CarMax held its earnings call for the period ending June 30, 2024, focused on its Q2 fiscal-year 2025 results. The call, which took place on September 26, 2024, at 9:00 a.m. ET, was hosted by David Lowenstein, AVP of investor relations.
During the session, Lowenstein introduced Bill Nash, President and CEO; Enrique Mayor-Mora, EVP and CFO; and Jon Daniels, SVP of CarMax Auto Finance operations. Lowenstein reminded participants that forward-looking statements are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and carry significant risks and uncertainties.
Bill Nash expressed satisfaction with the company’s execution, noting positive sales trends, strong margins, cost efficiencies, and EPS growth despite industrywide auto loan-loss pressures. Retail unit volume grew year over year, with strong retail and wholesale GPUs and expanded EPP and service gross profit. CarMax also achieved record acquisitions of vehicles from dealers in the second quarter.
The earnings call outlined that for Q2 FY 2025, CarMax reported total sales of $7 billion, a slight decrease of 1% from the previous year. Retail unit sales saw a 5.1% rise, with used unit comps up 4.3%. However, the average selling price declined by approximately $1,250 per unit year over year.
Nash highlighted the stability in CarMax Auto Finance’s net interest margin and the initiation of new full-spectrum underwriting model tests. SG&A expenses were kept in check, leveraging 4 percentage points, even with increased compensation and benefits and maintenance-related occupancy costs.
Enrique Mayor-Mora detailed the strong financial performance, including an EPS growth of 13% despite a higher loan loss provision. Total gross profit increased by 9% to $760 million, driven by used retail margin growth and wholesale vehicle margins.
Jon Daniels provided insights into CarMax Auto Finance, noting a $116 million income, down 14% from the previous year. The finance arm faced industrywide challenges, leading to an uptick in loan losses. However, the newly initiated securitization programs and full-spectrum lending strategies are expected to bolster future performance.
The Q&A session covered topics such as unit comps trends, the impact of credit tightening on CarMax Auto Finance, and the company’s approach to maintaining and improving margins amid supply constraints.
In conclusion, the executives reiterated their confidence in continuing the strong performance into the second half of the fiscal year, while emphasizing the ongoing enhancements to customer and associate experience. The meeting was adjourned with an acknowledgment of the approaching storm and a call for the safety of employees and their families.