CarMax (KMX) 21 Dec 232024 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 Fiscal Year 2024 CarMax Earnings Release Conference Call. [Operator Instructions] 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.

Thank you, Jamie. everyone. morning, Good joining call. for XXXX quarter Third Thank our conference earnings you fiscal I'm President John Nash, Mayor-Mora, Bill Finance here with today our Vice CarMax Vice and operations. Senior our President and CFO; our and Daniels, President, Auto Executive Enrique CEO;

Reform remind and Litigation on that expectations assumptions not Let pursuant substantial Securities forward-looking we financial the historical performance differ XXXX. you statements future based company's our and to statements regarding could of harbor make to statements are including the our provisions the materially Private business statements of are that expectations. to Act our These subject today me actual uncertainties current are and fact, results risks from cause plans, of knowledge, and safe prospects statements are

other and statements, forward-looking update any we to obligation intent projections providing In or them. disclaim

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

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

morning, David. and for thanks Good you, everyone, Great. Thank joining us.

our yielded strategy quarter quarters. business has year-over-year straight of third across the of that continuation key our four Our for results reflect improvements sequential components

our impact we future. omnichannel from of positioned we excited consumers, remains the While investments, strong positive we're are that our used the well challenge for seeing belief for car affordability which reinforces a are about

more vehicles the strong reduced units GPUs. retail from wholesale SG&A further we quarter, from than prior sold also and more year. wholesale This and year a We dealers, we ago. and consumers bought We delivered

loss our positive resumed provision, had We NCAP's within receivables which repurchase portfolio, program. on continued to impact our strengthen share the loan a and credit mix we

volume total wholesale sales to This retail prices 'XX, third quarter and FY the compared billion, For was X.X% $X.X of partially lower selling comps year. of unit approximately unit used business delivered down driven retail by and X.X%. lower down volume. total model retail X% unit In our our wholesale diversified business, price declined last and offset or sales by declined per were X% year-over-year. $X,XXX higher Average

retail year. gross last quarter was relatively per with Third profit unit $X,XXX used $X,XXX, consistent from

margin. our our fourth the unit For year's fourth that our than margin last is quarter expectation record per margin -- be lower quarter, will

year margin expect We per unit last will continue to the to for year. that full be similar

$XXX and X% to approximately Wholesale As X.X% versus unit always, declined price the year. as unit we Average the elasticity last year-over-year. landscape. selling test we will price sales continue were monitor this quarter manage up actively third or competitive per

Third similar year. a ago. unit quarter our in will year GPU, gross margin be Like full profit per wholesale was for year outlook per $XXX line we the unit to with retail wholesale anticipate last $XXX on

the record particularly and the last GPU from and reminder, $X demand, benefited wholesale dealer a fourth our all-time As within end year's appreciation was at quarter strong of quarter. of

We in more year-to-date than be our unit performance quarter expect fourth with year. last and margin this year's line per lower will

than $XXX,XXX instant Of coming online our buys slightly from up vehicles year. We bought we more last during vehicles, from with approximately experience. half these from XXX,XXX consumers those consumers of dealers the approximately quarter, X% and appraisal purchased through

As our the for quarter. result, self-sufficiency XX% remained a above

sales this of our sales unit last from metrics, we XX% remaining up omni in our sales of the retail last Approximately XX% up approximately third prior online In were Edmond through retail unit year. approximately XX,XXX XX,XXX quarter team, support from XX% With of sourced up from the to year. dealers, vehicles the approximately sales regard XX% quarter were year. online,

third XX% same year. from the point, auctions of or revenue. XX%, third turn delivered $XXX CarMax online of At detail will sales $XXX a John last provide and virtual performance. were transactions Auto represents million the transactions. income will more was financing, Enrique, slightly during more This the XX% quarter period provide like loan who in are few considered to and CAF Enrique? CAF All approximately moments. and on year. from to Total quarter over on up revenue Finance loss total provision information call last of this customer our contribution wholesale from our online financial down I'd million

good Bill, Thanks, morning, everyone. and

across drove wholesale improvement improvement in unit total of we noted, P&L. sales dollars, our and Bill margin another our sequential EPS. Notable quarter leverage respective profit, their included CAF and and SG&A used performance As business of in contribution, year-over-year gross areas

million, Used $XXX vehicle reporting a Third million to X% driven quarter year. last higher per million delivered earnings gross share with year's in quarter. $X.XX Wholesale Total diluted Other margin increase ago. year This offset up increased a $XXX net profit a margin. was retail unit last by by to versus declined service, last a lower by with an million year. volume, ago. $XX from margin quarter slightly loss. improvement compared $XXX gross per unit partially year's year margin million, X% third by to $XX million, over increase up was volume $X.XX flat a X% XX% was this from and was per $XX which with profit

plan expect experienced. 'XX. pressures the measures to relatively were We profit-sharing receive third in coverage the not do place the Extended cost have year-over-year to we quarter quarter. end fourth towards in protection in our and of revenues put compared last to revenues year's to partners continued flat efficiency FY EPP 'XX performance The improved or due that FY drive inflationary

which Tier fees pay year finance volume for volume down for we a by a fee. higher $X Third-party Tier X were receive X which driven from and in lower ago, million a we fee in

over profit down expenses quarter year's of X to the lesser mainly prior last points primarily $XXX continue levered On decrease as was as overhead costs SG&A The XX quarter percentage continued gross associated in compared levels. from for due reductions from by This factors: to spend degree, and, lower year SG&A our X% SG&A million. cost by management driven decrease we favorability Other non-GAAP first, our benefits by front, was with from dollars year. a from favorability the staffing to decreased $XX a the see for and last in receivables to million, were third in as in percent technology platforms uncollectible efforts.

