CarMax (KMX) 22 Dec 212022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter Fiscal Year 2022 CarMax Earnings Release Conference Call. At this time all participants are in listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Relations. David would to conference I speaker your Lowenstein, Instructions] like the to over [Operator AVP Investor go ahead. Please

fiscal Vice Bill Vice Nash, Thank for President our and conference morning. Senior Good Mayor-Mora, our CFO; I'm XXXX our and Enrique our Daniels, Senior call. with you, Operations. earnings and third President today Thank here CAF CEO; quarter President Jerome. joining you Jon

performance business, differ and you intent Provisions remind or events the management's regarding statements involve forward-looking cause uncertainties any risks plans, materially pursuant prospects make current our financial other company Securities expectations. disclaims update of Litigation Harbor future me Let and Reform XXXX. the to to could from providing to and In forward-looking on based and knowledge our about Act today statements, are are Private Safe we projections future them. statements that of company's the that statements These obligation results assumptions the actual

additional these year company's extension filed to expectations. that Relations please this contact Form Please could XXX-XXX-XXXX, XXXX. February report XX-K SEC. fiscal XXXX the free information have you ended questions Should follow-up after affect for morning, the on XX, at the X-K issued the Form factors with see on any feel Department For its and annual important call, Investor our

in getting thank me queue back and let you more Lastly, the question follow-ups. asking in for one for advance Bill? only

as wholesale morning, delivered well EPS levels very with We pleased Great. as everyone, record quarter. the thanks third We're us. and used this Thank and for you, David. for Good joining of quarter. sales,

margins wholesale. used high and both We also delivered all-time in

FY model sales ’XX, and driven up the ‘XX, prices our $X.X FY of by the with diversified of billion For third higher both selling delivered quarter quarter average approximately total XXX,XXX share third year. retail earnings XX% business XX% up compared of wholesale cars Net sold versus per diluted Across our in XX% quarter was and year channels, a up ago. total, we gains. $X.XX, last volume third from

months nine as approximately first set each retail sold the FY combined, in new cars month. and records of we we ’XX, million For X.X wholesale

to continue from the above which third And versus self-sufficiency approximately last in We of bought is the consumers. from vehicles again, cars we We consumers up be quarter, XXX,XXX XX%. buyer XX% largest year. achieve

third Our and credit We driving our performance our we up and company. customer-centric by over used macro were built total experienced are even our our year. were sales and the comps XX.X% omni-channel In month saleable demand quarter quarter. each retail credit ramped strategy, to staffing last execution levels XX% solid partners achieved as inventory. robust offers, the in unit factors quarter and deliver unit continuing third by sequential business, up versus strong sales average XX.X price supported our the inventory CAF within We as and growth grew year-over-year. sales also across

tax season, pace. While we of demand staffing inventory determine and resources to are the with remain that momentum below retail to are confident we pleased build inventory the need the targets, we have our our access and ahead will

online ongoing of to car an $XXX primarily wholesale self-sufficiency Wholesale elevated struck unit In the right along atomic compared appraisal we gross supporting last sales, pass savings the was industry between use driven we to up $XX we versus increasing balance profit the acquisition $X,XXX unit up from chose addition record third our of in We our retail The strong of year prices. via achieved believe cost With all-time consumers of third units driven unit in to gross per strength $X,XXX, instant profit customers our prices. the lower were year. XX.X% ago. per and with per used and majority quarter last by the highs, offering. units at a margins record our year, reported unit quarter success all-time prices

CAF We down CarMax year. a $XXX same adjustments. also of benefited or market. from margins were $XXX income and still financial headwind impacted CAF elevated valuations the delivered from strong. of the million in during used million million period results Year-over-year Finance Auto autos last $XX remain by broader reserve

the reduced delivered in more few As of moments, credit reflects a pandemic, Jon normalized quarter third it tiers. all our well quarter over from of more In like more auto detail who this provide as to provision financial loan provision. and lenders as on contributions, conversion. year's CAF benefited last the systems information CAF now, on year's will a strong our reminder, Enrique? out Enrique, performance. on financing offers receivable impact the quarter I'd Right a turn and a customer and to will coming partner provide

profit, fees, also benefited cost finance $XX.X million compared million year. in and last XX%, a $XX third-party was which $XXX up $X wholesale a which quarter. and $XXX X.X%. gross Thanks, used was of This quarter income third renegotiated year's was improvement Tier vehicle $XXX or was positively up margin from Edmunds. third XX% $XX gross gross was margin from XX% good year's million of last last finance other third vehicle $X.X profit compared gross Bill, of million Also, million, contribution from record up million, and million, included up fees year. last lower Other up everyone. Favorability million, quarter. quarter. This X margin volume EPP from with morning, Total XX% profit by year's the of a million driven $XXX Other last driven to by was third-party profit impacting with from in was

