KMX - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax Fiscal 2019 First Quarter Earnings 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

Katharine Kenny

am Bill Good our Executive President quarter I and fiscal and Officer; XXXX today morning thank our first earnings you and Tom CFO. conference Executive and our President Nash, for Reedy, joining here Chief with Vice call.

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

information on report on For annual affect ended fiscal for the SEC. with please XX-K February company’s important year expectations, the could additional XXXX the Form filed see factors that XX, these

getting for for over I you in advance Before let question asking back your queue and me only call Bill the follow-up. in Bill. one thank turn to the

Bill Nash

Great, thank everyone. you Katharine and good morning

quarter the from grew unit traffic improvement and lower Total by negative used and year-over-year the X.X% a X.X%. comps quarter. first significant by comps driven were comparison. used were better Our for against The another tough previous represented units conversion

supply slow end in signs more since quarter at the some adjusted auction vehicle the vehicle quarter. normalized higher favorable While at was used mix more improving These of of the change indicates last year-over-year down valuations used depreciation. signs in place than year's in cost first the include fourth our than the in year. quarter data and still were in Industry recovery market vehicle acquisition last first a

strong quarter X,XXX compared QX again and by profit the unit X,XXX XX% buy the We another enhancements. to base. rate due year. X.X% Gross up in used grew units quarter to and our similar previous This per to rose to website our SCO due a store last to at had with again multi-year high traffic wholesale website growth in Our was to consistent first quarter which remained year-over-year.

used As I past vehicles for said their customers rate. are we supports buy in our our the can prices when offer higher vehicle which more

again as $X,XXX decrease Our delever. lower gross profit last profit would was overhead at for lower other impacted unit we comps. used negatively Remember The profits expect service our in unit wholesale in periods. volumes driven quarter to gross flat was by service unit as lower both said by we

due sales also by decreases with standards. which revenue. created partially finances revenue a new an related EPP reduction opportunity shift These the in We benefited in provider increased experienced to channel. offset finance some also and million but recognition were $X to party margin by enhancement grew revenue EPP from sales third for cost

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

digital XX% sales investment million both and increase per XX initiatives. the including our quarter. about our of fourth sales based and base, almost first There were first versus vehicles truck our per or or quarter to about that medium Large On the old expense four million share zero of $XXX up increased percentage XX% of to quarter X% opening to unit for of SG&A year-over-year X.X% in XX% SUV about the the year's in $XX the SG&A beginning and a in continuing As represents over to of compensation since a unit. year $X of XXX stores technology a XX% a last last year the from and platforms and quarter increase impacted several first an year. factors decreased are quarter the last which expenses related expense growth

Now I will turn the call Tom. over to

Tom Reedy

Thank quarter credit by sales you a channel the applications morning primarily of mix were of In Bill our result everybody. finance the we good first and received.

volume for was of at While behavior a credit CAF volume with X last Tier slightly sales year-over-year, we experienced application We compared some spectrum. to application down the we and lender Tier high combination see in X of year-over-year last which due and XX% low and year. accounted change Tier did originations. a very XX% the in quarter. ends growth discussed fell the X growth of

has by Tier some experienced performance stable While since X spring relatively last tightening been we that time.

receivables increase $XXX And line X XX.X% the and due sales. compared on This three year's quarter. used XX.X% sales of top Tier in margin. million. and CAF to day net penetration party XX% the modest managed interest to to penetration originated last rate of first the CAF receivables in was was represented X.X% compared Total to year unit the to which combination average loans continuation This modest a income net average growth with average in average last year in grew in in first increase by and quarter. the year. margin of growth in growth last payoffs due portfolio XX.X% the last increased selling compression the compared X.X% to CarMax of X.X% X.X unit CAF managed of interest quarter Third billion billion in X.X% of of last amount CAF financed in grew X% X.X% X.X quarter to the prices. versus portfolio was CarMax's in was to

compared originated of quarter sequentially reflection loan from environment. rate fourth a up ending interest the losses million in X.XX% quarter rate was down X.X% managed current first fourth Ending the customers to last receivables, of weighted loans year. in X.X% or slightly charged contract the allowance from but for to of during quarter, year to X.XX% XXX increased X.X% For to response a and average the ago quarter our the the

quarter during I'll we Moving now for XXX to to capital million Bill. shares and million the X.X first repurchased turn over back call structure the

