CarMax (KMX) 21 Jun 242025 Q1 Earnings call transcript

Company Profile

Participants

David Lowenstein	executive
William Nash	executive
Enrique Mayor-Mora	executive
Jon Daniels	executive
John Healy	analyst
Seth Basham	analyst
David Bellinger	analyst
Brian Nagel	analyst
Sharon Zackfia	analyst
Rajat Gupta	analyst
Craig Kennison	analyst
Christopher Bottiglieri	analyst
Scot Ciccarelli	analyst
Christopher Pierce	analyst

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Q1 Quarter Fiscal Year 2025 CarMax Earnings Release Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, David Lowenstein, VP, Investor Relations. Please go ahead.

David Lowenstein

Thank you, Savannah. everyone. morning, Good joining call. for XXXX quarter first Thank our conference earnings you fiscal I'm President Jon Nash, Mayor-Mora, Bill Finance here with today our Vice CarMax Vice and Operations. Senior our President and CFO; our and Daniels, President, Auto Executive Enrique CEO;

remind and that not Private Let pursuant forward-looking we financial historical performance; you statements future company's to statements Act regarding of Reform harbor Litigation make the statements are Securities including the our provisions the business of today me are fact, plans, of safe prospects statements XXXX.

we and current to These to obligation uncertainties substantial subject based other our that disclaim on them. statements providing update statements, and materially differ are knowledge, any our expectations risks intent In results and assumptions and expectations. are or could from actual cause projections to forward-looking

the information annual additional Form our morning filed For affect could important on filed XX, that with report please SEC. Form year and on these SEC the see expectations, for XXXX, as with fiscal this our ended previously the February X-K factors XX-K

please Should call, questions Bill? XXX-XXXX, XXXX. Instructions] any free to Relations follow-up at after extension [Operator the our (XXX) you department contact have Investor feel

William Nash

David. Good and Great. Thank joining us. everyone, you, for thanks morning,

seeing and we delivering and durable. continued are in by quarter, are stability that and by continuing trends, upper encouraged business price including ongoing wins to our associate funnel year-over-year and improvement the are During saw we what growth in positive strengthen declines, vehicle value customer demand. differentiated We're

dealers, income units X%. total while record. increased under launched units retail end, And used We In vehicles We non-prime post GPUs lending standards. approximately and year-over-year all-time the wholesale quarter inventory grew we grew We and from margins. strong inventory sourced decreasing X% tight CAF delivered saleable first our deal. we EPP X% securitization XX,XXX used year-over-year first quarter, an

manage million $XXX actively in and we our to continue shares. We SG&A, repurchased over

and sales total model retail compared prices. down 'XX, of quarter reflecting X% our of volume delivered For diversified to FY the last wholesale $X.X first lower business year, billion, and

business, total back or average our year-over-year. the were declined X.X%, strengthen performance quarter. and in of In sales first unit comp comps Used the per down approximately saw unit half unit and X.X% X% declined we price retail selling $XXX

per quarter in was retail of First gross year's unit with last $X,XXX, profit used line $X,XXX.

down a industry XX%. Wholesale was appreciation down or experienced the the year-over-year. XXX,XXX sales a year approximately unit selling declined up last record last as the were $X,XXX, per profit We price X.X% year gross from lower ago. during bought X% unit year. $X,XXX of quarter seasonal first from versus per Average approximately $XXX first unit quarter, Wholesale quarter vehicles

through approximately dynamics coming just of overall than slightly those I buys vehicles buyers appreciation instant from We appraisal experience. with well. online XXX,XXX that impacted as half The our mentioned more purchased consumers, our

With XX,XXX through sales the up sourced year. of dealers, our support team, vehicles XX% Edmunds we the remaining last approximately from

quarter For online, XX% our with were metrics, first online last of sales retail year. unit approximately consistent

this quarter, of We retail sales XX% prior from year. sales Approximately XX% up omnichannel [ experience. see ongoing ] were of the adoption continue to [ unit in our ] omni retail

from online revenue year. Total line with XX%, approximately last transactions was in

auctions for considered represent All online total transactions, are were of XX% and our sales quarter and first revenue of quarter. virtual wholesale which the

income. provide full becoming financing, -- customer in incremental our year. up Jon In a will from a more or on growth progress X% detail the CarMax loan provision, which loss CAF few ] income minutes, the period credit $XXX CAF, spectrum spectrum lender, Auto full in same million, contribution enables Finance, of [ delivered finance and last