well unfavorable return pressure XX%, year's prior support results $X use reserve and down gross quarter. service reflects year $X $XX service offsetting we anticipate period this instead quarter. third quarter each million month profit a favorability, to year's improve prior quarter. million This Service continue was grow by driven to into While fourth reconditioning. to versus penetration some return will our the at car was efforts compared year's as as the related was a retail shift million reserve profit adjustment the that to primarily during stable approximately during quarter, from adjustment technician in the capacity gross the staffing, in Partially favorable prior improved to a

by as profit flat the was SG&A to SG&A year XX.X% a of main factors. XX.X% over investment dollars growth On compared strategic quarter increase SG&A third continued driven the year's unit gross last in third from front, expenses was volume due up at related roughly million, The during the XX% last increased the the quarter, to our year. and to in initiatives. to percent $XXX for three quarter prior costs primarily

in total First, increase this quarter versus staffing, a $XXX by a in stock-based commissions, a million and $XX in unit a increase million ago. and the Edmunds volume-related strong year benefits, ramp compensation, driven inclusion payroll compensation of

brand our $XX savings awareness other previously reflects overhead, $XX And and the acquisition cost to a advertising our customer in of The third, remainder a to investments technology to $XX increase million receipt includes which offerings. a omni-channel from platforms action change expense, million communicated in build in the settlement COVID-related of increase of Second, and impact by the the drive million CarMax year amplify and our initiatives, advance as prior primarily quarter. class to a lawsuit. continuing of strategic

spend. to of of a efficient we profit over percentage months year's expect year the And first approximately XX.X%, that three as was We our gross time. nine of are fiscal last deliver committed effective to leveraging in continue nine areas ’XX, of and months ensuring will XX.X%. over our percent targeted For points that focus SG&A results remain we

AI CECs the machine conversion and quarter. This improvements improvement combination was associates. the level despite quarter, of handled ongoing of our of perspective, work web in the the leads. successful CECs drive efficiency During was ramps, learning the saw service record the we right third their utilization an in our of volume and due a levels that our and third of right from to that effectiveness processes This to solid and staffing

drive instant continue The to with program made data materially combination We of and see our to we've also our in investments a buying in efficiency automation middle science, XX% along adjusted gains AI, to our organization. per buy. the offer XX%. ratio continue of of debt to capital down the perspective, in with structure quarter the ended range capital an targeted we From our costs

excess into entered for we inventory capital dollars. in remain to quarter, loan approximately we agreement shareholders, XXX,XXX repurchased support to the our quarter $XXX approximately committed the million program, to the primarily and returning our of a to share repurchase During shares million. $XXX term In total growth regard

to Jon. I'd call Now, turn like to over the

solid everyone. again, our Thanks, business Once Enrique. morning, results. has Good delivered finance

a change Tier year. FY compared unit financing X.X% with driven was of year comping accounted or year. net the of For Tier compared vehicle, leveraging a payoffs observed over XX.X% CAF’s X.X% historically CAF penetration last of for cash with of was increased third with outside sales, XX.X%, the XX.X% as penetration ‘XX. ago. customers, high year-over-year last QX by purchase while sales, three of quarter, a The for used CAF to compared XX.X% larger penetration in their in of X day percentage X

provide strong between outstanding a Tiers swap CarMax X volume credit to for compete the observe access financing the customers of the volume partners for decrease We These with the to additional and application portion X. offers Tier continue offers across in lower credit the our spectrum credit they volume along as from to continues contributed spectrum. within channel. our CarMax to and X in

this CAF, period that This long-term value maintain XXXX. despite credit offering by same rates quarter above ability lender and platform such credit multi approval in approximately supported our remain the amounts to financing speaks our XX%, partners. strong XX% finance a of Our the over are to

of of During provision $XXX a million loans This rate this to used year-over-year X origination contract reserve is X.XX% CAF new of same reserve now Tier strength million quarter X the compared the $X.X normalized for Tier with loan reserve X.X% our the to significantly or driven executed includes average at margin quarter contribution record balance within $XX reduction from was X.XX% of ago, ABS favorable from in our provision million a highlights in continued Tier interest adjustment losses, capital of Note originating. reserve second same primarily portion $X end the originations the sales, in increase year’s APR quarter’s adjustments our loss the by million historical receivables. of loan fully managed margin of net almost from X.X% year. origination. or added the This our receivables. markets nearly in primarily CAF the driven This originated the also, range of along year-over-year X the of recognized quarter. income the headwind continued X.X%, quarter, that time the volume million, as receivables. within the results was point down and with was on that customers, in that to pandemic, of the $XX at X basis The the down was of the start in receivables, period is provision CAF of by year established up an a core included and program, testing, unit life was provision second the of managed or that of billion. CAF’s of customers of recognized loss offsetting $XX well is year change to X.X%. of mix The strength growth of current the charged increase X.X% $XX difference was X% remains COVID from of total allocated weighted state last quarter. million test. million ending over Tier the last reduced third the and at only is the the more result to the a the in Remember, $XXX the rate credit is implementation X the and The of The the quarter CAF

