CarMax (KMX) 26 Sep 182019 Q2 Earnings call transcript

Company Profile

Participants

Bill Nash	President, Chief Executive Officer
Tom Reedy	Executive Vice President, Chief Financial Officer
Katharine Kenny	Vice President, Investor Relations
Scot Ciccarelli	RBC Capital Markets
Sharon Zackfia	William Blair
Matt Fassler	Goldman Sachs
Brian Nagel	Oppenheimer
Seth Basham	Wedbush Securities
Armintas Sinkevicius	Morgan Stanley
Craig Kennison	Baird
Michael Montani	MoffettNathanson
James Albertine	Consumer Edge
John Murphy	Bank of America
Nick Zangler	Stephens
Matthew Paige	Gabelli
David Whiston	Morningstar
Chris Bottiglieri	Wolfe Research

Call transcript

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Operator

Good morning. My name is Jamie and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax fiscal 2019 second 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

earnings Good you our quarter all and for call. morning thank joining fiscal you, XXXX Jamie. Thank conference second

with As our Reedy, President Bill always, Vice I’m Nash, President and Executive Officer. and Financial Chief our and Tom CEO, here

drove Congratulations the mention our associates our past present and Before me celebrated actual to that we begin, over XXth again our of our customers who millions CarMax years. let birthday success last week. and

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

follow-ups. February the For get for company’s let see in fiscal XXXX, Form annual on appreciate and back in ask could on We XX-K factors your me SEC. it. with the advance XX, Last ended you these as the question expectations, ask report year filed important additional affect queue only one information please the that always, for to

I’ll turn over Now call Bill. the to

Bill Nash

by units the lower compared conversion, In Used in X.X%. by prior traffic. comps pleased return comps. to morning X.X% by you unit were quarter offset Total Thank and partially were Katharine, X.X% by to good the used driven year second we grew everyone. better quarter, and grew positive to

we second when mix-adjusted Our industry year what vehicle unusual and our prior somewhat year acquisition quarter. costs with were quarter, an year. only experience lower environment. acquisition quarter were lower our depreciation than in This continues contrasts experienced the the significantly remained this costs vehicle high first In to mix-adjusted over

in in by the quarter. grew more in month. year’s Our saw XX% the second visits website second up from we million XX%, XX average, per previous of quarter volume On traffic than quarter and first XX% the

unit $X,XXX Our increase year. profit We at higher $X,XXX quarter compared in XX% used in the wholesale our retail base, remained second units of rate. a quarter. strong a per was stable up gross last This year-over-year to and appraisal our had with in an result the traffic, store growth almost buy

$XXX and by unit acceleration and third quarter, party by at beginning million the approximately driven the revenue to revenue year wholesale second gross decreases in provider grew new lower increased related by of revenue recognition with to in finance year. cost improvement and of last fiscal from EPP profits. quarter EPP higher by $XXX were standard to service gross partially under $XX per Our period. adopted the These profit offset this the benefited sales $X accounting XX%, compared about Like over prior decreased Other profit fees. in the

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

or since or Large the same for which our beginning million, or of $XXX $X quarter base, to of XX% vehicles per the about million largely due is XX% the XX XX%, of platforms XX% expense, a $X.X the in ago expenses related initiatives. share-based SG&A, and digital XX% increased quarter. four-year-old which our of the to increase second advertising technology unit. a investment year-over-year exactly unit increase quarter as million truck last slightly Several of year-over-year including year, year, of the and almost about continuing timing, were sales second year increase sales, percentage a in On of last our first As growth factors first impacted and $XX XX% a expense but per versus opening down zero decreased SG&A $XXX in to to the a since about quarter quarter. and to represents expense, medium in compensation the to similar SUV an stores and

over Now I’ll to turn the call Tom.