Bill Nash

Thanks.

which During us Miami. stores, fiscal opened of existing quarter the a we North market we three the and In second and Greenville, was in new Carolina plan then in Dallas markets, XXXX two another to stores. first for quarter three open one

which the store is Santa opened Fe in second Albuquerque month. Our market in earlier this

The is Oklahoma for other stores will open our in market. in Georgia a market existing new Macon, which and CarMax City

was a store in You non-com will timing a there to openings. been contribution store change in that has This mix to quarters. and recent of note the relative due decrease

enhancements. a are grow As I mentioned we earlier improving customer growing variety experience but of website continues to and traffic the leads our through

for to speed the performance technical to of improvements continued the site. This make and example we quarter

In addition recommendations site. throughout improved and expanded we our vehicle personalized the

monthly released the payment. search also based the on to customers We desired capability for

to shopping us reminders. our appointment connect system. the to leverage We with the This We're new with new text to testing improve on communicate alert ways customers such allows continue experience CRM messaging, and thoughts, customers as and terms. their

features these meet to focus delivery, couple now new a pick various up finance customers new These the testing experiences combinations. As the deal years development to over online of placed expedited we allowed the have on you of and learn and their best individually us build appraisals, in test. tested pre-approval, know have last products as each needs. great of both to home and the customer tests how such Many

the expectations improve In as continue and features we to consumer change. addition behaviors

faster our combine that is empowering come pieces experience. store and learn our scalable now new training a the operationalize also this step how simpler, is their do the we're to all new and to and them customer's in to these next few complete Because to they the plan more to are comparable to experience comprehensive leverage next digitally best making tools digital Our to it associates easier, In we in-store into e-commerce for to take it customers purchase. quarters experience able markets before a way. with to progress comprehensive

on information in future quarters. tests more provide will We these

Now happy to your questions. we will be take

Operator

And question go Fassler Matt morning Instructions]. ahead. from our Goldman [Operator Please first this Sachs. from comes

Matthew Fassler

the at question year-over-year charging retail spoke and in to the sequentially. much both credit, My rates and so good Thanks relates are you CAF morning. for you about increase

to to that having might we've car the the firm kind than price, of talk underlying extent can used effective more you got it addition demand of raises the In be bit a about tech market car that the impact price fact on the that underlying what would?

Bill Nash

Good morning Matt.

rate You interest are the demand the on used cars? rise impact have may the talking of for the about

Matthew Fassler

Exactly.

Bill Nash

bigger Yes, monthly rate factors and other consumer so that price, well used I significant items. and in the the I in the believe small movements that think three factor. it's those payment, the bigger drive a the don't impact payment term. is down as the monthly The credit purchase have are payments interested as -- factors car

Matthew Fassler

it's impacting still in like average Are two in seeing still market the -- given the firm you change that mix are way? price tight, the seems is you or seeing and it potentially any rather other any is

Bill Nash

No, any to we are market not change in seeing that. regards

Matthew Fassler

you, so thank Got much. you

Operator

Nagel question next from Our Please Oppenheimer. from comes go ahead. Brian

Brian Nagel

Hi, good morning.

Bill Nash

Good morning Brian.

