CarMax (KMX) 24 Sep 192020 Q2 Earnings call transcript

Company Profile

Participants

Stacy Frole	Vice President, Investor Relations
Bill Nash	President and Chief Executive Officer
Tom Reedy	Executive Vice President and Chief Financial Officer
John Murphy	Bank of America
Sharon Zackfia	William Blair
Scot Ciccarelli	RBC Capital Markets
Armintas Sinkevicius	Morgan Stanley
Seth Sigman	Credit Suisse
Derek Glynn	Consumer Edge Research
Rick Nelson	Stephens
Seth Basham	Wedbush Securities
Chris Bottiglieri	Wolfe Research
David Whiston	Morningstar

Call transcript

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

Operator

Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax Fiscal 2020 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 Frole, to turn President, Vice to would over the Stacy I

Stacy Frole

call. today Thank for and President XXXX conference and joining Amy. CEO; our am you, Good our fiscal second morning. and Tom CFO. quarter Executive our Bill Nash, with Thank Reedy, you I President here Vice earnings

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

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

Lastly, follow-ups. back and for in queue for thank more in only getting one the you let asking me question Bill? advance

Bill Nash

you, Stacy. Thank everyone. Good morning, Great.

X.X% a delivered achieved in growth X.X% release read up conversion up traffic. increase in and earnings in by our performance strong revenues used used As increase you was up net total The We retail continued performance this in another comps morning, earnings this we solid X.X%, with units EPS a driven and quarter, X.X%, web XX.X%. sold. unit and

saw than month. up slightly $X,XXX. grew traffic On XX website million at per year-over-year, consistent year from average, unit Gross prior our the used profit was quarter. per quarter, for quarter with which second the In visits our first more was we XX%

unit reported Gross year an was quarter we wholesale primarily X.X% buy profit higher increase in rate. the This year. volume up ago. with increase X% with to wholesale compared a versus per addition, last units $XXX, was a In same due

increased to percentage trucks As a our of year a XX% accounted sales, Total year. sales, and XX% up last versus ago. XX% about of for X-year-old vehicles to from XX% X- SUVs

This quarter, car experience online between the our allows This seamlessly we experience, of remain the omni-channel is and on this customers significant future to rollout confident that made buying. also progress of which channels move fiscal customers and of our our now we one-third reach to on to physical and of end track locations, is year. customer the approximately base, remain the this majority offered of by

as opened Atlanta as we customer them our we City. In component they CECs providing to customer-driven is or are experience demand These a CEC to addition, begins quarter, the more ramp experience centers key nationwide. City customers stores. staffed, location buying it Kansas during continues new Atlanta help to refer our Currently, support two in fully to second and and serve on Kansas as our centers

also We focused on customer relentlessly a new basis. out rolling on the capabilities experience and continue regular to be

to our both for and our selling essential enhancing for our future associates focus in-store and These the new vision During we on tested interactions, providing progression and launched customers. the quarter, enhanced investments transition and they tools between a customer the our experience as for associates. seamless offerings online are second

performance. color will he I additional turn At second some this our provide over on point, the and Tom, financial call can to quarter

Tom Reedy

Thank Good morning, everyone. you.

operations the and plan increase combined growth, product and revenues In the increase second ongoing share. a increased in business, quarter our results, used earnings reflecting net we share in As our rates. extended gross driven quarter, of margin, penetration largely by repurchases. was XX% along across other double-digit reflects effects This unit wholesale, higher in X.X%. This profit CAF including including protection used, Bill increased a our with posted mentioned solid earlier, growth per strength

In million. in $X.X year, we’ve QX, addition, million you recognized if we EPP $X.X recall, Last estimated revenues. of sharing profit recognized

to front, impacting opening the our XX increased sales $X a second Similar technology our spend store campaign our which year, strength expect $XXX.X advertising experience. expense, strategic omni-channel quarter X% the a of the brand expenses higher beginning In launching our QX, spending was SG&A included up initiatives. platforms On reinforcing we year-over-year light Factors the the since support and half advance quarter, the for in to of X% our our which step associated SG&A and highlighting core the of stores marketing of we represented growth new in differentiated to year. and million are to due growth to the timing SG&A unit. a the first base, quarter per continued last omni-channel or with back decrease of our and of costs of

centers continue continue second Additionally, up. our to will ramp in omni-channel open half we CEC expect increase in to Phoenix and investments the as contact our other we

will our for by stock we X% leverage it range comps in take million. benefited In mentioned the provision from to the quarter, we believe of the taxes option for $X.X the X% year. As QX, settlements full income to SG&A in of impact

will I customer and Now, discuss finance CAFs.

