| Metric (in millions USD) | Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q1 2025 | Q2 2025 |
|--------------------------|---------|---------|---------|---------|---------|---------|
| Used Vehicle Sales       | $5,204.6  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $6,001.5  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $5,591.1  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $4,832.1  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $5,677.5  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $5,677.1  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| Wholesale Vehicle Sales  | $1,152.2  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $1,514.4  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $1,322.0  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $1,165.2  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $1,256.4  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $1,154.5  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| Other Sales and Revenues | $149.2  **[0001170010-23-000006_kmx-20221130.htm:15]**    | $171.2  **[0001170010-23-000065_kmx-20230531.htm:10]**    | $160.7  **[0001170010-23-000114_kmx-20230831.htm:9]**    | $151.3  **[0001170010-24-000002_kmx-20231130.htm:10]**    | $179.5  **[0001170010-24-000087_kmx-20240531.htm:11]**    | $182.0  **[0001170010-24-000130_kmx-20240831.htm:11]**    |
| - Extended Protection Plan Revenues | $91.8  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $111.2  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $101.7  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $90.8  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $118.8  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $121.4  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| - Third-party Finance Income/(Fees), Net | $1.0  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $0.3  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $(1.5)  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $(1.2)  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $(1.7)  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $1.4  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| - Advertising & Subscription Revenues | $33.3  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $31.4  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $33.5  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $36.7  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $34.7  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $34.3  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| - Service Revenues | $19.6  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $22.1  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $21.4  **[0001170010-23-000114_kmx-20230831.htm:9]**  | N/A | $22.7  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $21.7  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| - Other | $3.5  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $6.2  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $5.6  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $25.0  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $5.0  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $3.2  **[0001170010-24-000130_kmx-20240831.htm:11]**  |
| Total Net Sales and Operating Revenues | $6,506.0  **[0001170010-23-000006_kmx-20221130.htm:15]**  | $7,687.1  **[0001170010-23-000065_kmx-20230531.htm:10]**  | $7,073.8  **[0001170010-23-000114_kmx-20230831.htm:9]**  | $6,148.5  **[0001170010-24-000002_kmx-20231130.htm:10]**  | $7,113.4  **[0001170010-24-000087_kmx-20240531.htm:11]**  | $7,013.5  **[0001170010-24-000130_kmx-20240831.htm:11]**  |

7b2855907a6896a09a78b0c4ded381b5cafc54d6d9dd6985286b6a61786447f2

CarMax, Inc. is the largest retailer of used vehicles in the United States, operating through two main segments: CarMax Sales Operations and CarMax Auto Finance (CAF) **[0001170010-24-000034_kmx-20240229.htm:44]** **[0001170010-24-000034_kmx-20240229.htm:3]** **[0001170010-24-000034_kmx-20240229.htm:75]** **[0001170010-24-000130_kmx-20240831.htm:8]** **[0001170010-24-000130_kmx-20240831.htm:30]**. The company specializes in the retail and wholesale sales of used vehicles, along with related products and services such as extended protection plans and vehicle repair services **[0001170010-24-000034_kmx-20240229.htm:44]** **[0001170010-24-000034_kmx-20240229.htm:3]** **[0001170010-24-000130_kmx-20240831.htm:30]** **[0001170010-24-000002_kmx-20231130.htm:33]**. CarMax also offers financing options through its CAF segment, which provides competitive financing solely to customers purchasing retail vehicles from CarMax **[0001170010-24-000034_kmx-20240229.htm:44]** **[0001170010-24-000130_kmx-20240831.htm:30]**.

1. **CarMax Sales Operations** - Encompasses all aspects of auto merchandising and service operations, including retail sales of used vehicles, wholesale vehicle sales, and related products and services such as extended protection plans, vehicle repair services, and advertising and subscription revenues.
   - **Retail Sales of Used Vehicles** - Offers a wide selection of used vehicles for purchase by consumers.
   - **Wholesale Vehicle Sales** - Facilitates the sale of vehicles to other dealers through auctions.
   - **Extended Protection Plans (EPPs)** - Provides additional coverage options for vehicle protection.
   - **Vehicle Repair Services** - Offers maintenance and repair services for vehicles.
   - **Advertising and Subscription Revenues** - Generates income through advertising and subscription-based services.

2. **CarMax Auto Finance (CAF)** - Provides financing options exclusively to customers buying retail vehicles from CarMax, capturing additional profits and cash flows by offering competitive financing solutions.