$X was The primarily driven by share-based our compensation. in lower decrease benefits and efficiency compensation excluding and million continued by Total also This in Second, aligning decreased $XX increase was on impacted corporate CECs and driving sales. accrual decrease quarter. by a levels focus bonus in stores with staffing a million, the gains

This per by to increased unit compared spend reflects low by year's million. lower spend an as advertising units. unit $X increase level quarterly partially last per was offset of in Third, and

passed As the per exceed year's mark management is we since to a last year be efforts. for full spend quarter. our year's communicated, our previously Entering fourth Accordingly, in our fourth last expect spend on marketing year per that similar now quarter the this year. we we unit expectation will we our have have to quarter, initiated significant fourth unit basis cost

spend low the our we for being of beginning outperform when gross set out to remain on the disciplined well year's this said, requiring profit to at target lever benefits year, legal full with excluding track we the single-digit settlements. of even and are the the levels. year We growth SG&A from investment That

shares XXX,XXX the Regarding provided with share Repurchasing capital of a quarter. repurchase million spend is structure, resumed we in approximately $XX for pace in our line last October. total This guidance we quarter. program the in

quarter, end repurchase billion $X.XX we had the of of authorization of the As remaining.

other fourth in open such stores openings, of and of markets. new as uses New terms Angeles the market Chicago X metro we store one quarter. Los In in York the of Including four metro in the each capital, and will two

reconditioning open Atlanta the market. will center metro We first also stand-alone in our

a nationwide to and logistics network extensive continue advantage for footprint Our CarMax. be competitive

like I'd the over to to call Now turn John.

everyone. morning, Good Enrique. Thanks,

QX in contract originated last Auto XX% billion, new of the of approximately rate an XX.X% resulting have from half of period in QX quarter, penetration CarMax in from with in in observed well third in charged over Tier calendar payoffs, for the the relatively as same line line to year-over-year points the remains tightening to X-day XX%, During was XXX Impacting we yet the last Tier year. CAF's up as as X XXXX. as weighted average comp fully from and the increased of test QX. but Tier the during $X net observed to volume back each quarter which X third was Finance the of Tier increase customers percentage with basis year year. penetration basis X compared XX sales last partner lower was accounted at as X.X% sequentially XX.X%, of points The quarter results X. these up X.X% in and decreased

year of CAF million provision interest a year's removes last value income the adjusting that but reduction with $X The the of expense fair loss quarter. new hedging to driven million, accounted by adjustments the year. additional market a on rates income for $XX year-over-year inherently higher to period adjustments total overall in The careful million. year, total market increased by sequentially. originations. our but offset $X.X including of these was decreased from million same which margin for primarily from was began favorability for $X up quarter offset costs, Note eye last portfolio from $XX.X versus $XX.X in last the in expense a headwinds million, X-day continued CAF to is million X.X% funding the the million $XX was payoffs, This of million tightening the and sales prior last by down CAF's seen deliberate QX. fair result slight million $XXX margin The reduction of year, $XX from as X.X% CarMax quarter margin, value along this interest credit $XX profitability. strategy interest with million compared assets customer higher

with net X with This The of CAP's maintain X.XX% at rate the reserve investment our million in a relatively having of $XX the credit stable pleased portfolio. the resulted X.XX% has is even quarter continued the a and volatile in of occurred reduction or million compared Tier basis tightening that end overall space margin balance interest is despite $XXX our the are provision impact the quarter. to growing second on environment. evidence broader of interest receivables ability We the point to within XX

moves reserve cap of performance to strong loss ensure to While our historic case believe strategic date has levels, earnings. access remain executed deliver preserve as future been our to the targeted adjustment The anticipated hit we efficient portfolio. adequately norms, industry-wide, adjustments our future still loss we funding delinquency the versus the been levels elevated have reflects right underwriting yet cap

poised Tier provide to our recapture X in opportunity. and and economic We space as growth future improve are volume X conditions the X well should continued Tier Tier learning a

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

Enrique. Great. Thank and John you,

the mentioned call, at contributions about we from As the investments. beginning our seeing omnichannel I of excited are we're the

Our or the omnichannel much to as offer most online made car the capabilities enables experience they deliver a do in-stores buying personalized industry. uniquely journey experience in we've customers I'm our the progress and our as proud that that of little want. customer-centric them on to

digitally. before, we to consumers believe industry said prefer in will the have progress increasingly As used car ability the have to we

market end this leverage has That of of delivered when the approximately over that seeing the of year in approximately are XX% seeing. XX% some complete to share At this our year. years their customers completed to omnichannel are has challenging to transactions. see proof the our all so we few our omnichannel benefits digital I points made or to past some that to has our grown volatility capabilities business, We the rollout, it fiscal I initial data. recognize want our we 'XX direct

with in-store online First, likely new CarMax. customers. our who XX% an compared omnichannel driving to our Customers incremental more data indicates that transaction is retail be and fully to are complete to customers omnichannel CarMax

which to opportunity in the cycles. We consumers have of more our also purchase skew found creates younger, that online their participate lifetime