net conversion to year’s year. performance continue in of slightly cars used in the penetration with by loans $X.X was amount grew XX.X% was net as our the compared financed to CAF last was penetration Tier compared had billion net of and and the sales used X-day offset pleased originated rate. second in X.X% be with Year-over-year, average somewhat X.X% increase last X sold quarter. decrease year-over-year XX% CAF’s CAF’s up the to XX.X% by third-party accounting for lenders. We Tier unit payoffs with of strong X XX.X%

increase customers year the for the by average managed was provision the slightly our million, average in contract rate $XXX of slightly loan X.X% For X.X%, income to losses. was versus quarter, for charged loans weighted year. quarter originated the was up The CAF during last growth a X.X% up from impact receivables offset ago. in

same The a The provision on ago. based from allowance the X.XX% of and well growth year Portfolio interest losses year quarter portfolio for increase at with margin The versus was in quarter a remains modest in our portfolio the X.X% arises loan $XX in of loss expectations our versus QX X.XX% million ago. allowance million for and increase first in the comparable This the quarter $XX.X range X.XX% prior-year ending the was million the mix. strategy within the managed receivables and $XXX.X represents period. origination given experienced.

earlier our comments, market remain to for enhance Bill’s aggressively to expand share. our business, customers, investing experience committed reiterate and To associates and the in to we our

market, we in California; two stores, Phoenix, opened QX, Lubbock, a existing San Arizona. Francisco, and markets, X During one Texas, and new in

We also the XX next more anticipate over opening stores XX months.

continue our returns enhance we to addition, through buyback program. In shareholder stock

shares million, for in and During we we current billion from board. the remaining quarter, X.X $X.X repurchased have the million authorizations $XXX approximately

Now, Bill. I will over back turn to the call

Bill Nash

them our Customers tell of their it offer experience an and value provides can them. scale. powerful retailer The online shop convenient empowering to continue to at and significant size whenever Thank they terms a our us and in-store wherever and car used integration that no unique omni-channel other advantage capabilities us Tom. you, on is most for competitive with

their our supporting purchase mentioned I role of vehicle. earlier, CECs with in our As selection the customers vital a play and

CEC fourth Phoenix be in opening in We another the quarter. will

over As CECs, CECs confident remain the the as optimize in store we near-term in expect centralized our ability but inefficiencies omni-markets to utilized. fully we at transition to mature e-offices our become more time function a and

We efficient that this more current. believe our will continue a to be than model

our place, After mature before for focused point, allow X fully When measurements from on experience. X the our delivered. the market, these operational activities in capabilities customer in experience exceptional capabilities being performance the begin. our operating first bring omni-channel a we we to weeks to and experience launched promotional in are weeks we marketing few new and are ensuring leads a for support From new that is

quarter sales market and saw the to new was the appraisal experiences as the our is overall are markets, we appreciation am omni been to Atlanta performance are it comp While and talk stores understand company outperform to continues updates comps I omni double-digit market it We the we an both time. the for the say has for third to pleased at their providing launch. early about pleased buys. this too there in in consecutive with first

last other the markets of report becomes Atlanta It will more initiatives basis. a with omni-channel we begin to more performance introduced support is increasingly quarter standalone stores that on Atlanta’s as their are This difficult omni experience. new the nationwide to digital and compare journey

holistically than rather talk forward, basis. market-by-market a we Going omni about more will

experiences. focus to on and execution data continue our we leveraging our to improve Finally, our

process of We this more than than we and We XXX,XXX. we generates online make X competitive For will us, available vehicle an million Remember, XXX million in-store on continue the and right decisions. more basis, recondition advantage buying both help than customers more recommendations significant a credit X have to cars, million digital applications. value quarter, transport million amount on only we X data interactions. than to leverage. more annual to This example, our than focused a more

our excited customers. are initiatives, will about we our the While from feedback interactions ultimately our our ongoing success to key come and from

