CarMax (KMX) 4 Apr 182018 Q4 Earnings call transcript

Company Profile

Participants

Katharine Kenny	Vice President, IR
Tom Reedy	Executive Vice President and CFO
Bill Nash	President and CEO
Matt Fassler	Goldman Sachs
Scot Ciccarelli	RBC Capital Markets
Sharon Zackfia	William Blair
Brian Nagel	Oppenheimer
Seth Basham	Wedbush
Michael Montani	MN
Matthew Ziehl	Oppenheimer Funds
John Murphy	Bank of America
Derek Glynn	Consumer Edge Research
David Whiston	Morningstar
Chris Bottiglieri	Wolfe Research
Brian Nagel	Oppenheimer

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax Fiscal 2018 Q4 KMX Earnings Release 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. you. Thank like Investor call Relations. now Kenny, to turn President, Vice to would over the Katharine I Please ahead. go

Katharine Kenny

Thanks Kim, call. and joining our good morning, everyone. XXXX quarter Thank fourth earnings conference fiscal you for

our On today and Reedy, Executive the our Chief President CFO. are Nash, Tom and call Vice Executive President Bill Officer; and

are any events of projections you materially Safe providing let based on we Private performance or today are statements intent management’s from the statements could our current that regarding uncertainties Harbor prospects differ the knowledge update Act we begin, In disclaims and expectations. These and assumptions obligation that to plans, financial Before other that about company’s pursuant and the risks to make provisions cause me remind future Reform our XXXX. Litigation to forward-looking statements involve actual future statements, business Securities them. results that company forward-looking and the of

on the you February and queue. these filed before important for year follow-up affect ended the factors XX, could report For one only asking in for advance fiscal getting a XX-K Thank SEC. annual additional Form with company’s back information the that see in XXXX please question expectations, on

Bill. Now it over I’ll turn to

Bill Nash

update Good everyone. on to Katharine. will I’ll turn and our be Tom, financing call in it initiatives. who today’s you our you, Thank morning, I later over quarterly I’ll with results than will be

by used facing the comparison. X% Our in flat used fell toughest total we Remember relatively decline lower X.X%. for quarter, were and driven conversion. quarter comps fourth by This and year-over-year traffic unit fourth the by units our is that

partly believe that pricing a factors sales resulted to our We quarterly are in macro the disappointed comps, due environment. which softer in we with it’s decrease

the dynamics, in has pricing in higher in [indiscernible] would our quarter. year’s fourth average the quarter than growth which was have quarter, the in late-model increase our last vehicle These the adversely used valuations to was which Despite vary we during Although pricing believe with that been fourth our higher and selling the to year. time, fourth to has sales lower. used that should last fallen historically new appears in new affected acquisition since price CarMax’s prices fact higher believe lead changes fourth used encouraged due self-correcting still our pricing still that The the At spread same used between market we XXth, than absent are the significantly and time supply pressured by were market softness further over October costs quarter, our us continues vehicles think we drive been in that and average mix. fallen vehicle off the into lease have sales.

share largest our market For to the we data by were able increase shows calendar grow years. that X almost comp X%, in the our year,

compared Our once XX% of capabilities. to we at continue the consistent enhance year. website X,XXX our remained unit the used again in SEO in traffic grew last and profit as per fourth Gross to quarter quarter fourth website X,XXX by

service. by the EPP that due in we impacted compensation also to sales, decrease reported allocated in lower primarily which in and and for year-over-year of the the profit by was to to primarily growth store last used the pressure of $XXX year’s other fourth driven saw our fourth related service. in fact $XXX, the valuations. higher X% was service, to In regard unit one Our by Gross vehicle base rate similar unit bonus gross supported we half quarter buy wholesale our higher approximately units grew buy The a profit was some of was quarter. discretionary The due rate. continuation to the wholesale

our sales call I the cover over Tom, to Before expense. let and me turn SG&A mix

zero approximately slightly increased vehicles year, including base quarter sales, year. XX% of and or the expenses XX% our decreased sales Large fourth of related up medium million from XX% unit down year’s and expense. to increase opening decrease beginning represents were per to last in the old of of for SUV four-year our XX% stores $XXX which versus $X.XX $X million to XX of truck SG&A, per fourth quarter. X% in above impacted unit. and factors third of from SG&A share-based or the XX% As Several On about $XXX a the expense and quarter year-over-year quarter growth an quarter about in to percentage X.X% fourth last a compensation the a since last the

we in affected technology past, SG&A in as by experience. platforms our addition, continues discussed expense be investment digital and growth our the In to

was quarter’s deleverage this due our to However, decline. comp largely sales

Tom flows perform strategy rate. results, while by how impacted will our the Lastly, of cash created me let review reduction use address quarterly tax on in our tax briefly effective the

shareholder in higher drive associates our in invest our Our company goal to is and to returns. continue and

mentioned paid which we As a associates our discretionary about of bonus eligible press to our we one-time population. in XX% release, was

implemented the and FY more we’ll future. additional associate evaluating benefit ‘XX options we be For enhancements in

incrementally plan digital business including our invest also in and our We technology to capabilities.