XXXX, of in these growth our beginning their annual for the previous initially since growth average average older for to for growth calendar years. the from market the completing 'XX, markets XXXX. In calendar share XX rate calendar our growth rollout, the exceed the share omnichannel Additionally, share we not annual market where we X rate. rate since the average from doubled seen calendar annual have growth omnichannel have end to XXXX new markets oldest stores rate opened markets pre outsized Moreover, of continue these market

consumers online our purchases self-sufficiency core is we remained the since sourcing and Online Offer. capabilities approximately have we our well grow to This tool above prior significantly our tool. appraisal fueled algorithms us our We that enabled the to driving maintained which launched volume from noting dealer-facing over wholesale and offer, doubled a year consumer-facing is has year of wholesale volume, during part sales. Instant launch that XX% our Max It's Offer. grew which omnichannel Instant have launched offer also also support buyouts to our of instant our the instant offer Second, vehicle bots we our worth vehicle application. the XX%,

digitally multi-lender to prequalification to this begin traffic receive our Finance XX% credit score. process. web gives customers Over based the our been with products tool no as decisions #X they the This our lead across our quick customers has of using shopping supporting Third, ability source. inventory products are credit impact their credit are growth. online omnichannel double-digit

on is more to omnichannel structure to compared Finally, model. track our be efficient store-only cost a

Our cost store-only structure costs structure. more than has fixed our omnichannel historical

year-over-year show cost up. than fixed model. cost model as in for we structure, expect a sequential efficiency We to lever picks omnichannel demand key improvements more strongly previous continue overhead metrics more With the in to

to capabilities used not We that this many in seamless across consumers grow combines demand time We that able will to omnichannel be personalized a our expect progression. believe and as in-store experience the a of simple continue deliver of industry will online impact and the our competitors car manner. more experience over

have driving the sequential consistent approach can in our the we closing, strategy improvements we control confident business. to industry the quarterly deliver right place. In customer-centric we're in our what across and experience is most

be questions. from cycle we'll stronger your We Operator? an to take that, to company. this positioned are well With even emerge happy

with Thank Daniel Stephens. you. with first Imbro [Operator Instructions] We'll go

to to John, and impressive results Enrique, here. maybe takes. puts just trying want given on the the cash I'm back circle provision just the understand

So came But there. quite the in about are maybe underwriting you bit, it like the maybe looks we've level a down over highest talked seen tighter a allowance I decade. John, charge-offs just net at think

Or those trends us think should move of year can nominally right help tax would reconcile you credit I how provisions you going guess and can how has two -- about the think meant So this that the the end improvement refund you level those we factors? through provisions the And we forward? how of the is about as season?

appreciate absolutely Dan, and question Yes, the fully expected it.

start on piece. provision So first, the let's

up going of we Our provision made in in QX. of the the our be on book to quarter two the on of expect components. end versus that set existing we It's the to is business what losses going change be outlook at

Second, new it's reserve going on be the to losses the on originations. required

the business . of of look course first book piece. So that QX beginning lot expectation tell on change. the let's at What touch and is hasn't been over existing of we at of a the on there observed if can I you you what our QX,

and about our note how a referenced securitizations important what you that's publish on our the receivables. about to and monthly we have observed of actuals basis, Let's XX% that. that because performing. they're talk We It's

we're front-loading markedly said to that's the lower new occurring. knew we business believe seeing that have there. to a was that's stuff. tighter. We and in and We've into separate The below back securitizations, out We've the observed normalized came COVID the what two yet also has we well stuff books the of not been also in levels, come that that there's than you going early there more lot of But on certainly mentioned X% We see that X.X%. securitized. target, pre-COVID stuff been our what

newer look like curve when the 'XX, 'XX, loaded. at it's clear you We stuff, X early [ in. If in the there 'XX ], especially those ], the securitizations, difference a losses front come the [ X think in is

QX. at end All the of a reserve set when that was of we contemplated

this did of which originations, up there made the means end largely, major that adjustment about we had is new a So to primarily not our component the first provision we this. provision talked our -- and day, make, at the wasn't of of

originations then very a tightened Tier there's been Tier significantly X. tighter. we've there. limited X new our And even There's Our are in X Tier volume, amount stuff, test

it's tighter overall roughly provision. that required of amount is on lower of a So the the loss. It's $X a a book of billion, bulk relatively modest and that business. QX It's provision,