Tom Reedy

Good credit Bill. experienced volume across modest we last the spectrum morning Thanks, applications, in applications in Unlike the we where everyone. two quarter. the in the credit second declines growth saw quarters of

Tier Tier party X see year. sales in of which compared three-day higher with performance to X.X% space third XX.X% compared for second than in accounted at the During of last to saw quarter strong XX.X%. payoffs lender modestly the XX% was year, quarter, sales net unit weaker X.X% XX% X we we year’s of which continued performance compared last to used represented CAF penetration last but

the portfolio CAF to compared the portfolio first offset loan originated was quarter. X.X% X.X% margin net interest last the $X.X margin. an slight increase continued X.X% growth, This penetration was losses financed, income average of CAF our interest sales the second Our the to a quarter in the of and year, increase provision amount loans due in to grew in to X.X% $XXX managed quarter average result but and receivables in the by slight Total in partially increased an the rate. receivables to X.X% billion average of million. increase in growth managed by for flat compared compression in

million as managed quarter last in well quarter losses X.XX% and loss X.X% in to second loan increased a quarterly from originated experienced The arose the compared managed allowance receivables year ending weighted $XX period. average contract in X.X% for X.X% charged quarter. customers provision to prior quarter, the and to loans The to from ago was loan This during sequentially from for that year. loss with For the as the provisioning. first the the the first down X.XX% fluctuations of year million rate flat in are average $XX compared was of growth the often QX receivables,

to capital $XXX return to we for repurchased X.X Moving the to and shareholders shares quarter million structure, capital during million. continued second

Now, the I’ll call to turn back Bill.

Bill Nash

Tom. you, Thank

XXXX, we Santa quarter, market in and third During the the Georgia. open North Christi, the include stores: Albuquerque new include City, Macon, we In new plan another stores, which which markets, two for and one Shreveport, in will fiscal second opened actually Texas; a Carolina, Corpus in us. market, to of They today; quarter and existing three in Louisiana; Fe, we Oklahoma including markets four Wilmington, all open Louisiana. Lafayette,

These some and which process We purchase As homes how of can to out update vehicle the vehicle to our individual before, product options complete market. initiatives. most they you will allow their let shopping receive delivery recently I’ve after with customers done from second want the our to options of a decide rolled alternative me car. they

three in in our available includes delivery In addition market, service, Charlotte in August, market. early our the home which express pickup or off September. It stores is Raleigh the this launched and kicked in in to Raleigh service, expedited now all which

August. In the on an just estimator addition, few testing an with online provides we opportunity vehicle. questions, stores online the to customers began After appraisal offer approximate answering XX receive in their a in estimator quickly

customers home we the along experience based go it how customers center. is appraisal pickup ready offer. This combine to talked I Last schedule center to and with with products of together the work While can they consultants throughout one point These our are provides working into all are store for on their or until test Also, the any data. estimate, CarMax either an at have customer markets support now to and quarter, of way we actual delivery. purchase the progression is a journey. the about call offer shopping comprehensive online

much their enables online. that across experience and move omni-channel do and the buying experience full Customers with customers to a the building flexibility ease. to and are shopping in-store online We seamlessly want independence of

believe customers. complexity we this knowledgeable purchase, associates, experience national major and we they across online organization. experience our have at lead how automotive of will industry along our skilled the want the in-store a our industry. and our all the to points unique expert us This the infrastructure, capabilities, bring believe operationalize of learn journey. scale, the this store vehicle and ability Given provide best to our advantage is inventory clear competitive footprint, a both in often various digital them will our Because also strength, entire integrated integrated of and and will associates market. assistance across brand help delivering this we of technology in in to help Later a omni-channel investment the offerings scale experience to this continued to year, and We

this the in provide information future. We you on will more

take we’ll your happy to be questions. Now

Operator

[Operator instructions] from Ciccarelli Your Scot from RBC Capital first Markets. comes question

open. is line Your

Scot Ciccarelli

if faster maybe guys. so delivery seen out us Bill, help us have it’s has been I your out morning, just rolling and you in there, competitors of you know been can help rolling online-only thus works, one impediments that maybe success impediment we’ve what alternative process the the – digital understand full out understand capabilities of but to the Good kind given far. the what can to what the far? the wondering than

Bill Nash

I’m really make so that this omni-channel that Well home Scot, other the only want doing. We to is combine and experience want example, back for talking different all sure to connect We about, this can alternative to it experience. goes we the be tests delivery it piece with we’re to all one of the that express that’s pick-up, the or equation. the whether that whole delivery, able small pieces,

sales do is consultants to way make trained we they on continue that progress today. how do that thing to The than to are in other the sure our we to want a different customers want

change involved, that we’re and pleased actually made right It’s track. I’m we’ve big the of organization, a I the So, lot last with a the the there’s over think technology couple on progress years. for

I’m excited about it. So,

Scot Ciccarelli

this to into you’re the that I and how little markets? out it could you in what market you see, question then, if it to be that from rolled roll bit point out like if were major a Maybe half quickly rephrase back you expecting other the

