CarMax, Inc. (NYSE:KMX) Q3 2024 Earnings Call Transcript December 21, 2023
CarMax, Inc. beats earnings expectations. Reported EPS is $0.52, expectations were $0.43. KMX isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Q3 Fiscal Year 2024 CarMax Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, David Lowenstein, AVP, Investor Relations. Please go ahead.
David Lowenstein: Thank you, Jamie. Good morning, everyone. Thank you for joining our fiscal 2024 third quarter earnings conference call. I’m here today with Bill Nash, our President and CEO; Enrique Mayor-Mora, our Executive Vice President and CFO; and Jon Daniels, our Senior Vice President, CarMax Auto Finance operations. Let me remind you our statements today that are not statements of historical fact, including statements regarding the Company’s future business plans, prospects and financial performance are forward-looking statements we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current knowledge, expectations and assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from our expectations.
In providing projections and other forward-looking statements, we disclaim any intent or obligation to update them. For additional information on important factors that could affect these expectations, please see our Form 8-K filed with the SEC this morning and our annual report on Form 10-K for the fiscal year ended February 28, 2023, previously filed with the SEC. Should you have any follow-up questions after the call, please feel free to contact our Investor Relations department at (804) 747-0422 extension 7865. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-ups. Bill?
Bill Nash: Great. Thank you, David. Good morning, everyone, and thanks for joining us. Our third quarter results reflect the continuation of our strategy that has yielded sequential year-over-year improvements across key components of our business for four straight quarters. While affordability of used car remains a challenge for consumers, we’re excited about the positive impact we are seeing from our omnichannel investments, which reinforces our strong belief that we are well positioned for the future. This quarter, we delivered strong retail and wholesale GPUs. We bought more vehicles from consumers and dealers, and we also sold more wholesale units than a year ago. We further reduced SG&A from the prior year. We continued to strengthen the credit mix within NCAP’s receivables portfolio, which had a positive impact on our loan loss provision, and we resumed our share repurchase program.
For the third quarter of FY ’24, our diversified business model delivered total sales of $6.1 billion, down 5% compared to last year. This was driven by lower retail and wholesale prices and lower retail volume partially offset by higher wholesale volume. In our retail business, total unit sales declined 2.9% and used unit comps were down 4.1%. Average selling price declined approximately $1,300 per unit or 5% year-over-year. Third quarter retail gross profit per used unit was $2,277, relatively consistent with $2,237 from last year. For the fourth quarter, our expectation is that our margin — our per unit margin will be lower than last year’s fourth quarter record margin. We continue to expect that per unit margin for the full year will be similar to last year.
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