Our Nagel next come from Oppenheimer. question with will Brian

continued . nice a asking You're here. solid progression

you. Thank

the sales there those -- look at business looking the business, you more used what as at readthrough question guess, of explain is I just the here with the -- in Any of I the that quarter. question, definitely My guess natural just kind inflection business, third kind car given was association reasons your in would inflected are fiscal behind I first segments. wholesale that or have two to growth? the And wholesale over stronger

quick Any what in commentary given into quarter And then mean just commentary seeing what saw we progressed and any the we're a QX, I how early QX. follow-up. here

you Great. for Brian. Thank Yes. the questions,

yes, the So with are wholesale pleased growth. we

a factors. I of think combination it's

think going our little saw bit given offers. marketplace, I on things we there's year-over-year of back we we actually were, dynamics the last given pulled where a playing one, in where in on were that sales, year,

things. I the product think of little in really got of about also the bit feel reflecting that a innovation So growth. side the you've I kind good But year-over-year of on

then our had not we one completed markets which a get So offer, when offer, this to offer meant things did it. few about of the of offer, and pictures they quarter that Max instant component had instant still rollout of of a have the you think with vehicles Max value. take We

pictures, they can. option they take not to pictures, have they want still the take if just to Now

that I helps. of the innovation that's So there some think that

go kind And we great dependent will the given the So dynamics, it innovation. forward, that thing about more going time. what's really of at we in any on probably on as be market feel

just and outlook challenged, But out I as lot besides have quarter sequential And going is improvement, the -- I and and that headwinds car prices. obviously, this kind to depreciation. our have the And thing, we there's it bit the quarter, really the industry and to short-term of headwinds and look, us encouraging come continued it because near on steep little that As just some business we of we benefit even mean there. I in a the front-lit do saw far causes a be. still will where used some it wholesale retail out depreciation want side. isn't It's continue everybody some on overall it's to benefits signs knows cause fact a obviously, the on while that. think term, think to industry, will and that in

You like some about an saw this prices. $X,XXX in acquisition but year-over-year standpoint, adjustment more there. it $X,XXX, we're on down stuff year, we was From sales had mix

if the I good. So is at think again, think that's least depreciation great. stabilize, steep Interest I they rates

business. I great the for it's think

that the I And help. be down, they cake. I kind of come on think extra will icing think will that if

actually share thing that gotten Another I market period we've that on is first October, data is latest month share. which that would we've comped point our market the market the year-over-year. to our share is

encouraging. So think I that's

once lot to we've might some they're thing then that is for that there's bureaus a through customers a do where talked they it one with just be done, where just the seems from before of And of and tell about they're analysis like apply we've buying, CAF, they understand go? we've the not just not you I analysis other done customers And decide loan of buying. the comps the sales And the going. trying -- would credit

-- there's hopefully, like see So back. pent-up the that I almost we'll as think demand some a there's market comes it's maybe

yes, So in is into we've more taking time our again, encouragement, I our becoming bearing experiences I this challenged. cost some while by efficient, that just consideration, been mind, there's for And the that. all better think associates. We're having whole customers and still control, of signs on working industry also encouraged think

to well plays future. that the into all think I

So hopefully, helpful. that's

Securities. We'll to now turn Wedbush Basham Seth with

curves the is us in from some out terms really the 'XX going question that give that CAF. to are we on more My could securitizations flatten John, yet. data you expectations on those in loss also through XXXX late seen of haven't color because your

here what's Yes. think to I I think look is out key I -- stuff question. the Yes, if there obviously, is appreciate XXXX the going right you the to at published forward. thing now point

sort you 'XX, shape the 'XX we over. typical pull of think have of If -- is at 'XX, X that 'XX, probably absolutely X you access ], stuff stuff. that what back at and to look curve, XXXX, it's is [ I [ like And the ] you look you turning are seeing the the looks

that at [ way. looks which certainly their previous our XX, over. when point it Admittedly, in yet the had not to XX, like so turn within watching Now see that going [ ones loss, XX, XX, X [ we're ] timing exist. over, look life earlier carefully. they we things turned X closely, and you everybody is own the we I the look in of neither to have But and trend those at and very at ], targeted mentioned X the beginning X these [ But very the that's at absolutely ] The ] we're watching coming range.

we loss all we to X.X% how know of we truly of range, this, trended early in in all absolutely and coming the the believe this know [ is subsegments comes. they that which when X% We out, perform our there, the in, is are So target. ] how

the color further Seth, you give that? So anything does on . need, that you

that to range? above That's you losses any of are X% X.X% the helpful. outstanding, Of securitizations you forecasting for have them

in ] for see now subsegment X.X%, is pockets. by again, up that's there. -- that come of reserve Again, at the securitizations day, that's X.X%. the and will And the not going something If those the do -- breaking of [ have we to again, by X.XX% above today saying because, inning I be not for the to what has right make now, It other again, But that. see I'll ends a think months before no, I it of will X aware in tightening is. securitized it it this It's is, absolutely year. mind, well up think occurred been date. luxury and right a over And Not we we Bear accordingly. last at bulk this, have what X, came of different end we Yes. our point we anything only you're the do Seth. above the For has X, is down target. the

fully we to So the expect done stuff that evidence the hits I that the clearly see as you're market, the last of over going have tightening year.