Enrique, turn performance. more quarter Enrique? first call over financial to At who this provide to point, our will information the like I'd on

Enrique Mayor-Mora

and everyone. morning, good Bill, Thanks,

wholesale. unit margins per used and noted, strong Bill we As quarter both drove this for

other in and staying growth [ CAF focused SG&A. delivered gross contribution also ] on profit margins managing while We

diluted quarter year a per ago. versus net share earnings $X.XX was $X.XX First

a year's benefit million, profit last year's down legal X% quarter. quarter translates was which reminder, a a Total of $XXX As from per to $XX million, settlement. last gross had share first a from $X.XX

X%, unit margin million volume of by million by million a from retail and ago. margin vehicle increase lower up This margins. X% $XXX with gross EPP. offset per an was driven X% Used $XXX $X Other profit by in partially unit declined flat of with higher by lower Wholesale $XXX million, was relatively declined year volumes, per margins.

As penetration despite FY which profitability drove the a With we contract, increases 'XX. lower MaxCare per we fourth out quarter the of in FY that, in reminder, margin product rate. a margins product late overall 'XX, tested rolled raising QX

with delivered as $X in supported measures, million lower was first well efficiency coverage and year's deleverage margin, timing. due last by by by flat primarily to sales offset the as Performance in quarter. Service quarter year-over-year cost

the We service. of expect of sales leverage, given year-over-year deleverage year for improvement nature the by as performance, the governed balance

$XX first settlement adjustments this 'XX. of receivables approximately for during front, executives related million, year's legal X% the or $XX to year's On million the FY first SG&A of retirement-eligible certain during quarter expense the of and compensation for million quarter. the excluding the lapping was the favorable from quarter last were non-CAF pressuring expenses from Also received benefit share-based reserve quarter SG&A the million $XX when $XXX prior from up quarter, first uncollectible

the which total discipline levels. noted due to items, SG&A were continued spend in in year-over-year Excluding our dollars our FY 'XX in these first call, down quarter we year-end

favorable mainly the last for additional legal by by First, increased quarter settlement. dollars when excluding SG&A first impacted million overhead other two were factors: year's $X

non-CAF [ favorable in quarter adjustment. favorability by first year-over-year reserve year's offset last ] lapping than over more was uncollectible receivables Continued

by share-based expense, mostly ongoing $X stores compensation decreased by million, and compensation benefits, our total on Second, in driven focus efficiency and excluding CECs.

shares we 'XX. repurchase the in spend during pace for allocation, second the approximately million the $XXX half a fiscal year of an levels capital Regarding was which from total of X.X quarter, million, repurchased acceleration the in

billion off our rate we paid also floating quarter, end million scheduled to loan, the the was early June. which the $XXX of in of $X.X first of authorization term As we had mature remaining. In approximately quarter, repurchase

Jon. over like to to Now turn call the I'd

Jon Daniels

good Thanks, and morning, Enrique, everyone.

CarMax quarter, the average During X-day basis rate basis XX weighted $X.X from year XX XX.X% up approximately net was sales in billion, a resulting points was first penetration of increase last from payoffs, quarter. to new Auto originated of The which charged of contract an first year's Finance XX.X%, customers points ago.

quarter. last XX.X% place lower affordability. were for for volume compared Tier as customers application Partner down tiers of less saw accounted to challenged was in the observed the volume credit X.X% X first year, entirety year-over-year of Partner X penetration Tier XX.X%, up in improved quarter sales, from X.X% offers as last from partners remain our year. Both the with

decreased from results, each these the quarter was total period driven volume year, million $XXX impacting degree, Also $XX year-over-year increase as volume in of last margin. to Tier well increased is as X up in Tier income test CAF's interest million, a continued the the primarily in lesser X. for but an CAF same by

from market expense strategy last accounted million our fair this during first in value quarter hedging Note, million $X year's for quarter. adjustments $X in versus expense

offset previously investment X.XX% for expected in $XXX $XX but up the quarter near margin the in tightening at The balance loan the flat in net resulted at quarter. provision consistent of losses with million CAF's of year X from quarter, last reserve-to-receivable X.X%, last level continued in space, Tier reserve compared end or for contributed was of to percentage receivables X, by and Tier interest the million a to line X.XX% to last implemented ratio. a X%. our was The of

credit quarter, last highlighted CAF across all was As building scale has to capability the and tiers. infrastructure its participation been