service. to systems included third a quarter, legacy planned CAF’s new October number servicing and operational downtime loan the period collections including transitioned The During customer new areas, of This quarter. in had auto platform as This systems. brand of went and live our coming over a and in resulted provision increase from required we stabilize. delinquencies pause processes months, the normalize and and our we impact to that loan immaterial to an in in the expect both on loss an the business systems losses receivable

handle systems quarter regarding Additionally, staffing million once the the CAF contractor deployment roughly elevated expense change, back absorbed such the communication customer items as $X in support, call in proactive online. related added third to and temporary to volume

only for organization platform excited solution for would self not and allow to CAF take extremely our and also are new modernized corresponding to so who've opportunity customer us but to We about our the a will I tirelessly like and implement service this experience worked teams, in thank will a transformative enhance and efficiency, growth foundation build provide capabilities. this project to along the both CAF customers. our associates such that with

to turn back I'll over Bill. the call Now

Thank Thank you, Jon. you, Enrique.

needs. and to top-line continues quarter to This from interactions a performance in XXX% customers online, customers our ahead. personalize their excited XXX% buy for digital experience and about physical a our omni-channel their year’s car this capabilities opportunities ability mix and or We with meet that We're are to strong trend. the investments benefiting of our provide the lie allow store

across observed sales This who sales value another still digital little transaction X% proof seamless providing our our offer delivery in unit up the from digitally elect take and our omni-channel the more online retail to online, X%. quarter and us. we to majority to vast stores. ability were our quarter, grow, buy a our key for integration point of differentiator prior As to and year's than have is that continue In physical a third customers the customers of of is that is

this have so wholesale Approximately third increase resulting XX% this expansion up if in buyer can be half are that about record, were independently quarters. This online. choose than XX% new increase ends revenue through online quarter from that quarter, Our the our approximately and virtual, considered more remain during on two paid revenue year's last experience customers. from prior customer's of customers the over a of total quarter we largest compared unaided up of completing of XX% XX% instant the two-thirds sales remained appraisal, XXX% fourth they incorporate Total call. from bought little number sales, our reflects orders. without we to used of We've XX% to in the year’s end-to-end, complete supports auctions online approximately a from been car last transactions. which online XXX,XXX customers, the experience, use second our working to buying This autos focused our lanes remaining trade complete transactions sales buys retail first in third represents to transfers lanes. online represents we with increase was and from which our of through quarter, from online our rollout customers cases That's XX% ability to where unit Currently, from quarter. a trade growth the their are a The consumers XX%, entire In ends from of the total X% XXX% U.S. self-service will omni vehicles quarter. wholesale is belief and access online our process the from

lenders enjoy marketplace. retail vehicles additional towards customers lenders in remaining experience. enhancing experience exceed offerings going our expectations we inventory customer third forward, of store customers which progress this integrate finance best-in-class finance able are to FBS a across FBS shopping the our our finance-based experience on quarter, integrating this seamlessly the with the and personalized is expanding are key And see are adding experience. Roughly e-commerce multiple the to by online our to differentiator or In from to our of on to customers we continued our our and We full enables terms capability. continuously make website, today. XX% working to

a the questions. industry, and delivering most we'll speed and will this growth we for of the long-term strong be take we enable year-to-date. tool the launching Again, Additionally, the By to value. digital during increasing sustainable the Jerome? quarter, with in shareholder quarter your customer-centric meaningful sophisticated be of and version will create happy of we're And experience more proud that, decisions. fourth our results

Your Zackfia Blair. [Operator the from Instructions] with comes of question first Sharon line William

open. line Your is

may now ask question. your You

question in I'm I what and the per And SG&A a lesser line is over capacity low of single We're in sight leverage restrictions, know ago, SG&A that's last a kind per investments into percentage holidays. even a been year the into I of comparing business. against a digit good turning I car. curious mean, the on rate and increase to it's your quarters. But of at Hi, happy percentage double digit kind car. that more starting guess morning or future. of few

our Holidays communicated believe you as we were in of is actually three of we gross investing so Hey, at Day, grow not as car SG&A, quarter, ago as business, investing of that we're certainly seen Sharon, which morning, or business, wholesale new our as are that's SG&A reflective we resources margin to our as which platforms CAF to looking kind the in well. run how but profit we Analyst far the our our certainly business, more we and reflective percent much and gross technology Happy And dollars, only quarters and more good of and way well used this year, in business. efficiency, because this a we've