XX% As chunk of overall good rate. into where the warehouses, John That's mentioned, they're an in a a a see there's in right? don't the had warehouses lot are we that blending lot see because tightening. And that that public but public, It's are alternative receivables of you'll securitization of loss facilities. what, of our there that's you the what are data about, receivables necessarily in not that's really see roughly

We'll with Kennison go to Baird. next Craig

wedge I question wondering, whether might your ago, big AI. on innovation. had very I ways a you your tech in months several was few guess Analyst I'm as or highlighted winners a Day the At AI picture, used to field is team driving which that retailers really rather separate technology see does going ultimately losers. from playing a you for that a be technology other level car

for Well, recently a time generative generative think that of at generative leveraging referring, to kind of been AI lot I talked all, versus we a we Craig. question, aspects of first it been We've about separate I was the most have day think because really Well, And it you more AI embracing a point, around thank be some of time. AI will the Yes. And in long long different you're it business. at for folks the has AI. when AI.

on We're get in search. different leveraging ones mean, search a benefit really assistance of I our knowledge We've in in we the typing leveraging of now adopters you conversational where lot is in referenced, consumers. a got in which on as going generative early And our coding. think actually We're are we're AI tests we can our think it creative. the powerful. right some that on We're with key some to do term. for the near working We're be spots. leveraging on base instead conversational going search the leveraging a CECs, things, I it

I those again, things don't just need one at So day, disadvantage. I to have to -- you And kind the of of be you're of the you it's going going think that's a it. at end don't, if be to

an earlier think actually of So those I that embrace it get early benefit embracing it.

now turn We'll to with Rajat JPMorgan. Gupta

on I follow-up and SG&A. have and Should one margin. quick had net ] loan that we a interest X.X% that that question exposure CAF around a as follow-up level stable on clarify I around [ at to look going forward? just just wanted

appreciate where high. think off. we a thought, right? coming off a mean we're signaled Rajat. Yes, we I of of about couple like quarters relatively I was that's Yes. range felt going that X% level that question, the Sure. I historic fair to Remember, we're ago

to ability interest rate this the the in pleased to pass Obviously, So there was customer. market. our we've shock a that along been rate

helped interest those So higher and was clearly rates level said it were coming, us coming it has off. to

So now. rates anticipate where with this we're would up. level. the heads, stabilizing Fed are they we I think off all bets pleased we And going Obviously, where aren't If sit at lag right rates as go remain up lag down typically good a turn we're increases come when stable, and when a If rate rates and reminder, down spot. come we decreases in they rate think down. Hopefully,

margin down. But spot. right the now, a stable could on some So way enjoy we're hopefully, I in potentially, added we think

couple on here, done range. [ Look, add. of a would give look, just it's the what depending funds. really of little of we I of Rajat, last it's Yes, cost but X kind this think us ] of the room saying, funds we said We I be in quarters, cost in expect a wiggle to has good the John in job X, were reflected a down little bit,

think we about no John change it way the think I story, it's said. in as So really is

And an backdrop Understood. near actions areas on on you of it sense in looks accruals you in quarter the from and And was you salespeople of these mean, term? or on some are are taking Is the SG&A, us continued market the how there a way side. this or well? could bonus count medium what the to any -- give And this much indication there CECs, the view as quantify are Edmond. like your just Can any taking head I place at? impact relatedly, is it the

That there for miss multi-pronged I was that. question just... a If one,

Sorry.

year, the And almost one, remind the decrease what head in board sales our the it I and It's think comes when been -- where have SG&A. first in down compensation, our to compared stores question your was board. of in CECs. If the a really which the to across in been had and I terms the to XX% comes reductions when business field well. as been it it's question, count last been that's office miss We've just was across consultants the

driving in really you're to control compensation, also is better of but really metric at looking tight what So efficiency. our sales, overhead

this basis. were efficient efficient track the indicator, you improvements used We on about be we point. so the omni launched continue in we of there to we profit, look quarter-over-quarter of way impact the be plus operating Omni. total that efficient, X that we per Omni as wholesale we're unit when at of we've compared talked retail units, X And a our to versus but terms of than we're a more the used as used at than on to see when one more we're metrics efficiency on of total gross as omni year-over-year working model. in model still not And is percent the

is be there we're goal Our efficient, to but more not quite yet.

do questions. clip when we And positions good that about those for think when feel sales stronger focus So progress to that through does, at do, flow will. we're was on sales that what really really of one they a they us and I making. well rebound we your the expect really And efficiency

a volume trying taking just any in way impact any backdrop from third the recovery continued would like The the way? part an to quantify the view bonus you of quarter. in in like market is the that -- -- the just the there then Is Over quarters? other it indication or on next was reductions you're question third the was could few the the accruals what here? the And if of

you this SG&A. Rajat, Enrique, I'll the part. take is first take Bill.

fairly Like for far put consistent look as staffing, we've total fairly the quarters. but year, about we've can to As XX%, nimble think our if Look, that at has I this last been here. said, I ourselves we're think we very stable. you down really And been few a be head count position Enrique whole in

up. the are if where have staffing-wise, we really we business with downturn If hours happens some picks of the what a from we we business, on can took depending a manage reason, some So feel We flexibility. kind thing. about good like feel for the that also business

nimbleness forward. a that And kind really I'll you. of we've then pass think ourselves we given going good about I feel to So

Yes. corporate bonus compensation. within But pace the

that So favorability. terms million about the very of quarter $X specifically, in in was

with now . Will Ciccarelli Truist. Scot turn to

I turn of third-party but insight believe that, So just a been XXXX some per to get think any levels basis? get your appreciate XXXX get trends back you guys to due on XQ? provide negative. have And in that. levels could to -- you still and XQ a generally think back the you be to follow-up to in Do XXXX store might I affordability have I volume I the issues. data then back positive to levels on comparisons, to on affordability expecting guys a comps need suggest investors related to easy

Scott. Sure, Yes.

