CarMax Group Reports Record Third Quarter Earnings
18 December 2000
CarMax Group Reports Record Third Quarter Earnings
RICHMOND, Va., Dec. 18 In a separate release, Circuit City
Stores, Inc. today reported third quarter results for the company, including
record earnings for the CarMax Group that were slightly ahead of
expectations.
Sales: Total sales for the CarMax Group rose 15 percent for the quarter
ended November 30, 2000, to $561.7 million from $489.0 million in last year's
third quarter. Comparable store sales rose 11 percent. For the nine-month
period, total sales for the CarMax Group rose 23 percent to $1.86 billion from
$1.51 billion, and comparable store sales rose 15 percent.
Earnings: The CarMax Group reported net earnings of $7.6 million in this
year's third quarter compared with a net loss of $3.1 million in the third
quarter of last fiscal year. The net earnings attributed to the CarMax Group
stock were $1.9 million this year compared with a net loss of $757,000 in last
year's third 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 were
7 cents compared with a net loss per share of 3 cents in the same period last
year.
Net earnings for the CarMax Group rose to $37.8 million in the first
nine months of this fiscal year from $2.8 million in the same period last
year. The net earnings attributed to the CarMax Group stock increased to
$9.6 million from $664,000 in the first nine months 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 to 36 cents from 3 cents in
the first nine months of last year.
CarMax Group Earnings (Loss)
(Amounts in millions except per share data)
Quarter Ended Nine Months Ended
November 30, November 30,
2000 1999 2000 1999
CarMax Group Net Earnings
(Loss) $ 7.57 $ (3.14) $ 37.78 $ 2.83
Net Earnings (Loss)
Attributed to the
Circuit City Group $ 5.65 $ (2.38) $ 28.20 $ 2.17
Net Earnings (Loss)
Attributed to the
CarMax Group $ 1.92 $ (0.76) $ 9.58 $ 0.66
CarMax Group Diluted
Weighted Average Shares
Outstanding 27.02 23.84 26.97 25.66
Net Earnings (Loss)
Per CarMax Group Share $ 0.07 $ (0.03) $ 0.36 $ 0.03
"CarMax continued its strong sales trend in the third quarter,
successfully transitioning through the fall model-year changeover and
continuing strong used-car sales despite an industry-wide slowdown in new-car
sales towards the end of the quarter," said W. Austin Ligon, president of
CarMax. "In fact, this fall quarter was one of our best ever.
"We believe the strong sales reflect the improved execution in our stores,
the consumer traffic generated by our enhanced Web site and the inventory
management skills that helped ensure that we had the right vehicles on the lot
during this year's transition," said Ligon. "By effectively managing the
inventory, we also significantly reduced the gross margin erosion that has
occurred in prior years during this transition. That inventory management,
combined with an increase in used cars, which carry higher gross profit
margins than new cars, as a percent of the sales mix produced a gross profit
margin of 12.8 percent in this year's third quarter compared with 10.8 percent
last year.
"Leverage from the sales growth and more efficient advertising
expenditures led to a better expense ratio of 10.1 percent in this year's
third quarter compared with 11.2 percent in last year's third quarter," said
Ligon. CarMax's third quarter operating margin before interest and taxes was
2.7 percent this year. Last year, CarMax's third quarter performance resulted
in an operating loss.
CarMax Group Operating Ratios
Quarter Ended Nine Months Ended
November 30, November 30,
2000 1999 2000 1999
Net Sales and Operating Revenues 100.0% 100.0% 100.0% 100.0%
Gross Profit Margin 12.8% 10.8% 13.3% 11.8%
Expense Ratio 10.1% 11.2% 9.5% 11.0%
Operating Margin Before Interest
and Taxes 2.7% (0.4)% 3.8% 0.8%
For the quarter, the CarMax business produced pretax earnings of
$12.2 million this year compared with a pretax loss of $5.1 million last year.
The pretax profit margin was 2.2 percent this year.
CIRCUIT CITY STORES, INC.