39ad0f9b104175a228384bf25a4e9be44441f9ebc3f6180555624ee6ceb3df8f

| Metric / Quarter | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Vehicles Purchased from Consumers | **224,000**  **[KMX_1988997_0]** **[0001170010-22-000102_q3fy23earningsrelease.htm:1]**  | **247,000**  **[KMX_3246608_1]** **[0001170010-23-000008_q4fy23earningsrelease.htm:1]**  | **323,000**  **[KMX_3254252_0]** **[0001170010-23-000062_q1fy24earningsrelease.htm:0]** **[0001170010-23-000062_q1fy24earningsrelease.htm:1]**  | **273,000**  **[KMX_3329944_1]** **[0001170010-23-000111_q2fy24earningsrelease.htm:1]**  | **228,000**  **[0001170010-23-000121_q3fy24earningsrelease.htm:0]** **[0001170010-23-000121_q3fy24earningsrelease.htm:1]**  | **213,000**  **[0001170010-24-000014_q4fy24earningsrelease.htm:0]** **[0001170010-24-000014_q4fy24earningsrelease.htm:1]**  | **279,000**  **[KMX_3392617_1]** **[0001170010-24-000084_q1fy25earningsrelease.htm:0]** **[0001170010-24-000087_kmx-20240531.htm:38]** **[0001170010-24-000084_q1fy25earningsrelease.htm:1]**  | **269,000**  **[0001170010-24-000130_kmx-20240831.htm:33]** **[0001170010-24-000128_q2fy25earningsrelease.htm:0]** **[0001170010-24-000128_q2fy25earningsrelease.htm:1]**  |
| Vehicles Purchased through Dealers | **14,000**  **[0001170010-23-000006_kmx-20221130.htm:40]** **[KMX_1988997_1]** **[0001170010-22-000102_q3fy23earningsrelease.htm:1]**  | **15,000**  **[KMX_3246608_1]** **[0001170010-23-000008_q4fy23earningsrelease.htm:1]**  | **20,000**  **[0001170010-23-000065_kmx-20230531.htm:38]** **[KMX_3254252_0]** **[0001170010-23-000062_q1fy24earningsrelease.htm:1]** **[0001170010-23-000062_q1fy24earningsrelease.htm:0]**  | **19,000**  **[0001170010-23-000114_kmx-20230831.htm:37]** **[0001170010-23-000111_q2fy24earningsrelease.htm:1]** **[0001170010-23-000111_q2fy24earningsrelease.htm:0]**  | **22,000**  **[0001170010-23-000121_q3fy24earningsrelease.htm:0]** **[0001170010-23-000121_q3fy24earningsrelease.htm:1]**  | **21,000**  **[0001170010-24-000014_q4fy24earningsrelease.htm:0]** **[0001170010-24-000014_q4fy24earningsrelease.htm:1]**  | **35,000**  **[KMX_3392617_1]** **[0001170010-24-000084_q1fy25earningsrelease.htm:0]** **[0001170010-24-000087_kmx-20240531.htm:38]** **[0001170010-24-000084_q1fy25earningsrelease.htm:1]**  | **31,000**  **[0001170010-24-000130_kmx-20240831.htm:33]** **[0001170010-24-000128_q2fy25earningsrelease.htm:0]** **[0001170010-24-000128_q2fy25earningsrelease.htm:1]**  |
| Used Vehicle Gross Profit per Unit | **$2,237**  **[0001170010-23-000006_kmx-20221130.htm:48]** **[0001170010-22-000102_q3fy23earningsrelease.htm:6]** **[0001170010-22-000102_q3fy23earningsrelease.htm:0]**  | **$2,277**  **[0001170010-23-000008_q4fy23earningsrelease.htm:6]** **[0001170010-23-000008_q4fy23earningsrelease.htm:0]**  | **$2,361**  **[0001170010-23-000065_kmx-20230531.htm:45]** **[0001170010-23-000062_q1fy24earningsrelease.htm:5]** **[0001170010-23-000062_q1fy24earningsrelease.htm:1]**  | **$2,251**  **[0001170010-23-000114_kmx-20230831.htm:45]** **[0001170010-23-000111_q2fy24earningsrelease.htm:1]** **[0001170010-23-000111_q2fy24earningsrelease.htm:0]**  | **$2,277**  **[0001170010-24-000002_kmx-20231130.htm:44]** **[0001170010-23-000121_q3fy24earningsrelease.htm:4]** **[0001170010-23-000121_q3fy24earningsrelease.htm:1]**  | **$2,251**  **[0001170010-24-000014_q4fy24earningsrelease.htm:6]** **[KMX_3379781_1]** **[0001170010-24-000014_q4fy24earningsrelease.htm:0]**  | **$2,347**  **[0001170010-24-000087_kmx-20240531.htm:43]** **[KMX_3392617_1]** **[0001170010-24-000084_q1fy25earningsrelease.htm:0]**  | **$2,269**  **[0001170010-24-000130_kmx-20240831.htm:40]** **[KMX_3402149_1]** **[0001170010-24-000128_q2fy25earningsrelease.htm:0]** **[0001170010-24-000130_kmx-20240831.htm:31]** **[0001170010-24-000128_q2fy25earningsrelease.htm:1]**  |
| Wholesale Vehicle Gross Profit per Unit | **$966**  **[0001170010-23-000006_kmx-20221130.htm:48]** **[0001170010-22-000102_q3fy23earningsrelease.htm:6]** **[0001170010-22-000102_q3fy23earningsrelease.htm:0]**  | **$1,187**  **[0001170010-23-000008_q4fy23earningsrelease.htm:6]**  | **$1,042**  **[0001170010-23-000065_kmx-20230531.htm:45]** **[KMX_3254252_0]** **[0001170010-23-000062_q1fy24earningsrelease.htm:1]**  | **$963**  **[0001170010-23-000114_kmx-20230831.htm:45]** **[KMX_3329944_1]** **[0001170010-23-000111_q2fy24earningsrelease.htm:0]**  | **$961**  **[0001170010-24-000002_kmx-20231130.htm:44]** **[KMX_3369661_1]** **[0001170010-23-000121_q3fy24earningsrelease.htm:1]**  | **$1,120**  **[KMX_3379781_1]** **[0001170010-24-000014_q4fy24earningsrelease.htm:6]** **[0001170010-24-000014_q4fy24earningsrelease.htm:1]** **[0001170010-24-000014_q4fy24earningsrelease.htm:0]**  | **$1,064**  **[0001170010-24-000087_kmx-20240531.htm:43]** **[KMX_3392617_1]** **[0001170010-24-000084_q1fy25earningsrelease.htm:0]**  | **$975**  **[0001170010-24-000130_kmx-20240831.htm:40]** **[KMX_3402149_1]** **[0001170010-24-000128_q2fy25earningsrelease.htm:0]**  |
| Weighted Average Contract Rate | **9.8%**  **[0001170010-23-000006_kmx-20221130.htm:56]** **[KMX_1988997_4]** **[0001170010-22-000102_q3fy23earningsrelease.htm:2]** **[0001170010-23-000006_kmx-20221130.htm:54]**  | **10.9%**  **[KMX_3246608_4]** **[0001170010-23-000008_q4fy23earningsrelease.htm:2]**  | **11.1%**  **[KMX_3383973_4]** **[KMX_3254252_3]** **[0001170010-23-000065_kmx-20230531.htm:49]**  | **11.1%**  **[0001170010-23-000114_kmx-20230831.htm:53]** **[0001170010-23-000111_q2fy24earningsrelease.htm:2]** **[0001170010-23-000114_kmx-20230831.htm:51]**  | **11.3%**  **[KMX_3369661_4]** **[0001170010-24-000002_kmx-20231130.htm:52]** **[0001170010-23-000121_q3fy24earningsrelease.htm:2]** **[0001170010-24-000002_kmx-20231130.htm:50]**  | **11.5%**  **[KMX_3379781_5]** **[0001170010-24-000014_q4fy24earningsrelease.htm:2]**  | **11.4%**  **[KMX_3392617_3]** **[0001170010-24-000087_kmx-20240531.htm:49]** **[0001170010-24-000084_q1fy25earningsrelease.htm:2]**  | **11.5%**  **[KMX_3402149_3]** **[0001170010-24-000130_kmx-20240831.htm:49]** **[0001170010-24-000128_q2fy25earningsrelease.htm:2]**  |
| Weighted Average Credit Score | **712**  **[0001170010-23-000006_kmx-20221130.htm:54]**  | **708**  **[0001170010-23-000010_kmx-20230228.htm:53]**  | **715**  **[0001170010-23-000065_kmx-20230531.htm:49]**  | **721**  **[0001170010-23-000114_kmx-20230831.htm:51]**  | **720**  **[0001170010-24-000002_kmx-20231130.htm:50]**  | **719**  **[0001170010-24-000034_kmx-20240229.htm:59]**  | **721**  **[0001170010-24-000087_kmx-20240531.htm:48]**  | **725**  **[0001170010-24-000130_kmx-20240831.htm:47]**  |
| Weighted Average Loan-to-Value | **88.9%**  **[0001170010-23-000006_kmx-20221130.htm:54]**  | **88.3% (FY)**  **[0001170010-23-000010_kmx-20230228.htm:53]**  | **87.9%**  **[0001170010-23-000065_kmx-20230531.htm:49]**  | **88.8%**  **[0001170010-23-000114_kmx-20230831.htm:51]**  | **89.4%**  **[0001170010-24-000002_kmx-20231130.htm:50]**  | **88.7% (FY)**  **[0001170010-24-000034_kmx-20240229.htm:59]**  | **89.1%**  **[0001170010-24-000087_kmx-20240531.htm:48]**  | **89.5%**  **[0001170010-24-000130_kmx-20240831.htm:47]**  |
| Weighted Average Term | **66.1**  **[0001170010-23-000006_kmx-20221130.htm:54]**  | **66.0**  **[0001170010-23-000010_kmx-20230228.htm:53]**  | **65.3**  **[0001170010-23-000065_kmx-20230531.htm:49]**  | **65.0**  **[0001170010-23-000114_kmx-20230831.htm:51]**  | **65.2**  **[0001170010-24-000002_kmx-20231130.htm:50]**  | **65.4 (FY)**  **[0001170010-24-000034_kmx-20240229.htm:59]**  | **67.0**  **[0001170010-24-000087_kmx-20240531.htm:48]**  | **66.9**  **[0001170010-24-000130_kmx-20240831.htm:47]**  |
| Allowance for Loan Losses as a Percentage of Ending Managed Receivables | **2.95%**  **[0001170010-23-000006_kmx-20221130.htm:55]** **[0001170010-23-000006_kmx-20221130.htm:21]**  | **3.02%**  **[0001170010-23-000008_q4fy23earningsrelease.htm:2]** **[0001170010-23-000010_kmx-20230228.htm:53]**  | **3.11%**  **[0001170010-23-000065_kmx-20230531.htm:50]** **[0001170010-23-000065_kmx-20230531.htm:16]** **[0001170010-23-000062_q1fy24earningsrelease.htm:2]**  | **3.08%**  **[0001170010-23-000114_kmx-20230831.htm:52]** **[0001170010-23-000114_kmx-20230831.htm:15]**  | **2.92%**  **[0001170010-24-000002_kmx-20231130.htm:52]** **[0001170010-24-000002_kmx-20231130.htm:16]** **[0001170010-24-000002_kmx-20231130.htm:51]**  | **2.78%**  **[0001170010-24-000014_q4fy24earningsrelease.htm:2]**  | **2.79%**  **[0001170010-24-000087_kmx-20240531.htm:49]** **[0001170010-24-000087_kmx-20240531.htm:17]** **[0001170010-24-000084_q1fy25earningsrelease.htm:2]**  | **2.82%**  **[0001170010-24-000130_kmx-20240831.htm:49]** **[0001170010-24-000130_kmx-20240831.htm:48]** **[0001170010-24-000128_q2fy25earningsrelease.htm:2]**  |
| Annualized Net Credit Losses as a Percentage of Total Average Managed Receivables | **1.74%**  **[0001170010-23-000006_kmx-20221130.htm:55]**  | **1.49%**  **[0001170010-23-000010_kmx-20230228.htm:53]**  | **1.24%**  **[0001170010-23-000065_kmx-20230531.htm:50]**  | **2.01%**  **[0001170010-23-000114_kmx-20230831.htm:52]**  | **2.16%**  **[0001170010-24-000002_kmx-20231130.htm:51]**  | **1.93%**  **[0001170010-24-000034_kmx-20240229.htm:59]**  | **1.62%**  **[0001170010-24-000087_kmx-20240531.htm:49]**  | **2.36%**  **[0001170010-24-000130_kmx-20240831.htm:48]**  |
| Past Due Accounts as a Percentage of Ending Managed Receivables | **4.99%**  **[0001170010-23-000006_kmx-20221130.htm:55]**  | **5.00%**  **[0001170010-23-000010_kmx-20230228.htm:89]**  | **5.15%**  **[0001170010-23-000065_kmx-20230531.htm:50]**  | **5.45%**  **[0001170010-23-000114_kmx-20230831.htm:52]**  | **5.81%**  **[0001170010-24-000002_kmx-20231130.htm:51]**  | **5.44%**  **[0001170010-24-000034_kmx-20240229.htm:91]**  | **5.38%**  **[0001170010-24-000087_kmx-20240531.htm:49]**  | **5.53%**  **[0001170010-24-000130_kmx-20240831.htm:48]**  |
| Average Recovery Rate | **61.3%**  **[0001170010-23-000006_kmx-20221130.htm:55]**  | **64.2% (FY)**  **[0001170010-23-000010_kmx-20230228.htm:53]**  | **59.2%**  **[0001170010-23-000065_kmx-20230531.htm:50]**  | **53.9%**  **[0001170010-23-000114_kmx-20230831.htm:52]**  | **50.9%**  **[0001170010-24-000002_kmx-20231130.htm:51]**  | **53.0%**  **[0001170010-24-000034_kmx-20240229.htm:59]**  | **48.9%**  **[0001170010-24-000087_kmx-20240531.htm:49]**  | **47.8%**  **[0001170010-24-000130_kmx-20240831.htm:48]**  |
| CAF Serviced Customer Accounts | **1.1**  **[0001170010-23-000006_kmx-20221130.htm:38]**  | **1.1**  **[0001170010-23-000010_kmx-20230228.htm:39]**  | **1.1**  **[0001170010-23-000065_kmx-20230531.htm:36]**  | **1.1**  **[0001170010-23-000114_kmx-20230831.htm:34]**  | **1.1**  **[0001170010-24-000002_kmx-20231130.htm:34]**  | **1.1**  **[0001170010-24-000034_kmx-20240229.htm:44]**  | **1.1**  **[0001170010-24-000087_kmx-20240531.htm:35]**  | **1.1**  **[0001170010-24-000130_kmx-20240831.htm:30]**  |