XX% SG&A don’t While income tax on benefit bottom-line. current FY our change still impact pressure will leverage. investments pre-tax our to These outlook in put XX% this of ‘XX, thing we to growth on expect would the

of continue reduce the would to we SG&A of guidance begin long-term unit end to higher our expense per mid-single-digit estimate that comps. our at We

over to will Tom. the turn I Now, call

Tom Reedy

seen The driven where quarters, fourth originations, that And paid in in credit Tier own modest of with of brought the X Tier decline in channels XX.X% sales accounted customers Bill. cash or last XX.X% their X of Tier was in expansion allocation of compared across finance applications. percent quarter lending financing. by morning, sales sales year-over-year some of our mix some In the same Thanks, sales year. growth we the for X saw the and year everyone. specifically channel in trends recent by good we’ve mix largely

unit X the fourth of sales net at of originated Tier -- net year. And loans Third-party were XX.X% to X.X last flat X.X% quarter XX.X% penetration CAF sales XX.X% at flat payoffs CAF in quarter. remained grew compared to billion. three-day last used of versus year’s

interest portfolio the year third was to lower, unit managed XX% the average in average growth of margin XXX an X.X% slight offset quarter provision loss commensurate of the growth were by increase interest price. compared receivables, increased to both saw selling of amount X.X% While this CAF financed in income Total of a CarMax’s partially the This was portfolio in compression with lower sales managed million. we to of the and average result of a average receivables due and in X.X% last in the quarter fourth margin. year.

For a to loans rate in weighted originated ago X.X% to during to quarter. X.X% average the third charged the the X.X% and compared year increased quarter, contract customers

Our flat receivables. last for losses quarter sequentially in X.XX% XXX or ending allowance year. QX of loan That’s and from down the of ending was million from managed X.XX% fourth

a about capital Before the and call let structure. I about turn back few Bill, make points over tax to me

we reform saw of in identified was and to related fiscal the savings million in enacted the deferred our fining Between change to which the result end asset our the tax optimize you opportunities December year, This of a our and of the tax number tax when executed on of lower law. largely the revaluation release, is deliberate than tax As forecast. actions. tax significantly early was XX.X

XXXX this quarters, we be such due the XX%. as the future expect there adaptation rate in estimate taxes state have around seen future. FASB as continue in of Remember, the around and potential we variability to regarding tax expect comp For other concession. effective has would the past, to fiscal been share-based guidance in our We that variability to items

Regarding during shares million X.X structure, $XXX the repurchased million. we capital fourth quarter, for

of million. year, at a million cost we For $XXX the X.X full shares repurchased

the of billion $X authorization. year, approximately the our end of As in remaining have we

back Now, Bill. I’ll turn the to call over

Bill Nash

Tom. Thanks

CarMax, During new stores, the two South and existing opened in Denver. and and [indiscernible] for Boston four in two markets, Carolina [indiscernible] quarter we markets

During stores. XX quarter we the In open stores and fiscal the three XXXX, year. to XXX we of the open fiscal first of opened planned stores XXXX, end at had

last is week new and North Our store market a the for market in CarMax. Greenville Carolina opened

The in and of other markets for Miami are us. Dallas two both existing were opened which

which again population what XXX,XXX markets XX in XXXX, we of XX be fiscal During open of define MSA’s as a small less. once with plan as or stores, we to will

to open and XX We between also XX in plan stores fiscal XXXX.

Now some initiatives. I strategic of update our on want to you

personalized quarter, CRM fourth we and enterprise new roll completed of the the to platform experience new unified and view our buying delivering out CRM During shopping by or The across car of our a locations. all management history seamless customer selling full customer more stores. relationship platform enables a all wide

from information stores. the home Carolina This [ph] pick up feature as customer minutes purchase testing driven customers do test the our complete virtually completing to everything the take also but Lynchburg extra are it's pickup ride. in at in the Charlotte the allows expatiated option XX can Virginia We The us reviewing an vehicle and as North about all in for store. by little interest

terracotta In addition, stores. degrees to roll of in new featured we our XXX the all completed out

we our nearly software time. the be efficient quickly And in of platform enables part capabilities appraisal has more appraisal buyers we all to The for our also this which our reduced dramatically buyers in photo photo platform finally, will our our rolled to out, As innovate the future. roll updated stores mobile quarter. new stores out improve ability to which

advancing both experience technology We year. a the control two. the whether the for buying but shopping with digital on we it's our the will our the for our focus terms, associates we’ve on and to coming continue store, on quarter capabilities experience. flexibility of or customer not Customers year, made combination their of are very the in in their want online meeting customer, and only for pleased progress This and

