CarMax, Inc. (KMX), the nation's large st retailer of used cars, released its financial results for the second quarter of 2023, revealing a decline in net income and a slip in revenue compared to the same period last year. The company, which operates a chain of used car dealerships across the United States, reported its unaudited consolidated statements of earnings, balance sheets, and cash flows for the quarter ended August 31, 2023.
Net Income Decreases in Q2 2023
CarMax reported a net income of $118.6 million for the three months ended August 31, 2023, compared to $125.9 million for the same period in 2022. This represents a 5.8% decrease in net income year-over-year.
Revenue Slides in Q2 2023
The company's revenue also witnessed a decline, with total net sales and operating revenues amounting to $7.07 billion in Q2 2023, compared to $8.14 billion in Q2 2022. This marks a decrease of approximately 13.1% in revenue year-over-year.
CarMax's Financial Position
As of August 31, 2023, CarMax's consolidated balance sheet revealed the following key figures:
- Current Assets: The company had current assets totaling $5.39 billion, which includes cash and cash equivalents, restricted cash from collections on auto loans receivable, accounts receivable, inventory, and other current assets.
- Long-term Assets: CarMax reported significant long-term assets, including auto loans receivable, property and equipment, deferred income taxes, operating lease assets, goodwill, and other assets, totaling $21.91 billion.
CarMax's balance sheet also showed the following important liabilities and shareholders' equity figures:
- Current Liabilities:The company reported current liabilities amounting to $2.32 billion, which included accounts payable, accrued expenses, operating lease liabilities, and current portions of long-term debt and non-recourse notes payable.
- Long-term Liabilities: CarMax had long-term debt, non-recourse notes payable, operating lease liabilities, and other liabilities totaling $18.97 billion.
- Shareholders' Equity: The shareholders' equity section of the balance sheet showed a total of $6.01 billion, comprising common stock, capital in excess of par value, accumulated other comprehensive income, and retained earnings.
Cash Flow Analysis
In the six months ended August 31, 2023, CarMax's cash flow statement indicated the following key activities:
- Operating Activities: The company reported a net cash outflow of $61.1 million from its operating activities, primarily driven by adjustments to reconcile net earnings, provisions for loan losses, changes in accounts receivable and inventory, and other items.
- Investing Activities: CarMax invested $211.8 million in capital expenditures, partially offset by proceeds from the disposal of property and equipment and investment activities.
- Financing Activities: The company secured proceeds from issuances of long-term debt, made payments on long-term debt, and issued non-recourse notes payable. It also repurchased and retired common stock and issued equity.
Despite facing challenges in the current economic climate, CarMax remains a prominent player in the used car market. The company continues to adapt to evolving consumer preferences and market dynamics, with a focus on expanding its presence and enhancing its customer experience.
CarMax's leadership remains optimistic about the future and is committed to driving long-term growth while providing quality used vehicles and financing solutions to customers across the nation.