Bill Nash

plan be get be. focus We’ll Scot. want obviously what I we that, once our iterate so that, and see we’ll it on on wait market, quickly that’s to mean will the into would and

to see from it state. there, and the version is second be the it Our what to first get the because focus be market, in will of not the first will you’ll is think end iterate I one quickly

Scot Ciccarelli

Okay, you. got it. Thank

Operator

William Your Sharon with from Zackfia next Blair. question comes

line open. Your is

Sharon Zackfia

question I follow-up paradigm. a the morning. on good omni-channel guess Hi,

the Secondarily, any can seeing Charlotte give in customers metric actually a to us targeted maintain As going be Are gross you profile or early, and how forward, think you that per margin up? Is would about Charlotte? delivery. that? of choose still versus given about any that don’t you delivered get for there about think ever car, picked number talk what I you would looking think inquire car you’re can about about do profit what delivery or the that you’ve be you’re you know I on metrics to that in

Bill Nash

the on question, profile the Okay, a cost talk about early is and it to first structure. Sharon, the little

We’re still learning.

talked As opening I’ve center about, we’ve up. call a there got

I on that really I guidance opportunity testing different so lot so we’re at think that I you there’s on things opportunity compensation point. and a of there’s think continuing can’t to we’re work through, any this structure, give

that store that is correct size the that, we help them still at we the fits want to of haven’t customers the our expert all. number by still so sales some that make one with majority The customer’s not interact it’s point. want as the journey they talked far come customers, each and to points into As individualize of but you’re sure - want that and about we help to key far at need consultants

Sharon Zackfia

you. thank Okay,

Operator

from comes Sachs. Fassler question next with Your Matt Goldman

Your line open. is

Matt Fassler

much, like I’d Thanks on a so question CAF. good ask to and morning.

even as but funds able the better think a cost the securitizations? that a How of rate that speaking faster down spread moved higher. spreads know I I mixing moving been towards, the was of lower to able on pace I generally average spread stabilize securitizations saw than securitization, think, the bit that been charge, than as those you’re that’s you’ve So, still of sequentially. spread little the a is spread, have the been it has little to stabilized essentially I increasing one, your essentially prior bit coming as interest your last

Tom Reedy

testing, it’s last basis a at versus response In start rates little down in we quarter Matt, naturally little have rising. reaction to a last to year, a to as general, a so bit ability quarter, about, up lag, but it’s ago, this a little immediately bit basis stabilized in so it’s points, up. going up over year the under in been XXX the you’re interest charging we still you to think, successful a stable migrating back been look little but what rate I’ve see versus benchmarks our look a done first on which increasing year. payoffs, points, a think little talked We’ve rates, I if if in of rates increase benchmarks over But at what that, I bit over they’re increases eye XXX we’re tick customers we’ve very I it’s and three-day starting year. in quarter think this of have we now. up I an When kept saw in normalized

takes it rate You some time respond know, increases. the is to just reality to

but We’re little increase preemptively there. on are see prediction bit up, of think not rates environment, to increasing a an going rates to of we’ve good in naturally rate moving that done I go pretty going so a things up, a going you’re job to lag

Matt Fassler

Thank you.

Operator

Oppenheimer. Your next from Brian with question comes Nagel

open. line is Your

Brian Nagel

a with prepared stacked and comps, to it your you Nice good two-one in but from what’s used on stronger centers understand overall it’s quarter. basis, years. there I said positive want is to the like even your in on encouraging two comp, Clearly perspective business. the morning. returned environment. My a both question comments, happening Hi, what’s better Bill three on car

a factors headwind, then, so the factors that, Thanks. there elaborate helping for a talked out about maybe like that those on bit back sales, year? are better pricing that’s how half are of of the used - there other and about car we drive this it still sustainability You do think sounds and further

Bill Nash

time here market right Yes a Brian, I’ve been and very now. it’s a unusual long

still, end than It our depreciation to trends older, remarks, were at bit year-over-year after little starting had quarter, acquisition we your of of first we skewed end the see--although because offset acquisition it a said the end were ago, enough are when they I’ve a higher were an to year starting in was a increase we prices As of acquisition the that the but more stopped bit the my we on little first much prices. of prices higher, starting normalized. look wasn’t in see quarter offset basis, of and be to the quarter. you At opening a point the costs sold first at to really inventory

seen continued year, different normally depreciation just been it’s Second years of other see very in this unusual - depreciation quarter, - see words, It’s we than very you’d during flat. really curves and past that. we’ve didn’t time in

anticipation why with what’s on belief, speculating probably, I buy tariffs to that people really there’s trying new driving is cars is. think just this I and and to and my you, cars; some up of be know may of that but used be honest don’t

years. off normalize, over would at is to a starting comes think are New see few inventory to point would as if lease depreciation price. at your continued as we start that and normalize, last car I as we’ve outlook in still the it start cost see more more high as forward, to prices ever far some obviously think I up, go so higher we’d seen that the of as even especially they going trends increases the continue would