Brian Nagel

less, business, in regard I QX quarter. less and was a fiscal you mentioned used pressure. clearly the car Congratulations acceleration guess pricing so on this Bill pickup question about My in you now there with comments significant talked to your QX prepared

what less So guess if fiscal X primary from I the maybe dynamic, at here how it this in other up the quarter look a the were a to progress but question and somewhat so call negative quarter negative factors this was you is we have pricing follow through as it X factor going how the about it, think is, and I that to I that does the think Matt's about pressure, as and of a was far not QX? question absolute pricing should

Bill Nash

question. Okay good Brian,

the to about think talked what talk talking I So fourth best I start is quarter. way this about about first in the

fourth So obviously was in We talked between a new. the we it unfavorable tough model had used higher and acquisition the prices, spread, comparison. quarter had the about late we

We also post prior year. election a was the talked talk from there about,

on also supply SUV, large saw there affordable a was more to ones. more year prior We

in is on cars major right I higher this have still Consumer looks like started call acquisition hold a was in a So you there's of think that things although a value, it if is value look quarter. it still cars their trending tell is direction. than what was in price spread which out. their also And that certainly the but started -- spread there the holding better to I year-over-year large litany acquisition are Index Price again the new used would at it

helped there's And on competitors initiatives other are that of we another of known doing, work both those quarter this think on progress I we're that and quarter. continuing thing. helps still of to benefit. again our how think what so that kind I then they're like And a it have of make lot to things So and pricing

similar noise last some of the of again I trends macro more quarter course. lot to think quarter trending So, some this of of in there's a are the trends, but direction favorable

Brian Nagel

for it, the detail. Got thanks all

Operator

Our Baird. next from Please Craig question from ahead. is go Kennison

Craig Kennison

thanks my and morning question. for good Hey, taking

conversion mentioned structure changes lower opportunity that there? the there's more of curious experimenting you're traffic moves store trend. that's or to better You to as and on broaden about and those experiments activity in staffing with model been your any to -- any change updates to cost I'm any experiences line, whether your

Bill Nash

we've is is on goes sold to better made stuff It In continue the better advancements stuff we're of SG&A right some taking on focused of steps calls focused the our at focused one with that been sure better been goods and that changes leverage workforce question technology been And about previous and over and leverage of year our workforce with good how to the will a under we we've we've we've that cost make we've SG&A waste to on I've utilization. force. last Craig. been looking work also things into initiatives and talked on

work still point. that's progress in So, this at

Craig Kennison

you. Thank

Operator

Blair. Our Please Zackfia question comes from next William from ahead. Sharon go

Sharon Zackfia

And I morning. quick in general? anything I or the if your then marketing related real was or of forgive delivery to are question one a that just marketing more doing relatively I'm was year-over-year. know if the have are on customer quick and one didn’t the just credit question just question me. characteristics this then wondering than e-commerce spend, so pilots you good Hi, constrained if secondarily going looked is timing in customers? store if be on to flattish any Katharine year The the different it

Bill Nash

it'll on similar there some it Sharon so think look unit you on spend that a was basis, the is be per I think basis. marketing way when timing year-over-year Okay you on the should a similar there it about be should at

at So there play was there. some timing

customers? credit have asking we pilot in mix were different On seen you the any delivery our

Sharon Zackfia

if customers? just I'm the at are store wondering all characteristics your customer materially credit different from of that in

Tom Reedy

to skewed any Sharon as little over credit Yeah, bit this a expect. at heftier We about it as because break things point -- desiring to are tended People value lower big be anything time look you'd more this enough -- you pilot. is that are don’t at in see there has different. generally not a it this is towards to less have saved. mean new too is I talk

Bill Nash

speaking that I more to would up at what and stores overall difference comes the haven't point. to of But are are whatever mean can't customers to for on for convenience seeing whole this mix I pre-approval versus process think far we to that -- delivery is Yeah that the the the not just where reason and/or get looking experience. take any relevant they seen as us physically that take big it customers stores. the the necessarily as coming we're customers

Sharon Zackfia

Okay, you thank

Operator

question Please next RBC from Capital ahead. Our from go Scot Ciccarelli comes Markets.