And part you today? talking I price the you're Am about affordability. question, right? about interpreting assume the it you're talking of first I question, the in of it where XXXX think where is versus on cars I was

Correct?

hopefully kind all are today. XXXX, our we pressed I think think and I XXs over plenty get under to are see of we'll $XX,XXX than and think was -- like the This under back sales maybe average already that it where better And cars in there's I'd or or where think get I levels. so, XXs, XX,XXX back of progress XX we'll don't -- so, down Look, cards, there. price they making little a of I XXXX $XX,XXX XX,XXX. low was it's year-over-year say think to period, back be the low room I our hard those mid- do we're

more think sign. So that's good the becoming so, cars think all expensive. think a we partly just new they'll are get But I do I more way there. because and don't

negative. it look look think and I look, little is go, although thing September although demand If to consumer still better. it they a similar. And the was the does October quarter, right far December the mean, November yes, than November month it's think future? although as it's little the in it a like was a as was bit better I I to choppy. gap -- the October, market, lowest months October, was what then similar And is the So was although better month, of then choppy similar November, a little X than were was comps that standpoint. from best bigger I was been was our at it there now,

this So I but we that that need see think doing do. we on as monitor continuing manifest elasticity, some And hopeful the depreciation things I'm line. the to itself of we're front to

that forward. going be good for think I industry the will

back in basis your saw -- Bill, do I volume issue. in on the XXXX? a per get a of affordability kind improvement question affordability store guess need my what to to is much how you do Like you need you on

it's to be. Yes. a to that Look, exactly be hard to answer question what able needs

comp this can though the And having without again, come back the improvements year. sequential down start get that, get think even from haven't to seen prices the on the year think back we growth again, of to dramatically to XXXX. I we've I

So it's year, months months last to have were months share on we standpoint encouraging. last of X comp than for which which first X share to I We're the at the market the And a for year. last calendar XX hard first this our I question the look back last versus to year, data reality think market doing the of growth. months if is better from is of is XX we goal But answer, Scott. get look, a

that comped strong. earlier, fact share so we year I'm because yet year-over-year encouraged the month first was year-over-year said growth. total a half October last market have by haven't I -- first the We the month-over-month is But of as market share

We'll North now Healy go Coast with John Research. to

year's that kind corner. Just know see And season, monthly wanted maybe or don't kind factors what trends, just pluses Bill, feeling kind year's it's like but maybe of into anything around this go expectations on March kind or we or impact I that materialize? I fixate relating guys this to to tax of any as all your maybe kind other exogenous of minuses. season, of of you are demand how the see February might you of how might we the ask, levels just tax business know on kind

I last expect is -- call can nothing don't to will talk I'll sell answer Yes, I I you there's think more John, different you similar. tell I say think mean year. in that about know, right season, say, I dramatically if tax now, you, it know season don't I you the to it if to afterwards, okay, be appreciate going than I a foresee and let's cars, that. would tax be

what's last it appreciation steep And there in think vehicles. really the interesting I at year, think to will going beginning of is was interesting. year, be be the calendar I

counting steep aren't on that appreciation. We

pricing of right we a different. dramatically interesting see will because see we But year sit of be year-over-year as here don't it now, that was really planning season any kind the we're signs that a of make that last from So standpoint. tax dynamics to similar to it

Sharon with Zackfia to now go We'll William Blair.

that. like a changed you just far website? on if refund And the in inventory sea big way there's the expecting you change on I'm so inventory Because the why on I kind show that a look season, seeing last months. Have few been build. build guess it does inventory curious tax not you're a the follow-up in of we're

that's average to inventory -- last year. seeing Yes, you're year-over-year, and is the at for great And question. you saleable similar there average, if what the Sharon, look the very a it's quarter,

it's shutdown. up a quarter, the up of is bit, end the at reality little we're the And look planning to point, up. it's your nonsalable. you it's the some total reason And inventory production because salable versus in up and If salable is in is

off a the we And weekdays. fall on year, don't folks January, remember, both be want but holidays. join last you able year, on the day, to the and and well, the weekend weekend. build December XXth cars holiday give If fell on to the on falls first This time we our it

we closed So to make to a we for that bit we of little want give shops holiday. the actually that consideration and did on took time have early sure a in off prebuild the

a really of well, that's of you're but is what bulk -- it's kind dynamics bit you're So year-over-year seeing. as seeing. of There the little that's what

of a yet standpoint expansion for on And thought you're viewing year? from process unit kind Okay. how next any

our QX locations? guidance . call, new usually we'll Yes, in do. that guidance provide we'll that For we and in to provide that's intend what

to Paribas. Chris BNB Bottiglieri next go with We'll

like not share? seasonal ESP. historical the in the be QX expect to have that any terms just how primarily set on does in effect to comment fiscal share next elaborate year, difference to effect then there from profit into just F&I QX? expecting was And QX profit like -- similar any you spillover lower could you I Would is the the share? I see Is on you anyway, a know, hoping profit spillover of don't in

for sales, penetration map, as sales to really Thanks ESP question, so Yes. is dollars. in And effect seasonal the more Chris. The related right?