Brian Nagel

with we the the coast, recently dynamic hit [indiscernible] east the within further hurricane pricing that could exacerbate that, so the market? used saw On

Bill Nash

It’s hard to tell.

is industry this so I not a is of, the is think say, automobiles, that from Harvey to far destruction was. of this the magnitude not saying

year I ago. don’t think the a magnitude we’re did estimates some maybe I to think going vehicles that saw we or so, XX,XXX I see to of so

Brian Nagel

thank Okay, you.

Operator

Your Wedbush Basham next with question comes Securities. from Seth

Your line open. is

Seth Basham

that there, the morning. and you end quarter please? My is considering we year, us some question third. perspective How sales. this the from on you some year-over-year impact impacts Flo? color year, Thanks give Last sales a positive the about at lot, negative a good and some Can in do your hurricane I Hurricane second the had impact think on on think of

Bill Nash

of the Yes, so the hurricanes next impacted as year, quarter, far it is - us as really week quarter. only last you’re right so real last the impact the

will quarter, tell shut far well time we’ll have see events, inventory, have fared As organization the last that several but where down, of generally The and back about did then goes, timing as the period in stores did the we I impacts we Keep had Flo standpoint. a the it third in very happened and as we more an when but talk you afterwards. a of sales stores we get it’s mind, from we’ll the saw we property we year. that weather not some because these

Seth Basham

Did you pull Wilmington forward that potential to market? demand the store opening of capitalize the on in

Bill Nash

of to Actually, in because we prep, open opening right much we up so today. the the it hurricane delayed delayed why was which mix supposed it, Wilmington is the it’s pretty

Seth Basham

Thank you.

Operator

Armintas comes from with Morgan Stanley. Sinkevicius Your next question

Your line is open.

Armintas Sinkevicius

appreciate, for taking you that what that be having will in-house continue market way you there. same curious the the the Virginia, you take curious I done to to you do on think I’m capabilities bundled question. are the the it for and will cars capabilities your morning. been you that and think your can transport have realize thoughts Just Thank - develop, offers? Do the as can. Good in Carvana similar? launch of it can

Bill Nash

don’t We in wants on where complexity earlier, said the deliver that assistance, we we focused points involved understand customers that this is and feel with like do so I process we’re I making there customer that’s know, that used sure I cars, want more that’s the online, omni-channel. our like focus. to mean,

now right omni-channel, that. after delivering we’ll see how on the is focus Our responds the and market

Armintas Sinkevicius

the how Carvana What are and has market your changed? that in markets, shares

Bill Nash

and on than, We set say, view broader our We type competitors. speak as digital competitive don’t players, focused again individual all specifically to much competitors. we’re

we don’t speak geographic competitor differences, we about like to talk differences. Just won’t

Armintas Sinkevicius

thank so much. you Okay,

Operator

question next Kennison Craig with from comes Your Baird.

Your line open. is

Craig Kennison

rolling mentioned accurate I’m have appraisals the you more in those taking tool online markets. out to Thanks those my curious, in how Bill, proven be? morning. Good for pilots, appraisal question. online

Bill Nash

in bit. clarify remarks - me we’re was opening little let about the What that’s tool different talked Craig, than what I the a a estimator testing. Actually

how tests One is have series a have fill What very In out, new the simple several we’re is which doing different we markets we’re we’ve where on. appraisals, online is several can of questions the just that We we that, going which we testing estimate. of them as one, an well. offers. customer out the solutions, the can different give been found is for estimator, versions be may several really mechanism a best and the that be we to things test why things. several online delivery depending the there figure communicate on offers. best what’s customers, those for so the what’s that’s trying process we’re on customers, appraisal accurate and different What is vehicles, those, With testing continue to some individual different we’ve

Craig Kennison

the Could between you of and difference an appraisal? an just remind estimate me

Bill Nash

estimate The appraisal estimate said that that Sure. the The condition leveraged to - store what offer offer will that has is of offer. didn’t some type still assuming our oversee just through vehicle. to an I or brought customer that impacts online is online the the it’s one appraisal back, we be

Craig Kennison

Got it, thank you.