At infrastructure, Our we’ll position associates, our questions. in to and investments take our capabilities to Kim? happy us brand leave national used time, footprint, car scale this continued digital industry. to strength, technology be and continue inventory

Operator

[Operator Instructions].

from Matt from comes quarter first Goldman Sachs. Fassler Your

is line open. Your

Matt Fassler

in My the you relates focus ever the -- Difficulties]. macroenvironment [Technical reactions question have the dynamic and it's seen to really

Bill Nash

kind I asking broke think I said, a the environment. environment about, first-of-all question up year-over-year ‘re you tough bit your the as little what think factor we but confident that pricing Matt we a a about Hey obviously is pricing macro about of were but big and of

was two the think on I hits spread between only think our not there spread really pressure mentioned remarks, I all also the sides, on on as but there inventory, up opening I was think in that price late because it's car a I all our went used of acquisition it but seeing pressure that on my car, I our last prices years, two car relative If prices year-over-year. been coming prices last we've look in a terms and going up the saw acquisition model down. back we price over going new of new year down and acquisition

prices acquisition down. our first two saw going quarters this The of year, we

quarter, saw uptick Third saw of then significant uptick we little in bit we and fourth a the an quarter.

is this it think itself. we time up it things said I past remarks, a my wholesale will in seen through the bit takes but correcting little one have in pretty of self-corrected. opening market much is is like the It end those I of goes what

would stand supply big of lack medium The other large affordable from Last and thing which on I being improvements saw biggest finance. just is year-over-year, technology haven't we've before. SUVs larger comparison year seen some year we the we say a a

lot I of on think that's noise a going is So, there. basically there

Matt Fassler

on Difficulties]. improvements, bit so now? focus on better for you look that focused we If clues we be me pricing that [Technical for more a what Can can car we or follow used we hear should

Bill Nash

I just down is doing up. the focused wholesale think to board, and what what environment we across they are really should overall acquisition going the prices or going is on the prices be

part the plays certainly spread. car and New of about that you talk its when

to as it So, interesting we see forward. be will go

are come were Although little they have started bit, it year than like ago. seems incentives a still they higher to down a

Operator

question Markets. next Scot RBC from Capital Ciccarelli Your comes from

Your line is now open.

Scot Ciccarelli

you guys. category specifically various on some us profit on et the in of help understand the gross Good for other the the better Can revenues quarter cetera? morning, pressures service

Bill Nash

chunk the line. little of You Thank service headwind. said, bit went mentioned service You had Thank I bonus a one we to the a for big right of bonus, Scot. I Sure, on side, Like

that. was overcoming it So,

of saw We selling use also then in welfare many And and cars just impact. of deleveraging an some line impact also that course as by went the and into that an the lower was fringe as sale increase not health that benefits up well.

Tom Reedy

is -- on this kind to give in you like too. I that we way color we a to little doesn't going health a our reduction in and of of some big standard overall service versus to we item fee all regards that line And and Scot, Also, additional from relatively the the have. to compensation of very have the there. based we which cars a accounting that kind a expectations, If Hey cover profit welfare is the a we P&L lines for and service fixed each mean we've buried that changes cover overhead is piece pretty overhead much car. small a of it got to with it's P&L not cover have staffing and cost business are our and and it's have that perspective. for and the

impact that of swings company and on the will of So, have dramatic overall then in the reap line do all there they overall for SG&A. part service profitability a the more the

Scot Ciccarelli

through revenue flow down X that that's And million. to the then tier much X, direct that's from flow a $X profitability, lending I the guess XXX% through to pretty the mix tier on

Tom Reedy

Every I which in paying roughly we zero so into in talked X. see We’ve commission in that seen X Tier as is Yeah, $X,XXX before. you X. turns Tier X other the X versus growth lose we've get $XXX that represent also $X,XXX, and swing there paid Tier and something swaps into out tier X, out a through mean it a and from of Tier everything move tier you

Operator

next Your from William Zackfia Blair. Sharon comes from question

is Your now line open.