and car about but said, CEC person, her terms. Let to a outside She that said one very with the with experience. recent of online the a ever. delivered at what a experience gift has she a was is time She the to omni-channel. example with want exactly best best are Then application. to city service out for blown driveway getting she the each She This consultant surprise newborn XX that daughter. needed A online, has customer competitors, the was needed. That day, option she who away finance on wasn’t of me customer and the truly baby ability miles has retail shop. lives her personalize newborn. ever same immediately waste received, her but to journey, unique customer’s reached tried example. on It’s didn’t the not and car in channels into with Atlanta She to her our phone started or is had, she the share after combination of experience shop we perfect a she our traveling going provides and buying completed customer best whether a an of carmax.com by it a help to we our

customer exceptional proud an been We continuing and about to are experience customers’ our needs. have exceed I evolve we to always am

questions. With that, to glad will take be we your

Operator

comes America. open. first Thank of you. [Operator from Instructions] John Murphy with of is the question Bank John, line your line Your

John Murphy

efforts, Good morning, wanted kind the much about the omni-channel guys and thank that’s and of focus for you detail, on. what to very I particularly

if from miles a You there far your us of is store, going who away to typically mean, I potentially or the sort any that for productivity I example here, and to reached the sort of trying gauge Give is drive, XX how that from about stores? short you metrics the your was that you customer trying gauge if talk there of uplift gave simply way miles just productivity sort gauge around sort is your of us – are to to farthest but with customer what any customer and customer of on far one these that maybe efforts, in-store uplift? – potential omni-channel away us have that is XX how typical store, just be details know do from circumference

Bill Nash

John. Sure,

given on with. within on continue kind any less XX so of XX store. miles, the stores this, we miles experience, the overlap other, will to where miles the we of all, miles That’s of started more expand than XX relevant. first start limit set XX each on to radius, becomes as Obviously, we early no a from in So, mile

at as really said, point, As detail is this like far early. more giving it I

to markets available, those think third advertising third very about have If you type has point a it available progressed we short-lived. make to of other that customers, have of our any ones it, advertising experience at the this only although a do it the and been of has

over you CECs, to I connection there are there. The tell our some would other that is the that inefficiencies thing

turned most calls, taking we think they tenured about in you there Atlanta, associates calls in first June. it, that started that have the taking was on we the first CEC If

we a go plan it’s said, early to I talk continue about we little to any update as results. So, specific to forward. But as

John Murphy

are drive And mean, looking would sort is said new area I follow-up, you you typical radius, that defined the maybe I somebody XX-mile of I mean, if what distance without that that in-store could at? that

Bill Nash

out, There are have isn’t further we test store, I that – all mean folks very close typical that some that are drives leveraging of a we will have over. it’s kind to are and will the then

Tom Reedy

end will imagine, at a higher but look we the to penetration markets is within we the price are the I you customers, for when said, in to lot the as store. thinner closer won’t out the Bill have at less the a stores, service, John, said, penetration, but you drive -- as will get far the do the want X-mile would Yes, that that it’s car want. get just at of drive it’s you gets. you significantly we you But a band, lot And bandwidth you as penetration of you look XX-mile and –further

John Murphy

Got it.

almost that’s generally it opportunity like like seems opportunity? your something reading? my it going at XX-mile process looking a like like XX-mile seems mean So, Just you are to – that’s seems thought a is, that’s what I

Bill Nash

us help can we maybe we other help Yes. us – Well, bands. a option don’t lot think that have for mileage reach but it’s weren’t viable XX, we before. omni think them really to put we reach a of going customers put the We

John Murphy

much. Okay, great. Thank you very

Bill Nash

Thank you.

Operator

the Your Blair. line Sharon with comes Sharon, is question next your from Zackfia of line open. William

Sharon Zackfia

Hi, you Yes. morning. good me hear okay? Can

Bill Nash

Good morning Sharon.