Operator

comes Your from Montani with next Michael MoffettNathanson. question

Your line is open.

Michael Montani

Hey, the question. Thanks good taking for morning.

your How tariffs, happen. the a to Just ask, potential we you industry do broadly? the see for those around thoughts from playing were little Bill, that to to your extent out more for wanted and impacts bit see business that

Bill Nash

that cause and prices the our see, gap go did helpful to cars late model would business. on have then to think the I what that that think to new widen, for be would which used obviously car we’ll between wait new think you’d cars. I certainly to I have tariffs would and but would and up, the at look new cars

continue we progresses. close The in things on use as it is we’re the so have process, staying stay other we’ll really parts reconditioning monitor it thing and and our to it that to that tuned to we’d

Michael Montani

you. Thank

Operator

with Your next James Edge. Consumer comes question Albertine from

is line open. Your

James Albertine

adjustment everyone. good make would wanted in unit the and mix side, wanted I fell, look that morning cost on there but zero given you EPP higher side, benefit; a actually you, are you so possible. know in if the performance would the press to ask payments thank to a imagine accounting four-year-old factor sense release, driving to is the to an get and benefit and that some Great, I comp I alluded there’s regard. be increase, the because the seeing on better monthly even there, that attachment

Tom Reedy

and a years, lower onto was seen the the we rates seen we’ve darn of EPP part competitors passing little form year, it’s able prices attach because margin lieu pretty that with our consistent in through. cost in the of were come take to over we’ve it and the bit of earlier reductions elasticity customers reason this Jamie, more from that

We every that’s attach in quarter haven’t to at seen now. our a have we that to rate all. look regard something With standard, at the accounting reduction

we’ll but think in that. so quarter, one know get it’s the they’re based that where every set put at to of on that the into they’re move We to based have assessments we’ll One to a has we is we receivable we’ve use those could receivable to last important might that have recent I to years, the about plans dynamic and seasoning look worth to set, make seasoned into we’ll point believe be think put some expect on entitled some it a includes what collect we we’ve been thing consideration thing at those that being over-performance before estimation and changed expecting the payback. methodology of contracts, The either the plans I direction, helpful is books payments the I as new that on looking to for out, making quarter point at quarter, that on talked seen put plans the additional looking plans. going be every those consideration there for retro and an and the are we’re plans to and though, of what every in predict and quarter get vendors to

James Albertine

rate even that from would here. demand a if point see we four-year-old now, fair? an the to, uptick see expect say, Is vehicles that clarification, you’d So being fall, imagine, flat you vehicle the might just a and coming would I quarters, in to in of were older arguably surge so with zero attachment

Tom Reedy

would on the true. I have I some my data newer of The have the think of off be, but the mean, in me, of head, would I opposite top front still don’t vehicles left older going when the them, warranty to better proposition value because vehicles, a warranty. EFP don’t and is customer have frankly the manufacturer’s protect their a them the for it’s they

James Albertine

so Understood. much. you Great, thank

Operator

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

line is open. Your

John Murphy

guys. Good morning,

time you one Just being give opportunities. shifts omni-channel but just or by and on you new that same really competitive share in of seems there’s just a think we probably where to get point and can this online question competitive out the understand I’m Are there. you kind there I’m as are market, and right your out you’re you competitive there’s trying markets any wanted what market is in big but any to specific increasing and might together. markets it of dynamics an the any to where here be about see you’re the launch some about concern a you going the going or as think within if to competitors kind doing lot little winners put I a can now, coalesce markets you’re efforts us at trying of talked disruptive. lot be of It vehicle disruptive? obviously a dynamics delivery, examples but home to there, all there the at there’s What I the bit is digital focus you that and dealers, is being disruptive,

Bill Nash

different whether when - Yes mortar robust talk you, dial it’s focused it’s single competitive individual are are have digital you kind different we of I lot because the players, brick can of and going very the and specifically markets sets all them. all John, are whether angles, looking into standalone those from differently, about not competitors is a players, on an a there, I’m that really competition individualize There’s what customer the and we’re doing, to to this to going you’re to that players, to on customer, market, future look I of what’s the at that is thing, really particular doing their our that you be it’s on of omni-channel complicated okay, any age things try analysis customer tell customers about, player that right what that this so to where What That’s consideration the terms, every a less solution you just be doing. want of you interaction. tell the bunch We transaction stores. ourselves to our to think one for what allowing of we’re solution whole have is into take would is drive at. go. focus positioning