Sharon Zackfia

anything full infringement would few to periods or you’ve of unit share, market and discern. of know kind if believe, share or that past I color runway impede years any that wondering, you I’m of harder the just appreciate the shorter seen market the year are runway? But longer-term competitive on signs over growth the I kind

Bill Nash

I’m continued pricing vehicles regionally being we mean averaging our over year that every volume raising the Sharon locally. of our competitive quarter XXX and competition you it. also any both I No. believe we vehicles location. it, still And sell the From large given and per that we’re standpoint, said, we lowering competitive And prices, that absolutely a prices as are testing location. raising taking just know, of in part is margin for maybe and constantly monitor our we’re sorry by

gross would obviously that test elasticity the cars what we but pricing all on can, dollars. to to see to times sell I tell sales. has as optimize And we’re profit is doing as on it We’re many trying you impact that total also

on comfortable landscape at So, this point. we feel very competitive the

Sharon Zackfia

on this that share your an at is update market point that you and where Can And market or now? also give top Is stand? where us share your aggregate Charlotte? is Richmond does where

Bill Nash

Yes.

markets, through top be markets oldest our obviously buying most they’ve So, are to been the our going cycles. because

be the older market these market, some it’ll Richmond So, of the your Charlotte older markets, markets.

national stand you’re asking we share think do about there? how I the market

Sharon Zackfia

those to Relative in are where Right. oldest markets. kind of you

Bill Nash

little Okay. national Nationwide, share. Market obviously we the share gain a gain. on was actually bit market higher

comp X.X% before, mature X% like about, most talked little still was X.X%, in markets, think XX, above in X.X% XX%. and than I national to the look at the zero a then we’re we’ve still was around our that. were about being markets National at was when comp, bit higher more you

Operator

from Your next from Brian Oppenheimer. question comes Nagel

Your is line open.

Brian Nagel

how bit third do want an But I of headwinds started about like larger a for question the dive the I to example. we regards to pricing being question these abate calling various to go normalized sense supply asked that issue. just quarter this at dynamic the we have, dynamic be, which [indiscernible] to The now Bill is deeper it in But looking sounded back the now fourth conference the quarter. and just all costs quarter. sales was out the I somewhere upon you’re a it fourth the call, here first Because make early little or clearly should think post-hurricane it should being in has pricing. weigh there's talked vehicles market, hitting of with We your

hurricane, there should if I about, is, still what’s should dynamic question on behind this then we happening is think abate? a this here? give asking how all the when So, I’m us guess, more what’s and And this, you’re specifics out

Bill Nash

Sure Brian.

you all the supply think an leased us last let’s the through coming acquisition said back I the I of year, benefited quarters as year of of if added through So, cars two Like first earlier, the marketplace from into this go supply. about absolutely cost. and say

this quarters all replacement. the third year where push of two we inventory had was quarter this year you acquisition a because which Our vehicles. demand cost last of first see of There for the supply when were on and the down, you dynamic hurricane expect to have big of would higher

the we continued months our couple were in inventory period to that us So, inventory quarter we during up remember, in that third get quarter. ahead and will saw acquisition buying into fourth prices through of third time. we buying of that quarter start a tick the the And were

inventory I through I think we’re still the post of that kind So, have hurricane, do we that anomaly prices to -- the but through recover. do was think are that

a depreciating, they they haven’t year ago. While still to they gotten were back are where

Brian Nagel

Okay. follow-up I what understand there And it’s this had But is far a as vast of is, proportionately about of on sell, isolate skewed then I way way cars another impact to to is guess group specific just way as is and my comps this? of your difficult. cars think given to there the there that is a are -- a group that you and it --

Bill Nash

look No, it, cost I mean pretty at Acquisition up is it’s everything. much basically for when broad-based. we

wholesale in a also one rate, reflective And it’s just group that’s of down or units So, in buy I I reflected another. up trickling more wouldn’t the our because having performance on to wholesale higher say it’s think skewed everything. expenses and

Brian Nagel

the impact comps? on QX of quantification any Is there the starting

Bill Nash

so hard not example only hard there to because year say for is X% different little things negative a X% really because of into It’s more it’s more -- large and say last affordable saw I the of everything everything now medium is because trickles up. it expensive but was down ex-amount. many Yes, Well bit we tailwind a mean to SUVs.

So, there’s an impact on that.

been quantify I hard it’s it’s headwind. percent. But large personally specific to believe So, actually certain a

Operator

Seth question Basham from comes from Your next Wedbush.

