CarMax, Inc. (
KMX)
Q4 2010 Earnings Call Transcript
April 1, 2010 9:00 a.m. ET
Executives
Katharine Kenny – Vice President, Investor Relations
Thomas J. Folliard – President, Chief Executive Officer & Director
Keith D. Browning – Executive Vice President, Chief Financial Officer & Director
Analysts
Jaison Blair - Rochdale Securities
Sharon Zackfia – William Blair & Co.
Simeon Gutman – Credit Suisse
Ivan Holman – RBC Capital Markets
Craig Kennison – Robert W. Baird & Company
John Nab – Avery Capital Management
Matthew Fassler – Goldman Sachs
Rod Lache – Deutsche Bank
William Armstrong – CL King & Associates
William Truelove – UBS
Matt Nemer – Wells Fargo Securities
Scott Stember – Sidoti & Company
Presentation
Operator
Good morning, ladies and gentlemen. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Ms. Kenny, you may now begin your conference.
Katharine Kenny
Good morning. Thank you all for joining us today. My name is Katharine Kenny, I head up Investor Relations at CarMax and this is our fourth quarter earnings conference call. I guess I should also say Happy April Fools’ Day, but one thing we will not fool you about and that is that this is our last quarter with gain on sale accounting.
On the call with me today are Tom Folliard, our President and Chief Executive Officer and Keith Browning, our Executive Vice President and Chief Financial Officer.
Before we begin, let me remind you that our statements today regarding the company’s future business plans, prospects, and financial performance are forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on management’s current knowledge and assumptions about future events that involve risks and uncertainties that could cause actual results to differ materially from our expectations.
In providing projections and other forward-looking statements, the company disclaims any intent or obligation to update them. For additional information on important factors that could affect these expectations please see the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2009, filed with the SEC. Tom.
Thomas J. Folliard
Good morning, everyone. Thank you Katharine for that witty introduction. Well despite the challenges we faced this year due to the recession, we’re very pleased to report record fiscal year results for CarMax.
I want to thank all of our associates for their commitment in helping us achieve these results. During the year we had several noteworthy accomplishments and I’d like to list just a few of them. We improved our margins on both retail and wholesale vehicles during the year.
We improved our sales execution or conversion rates so that’s the percentage of customers who walk in the door, how many of those buy a car from us; we improved that during the year. We increased our inventory turns for the full year. At year-end we have now achieved a total sustainable reduction of approximately $200 per car in reconditioning costs.
This includes $100 we previously announced in June. We did that while at the same time improving our quality as measured by our 30-day comeback ratio and our customer surveys. We also aggressively controlled our SG&A expenses and we not only reported a record year at CAF, but we also successfully navigated the most difficult credit environment in our history.
Additionally, we increased our market share by over 10%. Now let me talk a little about the fourth quarter, total revenues increased by 25% and comp store used unit sales increased 12% compared a decrease of 26% last year.