First, begin CAF learning to to we has new Tier test quarter. in its Tiers experience X, underwriting a model, full-spectrum both and in X, the will operating along with leveraged its in which X second develop

broadly us offering funding million we ABS plan incorporates notes. first a of to from distinct From ] that ultimately one in single our our this To added We across securitization end, receivables capacity. that offered currently to prime expand the believe [ and and current segments. allow CAF market a investor platform perspective, better non-prime to base funding with generate asset-backed $XXX will program our with each is transaction non-prime align more

spectrum entirety complement credit full CAF decision partners position further our while ability fund the strategic Having the puts to the in business. also to lending a efficiently of the for and both roster successfully scale at income driving of finance additional

back call the turn to I'll Bill. over Now

William Nash

Great. Thank you.

to As us up vehicle continued and and growth. support earlier, further positive by taking we the business value our stability. encouraged improvements are offerings, of for the pricing I in proud which mentioned future seeing our performance and are our we setting differentiate trends been have in am durable actions I we're

We quarter use. MaxOffer while launching inventory this York units title second during to capabilities the that excited examples [ capability easier the are month about lowering focused inventory new New attracting enhancements stores. include: in to and inventory total ] management expanded even vehicle saleable each record increased dealers management from Some sourcing reductions make of by We've used through product sourcing volume units it with our nonproduction more and achieved in capabilities quarter. We've through used

lender, time. We enhanced a further full-spectrum income have become grow capability positions to which CAF over ] [ us to

profit. EPP service improved raised and gross We've margins our

We efficiency and very buy scale our will more have as CECs cars. that achieved well in gains we and sell stores

support in experience. with We help EV Edmunds through trust build customer the research have test tools capabilities established that for enhance a California to sales our EV operational evaluate increased readiness and stores of new number to and launched educate also consumers. We've also

enhance continued we omnichannel our further to Finally, capabilities. have

available out our and plan be to system year. rolling nationwide are for stores our it later this processing We to new order

step to guide from for each associates helps self-progression of more associates. assistance with consumers system and customers The seamless prefer who the journey a through experience buying blend provides

of network focused we've pursuing to our identified reconditioning by down across opportunities on and that we goods driving actions, addition these logistics cost In sold incremental operations. efficiency are

capabilities. moves For and transportation automates between centralized The new planning execution [ a logistics, drivers stores ] and system that dispatches communication we're through management testing provides and a team. system

sublet and For identified parts of to reconditioning, optimizing in-house such work bringing we've as acquisition, workflow. production elements reduce opportunities costs

drive we across potentially more to centers take enable stores production on that balancing believe us capacity efficiencies In and work stand-alone our MaxCare over reconditioning addition, and will time. further

All actions sales better profitability. make our stronger, about position growth our in continue fuel and future consumers to a support these excitement of to and

With that, questions. we'll Savannah? to happy be your take

Operator

Research. from Instructions] John [Operator first come Our Northcoast will with Healy question

John Healy

start of the kind Bill, just you the I'd on for with sales. to same-store top just funnel guys love of

through just you love what now. improved on maybe thoughts that as would I think you're improved and those how And your comp maybe get we trends mentioned moved to QX. seeing

is answer just that's market feel a you delta, do a these you the as there share Because biggest that the do numbers delta? the in we you you investors but are is question? do guys bring one follow-up how peers? that, how explain And see up, how I CarMax, to think And for versus if performing

William Nash

Thank asking your what question, first kind cadence. think you, On of John. I comp you're is basically

call we again, you the go last through were fourth we So if quarter, -- quarter, we the halfway did running back mid-single-digit to negative comps. the

back then performance, and if better And was the -- the we're actually than new we running continue were slightly the the you date positive month look we month quarter, half we which June half comp to date. to by. also see for Obviously, of of June quarter, the continued improved encouraged to quarter first at some

continued we're improvement encouraged there. this see So to

fourth we where far first X We quarter. calendar the year, the were X, quarter data the we than look of the to if in similar year the of first the of 'XX -- we data, which As in last also share months had quarter were in first as calendar at calendar higher XXXX. market were we're title quarter we calendar

big you, price X, last to [ remind we've corrections. the seen X ] just And quarters,

one similar. as December, And so up last this We It year. we're did looks out back coming the was about we of same that's we're like -- bottomed up. coming kind rate

fairly is share market year-over-year So similar.

are there's a end that my necessarily -- periods. because barring up, we're the there lot year other got on markets talk short of markets some seeing big about On volatility is look, any market price share some again plan correction, until the we that down. already, of are the market not share, And the

period way I look the of is looking it. longer really time at the over think to

factor again, trends. at But again So outsized the macro impact about on year, having it. unless that's big I'll feel an this good of end we the we update the some see