Your line open. is

Seth Basham

Thanks a a to or lot, there quarter? traffic morning. conversion fiscal relative bigger and at good deterioration last comp, quarter’s comp look this in When the you was

Bill Nash

was larger you our it flat. about a basically traffic We think when had So, decline from quarter-to-quarter. conversion in

the it I conversion. would than So, more traffic the was of say on

Seth Basham

conversion, are slower think Got it. is things pre-approval a this simply the out the when there you are of about conversion of you drivers standpoint? the conversion like quarter, What And it think that you do somewhat. to did it from things online, can point slow of flapping financing roll

Bill Nash

we’ve having here conversion it’s because quarter, some was recently, this been softer. little one Yes, interesting each incremental a and

If it’s driven has us, by lot growth you advertising. double-digit of generates that paid a SEO and traffic for which just website look been like leads again up

bit [indiscernible] specific when in SEO and increase whether think is a than fourth some that quarterly leads at what I any leads, think saw little those out other an SEM the leads quarter you to have we more correlate of leads look the same but specifically. convert vehicle converts the quality I basis better you look its as as leads a high during other don’t necessarily or the some on

more vehicle that? appointment we say a by necessarily don’t fourth mean convert I as appraisal leads saw leads. high do sales appraisal what as to leads, In So, quarter, the

into can impacted have bit and conversion a also more highly lead the that is of time the environments. probably we macro of quarter, types these a which given So, think in some where think landed in plays in pricing by little you I this mix any I

Seth Basham

Got it, okay.

the deteriorating last leads terms terms doing from still digital continuation absolute you little online digit? a quality are in bit in the leads, growth double in So, of of of the quarter

Bill Nash

investments because doing what standpoint. as double out I think roll its it's we’ve still digits of seen we’re also partly we’re double we’re not and and over I Yeah, and digits the some pricing from big probably as because some what some in but that’s a things seeing And past. lapping

Operator

question next Michael MN. from Your from comes Montani

Your is open. line

Michael Montani

thanks good morning question. Hey the for taking

three credit could, can particular and ask you any Just still Tier-X if if little lending incremental and cycling discuss if the cash from off tightening or I there motor you first a in ago? are to again environment think I more just bit wanted quarters partners that around in either tightening the or is

Tom Reedy

at talked this but This walk to is of an something in that’s on last all much but With we ongoing consistent and the Obviously, benchmarks, behavior can our kind some we’ve the now early heard in about increase we’re Tom, lending through. since been that looking rates tightening I doing we year basis. year with then. regard pretty cap, we’re

across result mentioned, a a of door. of the and environment but have little applications kind lending the of heavily volume As that most about sales we generally I at deteriorating of the to Tier-X year-over-year coming space. also board, and is shift volume is of in have the can we’ve application seen and middle I one seen through down X.X X, of look some in been in on if mix the the is nature that Tier-X down And conversion the range. comment which kind you bit points kind has applications the Tier-X we in

I in some I a last space. testing of by We’ve and little with is also think lender of performance about weakness seeing that in in we year least think doing folks. have QX by they’ve talking of lenders. applications of Tier-X at nature lender the other some been the that the Tier-X several quarters of bit some that’s been been one last

they’re introduced continues environment April year-over-year proving robust their fourth they’ve it describe of the significantly in stores XX% down I Tier-X bit probably not us sales door in and this so phase that over the know early was -X least that consistent improvement Tier-X and, is course year-over-year based our factors. also quality in and trickle the than those year. for benefitted activity applications at in since course from perform from think of strong. well the you us would from of in on And we've year ever, coming that their the But as call I as more I’d we’ve of approval quarter some lender us I another So, seen headwind a a Chase overall, also getting to Tier, the the Tier-X Auto. mentioned are customers of think

Michael Montani

up great. two you is have Okay, appraisal doing provide follow if the One as delivery? color. around just we as Because finding fronts. helpful if GPU looked can update always the was of question initiatives market seen on disciplined little That's right terms some it other you And of about units, like then and -- well think there was dealer And been all used when an heavy peers. data some that. at but a I that a share. we been terms have modest you of could on balancing car came home in franchise all the think just home And to the cost for that downs more in between GPU the have a growth bit it really of

the comfortable continuing So kind you here to is order in maintain need question the sacrifice was hold some or be if to of to GPU? are shares

Bill Nash

the online so delivery. points, couple and of Okay first home on appraisal

So the customer and different continue different test XX presentations We're some stores. in working on continuing we actively online things. appraisals to to learn we're to

been delivery delivery, at about point. more delivery, So, a being is which I on this have an you out test Home and delivery stores. things home home started as that to on delivery only building on home tend the some I in like alternative enable think delivery don't for broader but not you to one We've really expedited to update of view capability delivery heard, them. expedited focused we've

that fronts. both the those So, on making I'm with pleased we're of progress

about total Look, question. share. we profit to we that we maximize could margins net yes. and it lowered out test. have our -- gross GPU said, talked gross being maximize lowered the as far want answer and we total the We also net, our dollars. want netted want it dollars, little and sales would feel no. we we're additional sold maximize to earlier we prices But maximize sales every As test profit more have And bit I like we're Do some is the doing on and a continuing but to cars if quarter, elasticity that

So, opposed up long not more as as results total and it changing the as we're financial it's that it GPU long produces as dollars. produces gross to better profit

Operator

from comes Matthew question Oppenheimer Funds. next from Ziehl Your

Your line is open.