Scot Ciccarelli

you lost why assume guys. in on would used it last year? lot we're whole on your those reasons, now reasons but year a don't away curve vehicles there flooding Good everything a more not the values are depreciation that view morning in logical normalized from do the the I know forecast closing from any vehicle call all based see on guys a you side

Tom Reedy

a of normalized this to opening higher Yeah, point said what is with that you a it end I hurricanes know I the like Scot quarter just year depreciation at the this. my curve starting we price to last happened at like much did of would see speak although given In more remarks kind in first thing.

as -- normalized as that I just but know, be the -- quarter first I a more don't a depreciation. I seen know expecting to far return So going forward we've would in

Scot Ciccarelli

you. thank okay, Understood,

Bill Nash

the would we supply to continue roll I prices. Scot which from to continue vehicles Hey acquisition why we of the effect think that expect an That's into see do still on lanes to obviously have will will understand. everything vehicles auction

Scot Ciccarelli

sense. makes That

thanks Okay, guys.

Operator

from Securities. Our Wedbush Basham ahead. Please next question comes go Seth from

Seth Basham

or have Thanks a you on growth recent around growth about had lot us [ph] and is in commentary the quality asked leads? lead and whether good not some of give question lead online I morning. you quarters to online elevated My could those as continue

Bill Nash

lead Yeah, growth. Seth we have to do double-digit continue

The quarters SCO talked the it there obviously traffic the through being And so real website making driven improvements right are lead in as growth is there specific now. they similar whether that now, of the And the leads, Our online quarter. no as like mix or far we're past is they leads. come the we've the is in of they last the change majority the whether by which about several come quality similar to have mix types was performing store.

Seth Basham

quarter Got if conversion lead this a level about it then improved quality your in as and what up of drove to a similar just follow growth that similar level of you're and the talking view?

Bill Nash

actual stores Web to talked tools -- and our the opening the continue traffic this more associates giving and have training better did we're comments enable I then the the I we year think that about progress Well, in customer. to them traffic.

So a but of I coming think it's I website. it's combination execution think also to do the increased store traffic

Seth Basham

you. Thank

Operator

question next MoffettNathanson. ahead. from Please from Our go comes Montani Mike

Unidentified Analyst

please if maybe further? to see you Mike. help comps and you in as to pilot is how the this home you roll and from what for that the about with bullet place, thanks how that and maybe the getting initiatives think the have [ph] us delivery out Gail learn discuss the can you appraisal, was on wondering I multichannel you Hi, Alexio understand accelerate

Bill Nash

we Look, on Well, a in focused are comps. driving question. lot that

business really You in so we to existing grow are customers to we But way. footprint the our able will base on leverage store we continuing know that to grow ways we're focused previously been haven't continuing that reach. reach and

ways our enterprise. we single-digit that think us drive the we've to growth infrastructure that to leverage mid and across should been in continue be comp I So the working help on will able we haven't initiatives

we So that. feel about good

Unidentified Analyst

there XX% and are have their rapid you your the nationwide? market still accelerating have growing while of you country thanks maybe pretty of competitors because footprint maybe presence no penetration some are considered Okay, where at

Bill Nash

Yeah, a to is so it going be combination.

the pace just also existing new for are I through XX footprint we're in the which very it business. in But at range allows earlier execution reasons the market us to comfortable opening we of focus this We the feel increase cited penetration because the on also we stores XX question. to can our like of

focused we're So both. on

Unidentified Analyst

Okay, thank you.