2261b52cdc69b2eea013ee54ac1304e94c716275c3983a7b3cd2371496a1acef

| Name                  | Position                                                   | Start Date | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|-----------------------|------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| William D. Nash       | President and Chief Executive Officer                      | 1997       | William D. Nash joined CarMax in **1997** as an auction manager. He held various positions, including Vice President and Senior Vice President of Merchandising, and Senior Vice President, Human Resources and Administrative Services. He became President in **February 2016** and has been CEO since **September 2016**  **[0001170010-24-000081_kmx-20240509.htm:7]** **[0001170010-24-000034_kmx-20240229.htm:40]** .                                          |
| Enrique N. Mayor-Mora | Executive Vice President and Chief Financial Officer       | 2011       | Enrique N. Mayor-Mora joined CarMax in **2011** as Vice President of Finance. He was promoted to Vice President and Treasurer in **2016**, then to Senior Vice President and Chief Financial Officer in **2019**, and to Executive Vice President and Chief Financial Officer in **2022**  **[0001170010-24-000034_kmx-20240229.htm:41]** .                                                                                 |
| James Lyski           | Executive Vice President and Chief Innovation and Strategy Officer | 2014       | James Lyski joined CarMax in **August 2014** as Senior Vice President and Chief Marketing Officer. He was promoted to Executive Vice President in **2017** and transitioned to the role of Chief Innovation and Strategy Officer in **2023**  **[0001170010-24-000034_kmx-20240229.htm:40]** **[0001170010-24-000081_kmx-20240509.htm:29]** .                                                                                                                           |
| Charles Joseph Wilson | Executive Vice President and Chief Operating Officer       | 1995       | Charles Joseph Wilson joined CarMax in **1995** as a buyer-in-training. He was promoted through various roles, including regional vice president of merchandising, and eventually to Executive Vice President and Chief Operating Officer in **2022**  **[0001170010-24-000034_kmx-20240229.htm:41]** **[0001170010-23-000010_kmx-20230228.htm:36]** .                                                                                                                  |
| Shamim Mohammad       | Executive Vice President and Chief Information and Technology Officer | 2012       | Shamim Mohammad joined CarMax in **2012** as Vice President of Application Development and IT Planning. He was promoted to Senior Vice President and Chief Information Officer in **2014**, then to Senior Vice President and Chief Information and Technology Officer in **2018**, and to Executive Vice President and Chief Information and Technology Officer in **2021**  **[0001170010-24-000034_kmx-20240229.htm:40]** **[0001170010-24-000034_kmx-20240229.htm:41]** . |

e6ae8ccd5f47720dfedb4d796aebd1211db42c7d74e3e50019da66748dedef16

1. Your credit penetration remains in the low 70% range, while an online peer has expanded theirs to the mid-80s; what specific constraints are preventing you from increasing your credit penetration to similar levels, and what strategies are you implementing to address this gap?
2. With worsening trends in the broader auto loan market and Tier 3 penetration down to about 7%, how are you adjusting your underwriting standards and business planning to mitigate potential risks from a weakening credit environment, and what further cost efficiencies can you realize?
3. Given the current headwinds in credit quality and increased loan loss provisions, does it make strategic sense to push forward with your full-spectrum lending initiative now, or should you reconsider its timing to avoid potential negative impacts?
4. Can you provide more details on how you are rethinking or retooling your reconditioning operations to improve efficiencies and margins, and what specific actions are being taken to enhance profitability in this area?
5. Regarding customers who are not procuring financing through CarMax and instead use third-party lenders or pay cash, what strategies do you have to better capture this higher-end, rate-sensitive customer segment and increase your overall financing penetration?

