Core Insights - CarMax experienced increased loan losses and economic uncertainty during the quarter ending May 31 [1] - The company's CarMax Auto Finance (CAF) raised its provision for loan losses to $101.7 million, up from $81.2 million year-over-year [2] Financial Performance - Retail used unit sales grew by 9.0%, comparable store used unit sales rose by 8.1%, and wholesale unit sales increased by 1.2% [4] - Gross profit per retail used unit reached a record high of $2,407, an increase of $60 [4] Operational Efficiency - The deployment of artificial intelligence has led to efficiencies, with the AI-powered virtual assistant Skye achieving a 30% improvement in containment rate [6] - 80% of retail unit sales were supported by digital capabilities, with omnichannel sales accounting for 66% and online sales for 14% [6] Market Dynamics - Growth in sales was partly driven by consumer purchases ahead of new U.S. tariffs, although the company had been growing prior to this surge due to internal improvements [5] - A slight decline in omnichannel and online sales percentages was noted, attributed to seasonal changes, but the overall trend remains positive [7]

Core Insights - CarMax Inc. reported adjusted earnings per share of $1.38 for Q1 fiscal 2026, exceeding the Zacks Consensus Estimate of $1.18 and up from $0.97 in the prior year [1][9] - The company's revenues reached $7.55 billion, surpassing the Zacks Consensus Estimate of $7.52 billion and reflecting a 6% year-over-year increase [1] Segmental Performance - Used-vehicle net sales amounted to $6.1 billion, a 7.5% increase year-over-year, driven by a 9% rise in unit sales to 230,210 vehicles, exceeding the forecast of 207,124 units [2] - The average selling price (ASP) of used vehicles decreased by 1.5% to $26,120, which was below the projected ASP of $28,279 [2] - Comparable store used-vehicle units increased by 8.1%, with revenues rising by 6.6% year-over-year; gross profit per unit (GPU) was $2,407, up from $2,347 in the prior year but below the estimate of $2,376.8 [3] Wholesale Vehicle Performance - Wholesale vehicle revenues decreased by 0.3% year-over-year to $1.25 billion, falling short of the projection of $1.27 billion due to lower-than-expected ASP [4] - Units sold in the wholesale segment rose by 1.2% to 149,517, exceeding the forecast of 145,645; however, the ASP fell by 1.7% to $7,959, below the estimate of $8,717 [4] - Wholesale GPU was $1,047, down from $1,064 in the prior year but above the estimate of $1,033.3 [4] Other Revenues and Expenses - Other sales and revenues increased by 6.1% year-over-year to $190.4 million, missing the estimate of $196.2 million [5] - CarMax Auto Finance's income fell by 3.6% year-over-year to $141.7 million [5] - Selling, general, and administrative expenses rose by 3.3% to $659.6 million [5] Share Repurchase Activity - During the fiscal first quarter, CarMax repurchased shares worth $199.8 million and had $1.74 billion remaining under its share repurchase authorization as of May 31, 2025 [6]

Core Viewpoint - CarMax, Inc. has experienced a decline in share value, losing approximately 10% and nearing a 52-week low due to challenges related to higher prices impacting its performance [1] Company Performance - The quarterly earnings report is anticipated amidst the company's struggles with pricing pressures [1] Market Context - The company has been identified as a poor performer in the current market environment, reflecting broader challenges within the industry [1]