across we're So board. investing the

the to when intent basis points. gross at take it business. year-to-date, year, you into as SG&A, as quarter our of leverage is fourth plan leveraged if percent how leverage well. will And, to and kind SG&A comes a that we by a of And profit, that So we is we've look that's the our that manage XXX this

as on investors Okay, question great. car lot from prices. mean, used on I such a follow-up of And are benefiting pricing. how a Thank much new amongst then yourself car you. companies debate there's

particularly prices, maybe to from there you increased initiatives GPU is, way think the in the that arena? opposed general to you've as wholesale have appraisal any in what from done that is the benefit the volume disaggregate So, online

used side, prices, tailwind. one side it's a on bit of it's bit a headwind, I When Yeah, another Sharon. a on of think car about a

I is think, wholesale. it's the hit of which where more area think I a tailwind, you've

price used certainly for good goes us. and a valuation anytime So buying thing up, thing cars, that's it’s a for good are organizations

some appraisals, even or the saw result really first the innovations, self-sufficiency driving the that's in would on I the and things just As the wholesale to believe it that think I about buy. we of growth go to majority growth the back I I majority growth wholesale that didn't for go instant where ramp we in of is prior that a huge increase the growth. just of still think Because up our have see to instant valuations, like that offer we of appraisal, and was totality, and back if this we continued of kind quarter overall a

believe we while So point I to disaggregate majority of two, to internally. hard it think the by increase the that things we're that is is the driven doing your

Great. Thank you.

Thank you, Sharon.

from Your Stephens. Nelson next question comes Rick with

Your line is open.

Thanks me stayed that ago, sequentially? year was on didn't quarter. I’d Good but a up sequentially. yet, follow-up a like it online stable Nice X% why grow see we to X% that morning. from thoughts lot. penetration, on Any

last the that part functionality latter what Yeah. was And the some to a we self-progression up small really year. two-thirds options I the giving to liens. was And about have fairly things. of seeing to was morning, you're don't added last that bit. got it we're our different customers quarter a it, from think I Good But more one trades think because of added the we're do is about reasons to we the up little right, Rick. It And, that we as quarter. increase

opening still wanting do So to an said some and while I think, in do couple they're the things deliver sale, in online okay, people my remarks, in I'm are -- they to in may a store. store, as the to coming they want going

one consumer make more think forcing which that's one way by and to a go sure see want going it's wants just giving they about. they customer's them give or the think thing, We most this to experience. buy big a a be to So they behaviors up. how personalized to percent do we're than going don't they're expect just we driven care the options so and anybody us path, options. to all actually I different We which other. delivered, that it or way what consumers to to go But want take may the continue I'd driver we're is again,

Bill. Thanks, Okay.

Sure.

Your next of question comes from line Craig Kennison with the Baird.

open. is line Your

has Hey, segment With especially any good of over $XX,XXX, to morning to affluent crowd your affordability. than among high are your seeing ASPs base, and question happy you prices customer with $X,XXX up the out, more My holidays. your less consumers? do

Yeah.

goes think think some wholesale. we've the bit more So, on When about is Craig, I the of Sharon's this headwind, little there ASPs, we've of question I headwind where to said, some The a back a on got headwinds, a think side. tailwind little I is you got bit tailwind. retail the

fact from there that some higher is that the so probably you're up. While looking are price customers benefiting new that selection, are you’re the new out getting less car for cars

I customers, think end it to does as possible, it can at the why in very of of just for on them them. out give which, it as to through we continue took a the we to some efficiencies lot put consumers again, and pass stay reason make sure self-sufficiency sure gains to the lower that also make make spectrum, more a focused along our why deal difficult is we This could is can we good credit trying especially pinch that prices.

my that just made Yeah, Craig, remarks. and accentuate prepared I'll comment, I

and platform this lenders provide us to on able the approval space did quality strong the makes still And in rate given our the more that door. offers. through ASPs that plus XX% our think our feel come I on those down better all lending

we the like it there, provide down credit have recognize those feel we customers. challenge certainly, to So a can but be

you. Thank Great.