John Murphy

just follow-up. channel this and is the in that because because When it the pricing in ramp-up way that, seems think might pressure and end up driving pricing competition the or about the maybe Maybe the quick upward vehicle really the in on an a the meaning consumer, a you of market, be market that just to specific normal of depreciation and there curves? is is focus or in market, used vehicles increasing this increasing competition used supply very acceptance demand that lower counterintuitive grosses what’s by on

Bill Nash

competitiveness about pricing of think - about our I the Yes, the is I it, way feel and our very pricing. good look John,

it time. you at the time, all look all test the we it know, we As

gross think I think a there a of lot any in out competitors what from of I are happens there because there’s a focus without, worried some at different per can price our our confusion what to changing there’s unit we But a point do things there this because is probably is I’m is about given there. is. less advertising, so improve that lot some because lot different different of profit areas, say, pricing the market confusion

a out of different there, bunch or just confusion of more lot competitors. now, awareness of right out I a think there’s there

John Murphy

much. very you Thank

Operator

Stephens. next Your Rick question comes from with Nelson

Your open. line is

Nick Zangler

see transaction here. physically in your Hey the a desire that conduct commit a Thanks. what’s the guys, and early online entire Rick question. foresee vehicle customer purchase a pick be to the does I Nick value up into More the there, to of to importance a before you they for view debated, of customer findings, in vehicle and - can a allows Zangler person talk about but related, do a the virtually in strategic and for From consumer vehicle think capability condition Then it could your you as well? verify capability come store, general delivery simply the that there?

Bill Nash

options take that in a it that do to want test the car. our Okay, the that. of vehicle. to we’re value first and they about is customer everything much express be longer described will the and want That’s it, test the you of question, can then so on listen, want when If want drive is delivery drive, a to obviously it, to into side come what in understand majority XX store customers how Absolutely, foray, the minutes. expedited what what the want first be to drive still see But want be the see online test the of attempt a your out our store. they be on customer second the talking they we lot do for they see in they it they - want the On to most if XX of your test drive out to in determine into Again, time see delivery. to are. just If can they car? or most we in what minutes, say and, question, the than will where little bit they customer cases,

Nick Zangler

Great, thanks.

Operator

Matthew from with comes next Paige Gabelli. Your question

open. line Your is

Matthew Paige

with ask have quarter. CarMax are make piece schedule? question. a or term might Good lessons of any wanted a a system to you vehicles deal different these small your to fully any growing morning, those Obviously to nice that potentially appraisal of to a but market, longer but the kinds U.S. potentially learned have changes depreciation and congrats on how I

Bill Nash

exactly Matthew. sure not I’m asking, what you’re

Matthew Paige

EVs, I system your historical entries don’t for into likely have have dealt with kinds basis new a How how you cars. appraisal market? the does of other

Bill Nash

been well, think we That look at if the our them today. percentage bigger let’s as cars we’ve said, the of have offsite so like EVs, and muscle compared so get Yes, EVs data to lane, EV specifically, you’re honed thought both a because that offsite, many that as we a do sales traditional we in the obviously where through buy say would cars. have appraisal whole the being is it just I Because with as industry lane talking set, would appraisal

we able learn small subset, of those we look at very price being we can have again and vehicle, because of basis, that the we react and to the comfortable learnings. to we then though in very a weekly far, quickly type it’s even So that a of feel data that vehicles on number and

Matthew Paige

Great, my taking I you appreciate question.

Operator

from Your David question with next Morningstar. comes Whiston

Your line open. is

David Whiston

just digital the on ecommerce that you can is big do question My some laws Have If bit, the and morning. and really where been omni-channel tech-wise, thanks. been working you are times issues platform real resolved? good in whole think behind issues those on. talk the you’ve there about the Thanks, states are challenges those a

Bill Nash

a I think from things. regulatory there’s different standpoint, couple a

but then to call we visit the in require still the one dealership states you at customer states, have don’t vehicle in those location to - more physical dealership’s requirements. has the a location of states transaction Some have Other to the the have and door. customer other occur that to you you and either the sales have that the liberal store, have that darkening physical have actually obviously do come and necessarily are don’t and

sure follow continue and on do again a laws, we’ll obviously is make to we their in and terms customer legal way. our any we applicable As meet the we’ll that goal that this, to work through

David Whiston

Okay, thank you.

