CarMax(KMX) - 2025 Q3 - Quarterly Report

Financial Performance - CarMax reported net sales and operating revenues of $6,223.4 million for the third quarter of fiscal 2025, a 1.2% increase year-over-year, while total revenues for the first nine months were$ 20,350.3 million, reflecting a 2.7% decrease [124]. - Gross profit for the third quarter was $677.6 million, up 10.6% from the previous year, and for the first nine months, it reached$ 2,230.0 million, a 4.8% increase [124]. - Used vehicle sales for the three months ended November 30, 2024, reached $4,888.9 million, a 1.2% increase from$ 4,832.1 million in the same period of 2023 [138]. - Total net sales and operating revenues for the nine months ended November 30, 2024, decreased by 2.7% to $20,350.3 million from$ 20,909.4 million in 2023 [138]. - Interest and fee income for the three months ended November 30, 2024, was $469.2 million, a 10.6% increase from$ 426.9 million in 2023 [180]. - Total interest margin increased to 6.2% for both the third quarter and first nine months of fiscal 2025, up from 5.9% and 6.0% in the respective periods of fiscal 2024 [183]. Vehicle Sales and Inventory - Used vehicle unit sales totaled 184,243 in the third quarter, a 5.4% increase, while total used unit sales for the first nine months were 606,395, up 2.2% [124]. - The company purchased approximately 270,000 vehicles during the third quarter, a 7.9% increase from the prior year, with over half of consumer purchases made through the online appraisal experience [132]. - Used vehicle unit sales increased by 5.4% to 184,243 units in the three months ended November 30, 2024, compared to 174,766 units in 2023 [139]. - Total inventory as of November 30, 2024, was $3.67 billion, a decrease of$ 12.9 million compared to the start of the fiscal year [190]. CarMax Auto Finance (CAF) - CarMax Auto Finance (CAF) income was $159.9 million for the third quarter, a 7.6% increase, and$ 422.4 million for the first nine months, showing a slight increase of 0.3% [124]. - As of November 30, 2024, CAF serviced approximately 1.1 million customer accounts within a $17.76 billion portfolio of managed receivables, financing 42.8% of retail used vehicle unit sales in the first nine months of fiscal 2025 [120]. - CAF's managed portfolio aims for cumulative net losses in the 2% to 2.5% range over the life of the loans, with actual performance potentially varying based on economic conditions [172]. - The allowance for loan losses as a percentage of ending managed receivables decreased to 2.70% as of November 30, 2024, from 2.92% in 2023 [182]. Cost Management and Efficiency - The company is focusing on cost efficiencies, targeting savings of approximately$ 200 per retail unit, with half of these savings already realized [131]. - SG&A expenses increased by $15.8 million, or 2.8%, in Q3 FY2025, with SG&A as a percentage of gross profit improving by 6.4% [164][165]. - SG&A expenses increased by$ 119.4 million, or 7.0%, in the first nine months of FY2025, with a 2.9% increase when excluding a prior year legal settlement [166]. Expansion and Strategic Initiatives - CarMax aims to achieve annual sales of over 2 million combined retail and wholesale units between fiscal 2026 and fiscal 2030, extending the timeframe due to market uncertainties [135]. - CarMax plans to open two additional stores and one stand-alone auction facility by the end of the fiscal year, continuing its expansion strategy [135]. - The company opened 1 new used car store in the three months ended November 30, 2024, bringing the total to 248 stores [144]. Debt and Financial Position - As of November 30, 2024, total debt amounted to $18.70 billion, a slight decrease from$ 18.78 billion as of February 29, 2024 [198]. - Cash and cash equivalents were reported at $271.91 million, down from$ 574.14 million in the previous period [198]. - Non-recourse notes payable related to asset-backed term funding transactions totaled $13.16 billion, with an additional$ 3.94 billion from warehouse facilities as of November 30, 2024 [201]. - The company has $2.16 billion of unused capacity in its warehouse facilities as of November 30, 2024 [201]. Market Outlook and Risks - The company anticipates that fourth quarter fiscal 2025 results will exceed those of the third quarter, supported by improved comparable store used unit sales [145]. - The company cautions that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations [206].