Sharon Zackfia

Great. seems to as follow-up more what omni-channel, out has on that, environment. been you I create are striving a been it as you I surprising have a most if just I feature? really rolling mean frictionless question mean the just kind of guess

driven like you is it options And that, and the are in you – they you seeing by the delivery? people what comp comp where or are Atlanta, consumer, or that increased have they that corollary seen financing – when is the increased appraisals come because is because kind uplift conversion, come are for or uptake that, the then factor, of people about in are veto going So, online you of to know that get when just where to think the biggest really from? lowering that curious traffic, in is

Bill Nash

Okay, Sharon.

as I as which on their on consultants. we have pretty do to the progress new they able transaction of new, all, decide to what own to that surprise, they it are appreciate been it what’s seem I out they point customers them customer of they hub the it that anything so kind car far can speed. know the allows are that call They assisted is in, point first the our can think that a I So, these once but do – on hub omni also necessarily biggest, into their puts if customer really by don’t – we generates do roll they would lot, it the interested to much the customer and a be terms, at customer want on experience any at the and as in

overall appreciated. utilize percent of a to obviously that Customers really a received very to think I very small sales. engaged, that’s drives mind, – Keep in So, with the well very, – their has test still delivered folks home, new been feature. it’s are they highly are that,

keep As market very was in was we the controls, mind it rolled because with rolled it in else a there far U.S. when omni anywhere in as when we pure the into Atlanta Atlanta, nothing good there comps,

we are So tests. in by not only of comps to some think we up all put the some And we that. omni transfers, advertising, there, new do did being the pricing opened we additional do continue generated I experience

have the have and pieces omni. taken first taken we I point, Now, of that have about components this talked in from of we this quarter,

that of the improvements website, the the benefit. to been get country So quarter, to the the website, we example, has that the new of rest country rest for first moved that able to of new the we technology the in into some made

markets, go new as harder the reason we of forward, gets it’s a some compare to anymore. it and no Atlanta to the control is and really why control, harder there So, because

Sharon Zackfia

Okay, thank you.

Bill Nash

Sure.

Operator

the from RBC Your open. comes Scot, next line question Scot with your is Capital of Ciccarelli line Markets.

Scot Ciccarelli

Good morning, guys.

Bill Nash

Scot. morning Good

Scot Ciccarelli

like looking coming the understand maybe at, over it Hi. Can us through growth single-digits growth there? changed accelerate early, distribution? actually of with CAF origination we Tier low comps with help be with just from are you your to we what’s originated especially your financing partners your talk to I Can down and – growth were XXX% X about guess through the that CAF way Tier of seems the loan negative were why but and know rollout lenders. appears comp omni-channel, X channel I

Tom Reedy

I Scot, a the as though it’s if Yes, don’t by specific we actually year-over-year up of CAF, percentage units mix. know comp but growth, it’s even look about at down financed

So a to lot of quality credit product ways of is just in be feel of the we application CAF the a volume. going

because into read omni markets. point, only it’s wouldn’t I anything limited this at So, in

as third-party Tier is performance of factors over that to conversion to particularly half that’s which think strong Tier how how see back X we did going we significantly sale. don’t them. applications and we the conversion it’s far there. some year, X, strong on evaluate lenders I X, of a improve they Tier into do as year. year, it we course As this from with as see omni convert last the X many much our Tier them, the and improved reminder, and And saw of in a the the In held anything as lenders has observed from

volume to X, we the as made performing the anniversary looking as practice away kind from lender aggressive us in recall underperforming are far a Tier QX probably and if in of you more lender year-over-year so a that a year, at an and this quarter. X. deliberate last but we So X will upcoming that’s more benefiting better towards year, application volume lending in Tier switch Tier activity we

Scot Ciccarelli

board was addition financing it lenders you that or there aggressive kind more provide becoming Tier to that for is program in of just the use lenders is the that an there group of there to – guys? new terms of across of that X, that, in Tom, But are seeking you anything

Tom Reedy

board, fair say changed. particular a one in lenders see them did year. get characterization. versus The portfolio few of reason we is a We their Tier more up because little a not and weaker, would of I a of over the X course it’s has the in behavior across Yes, net-net, that got but last bit year significantly was conversion aggressive the the maintain

Scot Ciccarelli

Got guys. it. Thanks

Tom Reedy

you. thank Yes,

Operator

comes Armintas, line Your is open. next with Stanley. your Armintas the from Sinkevicius line question of Morgan

Armintas Sinkevicius

appreciated. Much Great.

grow leverage growth, callout previous to different single-digit it to year X%. like that same-store mid seem than about but the does to need you mentioned That’s You SG&A X% particular. the in this sales filings

you talk to can So XXXX? SG&A to about leverage the plan me how beyond

Bill Nash

Yes.

