raymond james investor meetings atlanta, georgia october 9, 2008 katharine w. kenny
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Raymond James Investor Meetings Atlanta, Georgia October 9, 2008 Katharine W. Kenny Assistant Vice President, Investor Relations. Forward-Looking Statements. - PowerPoint PPT PresentationTRANSCRIPT
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Raymond James Investor MeetingsAtlanta, GeorgiaOctober 9, 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:
• 99 used car superstores
• 46 markets
In FYE 02/29/08 CarMax sold:
• 377,244 used vehicles
• 222,406 wholesale vehicles
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Strong Culture
Founded on the principle of integrity Well-trained, engaged associates Culture recognized in wide variety of
awards
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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Diversified Profit Base (FYE 2/29/08)
Percentages represent breakdown of gross profit dollars, including CarMax Auto Finance income
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Store Growth
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Finance Originations
Purchasing/
Inventory
Management
Reconditioning
Consumer
Offer
Competitive AdvantagesWell-tested Proprietary Processes & Systems
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Competitive AdvantagesScale Efficiencies
Sell more used cars per store
25,000+ used vehicles in national inventoryCustomer transfers represent ≈ 25% of sales
Carmax.com and marketing efficiencies70% of customers visit website first
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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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Difficult Current Conditions
Economic slowdown and reduced consumer spending power had a negative impact on retail business
Disruption in financial markets reduced ABS liquidity
Consumer confidence at record lows and future conditions uncertain
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Q2 FY09 Q1FY09 Q2FY08
Used unit comps (17%) 1% 3%
Revenue $ 1.84 bn $ 2.21bn $ 2.12 bn
Gross profit / unit $ 2,753 $ 2,564 $ 2,869
Net earnings $14.0mm $29.6mm $65.0 mm
Results – Q2 FY09
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Current Results Reduced sales primarily due to decrease in traffic,
as conversion remained similar to prior year
Wholesale results strong
Buy rate decrease pressured used unit gross profit vs. Q2 ’08, but sequential gross profit increased
CAF results include negative charges of $28 million related to market conditions
Sequential reduction in SG&A due to cost cutting
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Steps We’ve Taken
Cut future growth plans
Dramatically decreased inventory and adjusted mix
Reduced variable costs throughout organization
Reduced staff in operations
Increased capacity in warehouse facility to $1.4 billion
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CAF Liquidity Options
Warehouse facility now offers greater flexibility to await securitization market improvements
Short-term balance sheet support Revolver increased to $700 million Sale-leaseback opportunities
Ongoing exploration of other options, including private securitization
Reduce warehouse usage for short term and offer bank partners more originations
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Future Opportunity
Long-term growth story remains strong Current store base covers only 43% of population Market share for Carmax averages only 5% in most markets
Unique CarMax model is adaptable to changed market conditions
Opportunities to reduce costs in reconditioning
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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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