Operator

come will with Basham Wedbush from next Our Securities. question Seth

Seth Basham

multipart My on cash. questions

a you're aggressively your trends that portfolio, see to you trends First, looking in reserves going we have loss looked more loss losses your continue? and the light. increase to continue Do if securitized at the bit reserves, to your little reserve think

non-prime securitization X Tier can you X have now and And then you program? secondly, ramp how lending Tier quickly a as

Jon Daniels

I Yes, the appreciate question, Seth.

reflected expected So the I'd line with quarter, we with in basically delinquencies think that's provision, for much and regard And we to within I the is what quarter. very largely, losses flat. the say year-over-year are in

ratio, If you sequentially. receivable flat look at our reserved

data the higher quarter, quality typically that's a the a But trends a we because of will portfolio. typically actual there Certainly, time so And bear again, roughly on expected. published mind, in you've as quarterly and are Remember, XX% it's be as tax this quarter, basis. of high-volume lower more quarter typically credit is your originated because in well. our quarter provision

add I'll a in it a expectations. delinquency part, as most losses for But from that. our So was for the and line right us nonevent with

to let's we I easier question, ramp X think quickly to we that the originate kind how anchor today. answer of second Tier volume? your can way To Tier the and what X is

in are point take, vast in clearly, Tier The given or today. majority, give any what sales, of doing largely XX% X. we is is So

we've we're trying been but understand It's at we're because Tier in the Tier really historically piece X, in portion that. a Tier of X. to X investing larger, small In and higher

our we to also take higher growth do in both are the call We really the lower larger spectrum what what percentage but higher think excited us non-prime We program. prime the in segment. that's our we of a to securitization credit of going for in truly end enable end sales, to expand about

So forward we're to looking that.

roll just far the And take the to the learn would timing begin the in some ramping going I to Tier models spectrum. going models as our we're the ramp, in to Now new about the of the as our the X and going term, test quarter. that of maybe about continue year, new time. We're to sorry, entirety space. of out learn near for We're Tier balance -- to will X say the

more the timing probably we XX%, that, when. do will let seen, the but it XX%, for year. there's of and beyond be substantial, And think of what to doing folks the we as But we're grow that, we certainly than how much believe room XX%, doing much we be us Will to it's for grow do today XX%. know. But balance not beyond remains

Enrique Mayor-Mora

longer billion capacity funding you going it's worth think term think think when this do I when ourselves $X when well, which about we excited how billion can over funding about, about give probably as you deep another you assess, really think entering us into capacity, to $X to market, eventually we're you when of go we're that time.

income exciting So and our this program, moving incrementally, we is financing expect a really drive forward. to

Operator

comes Our with next line the of David question Bellinger from Mizuho.

David Bellinger

It's on side. the expense

year? of you're about compares look your spends the X% spend [ flattish. think overall, on total that should think and us about per for any the walk we Maybe up if the the So just you ], in just unit was ad over through And QX year-over-year, there SG&A to at balance changes seeing I line. dollars guidance how ad

Enrique Mayor-Mora

the here total plus benign, little how I I be here, pretty is, total a which on would for basis, question. unit right? bit it's advertising quarter-to-quarter, going again, think that's negative to Thanks manage we tell our the spend. you

say. look wouldn't I balance anything year at but I quarter-to-quarter that the kind than So we $XXX -- year, just for committed per roughly should unit to the the as entire of managing total other for to of are add fluctuations,

David Bellinger

rest of the on SG&A the year.

Enrique Mayor-Mora

question -- again? of For you the the rest sorry, repeat year can the

David Bellinger

overall just Yes. dollars. And just SG&A the second part, expense

how year? Just the of about think that through we should balance level the

Enrique Mayor-Mora

Yes.

standpoint. year-over-year. would really that's fact of out balance actually think I more to back noise first of from entire I we're in challenging down for that once that proud a SG&A the to, that quarter, for going the the the the expect a we some the focused of little were year, dollar spoke be year, we're I really you bit total

But lever what on. that's be management we're focused able position is focused on. And putting in we're to single-digit to I'll profit And reemphasize ourselves really we're is cost here gross a low what what growth. on active through focused on what

a we've And will. migrating phase, more sales roll so when story, cost and little bit it past been years to lever a at when an which ability to really speaks they our fixed right? structure more investment that's look you in of where to around, several different heavy us the a for And

And moving about that's ability so leverage, to forward. think our how we

Operator

Our next question comes from Brian with Nagel Oppenheimer.