Operator

of from Bank comes at question ahead. Murphy next Our America. go Please John

John Murphy

markets XXX,XXX above I'm going just opportunity inefficient to larger in the go that to just of and just to of that a three or the you're winter, kind to we sort curious out right And and stores is base the there greater sort online create if lot much over as thinking curious might up smaller of two, call Good follow as about markets one, smaller and MSA efforts might be strategy the you're years large stores of MSA's base of is the we markets and some efforts, just to where a here make it talking there getting markets? also sense? you now in maybe your may think about be productivity leverage time more store that, is that just into that the morning installed online guys, a kind potential maybe is there about beyond the than and think

Bill Nash

the opening year up property we've stores and small that more MSAs a just John, the function of that's Yeah this well got. we're

to of additional large about markets can your markets up there's a point still we XX% us to stores that population and see of stores. larger continue add the really in lot You'll opening reaching

-- small been markets more to this factor larger and in be more timing have continue stores markets will well. you'll the fiscal in a there in while more a in us year put more it's see as small going, markets future of So,

John Murphy

in because just a online consider existing base ever in the the you be then your you shrinking to store some as more efforts? base with over base develops would And store lot efficient able get time the markets might

Bill Nash

need don't pleased and stores. stores. our that this we I to the all obviously Yeah, We're at our see evaluate of with all point do

opened keep or we good just in -- performance haven't feel hundreds so large placed and we know stores where of we thousands and shut do. it's of has which in like those You that store never I able stores. I about when to not are stores the had hundreds sell infrastructure we our volume like have vehicles leverage hundreds and one, good you're and mind to XXXnd looking really to the really think we've been up important is being

John Murphy

is Great, it Thanks. helpful. very

Operator

question next John Our Please ahead. from from Healy comes Research. Northcoast go

John Healy

trying there how and comps years? traffic of just of next wholesale it Thank was and growing related the more to quarters In to guys rates there kind but are you. we're trying is the of wanted bit business. that think the just are to a it know think should call think I you couple the to of about long-term the last I about growing Bill, up done business -- mentioned are stores permanent business business you how the about exceptionally for much business measuring you well that and more that the you in just the more with understand that's the guys little wholesale has traffic but kind as in ask for we terms and I used buy and the kind few to units as decoupling

Bill Nash

say time I about long grow over should and I of similarly. way the John, would roughly the wholesale, retail wholesale Yeah think period

tell nicely I have seen down multiple to is sales that to I over remarks high you that Certainly time that vehicle, one opening up, market, benefit sure improvements we long buy and you've it And the in said bit. rate a we all the wholesale also prices covered on is may maybe a I a this things put we wholesale that making with would vehicles in pick the down one to more quickly we've factor making which continue the mean know I execution certain the us -- you model at tell is up you, to goes can little more because made you up. very certainly of factors when has money enough of the think market bumps maybe Performing Now you react quarters But also understand diversified be that one sure that obviously what the or quarters. an on retail customers would been. can that I it's may which helps that one, quickly.

So think job the they I than there's an level done. ever execution better have doing store piece at where they're a

think this So, you hey, outgrow to think retail. going I the that always should is don’t

still I long-term same. have think the view of the the will that both long-term I over that grow about

John Healy

at just at when in in past? with we've the them that that's enough or you Fair any over two you seen evolved car in last different year -- and that it any the is similar converting is there customer purchasing are the look guys, a that has or than ratio come along they change lines

Bill Nash

that's similar. pretty No,

John Healy

so much you great quarter. Thank and

Bill Nash

John. you Thank

Operator

ahead. James Albertine Our Please Consumer Edge. comes from go next question from

James Albertine

want a light in on quarter, detail recall adjustment what's going unpack for business? revenues accounting more there thanks or driving if that to just in and bit you little lower the adjustment, little in want with a as the fourth and Thanks. terms EPP the kind comment I understand the don't mentioning recognition I you on of same can of had you question that the earlier of If the shed is well. think congratulations what costs you just my morning Good and taking bit on may to provider

