LONDON, UK / ACCESSWIRE / October 6, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on CarMax Inc. (NYSE: KMX), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=KMX, following the Company’s release of its second quarter fiscal 2018 financial results on September 21, 2017. The used car dealership chain outperformed top- and bottom-line expectations. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:
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For the second quarter ended August 31, 2017, CarMax’s net sales and operating revenues rose 9.7% to $4.39 billion compared to net sales and operating revenue of $4.00 billion in Q2 FY17. The reported numbers topped analysts’ estimates of $4.27 billion.
During Q2 FY18, CarMax’s gross profit increased 10.8% to $604.01 million on y-o-y basis compared to $545.36 million for Q2 FY17. The Company’s selling, general, and administrative (SG&A) expenses increased 10.6% to $405.1 million on y-o-y basis, attributed to a 12% increase in its store base since the beginning of Q2 FY17, higher variable costs associated with CarMax’s comparable store unit growth, and a $15.8 million increase in the accrual for its incentive pay. These increases were partially offset by an $11.4 million decline in share-based compensation expense.
For Q2 FY18, CarMax posted net earnings of $181.42 million, or $0.98 per diluted share, compared to $162.36 million, or $0.84 per share, in Q2 FY17. The Company’s earnings were ahead of Wall Street’s estimates of 0.95per share.
CarMax’s Segment Results
During Q2 FY18, total Used Vehicle unit sales grew 11.1% to 186,019 units and comparable store used unit sales rose 5.3% on a y-o-y basis, generating revenue of $3.69 billion, up 11.9% compared to the year-ago same period. The Company stated that the comparable store sales performance reflected continued solid improvement in conversion resulting from strong execution by its store teams and digital initiatives. In the reported quarter, used vehicle’s gross profit rose 12.0%, driven by the 11.1% increase in total used unit sales. Used vehicle’s gross profit per unit was consistent at $2,178 versus $2,160 in the prior year’s corresponding period.
For Q2 FY18, the Wholesale Vehicle unit sales increased 0.4% to 105,508 units, as contributions from the growth in the Company’s store base and an increase in appraisal buy rate were offset by a reduction in appraisal traffic. The segment recorded revenue of $547.8 million, down 2.3% on a y-o-y basis. The Company’s wholesale vehicle’s gross profit increased 9.6% on a y-o-y basis, primarily due to an increase in wholesale vehicle’s gross profit per unit to $950 from $870.
The Other Sales and Revenues increased 6.4% to $144.7 million in Q2 FY18, primarily reflecting improvements in extended protection plan (EPP) revenues, partially offset by a decline in net third-party finance fees. EPP’s revenues increased 13.9% to $85.5 million, largely due to the growth in the Company’s used unit sales.
For Q2 FY18, the Company’s CarMax Auto Finance (CAF) segment’s income increased 12.5% to $107.9 million. The segment’s average managed receivables grew 10.6% to $11.11 billion. Total interest margin was 5.8% of average managed receivables compared to 5.9% in Q2 FY17. The Company’s provision for loan losses declined 7.8% to $32.9 million versus $35.7 million in the prior year’s comparable quarter.
CarMax’s allowance for loan losses as a percentage of ending managed receivables was 1.15% as of August 31, 2017, compared to 1.18% reported as of May 31, 2017, and up from the 1.08% reported as of August 31, 2016; reflecting higher loss experience over the course of the last year.
During Q2 FY18, CarMax opened three stores. The Company entered one new television market Salisbury, Maryland and added two stores in existing television markets – San Francisco, California and Hartford, Connecticut.
Share Repurchase Activity
During Q2 FY18, CarMax repurchased 2.5 million shares of common stock for $156.5 million pursuant to the Company’s share repurchase program. As of August 31, 2017, the Company had $1.25 billion remaining available for repurchase under the program.
On Thursday, October 05, 2017, the stock closed the trading session at $76.37, slightly down 0.10% from its previous closing price of $76.45. A total volume of 2.14 million shares have exchanged hands, which was higher than the 3-month average volume of 1.78 million shares. CarMax’s stock price soared 19.42% in the last three months, 31.67% in the past six months, and 43.82% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 18.61%. The stock is trading at a PE ratio of 20.99. At Thursday’s closing price, the stock’s net capitalization stands at $13.91 billion.
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