that fourth end the we've couple last profit partners only of And where past materialized we've year years quarter material. quarter. the at of our in the share seen was seen in the is So from really pretty thing the

think over million. $XX I was it

that to make out. called And so we sure wanted I

the the seen that. there over their to given for it's more at And in for to just Just profit past the that our amount have year, pinched. us pressures little when partners share made -- inflationary day, bit that share, of we to end have that the certain they're seeing look needs be a a profitability

see that's not that inflationary we far will so year due that this for partners anticipated share. are pressures is profit to our seeing. But really we've that what So again,

you. Got

kind just you a average Like could the tell the kind the elaborate of of I portfolio. maybe And on then portfolio. stuff. It's roughly versus age Okay. little What's was you X/X there? in us the about could of warehouse what's hoping securities today the more size bit securitized

sounds on these was were the you're like like hoping little can signaling you kind better, a performance vintages of that nonsecuritized receivables, to just loss like I securitized bit compared are like-for-like the in test elaborate you book? the of to look that It like does more. at If vintages X, it's how those non-Tier X that but

Sure. right that it Chris. Yes, really, to a our or we provide funding to lines we the there. Yes, now do hold conduit one, other more short-term funding take lines assets until an I'll newest the at take until solution warehouse our them permanent market that ABS instruments But we primarily to take market. look

going going to is there. there. stuff sit you've -- Last quarter So to stuff is got this quarter sit

could some $X billion. be Let's call as spillover that There well.

that tightened So in X. what we X conduit you're in perform certainly as X, what's recent the particular, mentioned, But if Again, assets space. stuff well. of we securitizations. be X and it better think absolutely Tier it, from from the performs to in a lower is the the loss all the isolate would we those Tier significant seeing to than Tier in securitization. most we've than Tier very X a Tier perspective, tightening expect we've done going But we've loss

our go receivables the months, time in then the will The X they to to sit X tend for X, between right, warehouses securitizations. into until

of that's buckets And the bit little two between of performance timing those receivables. right, a a see of you so delay, why

you. Got

just little up. last would a markets Tier ABS up one much the it might bit little why to pre-COVID. X, seizing aren't X, quick there but still is I perfectly is up The bit. ticking the it been what just loose, some we Tier of as season you that any just have secure a seen brought that why one, -- we is know you're guess Is is like Just -- as I versus not has it or

Yes. Sure.

demand continues I we at growth. That really times that we into match of a to think the amount and great our billion obviously about obviously, deals. that's sales a out deal a market time. originate cap comes $X.X quarter try year. securitization of volume. has and each the I the billion. $X mean, volume deal that to We're We're with down with has over about four originating ton $X we're grown each there, we put doing billion That the look

So therefore, naturally, on longer I it has to unique a it's sit than little don't thing. timing think going anything It's there. bit warehouses. just the purely a

Evercore We'll to with Montani Michael go ISI. now

first plus seems off, kind ask, in the we provisioning better. to wanted Yes. came it thinking a $XX to were on million obviously, front, rate of and be run trend

this, to the then had that follow-up. of handle right a term maybe SG&A an think some done And we that given the tightening near you've that six the I is starting with know. just in about and way So all

Sure. Yes.

of for is of relatively just function repossession a of well X sign it. the to it's Tier is which Tier of rate the sign preceding from cited from your limited. $X a volume. up then in piece plus how we billion. to business about we once quarter. the book It's the change, components. on existing preceding what in two versus So again. believe then of main for provision Again, in touch and had any reserved the take did business. Tier let's X, billion We a X one second standpoint, overall is Tier quarter. X is think way Tier that one The I new small, originations. There's we've recover X the originations. test Tier reserved That's first. of but X, loss piece the you cost new provision. We've the lifetime is, $X year. anticipated the this And an a it an expectation bulk

we saw As like up Nothing off we felt done were good a the -- we that's ended million. quarter suggested you we performance materially with so and this $XX quarter, within we've how mentioned job.

successive you've to think you I set how those your quarter. that's and pieces [indiscernible] each provision got So two

Is right to way I just kind I do And SG&A volume the near mid-XXs to gross. and And that down on target think to guess term dollars come near-term kind mean, start this overall, of think the if SG&A just level? that still continue then a SG&A about follow of up the to we is in can build the Or dollars share. to backdrop? do drive we try to demand

Yes.

couple So of a questions there.

strides mid-XX made we've hitting ]. we've profit. require efficiency mid-XX% also absolutely strength. undertaken, the profit, return of material school of But in as addition that our efficiency to the that consumer with in business. driving a in that our terms percent to it's next communicated. going SG&A And our SG&A some gross step In next cost is of a gross the management is also [ function we're to efforts We've

is at that this year-over-year right? kind And the hit need XX%, that as our forward, see we efficiency our And gross some same what point reductions step. absolutely growth are but well, proud that improved next rebound. deliver. going SG&A in the to of And in to us well as time we've that to sales our on profit positions when able for associate focus really to been customer I'll our we omnichannel, that's out decent we've done experience moving along that further When to migrate it we've so comes and again, we're of material

our anniversaried more levers. it cost Now over be will challenging little we've QX, bit for as largely a

dollar will be performance QX, impacted So of movement. I our tell terms that year-over-year by you it more would sales SG&A in

QX, volume-driven. said, you're historically, more as the generally, to And up And go SG&A Enrique which QX to volume. reasons is pointing, your Yes. does

