CarMax Falls as Earnings Beat Fails to Offset Lack of Guidance
CarMax (KMX) - Get Report shares fell on Tuesday after the company posted fiscal third-quarter earnings that beat analysts’ forecasts but chose to hold back on offering forward guidance amid ongoing uncertainty surrounding the pandemic.
Richmond, V.A.-based CarMax said it earned $235.3 million, or $1.42 a share, in its fiscal third quarter, up from $173.2 million, or $1.04 a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting per-share earnings of $1.13.
Total sales and operating revenue rose 8.2% to $5.18 billion from $4.79 billion. Analysts polled by FactSet had been expecting sales of $5 billion.
Total used vehicle unit sales increased 1%, during the quarter, while comparable-store used unit sales decreased 0.8%, CarMax said, noting that a resurgence in Covid-19 cases and accompanying restrictions and closures dented sales in the latter part of the quarter.
“Despite the near-term market challenges due to the trajectory of the pandemic, our fundamentals remain robust and reflect the strength of our diversified business model spanning retail, wholesale, and auto finance,” said CarMax CEO Bill Nash.
On the financing side of its business, income increased 54.7% to $176.4 million, reflecting a decrease in loan-loss provisions to $8.2 million from $49 million in the prior-year quarter, plus an increase in net interest margin and average managed receivables.
Total used vehicle revenue increased 4.5% due primarily to average retail selling prices rising nearly $700 per unit vs. the prior year quarter, reflecting higher vehicle acquisition costs resulting from strong wholesale industry valuations, the company said.
CarMax said its loan-loss allowance at the end of its most recent quarter was $431.6 million, or 3.17% of ending managed receivables, down from 3.23% at the end of August. At the same time, CarMax didn't offer up any forward guidance amid a still-uncertain economic environment related to the pandemic.
CarMax shares were down 6.53% at $93.90 in trading on Tuesday.
