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<p class="has-drop-cap">CarMax, Inc. (NYSE: KMX) reported its <a href="https://investors.carmax.com/news-and-events/news/news-details/2024/CarMax-Reports-Second-Quarter-Fiscal-Year-2025-Results/default.aspx" target="_blank" aria-label="financial results for the second quarter ending August 31, 2024 (opens in a new tab)" rel="noopener noreferrer nofollow" class="deco-link">financial results for the second quarter ending August 31, 2024</a>, showcasing a notable performance. The company experienced a 5.1% increase in retail used unit sales and a 4.3% rise in comparable store used unit sales compared to the same period last year. <br><br>However, wholesale units saw a slight decline of 0.3%. Gross profit per retail used unit stood at $2,269, mirroring last year’s figures, while gross profit per wholesale unit was $975, also consistent with the prior year’s performance.</p>
<p>CarMax’s Extended Protection Plan (EPP) margin grew by $69 per retail unit, reaching $575, and service margin increased by $84 per retail unit from the previous year’s second quarter. The company bought 300,000 vehicles from consumers and dealers, up 2.9% from last year, with 269,000 vehicles purchased from consumers and 31,000 through dealers, marking a significant 61.4% increase in dealer purchases.</p>
<p>Despite a 4.2% increase in Selling, General, and Administrative (SG&amp;A) expenses, which totaled $610.6 million, CarMax managed to maintain strong leverage in SG&amp;A as a percentage of gross profit. The company’s CarMax Auto Finance (CAF) income declined by 14.4% to $115.6 million due to an increase in the provision for loan losses, which overshadowed growth in CAF’s average managed receivables and a stable net interest margin percentage. Net earnings per diluted share were $0.85, up 13.3% from $0.75 a year ago.</p>
<h3 id="carmax-reports-better-than-expected-results-for-fiscal-q2">CarMax Reports Better than Expected Results For Fiscal Q2</h3>
<p>When comparing CarMax’s current performance against market expectations, the company exceeded the anticipated <a href="https://tokenist.com/investing/how-to-value-a-stock/" rel="noopener noreferrer nofollow" class="deco-link">earnings per share (EPS)</a> of $0.84 by delivering an actual EPS of $0.85. This 13.3% year-over-year increase in EPS indicates a robust financial performance despite some challenges in the auto loan sector. The revenue, however, fell short of expectations. Analysts had projected quarterly revenue of $6.82 billion, but CarMax reported $7.01 billion, a slight decrease of 0.9% from last year’s $7.07 billion.</p>
<p>The total gross profit for the quarter was $760.5 million, reflecting a 9.1% increase from the previous year’s second quarter. This growth was driven by a 5.9% increase in retail used vehicle gross profit and a 33.1% rise in other gross profits, primarily from EPP revenues and service efficiencies. Despite the increase in SG&amp;A expenses, the company managed to reduce SG&amp;A as a percentage of gross profit to 80.3% from 84.1% in the prior year, indicating effective cost management strategies.</p>
<p>CarMax’s wholesale vehicle gross profit saw a marginal increase of 0.9%, while the gross profit per wholesale unit remained stable at $975. The company’s ability to maintain gross profit margins despite a decrease in wholesale revenues by 12.7% demonstrates strong operational efficiency. However, the decline in CAF income due to higher provisions for loan losses reflects broader industry challenges impacting the auto finance sector.</p>
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<h3 id="carmax-committed-to-expanding-its-footprint">CarMax Committed to Expanding its Footprint</h3>
<p>CarMax plans to continue leveraging its diversified business model to drive future sales and profitability. The company’s CEO, Bill Nash, emphasized the importance of their omni-channel capabilities in enhancing the customer experience and differentiating CarMax in the market. The company remains committed to expanding its footprint with the opening of new store locations and stand-alone facilities.</p>
<p>For the fiscal year 2025, CarMax aims to open a total of five new store locations, one stand-alone reconditioning center, and one stand-alone auction facility. This expansion is expected to support the company’s growth strategy and enhance its market presence. Additionally, CarMax’s recent execution of higher prime and non-prime public asset-backed securitization deals is set to strengthen the funding foundation for CAF’s full-spectrum lending platform.</p>
<p>CarMax also highlighted its focus on managing through industry-wide auto loan loss pressures while maintaining strong margins and cost management efforts. The company’s forward-looking statements indicate a cautious but optimistic approach, with an emphasis on adapting to market changes and leveraging strategic investments to sustain growth. The upcoming third-quarter results, scheduled for release on December 19, 2024, will provide further insights into the company’s performance and strategic direction.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe>
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p>
<h3 id="br"><br></h3>
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/carmax-surpasses-q2-expectations-with-0-85-eps-despite-slight-revenue-dip/">CarMax Surpasses Q2 Expectations with $0.85 EPS, Despite Slight Revenue Dip</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

CarMax Surpasses Q2 Expectations with $0.85 EPS, Despite Slight Revenue Dip

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