Matthew Ziehl

question. my for Yes, hi, thanks taking

Just ask and geographic the fourth there if weather quarter to would guess any back to I up it to we in showed was normal related weather fiscal got wanted related in winter difference some impact at nasty times have had and and to between comps weather noticed an you winter. markets that's more any could maybe Did meaningful impact? [Sunbelt] northern in and aggregate

Bill Nash

comps. the through we Sure any type it at yeah, went we Matt, would events quarter. like you weather, had on get once did of were we that only during think the a lot in generally But the where sales was ended of a very the the big lots generally on weather impact the quarter. up not end impact that. Because we you And weather stores driver that as obviously you weather see of of in had said those past, eventually don't back we

always once back you So, the on that like, has we impact weather those sales do we're felt was get weather, while like there passed. generally

Matthew Ziehl

following just like of you’re bucks hard giving on of willing the and little be? its by it do XXX real so bucks But the public or end feedback question, forgo Is or how, the nothing much quarter day have. and it you kicked it actually without surprised surprising you’re all But as Okay, does to isn’t profit and so that, real quarter. elasticity seem XXX much thank some it a you’re not you. how on surprising sales sales were profit. that the time testing your willing that is And just saying it as your beat up this had competitors or you hold is. gross it maybe any testing gross your up line understand, that even how that, I horse this don’t down actually you profit up the a your to was gross rapid GPU much tick actually up bit to the at maybe quite need than of to time possible how testing too methodology

Bill Nash

No.

feel First the and slight and we to That’s us. noise comfortable we’re of that’s I all That’s back to, more. even within not on the go every real [indiscernible] again, the testing do just quarter see make with methodology it can going for range the our noise I range. within we because And time. tick-up, very results

a so that me was don’t see if I much think I we just if there that. sales, So ask don’t -- gave again, surprise you that up

Operator

next [indiscernible]. comes Your question from

open. is line Your

Unidentified Analyst

guess, what the car quarter and like data surprised me February. was the from for sales looked was number X% for January Edmonds year-over-year the used up I looking industry this December, at

So, people companies pockets means given for and employee cars. out more paying bonuses there including lift have then purchases money their including the yourselves in

in there? coming of I Can tailwinds, me be of sales where was might So, what you they those missing through light same-store to surprised walk see the I were. sort

Bill Nash

Yes.

have why months that’s used we catch-up, pocked we market have is three And XX data. speak can’t understanding. it market the to speak what since data. which for Edmonds What to it information XX-month at on because a is, of DMV I calendar takes a is that on share better found we can basis lagging. the I look is we months year couple data, So, reported to we a period, And

we what was is used is market say year that flat. the would fairly the at I for overall seen what calendar for least So,

a at couple speak it of Nor, So, Edmonds the such it to on basis. is I I’m the months. how not can’t sure last such short accurate looking for on

Unidentified Analyst

as given employees it’s you’ve had to with just anything far as Okay. and or maybe much? coming on that back hard bonuses have but it’s seen the And extrapolate, you traffic I’m commentary your sure, not stores the so to

Bill Nash

I wouldn’t have anything out. that would call it

Unidentified Analyst

Okay. And one just more.

same-store You’re XX emphasis Maybe can to actual in store little up you opening profitability stores, drive about the XX versus driving on markets. given a talk count? in new profitability small of the sort stores plans bit

Bill Nash

Yes.

So, about opening stores before. talked I’ve year. XX are up we this And this

comp push to out boxes want we We that. continue existing want we growth get to While these like we that to on to that to help feel the initiatives have of still a stores. of try working have to our are existing strategic plenty of we in We to up runway more open continue enable to will and lot stores. try

when market footprint we to growth, how sure we component continue So, do make have. one the important And share existing adding think to about is continuing we that leverage market we and is gain while about share. think that, equally we that of stores

Operator

from question Your Murphy Bank America. from comes of next John

open. Your line is

John Murphy

Good morning, guys.

bit with drop you’re I spectrum? focused on is opportunity further understand managing since or a same-store from an months there age get in used given sort spike first try bit very Bill I help be competition away the GPUs every just the sales, and little Just these going age may of be question, vehicle older all I in volatility a we mean little vehicles, slightly six in new or periods do a to pricing, the time consider mean up of spectrum to but year in may a those