Core Insights - CarMax reported strong financial results for Q1 FY 2026, with total revenue of $7.55 billion, a 6% increase from the previous year, and adjusted earnings per share of $1.38, up 42% [2][4]. Financial Performance - Total revenue increased from $7.11 billion in Q1 FY 2025 to $7.55 billion in Q1 FY 2026, representing a 6% growth and beating expectations [2]. - Adjusted earnings per share rose from $0.97 to $1.38, marking a 42% increase and also exceeding expectations [2]. - Retail used vehicle unit sales grew by 9%, from 211,132 units to 230,210 units [2]. - The average price of used vehicles decreased slightly by 1.5%, from $26,526 to $26,120 [2]. Business Operations - Total vehicle unit sales increased nearly 6% year over year, driven by strong retail performance, with comparable store used unit sales up 8.1% [3]. - CarMax purchased 336,000 vehicles during the quarter, a 7% increase, and revenue from extended protection plans rose by 11% [3]. - The company emphasized effective expense management and stronger gross profit figures as key factors in its earnings growth [4]. Market Reaction - Following the positive financial report, CarMax shares surged nearly 11% in premarket trading, indicating strong investor confidence [6]. - The stock had been trading near two-year lows, with concerns about consumer sentiment, but the results suggested resilience in consumer purchasing behavior [7]. Strategic Initiatives - CarMax opened two new stand-alone centers for auctions and vehicle reconditioning in Phoenix and Dallas, aimed at supporting strong market conditions in those regions [8]. - The company accelerated its stock repurchase program, spending $200 million to buy back approximately 3 million shares, leaving $1.74 billion available for future repurchases, reflecting confidence in ongoing favorable industry conditions [9].

Financial Performance - CarMax beat expectations on both top and bottom lines [1] - CarMax's same store sales increased by 81% for the quarter, exceeding analyst expectations of around 77% to 78% [2] - Gross profit per vehicle was also slightly better than many analysts anticipated [3][4] Market Dynamics - Tariffs are contributing to increased demand for used cars, particularly evident in April and May [1] - Residual value in the used car market is near a record high, benefiting CarMax's buy and sell operations [3] Company Outlook & Sustainability - The market is uncertain about CarMax's ability to sustain its strong performance consistently [4] - CarMax has historically struggled with delivering consistent results on a quarter-over-quarter basis [5]

Core Insights - CarMax reported a 6% year-over-year increase in total sales to $7.5 billion for Q1 FY2026, with used unit comps rising by 8.1% and a record diluted EPS of $1.38, reflecting a 42% year-over-year growth [1] Funding Strategy and Risk Mitigation - CarMax Auto Finance (CAF) originated over $2.3 billion in loans with a 41.8% penetration rate, earmarking a $632 million principal balance of non-prime receivables for off-balance sheet sale, marking the company's first such move [3][4] - Total loan loss provisions increased to $102 million, resulting in a reserve balance of $474 million, or 2.76% of managed receivables excluding loans held for sale [3] Operational Advancements and Margin Expansion - Digital engagement accounted for 80% of retail sales in Q1 FY2026, with SG&A expenses growing only 3% despite a 9% increase in retail unit sales, achieving "omnicost neutrality" on three key efficiency metrics [5][6] - The deployment of AI technology, including the Sky AI virtual assistant, led to a 30% year-over-year improvement in customer self-service containment and a 24% increase in consultant productivity [7][9] Future Outlook - Management anticipates continued positive retail unit comp growth and market share gains for the remainder of FY2026, with service margins expected to remain positive [10]

Group 1 - CarMax Inc (NYSE:KMX) reported better-than-expected first-quarter earnings and revenue, leading to a 3.2% increase in stock price to $66.41 [1] - The company experienced its largest increase in used vehicle sales since late 2021, with 230,000 vehicles sold in the past quarter [1] - Despite the positive earnings report, KMX is down 18.6% in 2025 and is struggling to recover from a 52-week low of $61.34 [1] Group 2 - The trading volume for KMX options has significantly increased, with 7,414 calls and 3,713 puts exchanged, which is 3.1 times the typical volume [2] - The June 62.50 put is the most popular contract expiring today, indicating heightened interest in options trading [2] - The 50-day call/put volume ratio for CarMax stock is 2.14, ranking higher than 92% of readings from the past year, suggesting bullish sentiment [2] Group 3 - Approximately 8.5% of KMX's available float is sold short, indicating potential for gains if short interest unwinds [3] - It would take shorts nearly four days to cover their positions, which could further support stock price increases [3]