Thank you, Craig.

the line question next John of comes America. from Murphy Your of with Bank

Your line open. is

million the and in your Day one on May, provided of at Smith sell which back I time, levers X circle were that Aileen to year, year ask back for to is you're targets was This a Analyst everyone. But question to which is morning, by across based be John. where XXXX vehicles channels. volume you on Good to the XQ closer per to wholesale impressive. X.X X.X, retail At close range. X.X the probably and this your for going the to lands, wanted

you relative six question progress business omni-channel outlook of so expectations? when what that attribute would And what or to than factors wholesale? months sourcing ago, has provided perhaps first So this, increasing segment offerings? better to the or through performing on your Retail other inventory with more second, been you making efforts or customers

Yeah, been is, so surprised way the about some by I it think we've innovations. pleasantly of

wholesale expected been well. to the been as why has both and We but sales, strong increase retail, so we is out Obviously, and retail, is strong, set goal there. top-line very wholesale which has retail

So year-end think think the after I early. on reviewing targets probably long be out very little And, potentially just a ago, too in put we're later I pleased. this there, year targets little those But at it's the We it's and those we'll point. but a that updating. not early

a It's self-sufficiency, has resonated with And our marketplace. also has well. but it with of consumers, I agree that in And through driven our the really our out and with business just driving would taken our Yeah, quarter part product expectations. wholesale performance previous business resonated instant and offer that on off. our the I really said as We put first we've calls, think, that. really has exceeded our good it's

instant program our So has gotten it's gotten stronger quarter. expectations. our every offer -- exceeded And that single has

was first, quarter quarter than stronger stronger the than So third second was the second.

there it So building to seems momentum marketplace. in the out be

Great. That's helpful. my for Thanks taking question.

you. Thank

JP Your line with Gupta next question Rajat of the comes from Morgan.

is line Your open.

question. for Thanks taking morning. Good Great. the

situation are stores, follow-up I is to staffing in had just a And to have come the of with level serve of demand to the capacity today. that the hiring the you that and at comfortable near wanted and just pace to on the follow-up? labor How Just you medium-term? your

If inventory look for feel, in majority my hired we both great quarter, the those the Yeah, we momentum staffing. associates. and obviously I experience about more and at in I the we like just are prepared And customer said staffing, X,XXX than center. the field feel in of the remarks,

trend a there. So we're on good

like little ramp where wide traditional time year where We’re great feel we'd to up that. season. start for a this the is about we also of be tax But to we a and

ability also to our We feel great produce cars. about

month we're of get fourth we've and that the As continued early can We're very and quarter. this trend that both I said into the wherewithal that we single resources where every we care we've to take earlier, sequentially both. confident got building to need

within is it. kind like you’ve X Tier CAF third-party mix few you've of X, on your Tier two just CAF. mix years the it increased CAF, Tier helpful. And ago, Got within compare over That’s And to I X follow-up last looks increased X higher, mix quarters. also if your whereas it also the Tier

customer general? how towards the maturity like, a curious base business? how one-time Is shift like as more to So and just to changing that impacts what's that's months? Or, three is overall going there on a your in more in just permanent taking thing, just curious this change

saw our that been so that'll positive, that which X A kind volume was lenders from is note important mention a that We of credit. offers sales the that those a Tier has down credit from function lender less is Yeah, you of up there within on also quarter. did Tier the space, take think pulling obviously, I obviously, X in and is a X. going went question. of appreciate subprime Yeah, Tier that Tier applying the of some from a out there, standpoint. things will X, couple they're or the for percentage, that probably But spectacular, very of the participation the amount Tier are volume lower within up volume take or penetration certainly

X space some what's taking offers Tier did there. volume and X of Tier the applying, strong. think combination Tier and then CAF the changing is So Tier I in credit But so the we're space. X that’s the Obviously, are in as recognize is strength you well, that the the quality of X

Thank Great. you.

And your line of Nagel next Oppenheimer. with from comes question the Brian

Your open. line is

morning. quarter. Congratulations. Good Nice

Thank you, Brian.

lighten constraints I a about definitely want from demand question look, it there was up. of give fiscal prior think as the How at a the consider some the in key responses Bill, recognize business follow-up the we're is, the more And acceleration? maybe ask, end the some of you this was I car maybe QX. to guidance. of talked in should what more to the the driven? sustainability prepared and I guess probably you nice were QX? really But about in fiscal business acceleration the behind inventory, seeing my its least how a don't used questions should bit supply your we about inventory in of factors of And to What So comments question it? we questions. QX then,

Yeah.

Brian, you So for question. the thank

give done just factor. fact in think we've second First that, did to a we quarter, especially out the to the of inventory, continued shout in opportunities. a light the and advantage big all, taking of they've an job phenomenal I Like a got how because the from have I execution that's to I that think through standpoint, team I been say, work

the factor, the we're think staffing centers. because in our experience customer I another is understaffed stores big and

online We continue was of I on just our of If sales. omni-channel year year-over-year, enhancements the XX% a think let's omni-channel sales, this roughly, XX% year about it it experience. make to ago was and call

pass the really And we pricing, we also along I along savings quarter seen passing being was this good those XX%. first think through continued self-sufficiency a that saw quarter in to able quarter that think had above were I thing. last efficiencies

