What guidance did Carmax's management provide for the next earnings period?

What factors drove the changes in Carmax's revenue and profit?

Did Carmax beat or miss consensus estimates last quarter?

What were the key takeaways from Carmax’s earnings call?

What does Carmax do and what are its main business segments?

What is the revenue and EPS growth rate for Carmax year over year?

What is Carmax's gross profit margin?

What is Carmax's latest dividend and current dividend yield?

- **Sales Decline**: Q3 used unit comps down 9%, driven by higher-mileage vehicles (40% of sales).
- **Margin Reductions**: Testing $100-$200 margin cuts with marketing, targeting near-term sales recovery.
- **Cost-Cutting**: $150M SG&A savings by FY27, with 30% CEC workforce reduction underway.
- **Digital Focus**: Simplifying online experience to improve conversion rates.
- **Credit Strategy**: Adjusting rates in prime credit segment (650-750 FICO) to regain lost volume.
- **CAF Growth**: CAF income up 9% YoY, with new MaxCare plans rolling out Q1 2027.
- **CEO Search**: Actively pursuing candidates; interim leadership focused on turnaround.

**【CEO Summary Section】**
- Interim CEO David McCreight emphasized the need for immediate action to reverse declining sales, including margin reductions and increased marketing spend.
- Key priorities: pricing competitiveness, customer experience focus, digital monetization, and $150M SG&A cost reduction by FY27.
- Culture shift towards faster decision-making and risk-taking to reignite growth.

**【CFO Financial Commentary】**
- Q3 2026 revenue $5.8B (-6.9% YoY), used unit comps down 9%, driven by higher-mileage vehicle sales (40% of units vs. 35% prior).
- Gross profit $590M (-13% YoY), with used retail margin $379M (-11%) and wholesale margin $115M (-17%).
- SG&A expenses $581M (+1% YoY) due to marketing investments and restructuring.
- On track for $150M SG&A savings by FY27, with 30% CEC workforce reduction already implemented.

**【Q&A Highlights】**
- **Pricing Strategy**: Testing $100-$200 margin reductions with marketing support, aiming to narrow gap vs. market. Early results TBD in Q4.
- **Digital Transformation**: Simplifying online experience to drive conversions, with focus on sales-focused digital voice.
- **Credit Penetration**: Prime credit segment (650-750 FICO) underperforming, with plans to adjust rates and improve product offerings.
- **CEO Search**: Actively pursuing candidates with omnichannel, digital transformation experience; no timeline disclosed.
- **COGS Optimization**: Rolling out regional reconditioning centers and tools to reduce costs by $125/unit.
- **CAF Growth**: CAF income $175M (+9% YoY), with focus on full credit spectrum expansion and new MaxCare plans.


CarMax, Inc. (KMX) Q3 2026 Earnings Call Transcript

- **Revenue decline**: Q2 sales down 6% to $6.6B, driven by 5.4% unit decline and $250 ASP drop.
- **Strategic Focus**: $150M SG&A savings, CAF expansion to 42.6% penetration, and 'Wanna Drive?' campaign launch.
- **Financial Challenges**: EPS down 26% to $0.64, CAF income down 12% due to $71M provision adjustment.
- **Operational Strengths**: 84% SG&A efficiency, 20%+ AI-driven service improvements, and 1.5x profit on 2024+ CAF vintages.
- **Q3 Outlook**: Improved inventory, stronger September sales, but cautious on macro demand.

**【CEO Summary Section】**
- Q2 revenue decline of 6% to $6.6 billion, driven by lower unit sales (-5.4%) and average selling price decrease of $250 per unit.
- Key challenges: $1,000/month depreciation impact on inventory, pull-forward demand in Q1, and intentional margin compression to clear inventory.
- Strategic priorities: 
  1. Price competitiveness and selection optimization
  2. Brand awareness campaign ('Wanna Drive?') with increased ad spend
  3. $150M SG&A reduction over 18 months through technology and process improvements
  4. CAF expansion in credit spectrum with 42.6% penetration
- Q3 outlook: Improved inventory position, stronger September sales trends, but cautious on macro demand.