Core Insights - CarMax reported $7.55 billion in revenue for the quarter ended May 2025, a year-over-year increase of 6.1% and an EPS of $1.38 compared to $0.97 a year ago, exceeding the Zacks Consensus Estimate of $7.52 billion by 0.40% and delivering an EPS surprise of 16.95% [1] Financial Performance Metrics - Comparable Store Used Vehicles Sales increased by 6.6%, matching the average estimate from seven analysts [4] - Gross Profit per Unit for used vehicles was $2,407, surpassing the estimated $2,376.50 from six analysts [4] - Revenue per vehicle retailed (ASP) for used vehicles was $26.12 thousand, below the estimated $26.75 thousand [4] - Gross Profit per Unit for wholesale vehicles was $1,047, slightly below the estimated $1,054.24 [4] - Revenue per vehicle retailed (ASP) for wholesale vehicles was $7.96 thousand, compared to the estimated $8.29 thousand [4] - Net sales for wholesale vehicles were $1.25 billion, below the estimated $1.31 billion, representing a year-over-year decrease of 0.3% [4] - Net sales for other categories reached $190.36 million, slightly above the estimated $189.46 million, with a year-over-year increase of 6.1% [4] - Net sales for used vehicles totaled $6.10 billion, exceeding the estimated $6.02 billion, reflecting a year-over-year increase of 7.5% [4] - Third-party finance fees reported a net of -$0.70 million, better than the estimated -$1.33 million, showing a year-over-year change of -58.8% [4] - Extended protection plan revenues were $131.70 million, above the estimated $128.95 million, with a year-over-year increase of 10.9% [4] - Other sales and revenues totaled $22.90 million, below the estimated $25.17 million, representing a year-over-year decrease of 17.3% [4] - Advertising & subscription revenues reached $36.50 million, exceeding the estimated $34.15 million, with a year-over-year increase of 5.2% [4] Stock Performance - CarMax shares returned +1.8% over the past month, outperforming the Zacks S&P 500 composite's +0.5% change, with a current Zacks Rank of 3 (Hold) indicating potential performance in line with the broader market [3]

Financial Data and Key Metrics Changes - The company reported total sales of $7.5 billion, a 6% increase year-over-year, driven by higher volume despite lower prices [7][17] - Earnings per diluted share reached $1.38, marking a 42% increase compared to the previous year [17] - Total gross profit was $894 million, up 13% from the same quarter last year [17][18] - The company achieved a 42% growth in earnings per share, marking the fourth consecutive quarter of positive retail unit comps and double-digit year-over-year EPS growth [7][26] Business Line Data and Key Metrics Changes - Retail unit sales increased by 9%, with used unit comps up 8.1% [7][8] - Retail gross profit per used unit reached a record high of $2,407, an increase of $60 year-over-year [18] - Wholesale unit sales were up 1.2%, while average wholesale selling price declined by approximately $150 to $8,000 [8][18] - CarMax Auto Finance (CAF) originated over $2.3 billion, resulting in a sales penetration of 41.8%, which was 150 basis points below last year [11][12] Market Data and Key Metrics Changes - The company purchased approximately 336,000 vehicles during the quarter, a 7% increase from last year [8] - The digital capability supported 80% of retail unit sales, with 66% being omni-channel and 14% online [9] - The Net Promoter Score reached its highest level since the rollout of digital capabilities, indicating strong customer satisfaction [10] Company Strategy and Development Direction - The company is focused on enhancing its omni-channel experience and leveraging digital capabilities to drive sales and market share [5][10] - A new marketing campaign is set to launch later in the summer to promote the omni-channel experience and digital capabilities [10][22] - The company aims to achieve omni cost neutrality and improve operational efficiencies through strategic deployment of AI technology [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining sales growth and market share gains despite macroeconomic challenges [36][47] - The company anticipates service margin growth year-over-year, particularly in the first half of the year [23] - Management noted that the consumer sentiment is slightly less positive, but this has not significantly impacted buying habits [131] Other Important Information - The company doubled its share repurchase pace, buying back approximately 3 million shares for a total of $200 million [22] - The loan loss provision for the quarter was $102 million, influenced by seasonal sales and credit quality [12][16] Q&A Session Summary Question: How is the company viewing the sustainability of the recent acceleration in the used car business? - Management feels positive about the acceleration, attributing it to both macro factors and internal improvements in inventory management and pricing [34][36] Question: How should expenses be considered in the model moving forward? - Management emphasized their commitment to leveraging SG&A and finding efficiencies, indicating a focus on maintaining expense control [37][39] Question: How should comp growth be modeled for the balance of the year? - Management expects to continue growing sales and gaining market share, maintaining their outlook for the year [47] Question: Can you provide more color on the shift in non-prime lending? - Management confirmed that the held-for-sale transaction allows them to mitigate risk and supports growth in CAF income [50][55] Question: How is the marketing campaign aimed at increasing awareness of multi-channel capabilities? - The campaign focuses on educating consumers about their options and the flexibility of the buying experience [61][62] Question: How is the company addressing the financial stress of consumers? - Management noted that while consumers are slightly less positive, there has not been a significant impact on buying habits [131]