e92217b3e285563a8572cf9f87d20788e67a552ead01b3129f43382b69c8d130

Vehicles Purchased from Consumers

Vehicles Purchased through Dealers

Used Vehicle Gross Profit per Unit

Wholesale Vehicle Gross Profit per Unit

Weighted Average Contract Rate

Weighted Average Credit Score

Weighted Average Loan-to-Value

Weighted Average Term

Allowance for Loan Losses as a Percentage of Ending Managed Receivables

Past Due Accounts as a Percentage of Ending Managed Receivables

Average Recovery Rate

CAF Serviced Customer Accounts

c71a346657669ed4527c6368b28bf0296bfed3229462739928202edbde88c8c7

Used Vehicle Sales

Wholesale Vehicle Sales

Other Sales and Revenues

- Extended Protection Plan Revenues

- Third-party Finance Income/(Fees), Net

- Advertising & Subscription Revenues

- Service Revenues

- Other

Total Net Sales and Operating Revenues

97c5abbcbc3dd56e630c2af39ff814f64f32ec564293a6c1c8f9bf5a3a79a51c

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: The documents do not specify a future period in the form of 'Q# ####' or 'FY ####'.
- **Guidance**: The documents do not provide specific guidance metrics for CarMax from the Q2 2025 earnings call. The discussions focus on past performance and improvements in various areas but do not explicitly mention forward-looking guidance metrics.

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: The documents do not specify a future period in the form of 'Q# ####' or 'FY ####'.
- **Guidance**:
  1. **Advertising Spend**: Approximately **$200 per total unit** for the entire year.
  2. **SG&A Expenses**: Focus on active cost management to leverage low single-digit gross profit growth.
  3. **Cost of Goods Sold**: Aim for a couple of hundred dollars per retail unit in savings over the next year or two.
  4. **CarMax Auto Finance (CAF)**: No significant changes expected in the percentage of sales financed by CAF for the balance of the year.

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  1. **SG&A Leverage**: Low single-digit gross profit growth required to leverage SG&A, aiming for mid-70% range over time.
  2. **Marketing Spend**: Approximately **$200 per unit** for the full year.
  3. **Share Repurchases**: Modest acceleration in the pace of share repurchases, with $2.36 billion of repurchase authorization remaining.
  4. **Capital Expenditures**: Between **$500 million to $550 million**.
  5. **Store Openings**: Five new store locations planned.
  6. **Long-term Financial Targets**: Goal to sell more than 2 million combined retail and wholesale units annually by fiscal 2026 to fiscal 2030.

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance**:
  1. **Share Repurchase Program**: Resumed with $2.41 billion of repurchase authorization remaining.
  2. **Store Openings**: Four new stores planned in Q4.
  3. **Retail and Wholesale Gross Profit Per Unit**: Retail gross profit per used unit margin expected to be lower than last year's Q4 record margin.
  4. **Marketing Spend**: Full-year marketing spend per unit similar to last year, with Q4 spend exceeding last year's Q4.
  5. **SG&A Efficiency**: Target mid-70% SG&A as a percent of gross profit.
  6. **Extended Protection Plan (EPP) Revenues**: No profit-sharing revenues expected in Q4 due to inflationary pressures.

d1a081f5c67265c73e6b89178e22499bdae22c26d9d1cc2c6f3794d123114927

- Franchised dealers: Sell both new and used vehicles and are part of the highly fragmented U.S. used car marketplace  **[0001170010-24-000034_kmx-20240229.htm:7]** .
- Online and mobile sales platforms: Facilitate increased competition in the used car marketplace  **[0001170010-24-000034_kmx-20240229.htm:7]** .
- Independent used car dealers: Compete in the U.S. used car marketplace  **[0001170010-24-000034_kmx-20240229.htm:7]** .
- Private parties: Compete in the U.S. used car marketplace  **[0001170010-24-000034_kmx-20240229.htm:7]** .
- Banks and credit unions: Provide direct financing to customers purchasing used cars, competing with CarMax Auto Finance  **[0001170010-24-000034_kmx-20240229.htm:7]** .
- New car dealers: Leverage franchise relationships to brand certain used cars as "certified pre-owned," providing a competitive advantage  **[0001170010-24-000034_kmx-20240229.htm:19]** .
- Companies with online focused business models: Compete in direct sales and consumer-to-consumer facilitation, impacting CarMax's business model  **[0001170010-24-000034_kmx-20240229.htm:19]** .
- E-commerce businesses: Enter the online new and used vehicle markets, potentially offering a greater inventory and superior online experience  **[0001170010-24-000034_kmx-20240229.htm:19]** .
- Automotive in-person and online auctions: Compete with CarMax's wholesale auctions  **[0001170010-24-000034_kmx-20240229.htm:7]** .

c63e1d4f3fc8f3f6a2a3e5e10899efd38e227ac9866f348280512a893d8759f7

| Program Details          | Program 1                                      | Program 2                                      |
|--------------------------|------------------------------------------------|------------------------------------------------|
| Approval Date            | October 23, 2018  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                      | April 2022  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                            |
| End Date/Duration        | No expiration date  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                    | No expiration date  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                    |
| Total additional amount  | **$2 billion**  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                        | **$2 billion**  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**                        |
| Remaining authorization  | **$2.15 billion** as of 2024-12-21  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**    | **$2.15 billion** as of 2024-12-21  **[0001170010-24-000130_kmx-20240831.htm:24]** **[0001170010-24-000130_kmx-20240831.htm:62]** **[0001170010-24-000130_kmx-20240831.htm:54]**    |
| Details                  | Part of capital allocation strategy  **[0001170010-24-000034_kmx-20240229.htm:103]** **[0001170010-24-000130_kmx-20240831.htm:31]** **[0001170010-24-000002_kmx-20231130.htm:24]**   | Part of capital allocation strategy  **[0001170010-24-000034_kmx-20240229.htm:103]** **[0001170010-24-000130_kmx-20240831.htm:31]** **[0001170010-24-000002_kmx-20231130.htm:24]**   |

7ded35d9a08b9c59f5aed6ac2807dd7bb99f9a5efba37835044da8013b168648

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 1996  **[0001170010-24-000034_kmx-20240229.htm:70]**  | Present  | Current auditor   |

98924f2ad27a472167e4ec82d4c7152a5e9db29fbb7b288c922a0df4bbb0f87b

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Current Assets [USD, Thousands]

Cash and Cash Equivalents [USD, Thousands]

Accounts Receivable [USD, Thousands]

Inventory [USD, Thousands]

Non-Current Assets [USD, Thousands]

Property, Plant, and Equipment (PP&E) [USD, Thousands]

Goodwill [USD, Thousands]

Intangible Assets [USD, Thousands]

Current Liabilities [USD, Thousands]

Accounts Payable [USD, Thousands]

Short-term Debt [USD, Thousands]

Accrued Expenses [USD, Thousands]

Non-Current Liabilities [USD, Thousands]

Long-term Debt [USD, Thousands]

