Upcoming AWS Coverage on AutoNation Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 17, 2017 / Active Wall St. announces its post-earnings coverage on CarMax Inc. (NYSE: KMX). The Company announced its financial results for the fourth quarter and full year of fiscal 2017 on April 06, 2017. The No.1 US used-car dealer exceeded top- and bottom-line expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of CarMax's competitors within the Auto Dealerships space, AutoNation, Inc. (NYSE: AN), announced on March 31, 2017, that it will release its financial results for Q1 2017 on Tuesday, April 25, 2017. Mike Jackson, Chairman and CEO, Bill Berman, President and COO, and Cheryl Miller, Executive Vice President and CFO, will discuss these results and other information regarding the Company during a conference call and audio webcast that same day at 11:00 a.m. ET. AWS will be initiating a research report on AutoNation in the coming days.

Today, AWS is promoting its earnings coverage on KMX; touching on AN. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

For the three months ended February 28, 2017, CarMax's net sales and operating revenues increased 9.3% to $4.05 billion. The Company's revenue numbers surpassed analysts' consensus of $3.97 billion. For FY17, CarMax's net sales and operating revenues increased 4.8% to $15.88 billion.

For Q4 FY17, CarMax's total used vehicle unit sales grew 13.4% and comparable store used unit sales rose 8.7% on a y-o-y basis, driven by a strong increase in conversion, together with a modest increase in store traffic. For the non-Tier 3 customer base, comparable store used unit sales rose 15.3%. The Company experienced a headwind related to its third-party Tier 3 sales mix, which declined to 9.4% of used unit sales from 14.5% in Q4 FY16.

For Q4 FY17, CarMax's wholesale vehicle unit sales declined 1.2% versus the year ago same period as contributions from growth in the Company's store base and an improved appraisal buy rate were more than offset by a reduction in appraisal traffic. In particular, age 7-to 9-year old wholesale vehicles continued to be in shorter supply.

For Q4 FY17, CarMax's Other sales and revenues increased 19.2% compared with Q4 FY16, primarily reflecting improvements in extended protection plan (EPP) revenues and net third-party finance fees. EPP revenues increased 19.3%, largely due to the growth in the Company's used unit sales and favorable adjustments to the reserve for cancellations. Net third-party finance fees had improved by 44.4% as a result of the reduced proportion of its sales attributable to Tier 3 finance providers.

For Q4 FY17, CarMax's total gross profit increased 14.9% on a y-o-y basis to $562.2 million. Used vehicle gross profit rose 14.7%, driven by the 13.4% increase in total used unit sales. Used vehicle gross profit per unit was largely consistent at $2,134 versus $2,109 in the prior year's same period. Wholesale vehicle gross profit declined 7.8% versus the prior year's comparable quarter, reflecting the 1.2% decline in wholesale unit sales and a decrease in wholesale vehicle gross profit per unit to $938 from $1,005.

For Q4 FY17, the Company's CarMax Auto Finance income declined 10.2% to $82.9 million, primarily due to a $15.4 million increase in the provision for loan losses, which resulted from both higher loss experience in recent quarters and the growth in managed receivables, as well as an update in the Company's assumptions for determining the loan loss allowance. Average managed receivables grew 11.5% to $10.54 billion. CarMax's total interest margin, declined to 5.7% of average managed receivables from 5.9% in the year ago period. As of February 28, 2017, the Company's allowance for loan losses as a percentage of ending managed receivables was 1.16% compared with 0.99% as of February 29, 2016, and 1.10% as of November 30, 2016.

In Q4 FY17, CarMax's net earnings increased 8.2% to $152.6 million and net earnings per diluted share rose 14.1% to $0.81 from $141.0 million, or $0.71 per share, in Q4 FY17. The Company stated that y-o-y assumptions were affected by a previously disclosed impairment-related charge of $5.2 million, net of tax, or $0.03 per diluted share, which reduced Q4 FY16's results.

For FY17, CarMax's net earnings increased 0.6% to $627.0 million and net earnings per diluted share rose 7.6% to $3.26.

Store Openings.

In Q4 FY17, CarMax opened four stores, including two stores in new markets (Mobile, Alabama, and Albany, New York) and two stores in Los Angeles, California. In total, the Company opened 15 stores during FY17, bringing its used car store count to 173 as of February 28, 2017.

Share Repurchase Activity

During Q4 FY17, CarMax repurchased 1.5 million shares of common stock for $101.1 million pursuant to its share repurchase program. For the fiscal year, the Company repurchased 10.3 million shares at a cost of $557.7 million. As of February 28, 2017, CarMax had $1.59 billion remaining available for repurchase under the program.

Fiscal 2018 Capital Spending Plan

CarMax is planning to open 15 stores in FY18 and between 13 and 16 stores in FY19. Out of these, the Company plans to open 6 stores in metropolitan statistical areas having populations of 600,000 or less, defines as small markets. The Company estimate capital expenditures will total approximately $325 million in FY18.

Stock Performance

On April 13, 2017, CarMax's share price finished the trading session at $55.37, sliding 1.55%. A total volume of 1.93 million shares exchanged hands. The stock has advanced 7.31% and 3.26% in the last six months and past twelve months, respectively. The stock is trading at a PE ratio of 16.98. At Thursday's closing price, the stock's net capitalization stands at $10.33 billion.

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SOURCE: Active Wall Street