Financial Data and Key Metrics Changes - The company achieved total sales of $7.5 billion, a 6% increase year-over-year, driven by higher volume but partially offset by lower prices [6][17] - Earnings per diluted share (EPS) grew by 42% to $1.38, marking the fourth consecutive quarter of positive retail unit comps and double-digit year-over-year EPS growth [6][17] - Total gross profit reached $894 million, up 13% from the previous year, with retail gross profit per used unit at a record high of $2,407, an increase of $60 year-over-year [17][19] Business Line Data and Key Metrics Changes - Retail unit sales increased by 9%, with used unit comps up 8.1% [6][17] - Wholesale unit sales rose by 1.2%, while the average wholesale selling price decreased by approximately $150 per unit to $8,000 [7][17] - CarMax Auto Finance (CAF) originated over $2.3 billion, resulting in a sales penetration of 41.8%, which is 150 basis points below last year [11][12] Market Data and Key Metrics Changes - The company purchased approximately 336,000 vehicles during the quarter, a 7% increase from last year, with 288,000 vehicles sourced from consumers [7][8] - Digital capabilities supported 80% of retail unit sales, with 66% being omni-channel and 14% online [9][10] Company Strategy and Development Direction - The company is focused on enhancing its omni-channel experience, expanding gross profit, and managing credit spectrum expansion [4][5] - A new marketing campaign is set to launch later in the summer to promote the omni-channel experience and digital capabilities [10][22] - The company aims to achieve omni cost neutrality for the first time across three key metrics, indicating a strong focus on operational efficiency [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining sales growth and market share gains, attributing recent performance to both macro factors and internal improvements [36][47] - The outlook for the remainder of the year remains positive, with expectations for continued growth in sales and market share [47][48] Other Important Information - The company doubled its share repurchase pace, buying back approximately 3 million shares for a total of $200 million [22][27] - The loan loss provision for CAF was $102 million, influenced by seasonal sales and credit quality, with a total reserve balance of $474 million [12][14] Q&A Session Summary Question: Sustainability of used car business acceleration - Management noted that the acceleration is driven by both macro factors and internal improvements, with confidence in continued growth for the year [34][36] Question: SG&A expenses and future modeling - Management emphasized their commitment to leveraging SG&A and finding efficiencies, with a focus on maintaining expense control [37][39] Question: Guidance on comp growth for the balance of the year - Management indicated that they expect to continue growing sales and gaining market share, maintaining their outlook for the year [47][48] Question: Impact of student loans on consumer credit - Management reported that about 30% of their customers have student loans, but no material change in performance has been observed [71][72] Question: Marketing campaign details - The new marketing campaign aims to educate consumers about the omni-channel capabilities and the flexibility in purchasing options [60][62] Question: Credit penetration and growth strategy - Management confirmed plans to increase subprime penetration, targeting a growth rate of 50% in the future [65][66] Question: Share buyback spending trends - Management intends to modestly accelerate share buybacks throughout the fiscal year, based on valuation and cash flow dynamics [124][125]