Brian Nagel

of couple A together. questions, I'll lump them

development, to The regard but mean, before, [ to first WAM we think with first, to this Seth's follow-up think it's -- -- just about non-prime a are what question the this securitization, how I should I as the term share, the going for I this better flexing how capability? mean ] this better vehicle Is both? think model drive longer profitability, replication to be about with potential now a CarMax? we again,

second my then unrelated. And question,

out other that the keep sourcing the from for You potential the calling sustainability sourcing. question of I the is and guess just positives vehicles also dealers. or margins

Jon Daniels

Brian, on I is XX% securitization. as above us to we there going sales, take this Yes, the first mentioned, continue that. of the anchor some I'm take of we to that appreciate the question. kind to with non-prime volume to I'll regard can substantive think

million best current of we CarMax. And we way sales value current is point it to of to situation, one worth give economics, can of for the the we to that can the think long-term every kind magnitude the here orders that the $XX grab, of value, financial see under million drive of $XX value

million. start you when But where provision you referring And day originate the to bear mind, becomes when additional to $XX I'm begin doesn't million losses. you accretive. to loan Now you get for that's volume, that need Initially, add to to in $XX state, X that steady volume. it eventually

something you additional we CarMax. after. long it's imagine, And additional run, the think and going you can looking on tackle forward value tackle points, for very substantial to in as we're you as So on

William Nash

far your second as been all them as Brian, And we've can part sourcing dealer at through them. we traditionally, sourcing, us, And for on look, off-site vehicles it buying what then we sourcing been we're the consumers, get wherever we've Yes. from question, don't And about auctions. of find consumers.

buying to little a buy it's This consumers. we consumers. there's -- dealers, from from we're of that retail We cars buy diversify. that dealers. we're ones of is of another the buying The through bought majority the just through a step We that, are bulk can percentage And that directly those higher different dealers.

as profitable from not they're go while have for. profitable we So the more one we to than off-site they're bought certainly ones consumers, as the

So think I that we we're this of encouraged why is from getting continued We're great the continue by it. -- improvements an which responses demand. think part is grow. seeing We to platform, the area you're to it's made dealers. some We've can this

really And ago added have using year bumped dealers And last actively if the a we've mean, we that added markets. that call are in the more up, more markets, few -- -- really many year. at a let's roughly look haven't I it we but added XX% I it, now, versus haven't

by encouraged we're it. So

Operator

comes William with Our Zackfia next from Blair. Sharon question

Sharon Zackfia

on has that that why? mean think little know, and I guess funnel of And at Is conversion broader industry do been of if something doing? I improve there's been operationally in obviously, down kind top where you of I for you? to a increasing, you you've improvement bit. seeing. starting you're so, it's is the kind the sales the dynamics, think do

William Nash

of Look, Thank a it's Yes. I Sharon. things. think question, the for combination you

it's doing to think down $XXX they're reflects But the they fourth internally. -- vehicle from quarter-over-quarter, prices, continued year-over-year. up just were that the also up look first, they some always we're were I the on work even though it of

more little we're values a be seeing vehicle So bit stable.

years, steep example first a to year. if appreciation the there look the is at the at all board, ways. you bit last is depreciation, would although in If -- normal, X you last more, over they're a I they're little both year look and trends, what call, This from for quarter depreciation difference

of up year, of of $X,XXX. And this time first about $X,XXX, only we in flat expand about saw saw went about kind appreciation it's kind Just year of to of year. We this by $X,XXX then the and earlier, then the end comments some last period on the of we quarter. my depreciation

bit environment last the in there's So value we've dynamics. little been you always more years the I that's again, have price a mean is an years, X.X just where impacted year-over-year us worked corrections. What's these of But X appreciation, nice. depreciation. big stability,

combination it's think I So factors. of a

Operator

from JPMorgan. will Gupta we next question Rajat our And take with

Rajat Gupta

and I had Bill, question just a strategy operations. on Great.

market I unit, like like changed onetime per can if as CarMax think unit improved. share. you the you the the historically. items and And be, you your the factual not on where they data at like not the exclude or look used margins to EBITDA all see comps, It's have quarter, this in

your that we I'm to approach? curious with culture, think peers all had something current if change? public So backdrop some right to you needs are for on improve when CarMax the around do all still the of to just the omnichannel think, waiting is Or of the strategy in-store for are you that Or impact these you doing sourcing, the especially have metrics, better? industry on do has better

William Nash

Yes, Rajat. about that the strategy. I great about. great talked about I the feel all feel you things Look,

and what from been big what's the story I a corrections really really these affordability and been going seen last price particularly, market, is think for more sell that late-model, standpoint. we in the you've car on high-quality years, X.X what's about the it's an over us, the fact

if look last being the seeing more you're years. cars year XX-plus data, So X you the in old at here sold

case calendar same first for the I think the even that's quarter.