Lease Liabilities (Current Portion) [USD, Thousands]

Lease Liabilities (Non-Current Portion) [USD, Thousands]

Deferred Tax Liabilities [USD, Thousands]

Shareholders' Equity [USD, Thousands]

Retained Earnings [USD, Thousands]

Common Stock [USD, Thousands]

Additional Paid-in Capital [USD, Thousands]

Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

Selling, General, and Administrative Expenses (SG&A) [USD, Millions]

Research and Development (R&D) [USD, Millions]

Depreciation and Amortization (D&A) [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

Earnings Per Share (EPS) - Basic [USD, Units]

Earnings Per Share (EPS) - Diluted [USD, Units]

df9d6b8f54b51e30b5c74eeeb4d7f4bbb56acbd2507482e2b143c04ab326226f

56eab758d25d5c5d40a6b74c828547ff9e13eeac7f784fff169974d1be16af75

| Year  | Amount Due (in billions) | Debt Type                  | Interest Rate | % of Total Debt |
|-------|--------------------------|----------------------------|---------------|-----------------|
| 2024  | 0.525                    | Current portion of long-term debt and non-recourse notes payable | Variable/Fixed | 2.8% = (0.525 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:4]** **[0001170010-25-000004_kmx-20241130.htm:24]** |
| 2026  | 0.700                    | Term Loan                  | 5.58%         | 3.7% = (0.700 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:24]** **[0001170010-25-000004_kmx-20241130.htm:24]** |
| 2026  | 0.200                    | 4.17% Senior Notes         | 4.17%         | 1.1% = (0.200 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:24]** **[0001170010-25-000004_kmx-20241130.htm:24]** |
| 2028  | 0.200                    | 4.27% Senior Notes         | 4.27%         | 1.1% = (0.200 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:24]** **[0001170010-25-000004_kmx-20241130.htm:24]** |
| 2031  | 16.560                   | Non-Recourse Notes Payable | Fixed         | 88.6% = (16.560 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:24]** **[0001170010-25-000004_kmx-20241130.htm:55]** |
| 2059  | 0.505                    | Financing Obligations      | Varying       | 2.7% = (0.505 / 18.70) * 100 **[0001170010-25-000004_kmx-20241130.htm:24]** **[0001170010-25-000004_kmx-20241130.htm:24]** |

3440c13613358ef13d47b3e9802be4145a606295c8420c3dfd35aa14f158d5a5

- **Persistent weakness among lower-income consumers is impacting demand, with sales from customers making less than $3,000 per month still at half of their previous levels.**  **[KMX_3411950_18]**
- **Flat web traffic indicates potential challenges in attracting new customers, suggesting growth is reliant on improved conversion rather than increased demand.**  **[KMX_3411950_6]**
- **Future cost savings are being passed on to consumers rather than boosting margins, potentially limiting profitability upside.**  **[KMX_3411950_9]**

187b6437bba9ca18daa457abb44c6da338b95b8ede346101eda88a742f848bab

- **Improving same-store sales trends with positive comps in June**  **[KMX_3392617_5]** : CarMax reported that comparable store sales improved throughout the first quarter, with performance turning slightly positive in June. This indicates potential revenue growth moving forward.
- **Cost-saving initiatives targeting approximately $200 per retail unit over the next 1-2 years**  **[KMX_3392617_12]** : The company is pursuing cost reductions in reconditioning and logistics operations. These initiatives are expected to enhance margins and contribute to profitability.
- **Expansion into non-prime auto lending to drive additional finance income**  **[KMX_3392617_6]** : CarMax Auto Finance is launching a non-prime securitization program with $625 million of offered notes. This expansion into full-spectrum lending is anticipated to increase market share and generate substantial long-term value.

01c34ada86085218389425e1a1da396d3eb2fba6e8f535d2599766a878701387

- **CarMax is facing challenges in unit comps, market share, and margins**, which are **not at historical levels or improving relative to peers**, raising concerns about the effectiveness of their **current strategies around sourcing and omnichannel operations**.  **[KMX_3392617_10]**
- **Increasing losses and delinquencies** in CarMax Auto Finance's securitized portfolio may necessitate **higher reserves** in the future; **current reserves may be insufficient if loss trends continue**, potentially impacting future earnings.  **[KMX_3392617_19]**
- Expected **cost savings from logistics and reconditioning initiatives may not enhance profitability**, as management indicates **these savings may be passed to customers through lower prices rather than improving margins**, thus potentially limiting bottom-line growth.  **[KMX_3392617_12]**

3cf24c390550d909bf401b40fc5b1a24c61a1fe1c70357d755cd78ac8cf16fac

1. **Sales Momentum and Comps**  
   **Q:** What's a normalized used car unit comp for CarMax?  
   **A:** It's hard to pinpoint a normalized comp, but we're pleased with the sales momentum. Throughout the quarter, comps improved sequentially each month. December's performance month-to-date has accelerated beyond the third quarter's comp. We believe the fourth quarter will be stronger from a comp performance than the third quarter, despite headwinds.  **[KMX_3411950_5]** 

2. **Expense Leverage and SG&A**  
   **Q:** How should we think about expense leverage as comps improve?  
   **A:** We're making progress toward our goal of hitting a **mid-70% SG&A to gross profit** ratio. With improved sales volumes and our cost management efforts, we're confident in our ability to leverage SG&A more effectively. We're past the heavy investment phase and are now focusing on enhancing capabilities to drive growth and efficiencies.  **[KMX_3411950_5]** 

3. **Supply and Sourcing Strategy**  
   **Q:** Are you changing sourcing to lower-priced or older vehicles due to supply shortage?  
   **A:** There's no significant change in our age mix; we've maintained a similar vehicle mix year-over-year. The notable difference is an increase in sales of vehicles under **$20,000**, which grew from **25% to 30%** of sales year-over-year. Our diversified sourcing from consumers and dealers allows us to obtain hard-to-find vehicles, helping us navigate supply challenges.  **[KMX_3411950_7]** **[KMX_3411950_8]** 

4. **Cost Reduction Initiatives**  
   **Q:** Update on $200 per unit cost-out initiatives and use of savings?  
   **A:** We've realized about half of the **$200 per unit** cost reduction, equally split between reconditioning and logistics, with the remainder expected in upcoming quarters. We're passing most of these savings to consumers while ensuring solid margins.  **[KMX_3411950_9]** 

5. **Market Share Gains**  
   **Q:** Are you back to gaining market share as prices stabilize?  
   **A:** While we prefer to measure market share annually, we feel great about our sales momentum and our ability to gain market share. We'll provide an update at the end of the year, barring any major price swings.  **[KMX_3411950_12]** 

6. **CAF Allowance and Provisions**  
   **Q:** What led to the cut in the allowance for loan losses?  
   **A:** Our provision reflects expected losses on new originations and any necessary true-up on existing receivables. This quarter's provision is at a more normalized level, with less true-up needed compared to last quarter. We originated **$1.9 billion** this quarter; tightening in Tier 1 is offset by testing in Tier 2 and Tier 3.  **[KMX_3411950_11]** **[KMX_3411950_21]** 

7. **Payment Extensions Impact**  
   **Q:** Provide more color on payment extensions and their P&L impact.  
   **A:** We've adjusted our extension policies to help customers facing temporary hardships, allowing them to make partial payments to qualify for extensions. This helps customers stay in their cars and potentially lowers losses. We've reserved accordingly for any potential impact, which is reflected in our provision and reserve.  **[KMX_3411950_13]** 