the I couple first little last his been think the spend a again So, this quarter about Tom’s to to point of the have bit for have of X%, last in earlier we half remarks, opening talking We of all, X% quarters, came certainly year. favorable the that in we second slated and quarter. advertising

The think So see we would that as on as advertising we our quarter you a will to we on omni expect quarter timing. a a be rollout. higher think on whole it little gets depending a about see whole way from jump bit to dicey advertising But it year, because up. about to per-car year, basis little a support

and optimizing ways managing initiatives our done think control, is one go to in-house forward, we that period, is eliminating we we we staffing, you from to of some make haven’t lots of that As sure talked this the leverage waste. we about, bit are of things to coming have there little of saw leverage continue

So merchandising make sales with in sure for have before, store. are department we same managers our the thing we different than our ways in buyers leveraging example, to in

is the offsetting we that’s are that, that incremental that’s are in you the some from some of what business. investing goodness So seeing coming expense

e-offices, for if continue the have opportunity, opportunity up. ramping because see quickly consultants do. we think because I we staff go continue of the to as in sales through stores still won’t CECs, which need year, that of the don’t our area are leverage I forward think we to CECs as grow they having again, growth next I to think a lot we will by we just I would to we as as an

So, think that things there good lot are a of us. is I in-store for still ahead

Armintas Sinkevicius

Okay.

or expect you same-store single-digit to would going mid back X% is get new then the So leverage to X% SG&A growth norm? to that forward sales to

Bill Nash

you said Well, expect should I X% X% what this to think we what is year. is

you the step investment, at up Next in year expect big but last a of or can a not step I at think this bit as year little up year. a

think assuming So, what I maybe would it – will will little better is a start plateau bit see have even to you you new off then bit. plateau next a year. expect see will and we get I to don’t that And it initiatives, come down little then

Armintas Sinkevicius

appreciated. Much Okay.

Bill Nash

Sure.

Operator

line of question Seth comes Sigman Seth, your Suisse. with next from Credit Your line the open. is

Seth Sigman

Good last guys. couple points. morning. I on to those follow-up Hey, just wanted a of

QX, advertising in of able the guys how much of just of shifted quarter So terms to out actually this are quantify QX? timing expense, you into the

Bill Nash

I Again, think basis. about would Seth, it an more annual on

what If basis on I little year. it over on per at we up an last it you look to bit be a was would annual unit, what expect a spend

last I running be the unit would was all-in year. around $XXX So I and that to end this per above think of expect at year

Seth Sigman

remind store provide experience just you talked as happen. to I CECs, labor out but playing When how thoughts And just cost take on initial as to to that top maybe just you being reallocate Got that it, waiting think that all about your talk here, us labor have early, you and Thanks. for rolling very and reallocate perspective do that, labor about in breakeven you curious is that does it just of ramp. you reallocated, consumers the start out the the to it terms that that ability to then just from that you your it’s to then how store a attrition in CEC? experience? related inefficiencies as two while obviously, And see okay. related follow-ups are long is can preserve just you

Bill Nash

Okay.

see currently so convert the keep when are stores that we market, a mind the over right e-office we On a of about staffed first areas inefficiencies question our couple to of in the shifts. handle new now, inefficiency, part

no turn So when e-offices. longer they to do we have omni, on

So are we overstaffed.

hold We going and make that each are us is staffing get to attrition them market to sure allow with opportunity the store can to right an to whole subsidizing as we our work make through we associates level. in more Each to normal different a think you go they I on where for omni standpoint, in be months, a what staffing a but looking if should few depending are into the little be from rollout, those within a would stores are they the staffing right-sized timeframe.

are CECs, Day something As taking since back tenured I again earlier, right as Atlanta headwind will for our the far only as effective some has go they in X XX little of or now to be shifts. person June. e-office I are a year. most Well, very in where us call not is Day as said there XX going CEC because their bit effective or you X are stores you to been a be That

it more And of about the was store? question, have CECs made what and past. than part those of and robust to training the it So the that up, to have continue as goodness more e-office will time. provide reps folks to coming they one continue train of we this our And the I as for had in the in been the it’s think learnings customer is what out get your experience program we revamped ramp the even continue we was over that second