We that you're that's really don't right, well, piece tell And about it the quarter. lot were felt to a quarter, fourth month of But with piece. you, I'll great and okay, every playing or in there's the it's guidance. quarter. start the strong think hard the say, they I So of we're give pleased this we into,

inventory, or and then And business, it follow-up those think other over still as again, place? Perfect. about And could constraints if in are that next what I the constraints labor, about few abating how should whatever? just then the say think we months Is to we things?

is focus labor continue think one that you to we'll think Yeah, on. I I hit labor,

to made And we've the more there. While whole folks progress, across great organization. that's much pretty hire we some want

build are our another where planned expansion thing any we look So I year, tax as We'll making call said But we and the roughly centers part inventory. also in able be for great the as it it we started. of to make the needs sure resources opening like time already to you up, path well that inventory have of to one think on the we're some continue And we'd are let's be have I the right production next is -- on our get sales. I'll think type earlier, to them focus XX that's new inventory. if of to growth to that continue out we'll of I geo, tell part of over of them other part time I we're as plans are some that progress,

think shorter-term trajectory. those we've But So are we're got us a I need certainly. and focuses for resources on good we the

would growth. improvements you is What that, to I add and today the ready what between that that is have for moving staffing I’d and that in operationally forward. strong a tell we capacity physical have we certainly belief strong and are the we Brian,

well-positioned. are we So

it. Got holidays. Thank Happy again. Congrats you.

You too.

comes Seth Your with next Basham from the line of Wedbush question Securities.

open. is line Your

Can which us morning. help retail dynamics next? the quarter, this from that quarter, be Thanks in changes the over comps question than to a unit self-sufficiency quarter your is up are lot, we the and this XX% stronger you and accelerate was ratio, those first second really But row. again much quarter. good a understand time saw driving big My your year-over-year GPU last regarding one

a that bit that able kind pass I and the puts about for those in obviously, factors to for to think pressure the drove prepared And mean, the know We all there. I do is in self-sufficiency that XX% what for said I a know I little spoke a are here. some up trying us, customer. quarter. like entire remarks, of comps second were walk balance my at efficiencies we Yeah, is along. we're We fine prices high

a standpoint, the a to trying elasticity, in I really But competitors affordable test do historically there's make lot at into from just did go both this inventory, things check look this. as we we're of inventory high. margin as quarter, to possible. we right last kind quarter, we balance, levels, So the think coming continue of vehicles like that We'll continue struck

came margin think at years, look we few to great you recent If we're last I the But still, ranges some consumers. along for on the that. in high to able pass efficiencies

Right.

between much is quarter, wholesale and last such else? follow-up, Is as difference the to improvement quarter between Or therefore GPU the and due to something comp. see forces, market in retail Just last prices? quarter this market there delta as or didn't we

did are it But, and along. and first till have think this the -- the tell gains I starting use you on last well few much quarter, self-sufficiency market end was think What either months. that or because XX%. we you were the there's quarter just talk of is last Well, sources the the here passing see. we that you definitely the that a about look And that to at to at look And we will bodes maybe what really for we calendar car external I’d market you if in the that of market, over due we'd is, year, basis last lag. realize out even we're to achieved tell is negative pretty the there overall flat don't a lag time some year

really but third kind that to you're things bunch think what to for you're on the really really comp, all Like whole of think starting of came lot in of factors what see you're I combination I is seeing I a the things that here So, of talked played a there's seeing quarter are a results. just different fruition. about

holidays. to Good and Thanks, congrats see. happy

Seth. Thanks,

You too.

of Your Montani Michael comes from the next line question with ISI. Evercore

line Your is open.

Thanks Great. the question, the and quarter. taking for on congrats

Michael. Thank you,

clarify into fourth would heard Just the fourth had quarter question gross correctly SG&A that you from to then want lever just to ratio quarter. a a to Enrique, the in all you make I But thing on and standpoint, clarification provisioning. wanted sure one to look to potentially

of all, clarify wanted that had Just then and follow-up. I to first

that's I No, said. Yeah. what

lever intent into the Our fourth quarter. is to

I stubbornly obviously, follow-up that rate from all and to you've then forward, theoretically how understand more Tier kind great. X moving you're got standpoint, about thinking had unemployment item just car you a potential should there's the are just line forth. which wanted was prices, basically further provisioning help Okay, Because for doing within so improvements you CAF? of And high and and used out. then obviously that But

little reserve up kind should the any provide or been think $XX there can a that built now million more So, a bit, you again would of quarter we less, has or a color lot? help

the now X combination if stated, we but Michael. the reserve expense Yeah, Tier right our about as question, of Tier the and uses reserve is stated in you recovery there Remember, X, receivables. to think some Great Yeah. exactly then there. provision metrically and the Tier reserve for as also volume X, X.XX% you

business. if If we we you look X X as you But getting out again, feels $X.X as origination. recovery X.X% much loss that X% billion, Tier feel and originations, for there's the Tier what quarter, Tier of back normal $XX normal range to of X of that that Tier size originated the Tier at as mentioned, in well Also in we're close million I our expense. to that recognizing X for higher a very that like X,