8. **Wholesale Business Growth**  
   **Q:** How sustainable are the gains in wholesale growth?  
   **A:** We aim to increase wholesale volumes as much as possible. Our focus is on buying more cars, both retail and wholesale. Our partnership with **Edmunds** has helped sign up more dealers, and we see plenty of opportunity to expand. We offer dealers an additional avenue to sell unwanted cars, complementing traditional auctions.  **[KMX_3411950_14]** 

9. **Omnichannel Experience Improvements**  
   **Q:** Has the omnichannel experience shift significantly benefited this quarter?  
   **A:** Improvements in the omnichannel experience are a continuous build over recent quarters. We're seeing continued benefits from enhancing the customer experience, reducing friction, and improving conversion rates both online and in-store. Customers doing more remotely leads to better conversion, and our stores are leveraging tools for seamless customer interaction.  **[KMX_3411950_6]** **[KMX_3411950_20]** 

10. **Store Expansion Plans**  
    **Q:** Is there an opportunity to reach 300 stores, or leverage multichannel?  
    **A:** We have **249 stores** and believe we can go beyond **300 stores** in the long term. We review our pipeline annually and see plenty of opportunities for expansion. While the omnichannel experience allows consumers to do more remotely, we believe a strategic physical footprint remains critical.  **[KMX_3411950_17]** 

11. **Earnings Growth Expectations**  
    **Q:** Should low single-digit comps yield double-digit earnings growth?  
    **A:** Our objective is robust top and bottom-line growth. With the investments we've made, we're positioned to leverage these as the operating environment improves. We've had two positive quarters of comps, with acceleration into the fourth quarter, and we're excited about our growth path moving forward.  **[KMX_3411950_16]** 

12. **Inventory Build-Up and Tax Season**  
    **Q:** Is inventory build-up for tax season affecting cash flow?  
    **A:** Inventory increased slightly as we're preparing for the upcoming tax season, which is a normal seasonal pattern. Our team has managed inventory well, improving turns year-over-year, and we're in good shape for tax time.  **[KMX_3411950_22]** **[KMX_3411950_23]** 

13. **Consumer Mindset and Demand**  
    **Q:** Has there been a change in consumer mindset driving demand?  
    **A:** We haven't seen a significant change in consumer mindset. Improvements are largely due to our internal efforts to enhance the customer experience and reduce friction, as well as prices being down year-over-year. Some consumers are still financially pinched, particularly those with monthly household incomes below **$3,000**.  **[KMX_3411950_19]** 

14. **Lending Partner Stance**  
    **Q:** Any noticeable changes from lending partners recently?  
    **A:** Our lending partners remain steady, without significant adjustments. They love the CarMax business and are supportive in various conditions, but they're being prudent as any lender should be. We haven't observed major changes in their lending appetite.  **[KMX_3411950_15]** 

15. **Impact of Consumers Shifting from New to Used**  
    **Q:** Are you gaining new customers shifting from new to used vehicles?  
    **A:** Overall used car volumes have declined, especially in the **0- to 4-year-old** segment, which is our sweet spot. Consumers are financially pinched, impacting the used car industry, particularly late-model sales. We believe consumers will return as economic pressures ease.  **[KMX_3411950_18]** 

16. **EPP Penetration and Margins**  
    **Q:** Was EPP growth due to penetration or price increases?  
    **A:** We raised prices on our Extended Protection Plans starting in the fourth quarter of last year, leading to higher margins. While penetration has decreased, we're overall making more money. We'll be lapping over that increase in the upcoming quarter.  **[KMX_3411950_22]** 

17. **Used Car Pricing Trends**  
    **Q:** Are used car prices rising year-over-year?  
    **A:** We feel good about our pricing due to actions taken and diversified sourcing. Off the top of my head, we're probably running a little lighter year-over-year in December, but we'll see how it pans out.  **[KMX_3411950_23]** 

61ea1ff955e45e124d3bdff3726ebfdb49d714fb46fac77f0d85fc1f4fa9e66b

1. **Market Share Outlook**  
   **Q:** Why did market share slip, and when will it improve?  
   **A:** Market share declined due to **affordability challenges** and **steep depreciation** affecting consumer behavior and competitor pricing strategies.  **[KMX_3379781_9]**  CarMax focused on **profitable market share growth** rather than lowering prices to boost sales  **[KMX_3379781_9]** **[KMX_3379781_17]** . Recent data shows **market share improvement in January**, and they feel positive about February.  **[KMX_3379781_9]** 

2. **Affordability Impact**  
   **Q:** How is affordability affecting car sales and demand?  
   **A:** Consumers face higher monthly payments, with average payments around **$520–$530**, up from the traditional $400, due to higher vehicle prices and interest rates  **[KMX_3379781_10]** **[KMX_3379781_13]** . This puts pressure on demand, as customers struggle to fit these payments into their budgets  **[KMX_3379781_13]** **[KMX_3379781_27]** .

3. **Credit Tightening Effects**  
   **Q:** How is tighter lending impacting sales?  
   **A:** Tightening lending standards are a headwind, especially affecting **Tier 3 customers**, whose sales have been cut in half  **[KMX_3379781_13]** **[KMX_3379781_15]** . While CarMax's platform helps mitigate this, some sales are lost when CAF tightens credit.  **[KMX_3379781_13]** 

4. **Service Gross Profit Improvement**  
   **Q:** Will service gross profit improve in 2025?  
   **A:** Management believes the pressure is **transitory** and expects **significant year-over-year improvement**.  **[KMX_3379781_8]**  Initiatives include investing in **RFID tracking**, enhancing reporting, increasing **MaxCare work**, and adjusting labor and parts rates to offset inflation.  **[KMX_3379781_8]** 

5. **Wholesale Margins**  
   **Q:** Can high wholesale gross profit per unit be maintained?  
   **A:** Expecting to maintain similar **wholesale margins** as achieved this year, reflecting operational improvements.  **[KMX_3379781_16]**  Investments in standalone auction facilities are expected to enhance efficiency and profitability.  **[KMX_3379781_16]** 

6. **Vehicle Supply and Mix**  
   **Q:** How is vehicle supply affecting sales, and are you shifting to older vehicles?  
   **A:** Supply isn't the issue; it's the **price**.  **[KMX_3379781_24]**  The mix of vehicles sold remains balanced, with no significant shift towards older cars or smaller vehicles  **[KMX_3379781_24]** **[KMX_3379781_27]** . Self-sufficiency in sourcing remains over **70%**, a key advantage.  **[KMX_3379781_24]** 

7. **Return Policy Change**  
   **Q:** Are you changing the 30-day return policy?  
   **A:** Yes, modifying to a **10-day money-back guarantee**, still industry-leading.  **[KMX_3379781_21]**  This change addresses experiential issues and reduces increased expenses associated with longer return periods.  **[KMX_3379781_21]** 

8. **First Quarter Trends**  
   **Q:** How are first quarter sales trending?  
   **A:** Early first quarter shows **mid-single-digit negative comps**, due to choppy demand and consumer pressures  **[KMX_3379781_11]** **[KMX_3379781_26]** . The consumer remains in a tough spot despite some positive demand signals  **[KMX_3379781_11]** **[KMX_3379781_13]** .

9. **Dealer Sourcing Growth**  
   **Q:** How is dealer sourcing contributing to inventory?  
   **A:** Dealer-sourced units grew by **45%**, with active dealers increasing by **50%**  **[KMX_3379781_14]** **[KMX_3379781_25]** . The MaxOffer program is providing quality inventory, skewing more towards retail vehicles, and enhancing self-sufficiency  **[KMX_3379781_14]** **[KMX_3379781_25]** .

