net cash provided of $547.0 million in the prior year, influenced by net payments on long-term debt of $306.3 million and stock repurchases of $213.3 million[172]. Market Outlook and Risks - The company cautions that various factors, including changes in economic conditions and competitive landscape, could materially affect future results[181]. - There have been no material changes to market risk since February 29, 2024[183].

Last June, I wrote an article about CarMax, Inc. (NYSE: KMX ) called I Would Not Make a Long-Term Investment , in which I said that I didn't see any competitive advantages and found the My primary area of concentration will be on identifying companies of exceptional caliber, with a proven ability to reinvest capital for impressive returns. Targeting those with a market capitalization of less than $10 billion, affords ample opportunities for growth. The ideal scenario is for these companies to demonstrate a ...