Bill Nash

reason been bit that is their EPP a plans reductions it for might a from providers have the a to or exceeding pricing on I cost those Yeah the room Jamie. describe you we're intertwined. decrease means guess of the that to take get as which And some several to last able is vintages sure our imagine way more expected the little from revenue cost they're The either perspective that there's kind bit margin. benefit performance

quarter which some shareholders the we turned to we cost take be more to a This out we and realize impact not bit able margin little case. for benefits, are believe the penetration

that arose from. growth where that's so And

the revenue it but is business from as arriving far a the planned standard core recognition new accounting on impact our does very impact it has As have accounting immaterial which extended revenues. on some

that vendor new it we receive, recorded the then received it each based as record on as them but estimate amount that for our before certain In to to of exceeding circumstances time. CarMax. accounting If thresholds payments expect when up referenced standard just are to those certain provides long-term payments exceeds we this the receivable So the agreement the and and to I the under came performance those of quarter plans the us a plans check, we those of have thresholds. vintages and we certain those past when true at

that after So that tax if the we first receivable $XX recognition about the of -- during you $X the minor we quarter. mean will. what am added I million fourth you for I And see from a that learned during receivable phenomenon of on quarter. this million sheet true balance sorry the represents of up quarter, also we the during

in any adjustments to that receivables prior material our have investors relates discern like that which million So expected we'll a to to we will activity disclose reserves just and the on current go are to the forward can revenue vintages. evaluate from we getting loss X plan period payments versus so basis loan

a cash think it's we will relates there plans expect are out I just But it real place. little more in on to money basis, that to bit and that dollars, collect already it that make a clear. is just

James Albertine

of… Thank than any you If just was yourselves bit there that detail. it sense trying related mix the I just -- the we're am to noted, get a performance on providers may the a I you perhaps driver to for clarification expecting, and better little a is that

Bill Nash

I related it's mix had I is think don't an think thing, better that it's just apprised than performance a to. overall they

James Albertine

understood, it, you again. Got thank

Operator

from comes question ahead. Morgan Stanley. Sinkevicius next Our go from Please Armintas

Armintas Sinkevicius

performance know you been compare just morning, down to call. capabilities or the curious I and have path, decided and you've taking have invested you already their Carvana you the a you path in-house? Good are do could similar thank some for quite customer those incredible gone they so experience a the The of has contrast down for what bit the tweaks that and to if model have seems you in adjust you it recent capabilities approach capabilities, versus if have because many steps that business to go like pretty

Bill Nash

continue my to in to really somewhat is Like and together been focus expectations all as been comprehensive capability opening our customer's we've I we've finance, we now and bringing a that said pieces in out the continue change. remarks and adapt that different appraisals testing it in in e-commerce doing package can roll online somewhat it's of online the whether combination it isolation,

about to home don't us want want delivery, to an existing terms online, it mix home of home they the to they whether that infrastructure. to it service to really a whether exceptional provide, It So complements all versus the into our to of or we us deliver come feel customer good base it's allows delivery and I all in-store, way and an I I through store. our gives think delivery. want somebody to the I want and you have have want customers smooth immediately I the easy online website don’t do don’t I right certainly if want this then their on part our progress or and transaction. decide be if to hit then advantage want

want okay to for process, we type focused they the customer what to that's are on. So customer however, we've and going one it solution of got let drive the we're one versus drive

Armintas Sinkevicius

of as and there? benefit transportation has experience it vehicles far what your the regards Got as cost the to been with

Bill Nash

Well, tell year. vehicles. I cars one X you would to We a the probably biggest of close million are move we transporters of probably

very we're familiar transportation. So with

through and better us. focused an and which a that I it have been we're investments to has logistic continuing differentiator be system excellent heavily we to continue even that big on for will think I think make

Armintas Sinkevicius

Thank you.

Operator

next Our Stephens. Nelson from ahead. from comes question Rick Please go

Richard Nelson

tell seeing traffic store online any good you if with you traffic in and or Tom, morning. Thanks website home difference concepts? you are these delivery can us are competing markets in where

Tom Reedy

large can Rick, I at competitors making look you Yeah is where what I are also headway markets tell you if the would I making so headway. we're tell

So there's to see just We direct of any no impact. type it. correlation don't

we again in markets. about we feel those where So good are

Richard Nelson

good luck. and Thanks

Operator

from Whiston Our Morningstar. next David comes question from go Please ahead.