10. **Depreciation Expectations**  
    **Q:** Will there be excessive depreciation in the wholesale market?  
    **A:** Not expecting excessive depreciation; anticipating trends more in line with historical averages.  **[KMX_3379781_22]**  Recent depreciation aligns with patterns from 2015 to 2019, rather than the unusual fluctuations of recent years.  **[KMX_3379781_22]** 

566de711ca7256d8d3f02ea790fe8d3fac8605321457a8374464d6876c4d2103

- **CarMax is improving operating efficiencies in logistics and reconditioning**, targeting cost savings of a couple hundred dollars per vehicle, which can enhance margins or be passed on to customers.  **[KMX_3402149_23]**
- **CarMax maintains strong self-sufficiency in vehicle sourcing, with over 70% of vehicles acquired through appraisal lanes and dealers**, allowing it to manage margins and supply despite market challenges.  **[KMX_3402149_21]**
- **CarMax is seeing improvements in used car unit comps**, driven by internal execution, including efficiencies in cost of goods sold, better conversion in customer experience centers and stores, and a more stable pricing environment with **seven consecutive quarters of year-over-year price declines** improving affordability.  **[KMX_3402149_10]**

2d503a65c557635386d90142b653322a404e2536b05809881cdb25c92c2790d0

- **Worsening trends in the broader auto loan market and tightening credit conditions are impacting CarMax's sales, particularly in the Tier 3 segment, leading to reduced sales volumes and affordability challenges for lower-income customers.**  **[KMX_3402149_13]**
- **CarMax increased its loan loss provisions due to deteriorating performance in its loan portfolio and broader economic factors, indicating potential future credit losses.**  **[KMX_3402149_10]**
- **CarMax's finance penetration is constrained, with higher-end customers using external financing due to better rates offered by credit unions, limiting CarMax's ability to capture more financing income.**  **[KMX_3402149_22]**

1bf4651ff9cb5ff0dcde1bd3c702be24ec2e11442bde7fb4710590cc44a8e7e9

- **CarMax is experiencing weakening sales trends, with mid-single-digit negative comps early in the first quarter**, indicating ongoing challenges in sales momentum.  **[KMX_3379781_11]**
- **The company is losing market share during disruptive periods due to its pricing strategy of maintaining margins over lowering prices**, which may limit growth and competitiveness in challenging markets.  **[KMX_3379781_18]**
- **Affordability issues persist, with average monthly loan payments significantly higher (~$520-$530 vs. historical ~$400)**, potentially limiting consumers' ability to purchase vehicles and affecting demand.  **[KMX_3379781_10]**

4502241e33d414b57fb8e6fa7f826b47a9f0671435a50bc8567830747b8ee068

1. **Non-Prime Securitization Impact**  
   **Q:** Will non-prime securitization drive growth and profitability?  
   **A:** Management is excited about the non-prime securitization program, believing it will enable growth in the lower credit spectrum and expand the higher prime segment. For every one point of sales gained, they expect to drive **$10 million to $12 million** of value to CarMax upon reaching steady state.  **[KMX_3392617_8]**  They see substantial long-term potential and aim to grow beyond the current **43%** of sales financed in-house, though significant growth may not occur until after the current year  **[KMX_3392617_6]** ,.  **[KMX_3392617_8]** 

2. **Market Share Trends**  
   **Q:** How is CarMax performing in market share?  
   **A:** CarMax's market share in the first calendar quarter of 2024 was higher than in the fourth quarter of 2023 and similar to the same quarter last year.  **[KMX_3392617_5]**  Management notes that market share is volatile over short periods and prefers to assess it annually unless significant macro factors arise.  **[KMX_3392617_5]**  They attribute recent market share dynamics to factors like price corrections and a greater proportion of **10-plus-year-old** cars being sold, a segment where CarMax has less presence  **[KMX_3392617_5]** ,  **[KMX_3392617_10]** ,.  **[KMX_3392617_14]** 

3. **Sales Trends and Outlook**  
   **Q:** Are sales and comps improving?  
   **A:** Management reports improved comp trends, with mid-single-digit negative comps in the fourth quarter but better performance in the back half.  **[KMX_3392617_5]**  In June month-to-date, they are running **slightly positive comps**, showing continued improvement  **[KMX_3392617_5]** ,.  **[KMX_3392617_10]**  They are encouraged by the trajectory but cautious about future projections.  **[KMX_3392617_10]** 

4. **Cost-Saving Initiatives**  
   **Q:** What's the impact of cost-saving in logistics and reconditioning?  
   **A:** CarMax is targeting a couple of **hundred dollars per retail unit** in cost savings over the next one to two years through initiatives in reconditioning and logistics.  **[KMX_3392617_12]**  While significant, management is undecided whether to pass these savings to customers through pricing or take them to the bottom line, considering factors like affordability and elasticity.  **[KMX_3392617_12]** 

5. **Strategy and Operations**  
   **Q:** Is the current strategy effective amid market challenges?  
   **A:** Management feels confident about their strategy, emphasizing that recent challenges are due to macro factors like big price corrections and affordability issues with late-model cars.  **[KMX_3392617_10]**  They have strengthened the company by expanding sourcing, focusing on cost of goods sold, and enhancing financing options.  **[KMX_3392617_10]**  They believe these actions will pay dividends as sales recover.

6. **SG&A Expenses**  
   **Q:** How will SG&A expenses trend this year?  
   **A:** CarMax managed to reduce SG&A expenses year-over-year in the first quarter after adjustments.  **[KMX_3392617_7]**  For the rest of the year, they expect total SG&A dollars to be more challenging but are focused on active cost management to leverage low single-digit gross profit growth.  **[KMX_3392617_7]** 

7. **Vehicle Supply Dynamics**  
   **Q:** Are there supply issues affecting vehicle availability?  
   **A:** Management states they are not having problems sourcing cars.  **[KMX_3392617_16]**  Any supply impact relates to affordability, particularly in older vehicles that meet CarMax's standards  **[KMX_3392617_16]** ,.  **[KMX_3392617_17]**  They see improving supply dynamics as the SAAR increases, which should eventually bring down used car prices, benefiting both the industry and CarMax.  **[KMX_3392617_16]** 

8. **Dealer Sourcing Sustainability**  
   **Q:** Is sourcing vehicles from dealers sustainable and beneficial?  
   **A:** CarMax is encouraged by dealer sourcing to diversify acquisition channels.  **[KMX_3392617_8]**  Vehicles sourced from dealers have a higher percentage of retail-ready cars, more profitable than auction purchases but less so than consumer purchases.  **[KMX_3392617_8]**  Active dealer users have increased by roughly **50%** in the last year, showing positive traction.  **[KMX_3392617_8]** 

9. **Advertising Spend**  
   **Q:** How is advertising spend per unit trending?  
   **A:** Advertising spend per total unit was up about **5%** year-over-year but is considered a benign fluctuation.  **[KMX_3392617_7]**  Management is committed to managing advertising spend at roughly **$200** per total unit for the entire year.  **[KMX_3392617_7]** 

10. **Impact of CDK Software Issues**  
    **Q:** Does the CDK software issue affect CarMax?  
    **A:** CarMax does not use CDK as their DMS, so the impact is minor.  **[KMX_3392617_19]**  The issue slightly affects them through slowed parts and title work from dealers who are affected, but it's minimal overall.  **[KMX_3392617_19]** 

