CarMax Group Reports Record Second Quarter Earnings
18 September 2000
CarMax Group Reports Record Second Quarter Earnings
RICHMOND, Va., Sept. 18 In a separate release, Circuit
City Stores, Inc. today reported second quarter results for the company,
including record results for the CarMax Group .
Total sales for the CarMax Group rose 26 percent for the quarter ended
August 31, 2000, to $673.6 million from $535.7 million in last year's second
quarter. Comparable store sales rose 18 percent. For the six-month period,
total sales for the CarMax Group rose 27 percent to $1.30 billion from
$1.02 billion, and comparable store sales rose 16 percent.
Net earnings for the CarMax Group rose 403 percent to $16.3 million in
this year's second quarter from $3.2 million in the second quarter of last
fiscal year. The net earnings attributed to the CarMax Group stock were
$4.1 million, an increase of 432 percent from $775,000 in last year's second
quarter. The remainder of the CarMax Group's net earnings are attributed to
the Inter-Group Interest held by the Circuit City Group and thus to the
Circuit City Group shares. Net earnings per CarMax Group share rose
400 percent to 15 cents from 3 cents per share in last year's second quarter.
Net earnings for the CarMax Group rose 406 percent to $30.2 million in the
first six months of this fiscal year from $6.0 million in the same period last
year. The net earnings attributed to the CarMax Group stock were
$7.7 million, an increase of 439 percent from $1.4 million in the first half
of last year. The remainder of the CarMax Group's net earnings are attributed
to the Inter-Group Interest held by the Circuit City Group and thus to the
Circuit City Group shares. Net earnings per CarMax Group share rose
367 percent to 28 cents from 6 cents per share in the first six months of last
year.
"CarMax has produced an improved sales trend throughout the fiscal year,"
said W. Austin Ligon, president of CarMax. "The especially strong growth in
used cars, which is our predominant business and the more profitable of our
two categories, has enabled us to consistently increase our earnings
expectations. We believe that CarMax has developed a distinct offer in the
marketplace and that our focus over the past year on executing that offer in
our existing stores has been the primary contributor to our improved results.
We also believe that our enhanced Web site is generating significant increases
in consumer traffic for our store locations.
"The higher-than-anticipated sales for the used-car business and continued
improvements in inventory management produced a gross profit margin of
13.4 percent in this year's second quarter compared with 11.9 percent in the
same period last year," said Ligon. "Leverage from the sales growth, more
efficient advertising expenditures and the continued success of our hub and
satellite operating strategy led to a better expense ratio of 9.1 percent in
this year's second quarter compared with 10.4 percent in last year's second
quarter." CarMax's second quarter operating margin before interest and taxes
rose to 4.3 percent this year from 1.5 percent last year.
CarMax Group Operating Ratios
Quarter Ended Six Months Ended
August 31, August 31,
2000 1999 2000 1999
Net Sales and
Operating Revenues 100.0% 100.0% 100.0% 100.0%
Gross Profit Margin 13.4% 11.9% 13.5% 12.3%
SG & A Ratio 9.1% 10.4% 9.3% 10.9%
Operating Margin Before
Interest and Taxes 4.3% 1.5% 4.2% 1.4%
For the quarter, the CarMax business produced pretax earnings of
$26.2 million, a 403 percent increase from pretax earnings of $5.2 million in
last year's second quarter. The pretax profit margin was 3.9 percent this
year compared with 1.0 percent in the same period last year.
CarMax is the nation's leading specialty retailer of used cars. With
headquarters in Richmond, Va., the company currently operates 40 locations.
CarMax operates 22 new-car franchises, most of which are integrated or co-
located with its used-car superstores. For more information, access the
CarMax Web site at http://www.carmax.com .
CarMax is a subsidiary of Circuit City Stores, Inc. Circuit City Stores,
Inc. has two series of common stock, one of which is the CarMax Group stock,
which tracks the performance of the CarMax operations, and the other of which
is the Circuit City Group stock, which tracks the performance of the Circuit
City operations and the retained interest in the CarMax Group. A portion of
the earnings of the CarMax Group is attributed to the CarMax Group stock; the
balance is attributed to the Circuit City Group stock.
This release contains forward-looking statements, which are subject to
risks and uncertainties. Additional discussion of factors that could cause
actual results to differ materially from management's projections, forecasts,
estimates and expectations is contained in the Circuit City Stores, Inc. SEC
filings.