CONSOLIDATED STATEMENTS OF Operations (Unaudited)
PERIODS ENDED NOVEMBER 30
(Amounts in thousands except per share data)
Three Months Nine Months
2000 1999 2000 1999
NET SALES AND
OPERATING
REVENUES $2,887,269 $2,984,607 $9,141,901 $8,633,983
Cost of sales,
buying and
warehousing 2,305,141 2,313,697 7,174,720 6,692,063
Appliance exit
costs -- -- 28,326 --
GROSS PROFIT 582,128 670,910 1,938,855 1,941,920
Selling, general
and administrative
expenses 677,853 581,216 1,829,357 1,653,710
Appliance exit costs -- -- 1,670 --
Interest expense 5,061 6,504 14,865 17,098
(LOSS) EARNINGS FROM
CONTINUING OPERATIONS
BEFORE INCOME
TAXES (100,786) 83,190 92,963 271,112
Income tax
(benefit)
provision (38,299) 31,612 35,325 103,023
(LOSS) EARNINGS FROM
CONTINUING
OPERATIONS (62,487) 51,578 57,638 168,089
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 (LOSS)
EARNINGS $ (62,487) $ 51,578 $ 57,638 $ 37,849
Net (loss) earnings attributed to:
Circuit City Group common stock:
Continuing
operations $ (64,407) $ 52,335 $ 48,057 $ 167,425
Discontinued
operations $ -- $ -- $ -- $ (130,240)
CarMax Group
common
stock $ 1,920 $ (757) $ 9,581 $ 664
Weighted average common shares:
Circuit City
Group basic 204,079 201,610 203,569 201,128
Circuit City
Group diluted 204,079 204,525 205,651 204,180
CarMax Group
basic 25,570 23,836 25,546 23,502
CarMax Group
diluted 27,020 23,836 26,965 25,658
NET (LOSS) EARNINGS PER SHARE:
Circuit City Group basic:
Continuing
operations $ (0.32) $ 0.26 $ 0.24 $ 0.83
Discontinued
operations $ -- $ -- $ -- $ (0.65)
Net (loss)
earnings $ (0.32) $ 0.26 $ 0.24 $ 0.18
Circuit City Group diluted:
Continuing
operations $ (0.32) $ 0.26 $ 0.23 $ 0.82
Discontinued
operations $ -- $ -- $ -- $ (0.64)
Net (loss)
earnings $ (0.32) $ 0.26 $ 0.23 $ 0.18
CarMax Group
basic $ 0.08 $ (0.03) $ 0.38 $ 0.03
CarMax Group
diluted $ 0.07 $ (0.03) $ 0.36 $ 0.03
CIRCUIT CITY STORES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)
November 30
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 121,868 $ 75,845
Net accounts receivable 564,832 648,661
Inventory 2,653,440 2,385,820
Prepaid expenses and other current assets 102,493 82,960
Total Current Assets 3,442,633 3,193,286
Property and equipment, net 1,021,973 1,007,121
Other assets 44,510 47,228
TOTAL ASSETS $ 4,509,116 $ 4,247,635
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 132,354 $ 177,785
Accounts payable 1,504,541 1,209,817
Short-term debt 151,386 288,392
Accrued expenses and other
current liabilities 157,333 141,638
Deferred income taxes 65,468 46,280
Total Current Liabilities 2,011,082 1,863,912
Long-term debt, excluding
current installments 118,105 250,309
Deferred revenue and other liabilities 106,336 120,466
Deferred income taxes 23,586 31,089
TOTAL LIABILITIES 2,259,109 2,265,776
STOCKHOLDERS' EQUITY 2,250,007 1,981,859
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,509,116 $ 4,247,635
CARMAX GROUP
STATEMENTS OF OPERATIONS (Unaudited)
PERIODS ENDED NOVEMBER 30
(Amounts in thousands except per share data)
Three Months Nine Months
2000 1999 2000 1999
NET SALES AND
OPERATING
REVENUES $ 561,693 $ 488,958 $ 1,860,995 $ 1,510,748
Cost of sales 490,014 436,230 1,613,305 1,332,244
GROSS PROFIT 71,679 52,728 247,690 178,504
Selling, general
and administrative
expenses 56,809 54,979 177,601 166,801
Interest expense 2,664 2,808 9,150 7,138
EARNINGS (loss)
BEFORE INCOME TAXES 12,206 (5,059) 60,939 4,565
Income tax provision
(benefit) 4,638 (1,923) 23,156 1,735
NET EARNINGS
(loss) $ 7,568 $ (3,136) $ 37,783 $ 2,830
Net earnings (loss) attributed to:
Circuit City Group
common stock $ 5,648 $ (2,379) $ 28,202 $ 2,166
CarMax Group
common stock $ 1,920 $ (757) $ 9,581 $ 664
Weighted average common shares:
Basic 25,570 23,836 25,546 23,502
Diluted 27,020 23,836 26,965 25,658
NET EARNINGS (loss) PER SHARE:
Basic $ 0.08 $ (0.03) $ 0.38 $ 0.03
Diluted $ 0.07 $ (0.03) $ 0.36 $ 0.03
CARMAX GROUP
BALANCE SHEETS (Unaudited)
(Amounts in thousands)
November 30
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 7,509 $ 6,987
Net accounts receivable 107,880 128,084
Inventory 322,153 280,160
Prepaid expenses and other current assets 2,813 3,077
Total Current Assets 440,355 418,308
Property and equipment, net 192,766 227,156
Other assets 35,872 38,840
TOTAL ASSETS $ 668,993 $ 684,304
LIABILITIES AND GROUP EQUITY
Current Liabilities:
Current installments of long-term debt $ 53,557 $ 59,750
Accounts payable 79,989 61,754
Short-term debt 60,912 98,394
Accrued expenses and other
current liabilities 21,104 17,354
Deferred income taxes 12,240 7,630
Total Current Liabilities 227,802 244,882
Long-term debt, excluding
current installments 42,736 80,636
Deferred revenue and other liabilities 6,934 6,489
Deferred income taxes 7,519 5,596
TOTAL LIABILITIES 284,991 337,603
GROUP EQUITY 384,002 346,701
TOTAL LIABILITIES AND GROUP EQUITY $ 668,993 $ 684,304