David Whiston

big incentives me little went Thanks, good morning. of to a on saying down quarter get vehicle upward? comps related certain the use reconcile also because demand so maybe understanding pricing is new was on this used picture kind I having you're can means to high I factors vehicle pricing which more are that due of just assume segments macro up, want your in help these and skewing that's then pricing but there you what

Tom Reedy

have is fall. No, bit I a a from what last prices the of think from we carryover in spike

generally but because higher happen the I some at starting from We starting you actually starts pricing. appreciation of sales cycles, the a saw depreciation that say price. normal year So time. you're with have When normal higher tax depreciation off

appreciation. it saw where any quarter was we a So, really different year's last of what environment, that is didn't flat you more than first

So have you some what that to appreciations/depreciation. experienced seasonal a the the have the normal still have saw the left residual in a that fall, cost little that acquisition double appreciation we of over you we from on bit you from added hit and

favorable that it you it is acquisition So, bit more mix was that a quarter. adjusted, the than first price little

the So that's trending direction. right in

used the spread that had The other and between I thing that was cited smaller. gotten new

cars last than quarter which had incentives atypical. New actually value more kind used is their lost of cars with

During the new looks that's back little see to turning quarter to hold like where value bit we where a normal started more. this that cars their

a So there's lot this the going of for with noise quarter. on

David Whiston

Is it as say is fall fair offs this hurricane the pretty to over tailwind expecting as sharp away? due going quarter to soon you're

Tom Reedy

going continue to normalized would have will mean is to then little of If continue I continues But say. to and earlier to that but my had a it's say it's would comment a to vehicles. we prices the increase. thought considering have would quicker hard supply really lower happened I hard say. think I we that used bit the to appreciation supply increase to depreciation cycle it that

David Whiston

you. thank Okay,

Operator

[Operator Instructions].

Our next from from Brian comes question go ahead. Nagel Please Oppenheimer.

Brian Nagel

again. good morning Hi,

noticed this on car about in your so conditions. market question going within Tier made lending recently that your my penetration, group that forward? continued you the that business, the sales also recognizing So some But of of we how this think changes used reflects and up pocket, X to decline should we co-order have hand out that follow is

Tom Reedy

X? Tier to referring you Are

Brian Nagel

correct. That's

Tom Reedy

in lenders. lenders those group performance as we We to group in evidence the are Yeah, important of think defined into at I believe But see. we that that see did in a have and as a experience a it's portfolio first last volume had my of looking year to sees I why some always lenders comments or there's the group. a having sales mentioned the prepared quarter is that We performance. we think deterioration year value and applications of that we last of

last Since deterioration first And we year. of do it's consistent. time after that quarter pretty so been performance see the

fact in In quarters. modestly than it was recent better

quarters. a portfolio. three attention will are we it, to can't behave, pretty to our continue tell on in they're depending going to pay manage we'll optimize you going things it's have and to the stable it how on the basis marketplace seeing what in to been but try to be partners Obviously and So go forward last I continue their

Bill Nash

lost I we questions. still any there. Operator there think Brian, Brian. you Well, more are

Operator

will this one closing no have the turn at We for over any I time. call remarks. back in queue

Bill Nash

Wood the building been operations, privilege industry in all future. month, to leading I close best champion XX the He's key Chief of associate-focused want work XX and take a years. Operations he He's he's been retiring has Officer. for with for recognize him years. our our those CarMax has before with culture moment in do who for instrumental listen Cliff him more next I been wish the to I've our we been to had a Well than

and our CarMax our joining what how for there do of talk in each today are thank their other, call out you. also XX,XXX and interest they again you every As I all and want customers communities thank your single take for for the Thank we always associates and quarter. I to they that care next will day,

Operator

today's concludes This conference.

disconnect. now may You

CarMax (KMX) 22 Jun 182019 Q1 Earnings call transcript