Michael David Montani

Michael David Montani asked about the progression of credit trends throughout Q2, including delinquency rates, and the outlook for provisions into Q3. He also inquired about the distinctness of the $150 million SG&A savings from the $100-200 COGS savings, and CarMax's commitment to reinvesting these savings into sharper pricing to boost top-line growth.

Answer

Jon Daniels, EVP of CarMax Auto Finance, noted seasonal delinquency trends but stated newer and older vintages are performing as expected. He projected Q3 provision for new originations to be in the $70-80 million range, with minimal true-ups. President and CEO Bill Nash clarified that COGS savings (targeting $125 million this year) are separate from SG&A reductions. He affirmed a willingness to reinvest some savings into pricing but doesn't expect all to be necessary, aiming for both bottom-line impact and competitive pricing.

Michael David Montani asked about the progression of credit trends, specifically delinquency rates, throughout the quarter and the outlook for loan loss provisions in Q3. He also inquired about the $150 million SG&A and $100-$200 COGS savings as potential reinvestment fuel, and CarMax's commitment to using these for sharper pricing to boost the top line.

Answer

Jon Daniels, EVP of CarMax Auto Finance, noted seasonal delinquency trends and stated that delinquency for newer and older vintages is in line with expectations. Bill Nash, President and CEO, and Mr. Daniels indicated that the Q2 provision for new originations is representative, and future true-ups should be minimal, with provisions expected in the $70-$80 million range. Enrique Mayor-Mora, EVP and CFO, confirmed 2024/2025 vintages meet expectations. Mr. Nash confirmed SG&A and COGS savings are separate initiatives, with CarMax on track for $125 million in COGS savings this year. He affirmed willingness to reinvest some savings into competitive pricing but doesn't believe all savings would be necessary, expecting some to flow to the bottom line.