‘XX. to over was we substantial improved, quarter pandemic, saw reduce of at able a performance It's So back reminder, about and fantastic as I the provision that consumers, think the a loss I think done we’re like we were a out in height you're again, time. performance right on And from a I'll million feel normal forward. the provision our the mark as one point one really we of going thing FY And at something rate would $XXX perspective percentage from here. that

the So year's is comped fantastic. quarter that fact last over we three

a realize comping right we've in we're still do. yes, But now. got we So to agree, that environment normal

you. Thank

Thank you, Michael.

comes question Morgan next Adam Your with the Jonas Stanley. from line of

open. Your line is

everybody. Happy Thanks, holidays.

online $X,XXX. if I'm prefer looks Thanks. love to tell as majority opt pickup delivery? would curious online of know a customers or follow-up, that? than how the versus vast portion the of label. in So Is And did home it you your store many, what within higher the can you the lower how for mentioned, or us still GPU X% on

Okay.

relatively it So on you in it's same GPU doesn't online in or is in the buy first your online GPU, the same. as matter It if the store. the question, store,

very obviously, is we just as well that think is pickup. more way delivery bulk it already and that, sales, as As of we far the home than out includes filled as and about come it into to I them the two where sales, everything delivery, online which store, speak maybe X% less the customers of pickups do, being with or in about alternative XX%, the it we out the percent but when And think total they've get things is express little more one and to quickly. express

share versus delivery. home the So, the that's bigger

Yeah. want you that. I if specify know to didn't

X% or vast of XX% just was did if the delivery. didn't it You just XX% say know of majority, home I the for X%

that. much it's smaller a delivery, home of percent For

Alright, Bill. leave Thanks, we'll there. it

you. Thank Okay.

line of Bottiglieri comes Paribas. question with Your from Chris the next BNP

is open. line Your

taking another question. the for and on had the then a thanks guys, credit, just credit question. I Hey, quick follow-up have

question, it no earlier, Mike's Michael system's sounds like first was question the I like one, mean, impact, response like So in there impact. to the Montani's

losses impact You seem to of but gross then to wasn't there imply is recovery, some like on it said provision. having kind

gross two, trying just quarter? more impact any I’m it recovery Or just triangulate like So expense? is on like to there those this the was on losses overhead

full volumes, and we've amount come disruption caught that Yeah, absolutely more as seen my normal planned with the no impact. we've lifetime the fair levels, I for. trend in loss of down big online But a lot to change Yeah, but -- believe the of on fair fully Chris. systems a and of question, remarks, said we are a those immaterial as And expecting up delinquencies prepared it's we portfolio.

corresponding there nothing the the And in and obviously that's provision so reserve. in

anticipation of Yeah, just was last that, it quarter it, immaterial It to quarter. on was Chris. immaterial add again this and

That’s helpful.

testing, rate on of -- And compared peer peer just you And more question. quarter. you your comment made new on quarter? lower a quarter, bigger large kind mentioned, like this to Okay. a elaborate then online picture last last loans Can the made a similar rates

of unusual to rates like the raising markets inverse where Just experiment we're timing feels the Tier terms seeing actually rates, bit rates. the and a in little cutting happening now, the

So passing then rise? when is rate more like, testing? the sensitive have customers historically rates for is first question you that I kind And guess, some there like, motivation periods of And between that with funding become backdrop, using just historical found big Like of costs where the we a should rate rates in customers lag go to think is impact those about through? how up? precedent on increases how

the to sole our offers our Tier rate, most we we provide penetration, for in of number importantly our can is Yeah, can. trying is testing on keep want execute yes, some possible Chris. rate best metrics competitive prepared day we what keep a number always highly eye we're a of remarks, can did the X results But or metrics at which do, quarter. on. Yeah, we as what three payoffs, internally, doing. to our the an this I rate It's as booking questions, customers, we an again, for in CAF great mentioned market eye the We be capture Look lender,

sense. it did the We of some market. testing, We that pulse wanted we're to rate made very carefully. watching the get and So just

or how again test do take accordingly, will market highly or CAF those as to we moving, capture be makes cars, come always As rate may do. of rates peers we Again, your the that certainly won't along the the at remain right in if you And a passed rates. in to experience what you customers, then a customer to To and We'll will. manage rate, sense future. We'll then in our to we'll mentioned, in increases the watch going we to there's always pass as are. to market if get not. it front we look out we that rate Fed get will reacts often what did not sales our the that. But the rising looking along is We're lag it environment. out see it how we do, impacts point, will And the away. there, competitive signal the

So the testing will drive what we do.

working that The own sales. to is thing Yeah, and on great help is maximize about they're maximizing the their CAF, profit. Chris I just working on profit, they're beauty focused not also they're but think

decisions arena. sometimes in from finance vary may other our are that just purely the So players

you. sense. help, makes Thanks it. the for appreciate It Got

Thank you.

