CarMax Q3 Profit Up 12%, But Misses View

(RTTNews) - Used vehicles retailer CarMax, Inc. (KMX) on Friday reported a 12 percent increase in profit for the third quarter from last year, mainly driven by higher sales of used vehicles as well as an increase in auto finance income. However, earnings per share missed analysts' expectations, while revenues beat their estimates. The company's shares are down almost 7 percent in the regular trading session.

Commenting on the results, President and Chief Executive Officer Tom Folliard said, "We are pleased with our continued growth in sales and earnings. The earnings growth was driven by double digit increases in total used units and CAF income."

CarMax's net income for the third quarter was $106.45 million or $0.47 per share, up from $94.68 million or $0.41 per share in the year-ago period.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total net sales and operating revenues for the quarter grew 13 percent to $2.94 billion from $2.60 billion in the year-ago period. Analysts had a consensus revenue estimate of $2.89 billion.

In the quarter, used vehicle sales grew 16 percent year-over-year to $2.40 billion, while new vehicle sales rose 10 percent to $50.07 million. Wholesale vehicle sales increased 2 percent to $437.27 million.

Other sales and revenues declined 5 percent from last year to $57.22 million, reflecting flat extended service plan or ESP revenues and decline in net third-party finance fees.

Total used vehicle unit sales for the quarter climbed 15 percent to 122,065 units. Comparable-store used units sales increased 10 percent, benefiting from improved execution in the company's stores, an attractive consumer credit environment, as well as modest increase in store traffic.

Total wholesale unit sales increased 4 percent, reflecting growth in the company's store base.

In the quarter, average selling prices for used vehicles and new vehicles rose, while selling prices for wholesale vehicles declined.

Total gross profit increased 11 percent to $381.7 million, with a 16 percent rise in used vehicle gross profit and flat wholesale vehicle gross profit. Gross profit margin declined 30 basis points from last year to 13 percent.

CarMax Auto Finance or CAF income for the quarter increased 16 percent from the year-ago period to $83.9 million. Average managed receivables grew 24 percent to $6.81 billion.

In Friday's regular session, KMX is trading at $49.41, down $3.64 or 6.87 percent on a volume of 85,189 shares.