Seth Sigman

talking Yes, are we that’s about. what

as think in, in Just addressed you the I still your that but preserve sort store come to consumers that? ability experience of

Bill Nash

lot for of we we roll an Yes. focus not is turning integration big the is X this We we for to omni when because sure CECs, weeks with omni, that a to we X to of before put only customer. want things are one work into market make go the the a we stores but seamless

store, do to done as credit for what the they have come that. repeat have they They So want when more previously. online to want the they don’t they to

so about been our we has leveraging that consultants into sales new the system and critical technology So are making our it’s that that stack have sure with interacting CRM integrates give they floor the has take the system what done. have and sure already far customers progressed the for to customer the face of how make understand face value-add credit they and them that

Seth Sigman

Got Alright. it. Bill. Thanks, it. Appreciate

Bill Nash

you, Thank Seth.

Operator

Your your Research. of next from is Consumer Derek line line with the Derek, Glynn comes question Edge open.

Derek Glynn

morning. my question. Good Thanks taking for

on there techs in as relates pool auto right the think can recent labor that’s now all those are discussed shortage the industry is hiring to fill what so? or last a going, update franchise provide have being openings to perhaps similar to do it how over year or your ample you supply and the peers you of the in some detailers, dealer you an Just technician initiative for

Bill Nash

for No, about fleet say challenging think hire now, technicians. that shortage it’s positions being to absolutely on right work absolutely tell – of the best would there a at I think we one, is I When I our the been the would have fact technicians places you and drivers years certainly XX and helps. brand for we top. I employment us, But the probably for XXX are

We great got got conditions. working have We great benefit.

for place So it’s come great technicians a work. to

the to through way the flow we apprentice techs with that, our operations, cycle. all addition In grow can whole

And to technicians. our starting own are grow so we

rely on So of schools kind trade thing. have coming solely that what’s we of to don’t out

do So we feel we that as are. a about that would meet to omni-channel. from we be make good where growth we growth have push or sure to additional expect stores that We now see whether can right

Derek Glynn

here in if in the in third And weather any more or impact to quarter late more either quickly, events helpful. quarter early out could just such just second That’s it. squeeze recently the call recent in, as Got from Texas? one I Dorian or

Bill Nash

Yes.

at of end there Coast coming it were think we number it had how varied towards north of stores, a We time, I okay, it the of stores had closed because and threatened over our Florida the it obviously out that then period started it’s out, impact closed there a did know hung as as kind went. Dorian while. Florida, XX stores for week to you point So, the about one East in for we of quarter,

would quarter, had get in would on third tell I we back you in small the and impact So, that quarter past but we quarter. to believe what did what have expect although is that seen a the straddled an what results, we it impact, the have we the

As stores than but far less a as Imelda, really we that closed day, Dorian. significant was for for some partial Houston

Derek Glynn

Understood. Thank you.

Bill Nash

Sure.

Operator

Your Nelson line open. Rick, from with next the your is comes from Rick question line Stephens.

Rick Nelson

talk Atlanta, can talked an GPU I as compares about some specifically, that pricing non-omni that in channel know Bill, market you market about to tests you specifically? markets? omni-channel have how

Bill Nash

Rick. Sure,

in that on They general, make. I anything all, each omni to We decisions not we First can are of GPU. other. separate not omni rollout view as have do two necessarily and with GPU and dependent

far it the Atlanta, relates did I As some pricing said transfers, in with to past more open Atlanta, some tests. we we as free did up like

was pulling of pressure there on back but we little markets. have bit omni, levers we on market, GPUs to some go forward different that as So in pulled And those we in a different of be are going things. seriously, for

So about separate again, GPU decisions. are I about as think do and we I feel good in them where

Rick Nelson

luck. and Okay, Thanks great. good

Bill Nash

Rick. Thanks,

Operator

line next Seth, question Basham the Seth comes open. Securities. Your is line your of from Wedbush with

Seth Basham

in going I you results of trends My rolling omni-channel you Thanks to-date, to the when of strong of what projections you lift appreciate outside your omni-channel is really as Atlanta’s markets Atlanta? Atlanta, in look rest fact speak that question type out the performance are a omni-channel expect from but are outside lot at where and markets, around to for the of omni-channel well. not good morning. markets

