Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 70

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7
Chunk 70
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15.4 %409.7 (27.6)%565.6 Total SG&A expenses$2,435.4 6.5 %$2,286.4 (8.1)%$2,487.4 SG&A as a % of gross profit84.0 %(0.3)%84.3 %(4.5)%88.8 %

(1)Amounts are net of intercompany eliminations.

(2)Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.  See Note 13 for details of share-based compensation expense by grant type.

(3)Includes IT expenses, non-CAF bad debt, insurance, preopening and relocation costs, travel, charitable contributions and other administrative expenses.

Fiscal 2025 Versus Fiscal 2024 (Increase of $149.0 million or 6.5%).  Factors contributing to the increase include the following:

•$63.1 million increase in other overhead costs driven by the $67.2 million benefit in the prior year in connection with the receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with vehicles containing Takata airbags.

•$62.9 million increase in compensation and benefits, excluding share-based compensation expense, driven by an increase in the corporate bonus accrual.

Excluding the legal settlement in the prior year, SG&A expenses in fiscal 2025 increased 3.5%, or $81.8 million.  SG&A leveraged by 30 basis points during fiscal 2025.  Excluding the legal settlement in the prior year, SG&A leveraged by 270 basis points, driven by the growth in gross profit and continued expense efficiency actions.

Advertising spend in fiscal 2025 was consistent with fiscal 2024 at approximately $200 per total unit.  For fiscal 2026, we expect that full year marketing spend on a per total unit basis will be in line with fiscal 2025.

35

Interest Expense

Interest expense includes the interest related to short- and long-term debt, financing obligations and finance lease obligations.  It does not include interest on the non-recourse notes payable, which is reflected within CAF income.

Fiscal 2025 Versus Fiscal 2024.  Interest expense decreased to $107.9 million in fiscal 2025 compared with $124.8 million in fiscal 2024.  The