Your with question the comes next from of Wolfe Research. Bellinger David line

open. is line Your

or from Hey, many morning, improving seeing sequentially? And my making for how each vehicles activity offers consumers repeat given conversion just effectively, nearly within quarter? deploying rate the good better are XXX,XXX even you the question. the armed a thanks Can I you're from engagement instant appraisal. sourced through Is taking customers? want all of you're ask more get data now to sense we past

Good Yeah. morning, David.

offers, you make Online the as of can On imagine, we a lot offers. online

buying shopping in car. Some and really they're even not selling their value, customers are interested for really of or just the a

we're a million making offers year. couple a So,

really standpoint. show they the that they our are the they the we've think appraised past to vehicle about up store appraised it online. haven't talked customers it have from there I look appraise, We conversion, had rate about whether their at get the or it at whether is, buy the had way As online, in

the appraisal had which appraised customer XX it we're hasn't lane, if at So where look I traditional rate, is buy online, mid great. a seeing really

then store, going they've imagine showing as that side, you rate. can be their vehicle if up is online they're had already the a and the On valued online buy higher to at certainly

of the should good see ones think pulls how But not do actually that we improvement how look sold. some think, really there. that's have I many as we up. by think We don't them overall it But about So at I it of offers, necessarily, business. rate the the

anything activity, instant repeat appraisal. terms see you And from past the it. on in engagement more Got of customers the

have of and that an You off them had go top look know my head. and the have David, I many I'd number to of that back what, price. see appraised don't how have customers are

the Okay. Bill. Well, appreciate for it, call. thanks I

Whiston comes question Morningstar. Thank Your from with next Instructions] David of the line you. [Operator

open. is line Your

negative do out hard market a you new crash the And you and if thoughts vehicle they too landing? are customers in see may cause say looking on I'm Thanks. abruptly? Good mind of the future ahead bit. what next your stay the ‘XX? that the a are Will as pricing don't the much over you chip morning. I’m store equity forward perhaps kind a curious Or that out about improves shortage you stay XX-months. your soft harder inventory to and just if worried of the a use curious in see having landing, of

the maybe tell gauge be of some itself. year. will be Yeah, it's I start part What wrong. when is I tough to believe you whatever kind really probably correct a of we'll question next going mean, shortage I think to latter relief to will I see chip

overnight. it's I going faucet like that turns not on think just a to be automatically

more you'll chips are cars available, the on start are available, see impact more prices. as to So used new vehicle

anybody But we our be down job been up that a the able we've are in work I whether tell just through a sales I And down. been whether that think there out can year-over-year, that negative it to a think, else marketplace. much given proven we we've equity, and think prices you, depreciation risk experience. such XX% we've you and negative be anytime than of are through time, it I in factors, would do there the I And better lot handle actually I any more is business could a can road, equity cycles be tell long some there. up

I a overall think we'll team say the I stay David's prices. the was misspoke. And on I informed meant me to what actually just quarter. car tuned. know question So million couple year. some just I IO couple here versus It's I the used said thing on misspoke. to while get other a relief per previous hard It's one when on year, it's quarter actually, a dollars million

wanted as I clarify So him for to that just well.

Okay. equity, be is more in And negative it CAF equity mitigating possible a negative about aggressive to can you talked situation?

CAF to situation all a great ASPs necessarily underwriting our Again, and of that the that. think being equity I captive adjust lender, where we're don't given in all going negative all, a and particular want and decisions. ABS our a need strong in be customer. We're to But to business. that going about think sales credit market, always environment again, to a capture underwrite book solid we we are of

focused we on So, just quality. are credit sales think and I delivering very

team job Yeah. And equity The like negative we time. there, just phenomenal a do. CAF customers our with the does third-party deal lenders all

Thanks. Okay.

you. Thank

Thank you. for this questions. the further closing And hand don't any call At Bill, have we any to back I'll remarks. time,

for all call questions and joining and support. today you Thank the Great. your your

of of excited opportunities I As want everything do, care the we reason car are really they all earlier, success about in the remain front the our that other used us. And and in I industry. we're always associates customers. take each and a why such to our disruptive said how as for I do, really positive they for thank our of force They

your all all holiday a of wish of quarter. and you I again So associates our talk you happy next we'll and season, Thank for time.

that gentlemen, quarter XXXX year fiscal release and Ladies CarMax you. conference third Thank call. concludes earnings

disconnect. You may now