Bill Nash

market? will markets? for ultimately. these – to tell of where going but through stages in as that early we too expect I bit cited it land really – about the what quarters, saying I next all market Absolutely I that don’t It’s But seeing. we have Do holistically every in have think lift. exactly in we talk double-digit be Do expect to different get a be get we on I We been single comps going every as is to it. more few as progress the reasons able Seth. expect what look, expect it’s expect far No, are we not, to as a I getting to little lift. we previously, be early absolutely to Yes, are it’s the to

Seth Basham

follow-up. Okay. a And I have

conversion you Tier are just to As see be of annualizing X that some and there the a as you it quarters. the to be in contribution will upcoming will half. of you strength you the forward in the fact Tier annualizing as be Tier you X Would in X expect – result? to to comp you improved X the spoke some going Tier penetration, X Tier second relates saw from limited well going more

Bill Nash

will the course the I the can’t year. over next No, what do predict lenders of

allocation. happen going will mentioned, did policy of So, of was to hard back more course, our as But say which a it the forward. X improvement over a of Tier because we half changed it’s year I step trend that unlike see mostly was what and we last function,

Seth Basham

Understood. very Thank you much.

Bill Nash

Okay.

Operator

question Instructions] comes of from Bottiglieri Chris open. is Research. [Operator Your Wolfe with line next Chris, the line your

Chris Bottiglieri

off-lease years? right difficult comps couple yet you. case, beginning backdrop two my and of you now, Wanted like you And a a taking get more sourcing about Thank talk time environment, inventory the do – availability, productive to for to units what in then are for but into to that the your growth so of are if seeing are strong the thanks if the about very then in back decelerate think you that Hi, terms obviously that of sense had you wanted question. given kind plateauing funding wasn’t half supply standards? fit how next wondering

Tom Reedy

Chris. Sure,

good is as the supply, as far there that I cited supply. a strength auction As we QX. in think

When the the refunds. from now QX think still obviously different of cited tax comps factors supply We I good. an is at that there I lot the in QX there. to were look a issue see I don’t

the You had environment lending great We is had execution. the good. –

of some digital gotten out rolled had have We the omni. things we that from

hundred the to quarter, go because went a up was The year-over-year we a hadn’t last year see a other was this certainly time about price was $XXX. was price a for acquisition but half fairly When we flat thing the year of already which do in $XXX up QX and seen that was our good there supply, bucks headwind, probably first a the comps not acquisition more. interesting I few to only and that over or actually

worked a that headwind So and that was through. headwind we a

like before seen we else something decent being fills what’s share of is happens pulled void. a measure they then from that where year every peak cycle there the that have you that as leases on leases I and this gets read, up far make sounds may to generally then As and truthfully leases at this lease sold and the the back. the think decline, question And is look ship, start I but what what

dealer leases, go staying instead cars. flat, means the which consignment SAR maybe will are buying people So of relatively up,

vehicles through just So we channels. other skip will those

have We that this a we time through able position, have no historically work and in are be will been before we done think that I different. it great because to

Chris Bottiglieri

comps your follow-up, think book That’s of one think conditions when and when then a I like and historically that your then your strength currently? accelerate. I is overall the like own helpful. CAF you. the Got the lending environment credit partners. see of Thank your lending underappreciated characterize b) data I auto how And observed assets do this like tighten, I I you have the your model, of, auto think a) environment would in it. guess, then kind you

Tom Reedy

Yes.

appreciate happen. overall environment, auto at looked with trend that financeable our with to the – sales really hard lending we what comps – – are and worked business partners haven’t book they allow our highly securitization how We of lend that to and we our market maintain will allow we In will that ourselves but to a standards CAF, whether really and concern and that the that doing. that’s

environment We at want tighten in red our us that’s point. flags no seen to current the anything made this standards; haven’t

our I that. and lending actually volume good down and order a when performance but feel past on system CarMax took have about a we business. Tier That’s from we great in coming the in while, preferred places basis, our they X our than had we out to I doing ongoing haven’t tight environment over a other of keep why them about partners an year. that business did the partners heard feel we their So, in other portfolio and of places

those on it past. run we has in like focus it in partnerships the the pays continue hopefully long and off to So

Bill Nash

Hey, it Chris. is only to The is thing add other would that affordability. about I really

customers are up, payment. go their on prices focused as monthly So

rate acquisition interest that changes together. don’t So, prices, plays and I kind versus in the of all think other. it’s one

if up that cars payment, cars are even equate new focused faster what standpoint? than isn’t a payment going on monthly to if as does from monthly used are tight, customers environment the financing that So and

Chris Bottiglieri

really you context. that’s helpful. the so Thank for Yes,

Bill Nash

Sure.