Operator

with Research. Moser from Wolfe Your Jacob next question comes

open. Your line is

Chris Bottiglieri

Bottiglieri is a questions--well, follow everyone, to couple Katharine’s had follow-up, Wolfe one I Hi Chris with at rules. this a Research.

challenged appraisal traffic, Are traffic, [indiscernible] traffic Given driving improve some see digital or increased starting you to maybe store two? connect the efforts appraisal talk you if you of just but that? your could higher the can saw the was about you

Bill Nash

think are favorable it’s we I helps can whether it’s can that, things, online. higher, acquisition appraisal your put we’re certainly is I doing also the vehicles, very environment think - Yes, do prices probably talked more a you rate. on when the I combination of stuff and marketing as pricing about some money where, that buy people’s of earlier, that traffic a

there’s a On that opposite rate your the side, depreciating little hurts market, a generally buy bit. if

in, a of based the to on. environment it lot think we’re working that in a that of off we’re lot things addition I other is So

Chris Bottiglieri

you. Got

can on that’s recently? you connected, ratio update and it’s been assume I more just trending follow-up, an a As how give your self-sufficiency

Bill Nash

and talked end in range. lower XX now typically Sure. range, XX%, the the Self-sufficiency, we’ve that about to right we’re of

Chris Bottiglieri

the it. you Thank appreciate okay. you, help, for Got

Operator

Your next question comes from Sharon Zackfia with William Blair.

line Your open. is

Sharon Zackfia

particularly this well. Hi, feel to in marketplace? like curious Do just Then a likely about to shape seen and to gain as until you annual market which follow-up know marketplace, feel a is you is. up if in to the question. I a an the like you’ve continuing are but over of Carvana’s disruption basis, you guess anything you’re market you get do data been disruptor share year? secondarily, get is years oldest the you’ve how in share Atlanta, where been lot discussion there’s I I’m hard

Bill Nash

going on your to Sharon, you’re disappointed, Okay, of both be questions.

share, term, basis. on to market as valid, the at at not on point, one it’s first why it it annual you look we an short when your in look is The the which

As time last you this probably that was share year our year’s while. reported last that have biggest updates we calendar which comp I a any on one front of in seen recall, at point. it, it market we’ve gains saw don’t we on

far I markets into get The other in specific to disruption thing a as fact, don’t any again that individual competitor. about really any for market, talking as individual want or,

that’s on. and competitive Our huge, set we’re focused what is

neither I’ve competition. but are I what know for you, you. of overall on focused those got satisfying answers to that’s We’re

Sharon Zackfia

All right, thanks.

Operator

Montani Michael from MoffettNathanson. comes question with next Your

is Your open. line

Michael Montani

about we’re When fare, get hire Hey guys, any and they thinking potentially follow Uber like the can and some maturation car and opportunity seem substantial. or wondering just be an channel revenue you partners and just have, the if your wanted would of the think channel, about up updates to or you I’m just growth just a it that maybe because provide then a thoughts seeing here. potential in to growth Lyft alternative on from

Bill Nash

changing. that different say I’d many automotive think are so - what industry exciting is an things I this look is, outright Michael, that time the because to of just in be

I of plate would at point. think and the wouldn’t I tell I for this there’s anything CarMax, opportunities off take lots you,

open talk we to working some a point. to options, do with lot as I at to make we’re business at we’ll and pretty much would things. continue different about future you, sure When and improve, the about, looking the something well as for constantly different the we that of it that talk just have strategic can changes. we’re we to We’re business partners plan how different trying material tell as

Michael Montani

it, Got you. thank

Operator

comes with from Matt Sachs. next question Fassler Goldman Your

is line open. Your

Matt Fassler

Thanks me lot. numbers. a a on. back Thanks for I the couple having have follow-ups on

The to first relates ASP.

that year-on-year, presumably ASP--I’m new Your consistent broadly. sorry, saw would the market with in car your up what and be were used we ASPs slightly

wholesale the per in tad bit. I pressure--not from was just little realm under down wholesale broadly? market ASPs, transpiring of a Your What guess the but was mix a on was different terms pressure of ASP were in more that se, going what in