CIRCUIT CITY STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
PERIODS ENDED AUGUST 31
(Amounts in thousands except per share data)
Three Months Six Months
2000 1999 2000 1999
NET SALES AND
OPERATING
REVENUES $ 3,179,781 $ 2,958,394 $ 6,254,632 $ 5,649,376
Cost of sales,
buying and
warehousing 2,477,990 2,290,111 4,869,579 4,378,366
Appliance exit costs 28,326 -- 28,326 --
GROSS PROFIT 673,465 668,283 1,356,727 1,271,010
Selling, general
and administrative
expenses 572,298 542,913 1,151,504 1,072,494
Appliance exit costs 1,670 -- 1,670 --
Interest expense 3,583 5,262 9,804 10,594
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 95,914 120,108 193,749 187,922
Provision for
income taxes 36,447 45,641 73,624 71,411
EARNINGS FROM
CONTINUING OPERATIONS 59,467 74,467 120,125 116,511
Discontinued operations:
Loss from discontinued
operations of Divx,
less income
tax benefit -- -- -- (16,215)
Loss on disposal of
Divx, less income
tax benefit -- -- -- (114,025)
LOSS FROM
DISCONTINUED OPERATIONS -- -- -- (130,240)
NET EARNINGS
(LOSS) $ 59,467 $ 74,467 $ 120,125 $ (13,729)
Net earnings (loss) attributed to:
Circuit City Group common stock:
Continuing
operations $ 55,341 $ 73,692 $ 112,464 $ 115,090
Discontinued
operations $ -- $ -- $ -- $ (130,240)
CarMax Group
common stock $ 4,126 $ 775 $ 7,661 $ 1,421
Weighted average common shares:
Circuit City
Group basic 203,770 201,315 203,318 200,890
Circuit City
Group diluted 205,494 204,551 205,686 204,011
CarMax Group basic 25,550 23,522 25,534 23,336
CarMax Group
diluted 26,956 25,673 26,937 25,571
NET EARNINGS (LOSS) PER SHARE:
Circuit City Group basic:
Continuing
operations $ 0.27 $ 0.37 $ 0.55 $ 0.57
Discontinued
operations $ -- $ -- $ -- $ (0.65)
Net earnings $ 0.27 $ 0.37 $ 0.55 $ (0.08)
Circuit City Group diluted:
Continuing
operations $ 0.27 $ 0.36 $ 0.55 $ 0.56
Discontinued
operations $ -- $ -- $ -- $ (0.64)
Net earnings $ 0.27 $ 0.36 $ 0.55 $ (0.08)
CarMax Group
basic $ 0.16 $ 0.03 $ 0.30 $ 0.06
CarMax Group
diluted $ 0.15 $ 0.03 $ 0.28 $ 0.06
CIRCUIT CITY STORES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)
August 31
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 432,700 $ 241,492
Net accounts receivable 614,540 556,168
Inventory 1,846,749 1,791,767
Prepaid expenses and other current assets 38,144 71,912
Total Current Assets 2,932,133 2,661,339
Property and equipment, net 954,960 1,005,894
Other assets 46,359 49,509
TOTAL ASSETS $ 3,933,452 $ 3,716,742
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 132,318 $ 177,760
Accounts payable 1,017,295 1,041,555
Short-term debt 2,470 5,487
Accrued expenses and other current liabilities 164,252 141,093
Deferred income taxes 63,791 13,242
Total Current Liabilities 1,380,126 1,379,137
Long-term debt, excluding current installments 118,393 250,585
Deferred revenue and other liabilities 110,202 137,844
Deferred income taxes 18,689 28,263
TOTAL LIABILITIES 1,627,410 1,795,829
STOCKHOLDERS' EQUITY 2,306,042 1,920,913
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,933,452 $ 3,716,742
CARMAX GROUP
STATEMENTS OF EARNINGS (Unaudited)
PERIODS ENDED AUGUST 31
(Amounts in thousands except per share data)
Three Months Six Months
2000 1999 2000 1999
NET SALES AND
OPERATING
REVENUES $ 673,561 $ 535,727 $ 1,299,302 $ 1,021,790
Cost of sales 583,012 471,947 1,123,291 896,014
GROSS PROFIT 90,549 63,780 176,011 125,776
Selling, general
and administrative
expenses 61,348 55,918 120,792 111,822
Interest expense 2,958 2,647 6,486 4,330
EARNINGS BEFORE
INCOME TAXES 26,243 5,215 48,733 9,624
Provision for
income taxes 9,972 1,982 18,518 3,658
NET EARNINGS $ 16,271 $ 3,233 $ 30,215 $ 5,966
Net earnings attributed to:
Circuit City Group
common stock $ 12,145 $ 2,458 $ 22,554 $ 4,545
CarMax Group
common stock $ 4,126 $ 775 $ 7,661 $ 1,421
Weighted average common shares:
Basic 25,550 23,522 25,534 23,336
Diluted 26,956 25,673 26,937 25,571
NET EARNINGS PER SHARE:
Basic $ 0.16 $ 0.03 $ 0.30 $ 0.06
Diluted $ 0.15 $ 0.03 $ 0.28 $ 0.06
CARMAX GROUP
BALANCE SHEETS (Unaudited)
(Amounts in thousands)
August 31
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 6,890 $ 35,710
Net accounts receivable 110,733 143,559
Inventory 287,603 286,022
Prepaid expenses and other current assets 3,019 1,027
Total Current Assets 408,245 466,318
Property and equipment, net 198,794 225,527
Other assets 36,754 40,565
TOTAL ASSETS $ 643,793 $ 732,410
LIABILITIES AND GROUP EQUITY
Current Liabilities:
Current installments of long-term debt $ 80,889 $ 104,713
Accounts payable 76,987 100,418
Short-term debt 1,513 4,452
Accrued expenses and other current liabilities 20,321 14,599
Deferred income taxes 10,732 8,259
Total Current Liabilities 190,442 232,441
Long-term debt, excluding current installments 63,761 139,731
Deferred revenue and other liabilities 7,097 6,057
Deferred income taxes 6,121 5,220
TOTAL LIABILITIES 267,421 383,449
GROUP EQUITY 376,372 348,961
TOTAL LIABILITIES AND GROUP EQUITY $ 643,793 $ 732,410