Bill Nash

Retail, John, there the sell will for. have lot out cars. We also wholesale on a Well, we customers the we whatever front to huge XX-year-old up business. looking are put

we So, we that the want we meet cars don’t, If wholesale. in them make they obviously standards. to sure our quality there out put put

wholesale and lighter the I look retail there, that about and have channel. I as think kind of about used when old doing of wholesale and model we have at we been something cars, think it I it to that’s aggregate do we the because So, out some really of through of vehicles, think the competitors they both but add kind through it

So we’ll it absolutely dynamic light it’s or nine-year-old that car an model whether used is you if then saw source pricing But eight eight, the and still car, or it. that up. nine-year-old, still the its go customers and want as exists price

that’s looking inventory of are the So matter piece headwind a at. no which you

John Murphy

then And question just quick a second Okay. follow-up. and

really was out markets. post in created and there of there and excess that not dynamic weird huge in was Florida understanding other a country of where stocking the the inventory was rest this inventory enough Our and markets the those into of storms Texas

vehicle high. seem supply and used is really quickly fairly So, that’s flow of vehicles remaining pricing like just It for happening it markets. the you out those to that of those pricing, back need doesn’t

this towards options see do where are you out year, and going know back last flowing kind because that adjustment of trying you that out, buyers of of just mean before, those and we’re I getting the are vehicles yet? So quite kind normalizes end was when in dynamic this the to it’s to gauge doesn’t this answered normalized seem I your but kind of question stores your

Bill Nash

think We But was supported that for stores there availability down inventory moving don’t like a in growth by was I of a that think the sales just that stores. that managed has feel well I there. was us. big vehicles I think the stores our only and new there. concern quarter around we very influx for softness been so we country, inventory agree went available I support certainly slightly saw, big the still inventory Yes, given in our the inventory factor. I cause of to this is really down a do inventory that grew don’t

Operator

Your from next question Research. Albertine comes Consumer Edge James from

open. is line Your

Derek Glynn

Yes, hi. Jamie. This my I Derek for your taking initiatives. follow-up is had Thanks on a on Glynn question. some of just for

how the place roll like? decide enable had if in scale expedite pickup, store the to your your would you look basically out delivery, roll this, home that and could you across to logistics this base, backbone what quickly you technology So, out

Bill Nash

tell cars this, is we’re our to the issue representing which investments there we cars out moving continue X getting homes, to I the you cars, timing I know, for CarMax about that would we we’re we I individual and million want out we want building the that’s to of to sure that area to move on for that Not on invest making systems. so as and think with is network a agree rolled our business, transportation is to really capabilities. continue What and moving think an the not focused or them logistics when point you, a product that in, you I issue it's in in We this at close not we us. another think make improve that. an continuing about we that I prepared have an lot unbelievable year, talk is cars why we been have us moving

this in to talk we’ll ready out but talk future the on full quarters more not about this that I’m about roll So, year.

Operator

Your next question comes from David Morningstar. Whiston from

line Your is open.

David Whiston

any the credit or good on terms are versus noticing more? income morning. your small vehicle of service market the back expectation they’re on on on legacy either and and customer question of the to age the in expansion, Question demographics there in also real the looking difference markets Thanks, you John’s the

Bill Nash

the we No, out size and difference we reason the give haven’t you but volume and small talked to any an the just of markets noticed main noticed worth that about noticeable of anything that we store therefore the idea be customer the calling have demographics. on would not

Tom Reedy

sell our color of a go every there. add differences to, than how see different those we we different market demographics contemplate we we’re that differences contemplate between can They’re to factors I’d returns there mean in in going little will little we and make to is and et we in Houston right the is estimates cetera the of are models, Boston our I Atlanta amount than need. sure those and cars the no but get money that small bit themselves a investing markets different. vary we in

David Whiston

Okay.

the soft in willing in is is of accelerate aggressive? there a environment. if uncertainty sell-off more ’XX you get your a you the rather macro lot noticeable and stock one buybacks, Just buybacks are quarter fiscal now obviously to on question you be My you more in question had a

Tom Reedy

buyback so you we to yes, programs the automatically we approach to view point real leverage need don’t the see in this we looking bit we’re we additional that we the on but programmatic past We’ll do we is more the that obviously stock if at is and we buy a as certain we So lower at tell a we’re continuously took pick what going up, would at volume level. extent manage talked about for fruition opportunity place a ever answer have to any if the target a and our to cash value have not flow program share, targeting the do our buys looking that when and comes less and a more that we’ll when it. it’s rich to range you take see to fit know have about and when to as

Operator

Wolfe next question Your Bottiglieri Chris from comes from Research.

Your line is open.

