Used vehicles retailer CarMax, Inc. (KMX) reported Friday a profit for the first quarter that grew seven percent from last year, reflecting improved margins, revenue growth and higher profits at its finance unit CarMax Auto Finance or CAF. Earnings per share matched analysts' expectations, while quarterly revenues missed their estimates.
CAF income for the quarter grew 15.3 percent to $109.1 million from the year-ago quarter, primarily due to the 17.2 percent increase in average managed receivables and continued favorable loss experience, partially offset by a lower total interest margin percentage.
"We had another great quarter, setting all-time records for quarterly sales and earnings. Continued strong performances in our used, wholesale and CAF operations, along with the growth of our store base and our ongoing share repurchase program, contributed to our solid results," President and CEO Tom Folliard said.
The Richmond, Virginia-based Fortune 500 company reported net earnings of $182 million or $0.86 per share for the first quarter, higher than $169.7 million or $0.76 per share in the prior-year quarter.
On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.86 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales and operating revenues for the quarter increased 7.1 percent to $4.01 billion from $3.75 billion in the same quarter last year, but missed thirteen Wall Street analysts' consensus estimate of $4.15 billion.
Comparable store used vehicle revenues grew 3.4 percent for the first quarter, with comparable store used vehicle unit sales increasing 4.9 percent, fueled by improved conversion and continued growth in customer traffic.
Total used vehicle unit sales rose 9.3 percent, and total used vehicle revenues in dollars rose 7.6 percent from the year-ago quarter. Used vehicle sales made up 82 percent of CarMax's business.
Total wholesale unit sales increased 4.7 percent, benefiting from the growth in store base, partially offset by a decline in our vehicle buy rate.
Used vehicle sales for the quarter rose 7.6 percent to $3.29 billion from the prior-year quarter, and sales for wholesale vehicles totaled $576.6 million, up 5.8 percent from the same quarter last year.
New vehicle sales declined 14 percent to $60 million from the year-ago quarter, as well as other sales and revenues rose 14.3 percent to $85.6 million from the prior-year quarter, with extended service plan revenues increasing 12.5 percent, primarily due to the growth in our retail unit sales.
Net third-party finance fees were relatively flat with last year. Vehicles financed by the Tier 3 providers and those included in the CAF loan origination test represented 14.5 percent of retail unit sales in the current quarter, compared to 16.1 percent last year.
Gross profit for the quarter was $543.8 million, up 8.4 percent from the year-ago quarter, and gross margin percentage improved 10 basis points to 13.5 percent from last year.
Looking ahead, CarMax currently estimates capital expenditures will total about $360 million in fiscal 2016, and expects to open 14 stores and relocate one store whose lease is expiring in fiscal 2016 as well as open between 13 and 16 stores in each of the following two fiscal years.
KMX closed Thursday's regular trading session at $71.96, down $0.44 on a volume of 2.92 million shares.
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