They'll We've dividends the dividends back. been come forward, continue sales as certainly we think macro pay get better. go have making on waiting sitting stronger. we And as think those related, been ourselves I So here to come them not been business for the but impacts will back. more I have to

back X affordability. of $XX.X of cars keep most year share million. think again, used mean $XX north old. it less last the than And that is in And typically exchange It's million. goes year, I group mind, I total to impacted the the was the

the told about strategy. about We benefits we've to actions will give which go I us as our that feel taken, great you feel great continue we forward. durable we So

Enrique Mayor-Mora

after out support it's those his aggressively sales, I do material that are that talked as prepared support margin, logistics those remarks, point and about can Bill moving think going forward and bringing items -- both reconditioning after after well, to costs, going can down, important anticipate those of going we items. it in costs that

So we're excited about those.

So it's we and of after matter can Rajat, a control, can we going that. aggressively also control what

William Nash

add The to only you Rajat, other this, I go want a thing like be that, would experiences you to when through is better, stronger company.

So future, to in happen if you do was this again the what different. might

our about of already things we've has talked talked some expanding And Enrique the goods talked really about about, financing. on the the -- sold. the cost Jon sourcing. just focusing of

not can going pockets to do. that only we I actually because to CAF grow little aren't units financing, that there's our maybe we picking the actually income, opportunity that actually think partners grow are now I an think us I think to pockets good little think there's allow it's up,

on that of the to variable factors, same. the prices on those should we've EPP, also the we example, when factors into that prices, the I lot all it equation work the the for think we those like a keep comes done lower measuring the elasticity cost, should enter increase

So a think We've of a lot. lot learned I improvements. again, we've made

our have tools So tool together, more has to ] in we chest. if the happen situation [

Rajat Gupta

to get is comps only monthly or Maybe some the course I fair it trends seasonality quarter? to seeing just the Or should the better keep there of in commentary, positive expect June through mean, that like is mind there? you're the on

William Nash

encouraged by Like No, the -- since look, the I of second continued the the look, really trend even quarter. said, first into we're it's June. half

keep that, going after to by encouraged we're and we're it. So getting

to we feel ball good have year, but tell don't going the you what's to I about trajectory. crystal this So exactly a happen

Operator

next Craig from will Baird. Kennison with come Our question

Craig Kennison

initiatives? then, Bill, to you for And to or mentioned related to some those reconditioning. to drive you logistics Do bottom those the through there impact of is savings to per you flow way cost-of-goods-sold lower unit the line any quantify expect initiatives and prices?

William Nash

retail from we're we're quantification yes, over hundred unit, and Yes. have a Great between I reconditioning questions, going -- a look, Craig. X year next standpoint, that after bucks per couple we And the or per think logistics. of unit

as all. insignificant at that's know, not So you

it. we're your there X, hit that the But about And then And like is excited question... other part of feel kind going of X the we day It's across of amount opportunity not there. tomorrow. to

Craig Kennison

hit is that line? Do something... that you Or expect to the bottom

William Nash

Yes.

obviously, what would start when I you a mean, So to have to tell you that decision you is, I pull in. make

As I look, probably I'd make through that those efficiencies. you say form sit have you as here the realize right to now, in decisions pricing. certainly, of some flow But of we'd

Craig Kennison

follow Why not if today, the -- I efficiencies why those not a why guess to just up, -- prices take your are line? take competitive bottom

William Nash

going me the make. you we'll because to have again, is we at a what we'll once like Well, for look situation there to hard again, factors that that. of looking at play lots the be And get be decisions to affordability, say lot looking elasticity. there's There's of it's into --

took We passing reconditioning But up helps enough, I it. you've to the us the mean, past the then, -- in a at overall some along, may of of We may been years them we line. we've price. when bottom picked savings, -- one point lot margin the long and we that take some take it us manage helps followed just since manage

have So we'll the a there's to that equation time. that into that in look lot goes at I just think point