Chris Bottiglieri

put I want on mid-single we digit as want something follow if expense versus on maintained question. that focus to your little just reinvestment, the you simple despite Hi, in thanks I sense for the as announced algorithm. core growth smaller a investment a the bit, algorithm up? I just on back lapping have like then the a get lease a to store taking else,

Bill Nash

that really two a taking years. actually function goods focus on making of SG&A it’s we our really been disciplined we’re while sold. Chris both talked waste and function very We’ve half and and our and out about continuing on are of being cost our I to focused invest, of for that a last sure year the

of dollars disciplined past that, advance as forward. of some in I we're investments and over I've the the out side, buckets utilization at our sold And incremental we look on we’ve millions labor parts as addition been to money incremental that been and sourcing knowing at what I talked there. we're to doing allowing of And staff good the on focused we've years strategic all in taken now procurement, two on On have to on really we organization discretionary side, the SG&A being think focused of about spending cost couple tens continue efficiencies. the those last and be really on

it's of a think So, I things. combination

Chris Bottiglieri

of just to to like out? like that get wanted then, tied growth to just digit that's that's algorithm. to initiatives spend That's you tied on much much some taking cost in Can helpful. growth the But you mid-single how out And how step the want back obviously sense store have. there, flexibility and

and what like in the be long it digits could that you Just do how term. to have think mid-single about

Bill Nash

just the have we that given. That's guidance basically

in it's As take to going that continue mid-single always we grow digit we've said range. to

We that expect stores we're because I right the back I growth the overtime, higher base. store that. would should the than now organization less percent our What investments. investing of given you is becomes that the company. little a time it's the leverage tell able to we into into store to now strategic as of new have be is and not the right growth bit would future less more and of Although

Operator

Your from next from Nagel question Brian Oppenheimer. comes

Your open. line is

Brian Nagel

again. good Hi morning

the dislocation vehicles to go So, What to going if in I wanted maybe checks regard market. there and again with a seeing environment. is back in just values to pricing our dynamic off-lease just we're channel back the residual

pricing seeing --? at interpreting to if question came that the at does So, pace how you're that And that that, which is have this highlighting. so, are that environment the you is, I they

Bill Nash

worth assume Yeah you're when the about not they about the you're that what's residual were and talking cars I you're coming and going surprisingly talking originally thought that to what they're value of talking dislocation worth that the about? is back

Brian Nagel

that's what talking Yeah about. exactly I'm

Bill Nash

cars high worth history lease back, people not told worth. they're what I Back come is And getting everybody saw they're so. thing that do. when to the tough say to as want itself repeats residual don't I is thought on leasing the a putting Yeah, vehicle we penetration, a value these

worth. us selling deal what They on going to that they're we're bring more, right end direct it. in up they're but those to buying from hold because auction, not to taking manufacturers the hoping cars they'll them those going for from from the ultimately, For they're may do

necessarily we're So, We're have have what they them, willing get to out going to don't have what we we're they pay what them. buying worry about to and to pay. them

some us. while impact think necessarily not traded may of does I impact that be publicly So, retailers, dynamic the it

Brian Nagel

has also prices the of And which not in higher But well from artificially CarMax. actually pace stepped be down are compete residual a slowed those positioned to then eventually to issue with leading to you back that. could in even cars guys against, this perspective, the bigger their [indiscernible] you marketplace way to making you've and have

Bill Nash

said, I don't see Like six a these what the on having If line. pay acquisition them. they think be the actually to is the acquire have Because in third. to I for And I acquisition auction quarters supposed step higher than up. us. supply coming price Yeah. our before do our to for we've thing seen good we're going vehicles through increased prices are to prior to that's more a

us. actually So, for think that's plus a I

Operator

next Jonathan comes from [indiscernible]. question Your

open. Your is line

Unidentified Analyst

mean horse for at that don’t of a that you and to be the many beat very I on GPU, think can change you period some in time? over comp moment X% takes the specific How dollars dead but changed sales? has how

Bill Nash

look and And continue evaluate tell you No. I’m every this to it’s consistent. quarter. what to ratio but be a to not do, we and specific of been time-to-time not that’s again, say pricing at standpoint. to have fairly quarter fairly we that going The surprisingly, X% consistent been every has which change from sales it you and doesn’t from

Operator

further no over back the time. There Nash. this turn Bill I questions are to at call

Bill Nash

everything joining everyone the want today. want for thank you. to Thank thank call I they for do. to associates our I especially

again customers and care thank to you how how for want see they and we truly XXth on This were care in they CarMax your Fortune companies best our again XXX how to was is honored this didn’t the in associates interest consecutive we you the community. talk to and year for. to a care will February, list testament next and Magazine’s our other, quarter. they work to for I all each time and your on If

Operator

This call. concludes today’s conference

may You disconnect. now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.