26d1ce17396bfcf6fa8f4863c7e00196732b62b486b3e7f6f3bda021ee49a34f

- **Accelerating sales momentum**: CarMax is experiencing strong sales momentum, with comps improving sequentially each month, and **December's month-to-date performance accelerating beyond the third quarter comps**, indicating a strong growth trajectory into the fourth quarter, despite headwinds like losing a Saturday and Leap Day.  **[KMX_3411950_12]**
- **Significant SG&A leverage driving profitability**: The company achieved **SG&A leverage of 640 basis points**, driven by growth in gross profit and continued expense efficiency actions, moving towards their goal of a **mid-70% SG&A to gross profit ratio**. CarMax is now pivoting from building capabilities to leveraging and enhancing them to drive growth and efficiencies.  **[KMX_3411950_2]** **[KMX_3411950_12]**
- **Diversified vehicle sourcing strategy**: CarMax's ability to source vehicles from both consumers and dealers allows them to secure hard-to-find inventory despite industry-wide supply shortages, supporting strong same-store sales comps and overall sales performance.  **[KMX_3411950_7]**

b7ff41e01006ffc0d93055908fc5e9028b4320acf28f81ff8e5cfa6aaf08a8ec

- **Positive demand signals**: CarMax reported that **web traffic was up year-over-year**, and **finance applications increased** during the quarter, indicating strong underlying consumer interest and potential for future sales growth as affordability improves.  **[KMX_3379781_13]**
- **Growth in CarMax Auto Finance (CAF) income**: CAF income for the quarter was **$147 million, up $23 million** from the same period last year, driven by a **$26 million reduction in loan loss provisions**. CAF is also **expanding its participation across all credit tiers**, which will help capture finance economics and drive sales.  **[KMX_3379781_5]**
- **Investment in growth initiatives**: CarMax plans to **open 5 new store locations** in FY '25 and is investing in **standalone auction facilities** and reconditioning centers. These investments are expected to expand their market presence, improve operational efficiencies, and drive growth in both retail and wholesale businesses  **[KMX_3379781_4]** ,.  **[KMX_3379781_17]**

f2179f316ff9de8b7e488e86684b4b6785f1fcbf1f2ea5057475dd5c17b19998

1. **Loan Loss Provisions**  
   **Q:** Why did you increase loan loss provisions this quarter?  
   **A:** The **$52 million adjustment** to our loan loss provisions this quarter was due to observed performance in our portfolio, particularly higher delinquencies converting into write-offs.  **[KMX_3402149_7]** **[KMX_3402149_8]** **[KMX_3402149_10]**  This adjustment was outsized compared to previous quarters (typically **$10–$30 million**) but we believe it captures where losses are headed.  **[KMX_3402149_7]** **[KMX_3402149_8]**  We feel good about our tightened underwriting and hope these measures will minimize future adjustments.  **[KMX_3402149_7]** **[KMX_3402149_8]** **[KMX_3402149_10]** 

2. **Credit Tightening and Full Spectrum Lending**  
   **Q:** Are you tightening underwriting standards further amid credit headwinds?  
   **A:** We have tightened our underwriting standards in **April '23 and April '24** but have not made significant changes this quarter.  **[KMX_3402149_6]** **[KMX_3402149_8]** **[KMX_3402149_13]**  We feel good about where we are and the profitable loans we're originating.  **[KMX_3402149_6]** **[KMX_3402149_8]** **[KMX_3402149_13]**  We're excited to expand into Tier 2 lending, deployed in the latter part of Q2, and plan to enter Tier 3 in Q3, proceeding prudently.  **[KMX_3402149_6]** 

3. **CAF Profitability**  
   **Q:** How is CAF profitability impacted by higher losses and changing funding costs?  
   **A:** Despite higher losses, we've maintained our net interest margin around **6%**, even amid tightening.  **[KMX_3402149_7]**  As rates trend down, there's opportunity to capture more margin.  **[KMX_3402149_7]**  The **$52 million provision adjustment** affected profitability this quarter, but we consider it outsized and not indicative of future quarters.  **[KMX_3402149_7]** **[KMX_3402149_8]** 

4. **Used Car Sales Comps Improvement**  
   **Q:** What underpinned the improvement in used car sales comps?  
   **A:** The strengthening comps were driven by internal execution and some macro benefits.  **[KMX_3402149_10]**  Internally, we improved efficiencies, better conversion in our customer experience centers and stores, and enhanced the customer experience with our new order processing system now rolled out everywhere.  **[KMX_3402149_10]** **[KMX_3402149_14]**  Macro factors included declining vehicle prices for **seven consecutive quarters**, improved sourcing of cars under **$25,000**, and a more stable pricing environment.  **[KMX_3402149_10]** 

5. **Vehicle Sourcing and Inventory**  
   **Q:** How did you effectively source vehicles despite industry shortages?  
   **A:** Our diversified buying channels, including increased instant appraisal offers and the Max Offer program, have enabled us to maintain supply.  **[KMX_3402149_9]**  The Edmunds team has done a great job, with **50% more dealers** active year-over-year.  **[KMX_3402149_9]**  We have better access to off-lease vehicles through our offerings, and overall, supply hasn't been an issue for us.  **[KMX_3402149_9]** **[KMX_3402149_15]** 

6. **Digital Initiatives**  
   **Q:** What progress have you made with digital sales and tools?  
   **A:** We've rolled out our new order processing system across all stores, making the experience seamless whether customers start in-store or online.  **[KMX_3402149_14]** **[KMX_3402149_15]**  This integration improves transparency and assists both customers and associates.  **[KMX_3402149_14]**  While online sales increased to **15%**, we're more excited about the **2-point increase** in omni-channel sales, as most customers engage with both online and in-store channels.  **[KMX_3402149_15]** 

7. **Operating Efficiencies**  
   **Q:** Are you seeing benefits from cost efficiencies in SG&A and reconditioning?  
   **A:** Yes, we've made progress in improving efficiencies, becoming more efficient on key metrics on a per-unit basis compared to pre-omni times.  **[KMX_3402149_15]**  In reconditioning, we're finding efficiencies through better part utilization, bringing more work in-house, and improving capacity utilization.  **[KMX_3402149_23]**  We're targeting a couple of hundred dollars in savings between reconditioning and logistics.  **[KMX_3402149_23]** 

8. **Advertising Spend**  
   **Q:** Why did advertising expenses decrease this quarter?  
   **A:** The decrease was due to timing variations within the quarter.  **[KMX_3402149_12]** **[KMX_3402149_24]**  For the first half of the year, our advertising spend is in line with our targets, and we expect similar levels in the back half.  **[KMX_3402149_12]** **[KMX_3402149_24]** 

9. **Other Gross Margins**  
   **Q:** What drove improvements in other gross margins?  
   **A:** Other gross margin rose by **$36 million**, a **33% year-over-year increase**, driven by improvements in service and Extended Protection Plan (EPP) performance.  **[KMX_3402149_19]**  We expect continued year-over-year improvements in service margins and EPP in the coming quarters.  **[KMX_3402149_19]** 

10. **Credit Penetration**  
    **Q:** Can you increase credit penetration further?  
    **A:** We're committed to providing credit offers across the full spectrum to all customers.  **[KMX_3402149_22]**  While we have an opportunity to increase penetration, we aim to do so thoughtfully, ensuring we offer competitive credit options without restricting partners or limiting customer choices.  **[KMX_3402149_22]** 

2760015a4359c7e543808073a48fe207a7918e7aa8bb6f391bfd4d441c0a8909

Carmax Inc (KMX)

Financials