Operator

from Our next with BNP Bottiglieri Chris Paribas. comes question

Christopher Bottiglieri

Tier hope have pretty Are on this the receivable. But sourcing different on you this credit. just sorry. between billion going CNL [ more Or acquisition? this up prospectus I legacy billion the David's like pricing? And legacy I differ ] elaborate a know yourself? So you new securitization, of are of Can then sounds X How [ rule, I and behind to direct X? than going? you material. that's just apologize. follow securitization $X a just type the Like suggest portfolio like last That is you that I ] asking where is non-prime partners parts elaborate, is how retail Tier Can does question that actually. I'm X? first, so how higher reduce vendor not I there's is question to intentionally, does to on would doing your that breaking I'm wanted $X

William Nash

Sure, David's up apologized Chris. broken only Well, first and of everybody all, that to it has rule, the breaking point. one this you're

you. forgive we So

question answer, ]. on to The of non I'll Jon first the pass over the I'll parts and it [ part

So look, have with. time, part have -- a for relationships we Parts partners partners. been we've got where so around unbelievable national long

there's which been some great. that parts internally applied. on are and not which do applied source that's parts better and see We we're getting which So just can and being optimization parts from being we that

many So things don't that's good We on. whatever this relationships, of we're to because parts just national we do, parts. we're working can think want those that have had optimizing just think have to do we we I we better -- job you a come the partners don't or great away pleased we But partners. and one with

So Jon?

Jon Daniels

Yes. I appreciate the question, Chris.

we ABS think that majority we of XX%, overall kind again, referred that what look program. has our portfolio we've the if So putting across The X at operated our been we're if you Tier or current $X program. about originate I current the to, legacy into of historically vast billion

those a the give scale securitized, X portion volume receivables, we're going into securitized down be a -- then to the receivables. And higher consider to target, this that about split and -- those then investor program. us will Tier the think, which the able X going including If we that, basically higher and to we different and create to together what to program, base across that add we we're going not Tier that, historically prime would historically think we again, really is have of be non-prime there, residual dropped lumped we

you how about what we today. originate that's So think

think then go about you Tier it's Tier and If might across in honesty, future, tightened and capture a pockets X what small XX%. But the that. X, do call that's the that there if look to wide would that entirety all you looking we're we be after in are Tier today, spectrum, of XX% X of that at sales; today, always that we've to we in able back, of

that being right is. what all captured think in we to spot volume we will so that, out the of figure there's be across And and

us -- there. this again, grow down So enable but will to

to Now cars anticipate selling volume, partners we love want volume. along lot enjoy we our partners us right is future, that in there that enjoyed on point thing I'd and the a the that ride. the last a our want of and for make We have with they

that we it X of opportunity Tier we want but grow the in volume to don't that there's all, So X go and space. do -- Tier after will that We there. think some in

answer question. So hopefully, that broad answers your

Enrique Mayor-Mora

thing, Chris. one would add I said just

from prime to way I than the high about about way high between that the less FICO perspective pools. is to and XXX, think just the general think prime split general and a is greater a in think than a then non-prime of non-prime two program the think XXX, is

Operator

Our next question comes with from Scot Truist. Ciccarelli

Scot Ciccarelli

can Carvana we Bill, I dealers. outside, couple I and public of I'm a but know to bit guess, see share, From rates swing here. a the you've going different to try market had differently of growth out little the on questions

Given credit relative mix, there the driver factors you of product approvals your Or earlier key seeing? play, rates or something it's do commentary that's the whether growth of your to think at late-model kind could other else? that on mix be it's we're

William Nash

calendar price of mean, hold of fragmented rid that the the factor Remember, No, really Obviously, Scot. that is I the market. folks of think our we inventory. getting don't year. last the hold at it's year biggest highly margins. their They're coming I off correction a There's end lots margins. big

I the and climb out. factor the recently quarter starting think fourth we're a in to So that's now back in most big been as drop

XX% there's for that our just space really I sold, certainly, older, and said butter as example, and that has always X. being X are other anything. I That's to think XX cars are that do that that's not I we more And kind years look, I think thing and historically, of what bread been of, is our are. beyond the But -- sales probably earlier, think a

been expensive for folks. ticket an that's And

years, migrate little credit there people when like the We've couple across cheaper so and And all of that's seen we've credit last apps, looking at -- spectrum. you -- are for look people car, bit seen down. throughout the a

of that there's on. So a combination going things are I think

have just not we we high-quality to and thing going years making a high-quality is the that And sure other product. maintain spent -- that we've to product, we're XX want

down. to that be understand And there's that so some consumers traded going we have