Bank question Our from next comes John America. of with Murphy

the might are in on or the drive just seen think still down. what is And at have I that peak, if sales just I'm going $X,XXX this getting you Just not prices but expect that we're to lift price inventory and as you acquire comp inventory? from about I to same-store coming that lower comp? the information, the what's you ASP curious forward able your question disclose in sell down you'll out. don't mean do average inventory. is inventory you if come know ASP a you've you can the

the mind, it's what the Keep quarter, XX% John. that sold the Yes. inventory through Thanks we for within of in to question, more was now. bought Yes, quarter. than prior the

So we're quarter, quarter, depreciation. that during was which been some to depreciation is what's bought the inventory and talked during stuff in see continuing the about, there's now steep

that mind, sales just -- new everyone keep you about though, the of ground you should year, So in just and in kind prices out, flat, bring about of need just your prices $X,XXX need more because year, given they're cars down. to any during to just expensive. Keep come depreciation, that's as

get you don't until basis. benefit you on annual over So really $X,XXX much get an after

do we average was inventory we is do our the think inventory -- feel sold is, cheaper while point price we saleable this I what at So in it what disclose don't is the -- quarter. than

about your what's going market in forces. if [indiscernible] market on think of landscape? from helpful. they vehicles on before. That's one about competitive they about I outside share. an competitive company buying and you going their the X.X an And very then Or did used and what's just Because mean, the had year. that's in how mean last I the follow-up just XXX,XXX million you on up outside at output obviously, think a on about an like been basis, dealerships their units the LTM mean doing do stepped and say I of actions automation

acquiring example, outside that is that Are and channels. just is it you of going like that even vehicles are franchise and kind traditional seeing are going that So of you're the the -- but same that's side, that some there a the as one after seems you or one-off? unique out just

as vehicles? the You of mean as far acquisition

source XXX,XXX are but But outside was franchise LTM stepped not dealers just right? of new the direct-to-consumer the and Well, that just auctions, third activity. trade-ins out an That's the traditional them that's parties other of or and would units flow and and on I they've as in basis, incremental that new, well, for an incremental new vehicle, mean, traditionally channel from to take going sources.

of them So curious I'm that's in general. more you're seeing unique if that to or sort just

of to creative. vehicles. they think out look, to you're inventory, aware Yes. in X-year-old the are kind be -- that more little And very especially there just No, bit I if auctions, that's looking X- a volume of got folks for

So it that me other are folks doesn't that. surprise doing

bit. to went little X actually X sales Our year-over-year up a

mean I I point you have. that's would that one -- data So

they think to skews just I I'm from that's are things like When wherever all innovation And trying dealers we're than product about the it sales consumers more get some of vehicles getting to can. why when about just the the don't from Max wholesale. excited that's it dealers. talk we offer. product from And in other efficiency, does what add retail there, we that comes

So an have that example surprise it you that. of doesn't me

I do things think And they're going like to folks to of that that. then can do competitors. that, there's a lot try

Let XX-year-old mind, there's competitors of thousands sell me cars. that keep X in to of tens

don't Some of them have ability. that

final our question We'll Morningstar. Whiston David take with from

X what I'm it's increase whereas to you spending advertising make ask about up to down go curious quarter months, for did is the about. Just the which expense, what wanted catalyst year-over-year, this was

technology our also right? portion that our see CapEx it much you'll to our then that's spend a is spend comes in and D&A. Yes, to very there. of just going going to the depreciated, of function depreciation be so technology impact our when spend, be But And

Yes.

on the the we're think this for advertising I in long haul. piece. Look,

going year, mind, to in that's about we're in for so When buy, that's the and on advertising, advertising. to Edmond. talk Keep to about brand, sales, that's money we're on in going mind, advertising trying spend on advertising to new how spend money keep think for about And we we're advertising talk acquisition.

hey, said, year, of full it's basis. a be back along, on the spend year we've we're but the half all to going similar going So to more in

we're actually so And executing it.

measuring want got shift the to But you ROI. some you ROIs shift is We're in think if some may I to to going go don't not that buys sometimes may just Now to you what or advertising. sales, on the Edmond. we're realize absolutely you like

what's more little but the generally, a is on a on -- and because depends just tax you've spend given it in expect quarter, volume. season would which it's bit in -- you got in So increase an going we coming, fourth quarter

what seeing. So you're that's really

thought were about sorry, David, asking . you apologize. Yes, depreciation. I

I appreciate the clarification.

got extra answer? an You

with more wholesale was sell Are units a aggressive who you looking your vehicles. you just to curious guys to nearly acquire X%. I on to offers being more to want if up you're vehicle consumers

more wouldn't standpoint. profitability a a all could Look, vehicles, it we're sense we but to could -- cars, want but from the buy we make acquire profitable a it do going mean to very you lot in I way. thoughtful,

done So I team top steep because of to think especially a depreciation on that it how has short-term definitely a the job, seen, headwind. the stay that's able phenomenal we've they've given been

by. And for back like at questions this additional we no turn I'd call closing Bill over to time, standing remarks. have to the

Great. Thank call for the I you your questions and you, to all for today of joining and Jamie. want continued Well, thank your support.

to holiday our all, you will wish next of loves as the to again associates happy want I they other of a you. how of As take we for talk all everything want all them do Thank care thank always, I season to to and and the each customers and communities. quarter.

for gentlemen, program. and ladies participation. today's you that again, Once does conclude Thank your

this disconnect may time. You at