**【CFO Financial Commentary】**
- Net EPS: $0.64 (down 26% YoY) due to lower volume and CAF provision adjustment.
- Gross profit: $718M (-6% YoY), with used retail margin down 8% on lower volume.
- SG&A: $601M (-2% YoY) but deleveraged 350bps to 84% of gross profit.
- CAF income: $103M (-12% YoY) due to $71M provision adjustment for 2022-23 vintages.
- Capital allocation: $180M share buybacks, $1.56B remaining under repurchase authorization.
- AI investments (e.g., Skye 2.0) driving 20%+ efficiency gains in customer service.

**【Q&A Highlights】**
- **Used Unit Sales**: Q2 decline due to Q1 demand pull-forward and inventory deprecation; September sales improving but still soft YoY.
- **Pricing Strategy**: Nimble adjustments to maintain competitiveness; elasticity testing shows variable expense management is key.
- **CAF Performance**: $71M provision adjustment for 2022-23 vintages, but 2024+ vintages performing as expected with 1.5x lifetime profit per unit.
- **SG&A Savings**: $150M reduction to be reinvested in growth (e.g., marketing), with $180M+ in annualized savings by FY27 exit rate.
- **Credit Expansion**: Prudent expansion into Tier 2 space with 23.8% third-party penetration, avoiding deep subprime risks.
- **Consumer Trends**: Higher FICO customers cautious, but mid-FICO buyers showing interest in older, higher-mileage vehicles.

CarMax, Inc. (KMX) Q2 2026 Earnings Call Transcript

- **Revenue Growth**: Q1 FY26 revenue of $7.5B (+6% YoY) driven by 9% retail unit growth and record $2,407 retail gross profit per used unit.
- **Digital Dominance**: 80% of sales via digital channels, with 38% YoY dealer sourcing growth and Skye AI containment rate up 30%.
- **Profitability**: EPS of $1.38 (+42% YoY), 700bps SG&A leverage, and $200M share buybacks.
- **CAFs Expansion**: $2.3B loans originated, 6.5% net interest margin, and $632M nonprime held-for-sale pool to mitigate risk.
- **Strategic Momentum**: New omnichannel marketing campaign, AI-driven efficiency gains, and FY26 guidance for continued growth.

**【CEO Summary Section】**
- Q1 FY26 total revenue reached $7.5B, up 6% YoY, driven by 9% growth in retail unit sales and 1.2% increase in wholesale units. Retail gross profit per used unit hit a record $2,407, up $60 YoY, reflecting strong demand and operational efficiency.
- Sourced 336,000 vehicles (7% YoY), with 288,000 from consumers via digital channels and 48,000 from dealers (38% YoY). Digital sales accounted for 80% of retail units, with 66% omni and 14% online-only.
- Launched a new omnichannel marketing campaign to highlight digital capabilities, supported by AI tools like Skye (30% improvement in containment rate) and customer experience center productivity gains of 24%.
- Doubled share repurchase pace, buying back 3M shares ($200M) and maintaining $1.74B remaining under authorization.

**【CFO Financial Commentary】**
- GAAP net income of $420M, with EPS of $1.38 (42% YoY growth). Gross profit reached $894M (13% YoY), driven by used retail margin of $554M (12% YoY) and service margin of $33M (30% YoY improvement).
- SG&A expenses leveraged 74% of gross profit, down 680bps YoY, with $21M increase in variable costs offset by efficiency gains. AI initiatives reduced phone/web response times by double digits.
- Accelerated capital return, with $200M in buybacks Q1 vs. $100M in Q1 FY25, and plans to maintain accelerated pace based on valuation and cash flow.