So things. I a think it's combination of

Scot Ciccarelli

your I follow-up? to in we your market, I share the look Can markets, you share XX% markets. Where a a just ask used when across -- it? specific management X% can team Okay. of Like market certain kind is the in older highest know compare of kind what historically, so refer to average is to market

William Nash

Yes.

still. we're oldest -- at 'XX, in we in market actually looked acceleration when And talked we over highest we our a nice and When rolled past. out I've are So about originally on XX the markets. little those this -- saw in -- we the share. XX%, And markets

I double lot know but older than they Obviously, stores. But over the that -- digits top XX%. they're -- is, is a grow don't the of slower younger the over end it where ones,

Operator

Chris Our next question will with come Pierce Needham. from

Christopher Pierce

at know talk you ahead. vehicles that overall need cars sort we're I the helps versus newer and cars kind is will growth grow the auction Can year-over-year supply older you to seeing cars what the you that -- commercial of that Like of that gain about share more perspective? older in come with back But from supply of share? share share of are you gain seeing a market supply? help

William Nash

that folks affordability a If the we're that any the Yes, from supply, it's it -- sourcing is on having overall and And get lot supply. to question, a have the into goes and written just and been cars. or supply not problem has but can supply problem. a we reality we there's impact

up. it's continues think that I great that, said the having to SAAR Now go

recent XX of we've saw already X. market, I X more point, that and used the think ] the bring most like the eventually, I your specifically, into X see help again, price come was and [ number To to it. down cars the more cars to started

enters, I good for think as and I for it's us. good that's inventory more think So the industry, I think

Christopher Pierce

Okay.

make just not to you're share. understanding supply decisions going older of kind and and the hurting supply, but supply I want making. not where what's the that's source is sure you're vehicles, choosing you're having of just sort I'm But So getting -- problems to

William Nash

Yes.

talking appreciate quality So to you thought, supply later-model you many when of, clarification the you for any bring cars. there's an there's were more but of lots them the about older that we can issue, the older because If buy no, for I I of vehicles, only vehicle, looking the standards. up it's you're asked supply so us, question, just if

roughly it So our more a quite more supply, if at older any versus all, be the in where -- let's it But are, CarMax standards. X supply bucket That's cars any But we the up have issue we've the again, vehicles would if be lot call should had -- it in of X/X years mean, meet that that from it, before. there's up old. than it's more late-model was bucket. probably I

Christopher Pierce

that the just vehicle that the to think about not is you're to been -- has changing? right flat, it Or way standard So meet supply supply vehicles the CarMax of the growing? What's retail? going

William Nash

younger look vehicle we that older or forward, you meets our as one. whether think an I it's look holistically, Yes, CarMax parameters

dynamic supply Because about up, eventually, just that go because the those the cars talked you is with the think of is improving SAAR earlier. to come continuing in. I

impact on come So us. And the good for has prices think industry, as that's and well it's start us just to the for down. I and good

Operator

Mizuho. next [Operator question Instructions] We from our will Bellinger take David with

David Bellinger

another Just one.

dealer CarMax widespread clarity the [ seeing does CDK some Just in the pretty any right just volumes changes any Are that on issues provide widespread and or you ] there? any from consumer implications have activity? now, the near-term of software can Regarding you exposure issue? are this

William Nash

them. do other a lot title ] things from down, it I parts, dealers say of the impact systems on it And the would of there's It has as because obviously work know work us. ]. parts on scheme as DMS well. [ not the there can a impact impact CDK for as it's small a dealers use has I those our of impact we us. But an Yes, us unfortunate just their down slow it's are are a minor as standpoint. on And if [ in far We on way a with is lot little

Operator

[ call questions As any there at to closing for ], are I'll remarks. this no back Bill hand further the time

William Nash

also to of of ]. Great. want I I to Well, [ thank you for the I our thank associates -- all what thank all joining today. always, they as want call doing are

key just we responsibility making read our tangible it. all on and you communities. the published XXXX the to to would on know, related of several provides from we're you recently let report, of updates climate I great local encourage It just impact initiatives our And

I proud. think we're

shareholders. our well long-term demonstrates it it live. think And us values we sustainable also I of value positions how to for drive and all our

again, today, your we'll talk time So and we again appreciate next quarter.

Operator

conclude today's will this and your for you may participation, Thank And conference. you now disconnect.

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