Used car dealership chain CarMax Inc. said Wednesday its net income more than tripled in the fiscal first quarter because it sold more vehicles as the industry slowly recovers from the worst U.S. auto sales market in decades.
The results beat Wall Street expectations, and its shares climbed $2, or 10 percent, to $22 in premarket trading.
CEO Tom Folliard said customer traffic is gradually improving but noted sales remain "well below" pre-recession levels.
The Richmond company, which will join the Standard & Poor's 500 after the market closes Friday, said its net income climbed to $101.1 million, or 44 cents per share, in the three months ended May 31, up from $28.7 million, or 13 cents per share, a year ago.
Excluding a benefit related to lower-than-expected loan losses, net income totaled 41 cents per share, topping analysts' estimates for earnings of 33 cents per share.
CarMax, which operates more than 100 stores, said its revenue rose 23 percent to $2.26 billion from $1.83 billion in the year-ago period, while revenue at stores open at least a year rose 9 percent. Analyst polled by Thomson Reuters on average expected revenue of $2.09 billion.
Used vehicle sales rose about 9 percent as the company's average selling price rose about 9 percent. CarMax said its gross profit per used vehicle sold increased 10.5 percent to $2,212 and total gross profit increased 21 percent primarily because it sold more cars. It also has lowered its reconditioning costs.
Its auto financing arm reported income of $57.5 million compared with a loss of $21.6 million a year ago.
Expenses for the first quarter rose 10 percent to $226.7 million as the company increased sale commissions, advertising and costs related to resuming store growth.
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