**【CAFs Performance】**
- Originated $2.3B in loans (41.8% penetration), with net interest margin of 6.5% (30bps YoY). Introduced held-for-sale pool of $632M nonprime loans to mitigate risk and generate upfront gains.
- Loan loss provision of $102M (2.76% of managed receivables) included $26M reduction from held-for-sale classification. 2024 vintage losses remain in line with expectations, but 2022/2023 vintages required additional reserves.
- Full credit spectrum strategy aims to grow penetration to 50% over time, with 100-150bps YoY expansion in Q1 offset by macro-driven headwinds.

**【Q&A Highlights】**
- **Sustainability of Growth**: CEO Bill Nash emphasized both macro tailwinds (tariffs-driven demand) and operational excellence, reaffirming FY26 guidance for sales growth and market share gains.
- **SG&A Leverage**: CFO Enrique Mayor-Mora highlighted 700bps SG&A leverage Q1, driven by variable cost efficiency, and commitment to ongoing cost optimization.
- **CAFs Risk Management**: CFO Jon Daniels detailed held-for-sale transaction to reduce risk in nonprime portfolio, enabling CAF income growth while maintaining capital flexibility.
- **Consumer Stress**: Management noted no direct impact on business from student loan defaults or broader economic uncertainty, but remained cautious on macro trends.


CarMax, Inc. (KMX) Q1 2026 Earnings Call Transcript

- **Revenue Outperformance**: 7% YoY growth driven by 6.2% retail unit increase, despite macro challenges.
- **Margin Expansion**: Retail GPU up 3% YoY to $2,322, with $125/unit cost savings achieved in FY25.
- **Digital Growth**: 58% of sales via omni-channel, with 15% fully online, reflecting digital tool enhancements.
- **CAF Expansion**: Targeting 100-150bps CAF penetration gain in FY26 via non-prime ABS funding.
- **Service Turnaround**: FY26 service margin expected to grow YoY, with first-half profitability driven by volume leverage.
- **Tariff Resilience**: Late-model used demand poised to benefit from new car price hikes, offsetting potential used price increases.


**【CEO Summary Section】**
- **Revenue Growth**: Total sales of $6 billion, up 7% YoY, driven by 6.2% increase in retail units and 5.1% used unit comps despite one fewer selling day.
- **Gross Profit Margin**: Retail GPU of $2,322 (up 3% YoY), wholesale GPU of $1,045 (down 7% YoY due to lower average selling price).
- **Market Share**: Nationwide share of age 0-10 used vehicles at 3.7%, with accelerating gains in age 0-4 vehicles through FY24.
- **Digital Sales**: 58% of retail units sold as omni-channel (up from 55%), with 15% fully online.
- **Cost Efficiency**: $125/unit savings in FY25, targeting another $125/unit in FY26.

**【CFO Financial Commentary】**
- **EPS Performance**: GAAP EPS of $0.58 (81% YoY growth), adjusted EPS of $0.64 (doubled YoY).
- **Gross Profit**: $668M (14% YoY growth), with used retail margin up 9% and EPP margin up $10/unit.
- **SG&A Control**: $611M expenses (5% YoY growth), leveraging 770bps due to gross profit growth.
- **CapEx Outlook**: $575M for FY26, supporting 6 new stores and 4 reconditioning centers.
- **Share Repurchases**: $99M in Q4, $1.94B remaining under buyback program.

**【Q&A Key Questions】**
- **Tariff Impact**: Higher new car prices expected to drive demand for late-model used vehicles, offsetting potential used car price increases.
- **Market Share Momentum**: Q4 saw accelerating gains in age 0-4 vehicles, with January 2025 data showing continued YoY growth.
- **CAF Expansion**: Recapturing 100-150bps of Tier 1 originations in FY26, supported by non-prime ABS securitization.
- **Service Profitability**: FY26 service margin expected to grow YoY, with full-year slight profit contribution.
- **Macro Risk Mitigation**: Experienced team managing inventory through fluid macro environment, focusing on efficiency and cost coverage.


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