Bill Nash

shift as we which you stronger prices--because mix, more we mix come we had if through Yes, which went price as but actually will the as had prices the change well. mix-adjust compacts more down cars the market, it our the pricing wholesale, is generally a bring older up, will well where our some have a did

side, different used offset have into factors vehicles. it the directions. price the and by higher You going partially was older again Then on acquisition different shift was in

Matt Fassler

as that about a on you given you’re lot I the typically doing, is but about spend expect I things and don’t focus spend. you end? press XX%, release. on and innovation it’s your of this had. Then of relates as a any P&L up big the innovation, think as this quarter the ’XX, follow-up Understood. way which item on since lot guide basis, know in you as overhead of the remains That talk line been other in a the is should you was late potentially that to to presumably overhead we some manifests go-forward increase There’s call line, big alluded your that been presumably for and in the as a you’ve big your an accelerate other

Bill Nash

the The a of things. investments those mind thing. Part I’ve things certain away go the the and because some our that other come back continuing a into I - those you Well, consulting, there in that advertising. that will we’re was the contracting, timing was there’s business, think keep projects of will of SG&A initiatives, total In we invest this around, in to as couple and - of category, software stick there’s put some and saw completion, of some some the of some to the increase along things all have do year advertising kind strategic that service as said there’s of where some up.

along the this So think we’re going continue there timing to there, in that some I but said is in is a again I’ve to all year organization. that invest

Matt Fassler

Totally understood. Thanks so much.

Operator

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

line open. is Your

Scot Ciccarelli

don’t had so I think yet, CAF guys. had one. Hi I questions just you enough

referencing he Tier see actually you that the Tom’s standards space. X earlier, performance brief just or remarks being I in lending think there? was is wondering, referenced I did guess I weaker the tighter during a mix down touch,

Tom Reedy

wasn’t guess enough. clear I I No,

in grades. in board. combination the volume may robust The so comments, spectrum across X a conversion a the a volume middle little much the up degradation more but pretty the lender, in is, decrease the mentioned X in seen increased where know, up space of of the performance across the but deteriorate, application we Tier course It credit actually and we’ve the prepared in resulted--you it in quarter over that’s-- was by As space it I have was my been saw X all Tier the Tier

Scot Ciccarelli

continue the quarter, maybe roll deteriorates we So will as during third if does quarter, that into then? it suggest that

Tom Reedy

progresses. that talked one lenders in Well, in particular. we’ll there, a number see it’s of how about--we’ve We’ve got

obviously We’re But it looking we’ll as tell you at at how we’re went. our alternatives quarter carefully. and materializes, third it looking

Scot Ciccarelli

you. thank Understood,

Operator

would like you a question. ask if to one star, that’s Again

Your next Seth Securities. from comes question Wedbush Basham with

Your open. line is

Seth Basham

maintain right up the a that than you CAF now? your to current bit it the basis little subprime have little relates you, seen you would rate you you for characterize seasonal as relates question forward, Do something loss it on on performance increase at specifically, level. it and going to more expect the the it a do seeing indicative see portfolio tightening it averages. expect we We’re a going we’ve Would to also as how or CAF level, lending forward? think might tick bit to historical that’s of outlook, a that wider I

Tom Reedy

start your I’ll second with question, Seth.

surprising there anything customer different seeing lending but seen we we than not in is We’re anything different a different relationship, given that and our a expected us, the do X that what space pause. animal has any Tier in haven’t so--obviously prime it’s us losses,

different that to committees, performance As I in That’s future. how want on can the one they partners, and can’t something it’s evolution, they different by points so really their global leadership speculate have we because change at have mind credit why get multiple be institutions I mentioned, behave. lender, their they could whether it’s different different about in

Seth Basham

Okay, thank you.

Operator

are no Mr. for Nash will I further time. back to this closing questions at turn There the call over remarks.

Bill Nash

joining for today. call you, Jamie, and Thank the all you thank

our success in your for communities. was of anniversary other, the and way associates success because our to live have to next customers, to they the our CarMax, in it a key again key want once values Thanks week, interest time future. for continue they to each Katharine reminded As first and that be last mentioned the absolutely company will the as again all out, a are them to for to she will and we with you it’s and I our is and when they in the why I’m started CarMax, thank the XXth testament everything do. our past, They our been and associates. a truly quarter. our differentiator talk

Operator

conference today’s concludes This call.

You disconnect. may now

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