lehman brothers 11 th annual retail and restaurant conference april 29, 2008
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Lehman Brothers 11 th Annual Retail and Restaurant Conference April 29, 2008 Katharine W. Kenny Assistant Vice President, Investor Relations. Forward-Looking Statements. - PowerPoint PPT PresentationTRANSCRIPT
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Lehman Brothers 11th Annual Retail and Restaurant ConferenceApril 29, 2008
Katharine W. KennyAssistant Vice President, Investor Relations
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Forward-Looking Statements
This presentation contains forward-looking statements, which are subject to risks and uncertainties. Additional discussion of factors that could cause actual results to differ materially from management’s projections and estimates is contained in the CarMax, Inc. SEC filings. The Company disclaims any intent or obligation to update its forward-looking statements.
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The CarMax Story
• Largest used car retailer in the U.S.
• Unmatched consumer offer Competitively low, no-
haggle prices Huge selection Guaranteed quality Customer-friendly sales
processes
• Unique culture• Diversified profit base
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Largest Used Car Retailer in the U.S.
CarMax currently has:
• 93 used car superstores
• 42 markets
In FYE 02/29/08 CarMax sold:
• 377,244 used vehicles
• 222,406 wholesale vehicles
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Unique Culture
• Ethical, experienced management and well trained, engaged associates
Fortune’s “100 Best Companies to Work For” 4 consecutive years
2008 International Torch Award for Marketplace Excellence by the Council of Better Business Bureaus
2008 Training Magazine “Top 125”
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Low Associate Turnover
• Less than 10% for managers and senior managers
• Less than 20% for President’s Club sales associates
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Diversified Profit Base (FYE 2/29/08)
Percentages represent breakdown of gross profit dollars, including CarMax Auto Finance income
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Strong Results
30
65
100
40
90
140
190
240
3,000
6,000
9,000
$ in millions $ in millionsSuperstores Revenues Net Earnings*
5 yr CAGR = 17% 5 yr CAGR = 15% 5 yr CAGR = 15%
* Prior years restated for SFAS 123R
40
89
$3,970
$8,199
$90
$182
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Growth Opportunity
15% planned annual increase in store base
4% to 8% expected long-term used unit comp growth
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Growth Opportunity
Present in markets representing ≈ 43% of U.S. population
5 year average used unit comps: CarMax +6% Public new car dealers (avg) (2)%
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Growth Opportunity
carmax.com (provide more sales leads and speed the sales process)
Future margin improvement (impacted by cost reduction initiatives and SG&A leverage)
New formats, including micro-stores and car-buying centers
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Finance Originations
Purchasing/
Inventory
Management
Reconditioning
Consumer
Offer
Competitive AdvantagesWell-tested Proprietary Processes & Systems
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Competitive Advantages
Sell more used cars per store CarMax 417/month Public new car dealers (avg) 50/month
25,000+ used vehicles in nationwide inventory Customer transfers represent ≈ 25% of sales
carmax.com and marketing efficiencies 70% of customers visit website first
Scale Efficiencies
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Competitive Advantagescarmax.com (original search capability)
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Competitive Advantagescarmax.com (with new search capability)
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Competitive Advantages
CarMax Auto Finance
Reduces reliance on 3rd party lenders
Provides opportunity to innovate and drive incremental sales
Generates attractive economic returns
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Fiscal 2008 Financial Results
Fiscal year negatively impacted by weak economy and credit market turmoil
3% used unit comps reflect strength of CarMax model
Lower earnings primarily a result of CAF higher funding costs and retained interest adjustments
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Why CarMax?
A unique and sustainable retail
growth story with
defensible competitive advantages
Used car focus, with diversified profit base
Unique consumer offer
Process and systems driven
Organic growth opportunity
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