Operator

comes Your Whiston line your next question Morningstar. of from the open. David, David line with is

David Whiston

digital increase over morning. Can anything Is in ratio sufficiency there help talk you technology terms the might that front all self Good you meaningfully in Thanks. – at that ratio? the on of your time? guys

Bill Nash

Sure.

So talked ratio usually is about XX% XX%. self-sufficiency in have the our we to

bit area. quarter. We are a than for focus this less that a That certainly little is

We through buy continue can much appraisals, to the best to auctions. tests to what resonates a of outside other we figure the certainly advance online as it online and as some large out is we with than trying companies, focus estimates, continue our with channels will but

David Whiston

is lending down talking were driving Okay. there factor channels in bps earlier the with is of And Tom, that from the the aggressive year, more primarily CAF XXX another you the that? about that about – first half being is that or the on penetration

Tom Reedy

No.

know, As first you look guys at all we did probably loans. of the

CarMax’s optimize key its try its to a fit runs CAF and profits. to business So, as profits

behavior a our year-over-year matter converting and we actually are is convert of a So all. coming our It’s book credit customer mix door folks. to a It’s through doing just ability a of on matter job coming door. the basis those of change And them. good at application through kind not lender a the our in what would impact of really third-party what’s

David Whiston

thanks. Okay,

Tom Reedy

sorry was here. I myself antiquating Or the am web. I

David Whiston

Yes, right.

Operator

the Scot, your of RBC question with is Capital line Your comes Scot from Markets. next open. Ciccarelli line

Scot Ciccarelli

Hey, guys.

side you quick is a that not CAF bank is because CarMax financing, than distribution there a am the choosing on more the follow-up Just any I kind on here, the omni-channel in from with? bigger of a I am know, the I store, am financing I or don’t familiar seeing actually like maybe lender for example, that maybe in the difference the are stores

Bill Nash

Yes.

have omni-channel, on-finance outside start that have think is we think is skewed seen you at utilize we that, it’s whether similar the online customers. I Really have the doing towards pretty that this only seen more of folks difference Scot, a in seen to of But credit point, I makeup. finance, stores. when lower credit we it’s store similar or similar kind the through a the

Scot Ciccarelli

growing kind that naturally more we their those that your people towards CAF? that’s omni-channel, trend, does a are using X shift of because the expand do Bill, and second tier would apps, as But the lenders rather to web obviously mean Tier X credit Tier you than more and more,

Tom Reedy

with think omni. our I to the is transactions with is what No. than volume credit first in is trying articulate that interaction Scot, Bill overall credit people their leading as that app significantly are lower us

of look people you in the it’s see we omni, at that rest with the mix us transact the who similar If in system. to

because I process. deal it think will it’s it’s later an just they issue know in the don’t that, they folks with that with have good the not lead and credit

Bill Nash

lower use generally a been that financing Right. it’s of was the for even folks credit. point has My just quite while, that more Online specific feature, omni. available before

Scot Ciccarelli

Okay, got it. Alright. Thanks, guys.

Bill Nash

Thank Alright. you.

Operator

turn our over Bill This I call now session. will concludes the for question-and-answer Nash closing to back remarks.

Bill Nash

are future. Thank excited you. about we the Listen,

are up X%. XX-year were We second X%. We company. a Comps hit just old are billion $X the revenue Revenues quarter north in almost is a XX%. for row. in of EPS up

We for are investing heavily future. in the the business

We are stock. buying back

costs. We are managing

we are So we very today. are about excited where

possible possible None But goes exceptional are the the service be want and are associates. for ones that I are excited future. and us. of what’s day-out. values They all thank enabling living that this dedication our to and the to about delivering this. drives. would They driving ones are are that customer without day-in it They them. their We are our

of thank again I For your everyone continued quarter. call, talking want you with support you the we look to to on CarMax else and forward next for

Operator

Ladies and Thank gentlemen, conference your this call. you participation. for concludes today’s

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.