CarMax (NYSE:KMX) Q3 2026 Earnings Call December 18, 2025 09:00 AM ET Company ParticipantsJon Daniels - EVP of CarMax Auto FinanceTom Folliard - Interim Executive Chair of the BoardEnrique Mayor-Mora - EVP and CFOMichael Montani - Managing DirectorSharon Zackfia - Group Head of ConsumerDavid Lowenstein - VP of Investor RelationsDaniela Haigian - VP of Equity ResearchDavid McCreight - Interim President and CEOJeff Lick - Managing DirectorConference Call ParticipantsJohn Babcock - Equity AnalystBrian Nagel - ...

Financial Data and Key Metrics Changes - Total sales for the third quarter were $5.8 billion, down 6.9% year-over-year, reflecting lower volume [15] - Retail unit sales declined by 8%, with used unit comps down 9% [15] - Average selling price increased to $26,400, a year-over-year increase of $230 per unit [15] - Net earnings per diluted share were $0.43, down from $0.81 a year ago, impacted by $0.08 of restructuring expenses [16] - Total gross profit was $590 million, down 13% from the previous year [16] - SG&A expenses were $581 million, up 1% from the prior year [17] Business Line Data and Key Metrics Changes - Used retail margin decreased by 11% to $379 million, driven by lower volume and profit per used unit of $2,235 [16] - Wholesale vehicle margin decreased by 17% to $115 million, with gross profit per unit down approximately $120 year-over-year [17] - CarMax Auto Finance (CAF) income was $175 million, up 9% over last year [17] Market Data and Key Metrics Changes - The company purchased approximately 238,000 vehicles during the quarter, down 12% from last year [16] - The average wholesale selling price declined by $40 per unit to $8,100 [15] Company Strategy and Development Direction - The company is focused on narrowing the price gap with the broader marketplace by lowering margins and increasing marketing spend [10][12] - A renewed emphasis on customer experience and digital selling capabilities is being prioritized to drive conversion and improve customer satisfaction [11][25] - The company aims to reduce SG&A expenses by at least $150 million by the end of fiscal year 2027 [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that recent results have been unacceptable and emphasizes the need for immediate change [5][10] - There is optimism that immediate pricing and marketing actions will improve sales performance, although they may pressure earnings in the near term [13][19] - The company believes it has the necessary attributes for a successful turnaround and is committed to strengthening performance [14][25] Other Important Information - The board is actively searching for a permanent CEO who can drive sales and maximize the benefits of the omnichannel experience [6][7] - The company is committed to leveraging technological platforms and process enhancements to reduce costs [12] Q&A Session Summary Question: Can you provide insight on the GPU reset expected in February? - Management indicated that margin reductions will be meaningful and are optimistic about improving retail sales trends [30] Question: Are there customer cohorts where CarMax has become less competitive? - Management noted a loss of volume in the higher FICO segments and is focused on recapturing that market [31][32] Question: What is the baseline SG&A for the $150 million reduction goal? - The baseline SG&A is approximately $2.5 billion, with reductions compared to last year [47][48] Question: What is the strategy for reducing COGS? - The company is focused on COGS reduction through initiatives like regional reconditioning centers and improved parts selection tools [79][80] Question: What is the outlook for service margins? - Service margins are under pressure, with expectations of being slightly profitable or unprofitable for the full year depending on sales performance [93][94]

Core Viewpoint - Carvana (CVNA.US) is set to be included in the S&P 500 index, effective December 22, which is expected to attract passive investment inflows [1] Group 1: Company Performance - Carvana's stock rose over 8% in pre-market trading on Monday, indicating a potential historical high at market open [1] - Bank of America analysts maintained a buy rating and raised the target price from $385 to $455, citing the company's inclusion in the S&P 500 and strong financial performance [1]

天眼查App显示，近日，四川恒途优选二手车销售有限公司成立，法定代表人为尹崇连，注册资本10万 人民币，经营范围为一般项目：二手车经纪；二手车交易市场经营；汽车销售；汽车零配件批发；汽车 拖车、求援、清障服务；汽车装饰用品销售；新能源汽车整车销售；新能源汽车电附件销售；汽车零配 件零售；技术服务、技术开发、技术咨询、技术交流、技术转让、技术推广。（除依法须经批准的项目 外，凭营业执照依法自主开展经营活动）。 ...

在帮助企业降本减负方面，主要聚焦实施地方法人银行支农支小再贷款奖补、银行机构养老再贷款 奖补、科技创新债券发行补贴、科技创新债券担保分险支持补贴等。如对2025年1月1日至2026年12月31 日期间，地方法人银行运用人民银行支农支小再贷款资金支持小微企业（含个体工商户、小微企业主） 和"三农"主体取得积极成效的，按其再贷款使用额度给予2‰左右的分档奖补；银行机构运用中国人民 银行服务消费与养老再贷款发放的养老产业贷款，省级财政按新发放贷款金额的1%给予一次性奖补， 单户企业最高200万元。 四川省人民政府办公厅印发《关于巩固拓展经济回升向好势头的若干政策措施》的通知 在推进企业快速成长方面，将实施工业项目竣工达产激励、工业企业生产增长激励、建筑业企业生 产增长激励、商贸企业经营增长激励、大企业大集团定向采购激励以及支持培育新业态消费市场主体。 如对2025年10月1日至2026年3月31日期间，竣工投产且新增生产规模2000万元以上的工业项目，省级财 政按不超过核定项目设备（含软件）投资的10%，给予单个项目最高1500万元激励。 省政府办公厅近日印发《关于巩固拓展经济回升向好势头的若干政策措施》，从大力支 ...

Core Viewpoint - The Beijing Changping District People's Court has highlighted a significant case involving fraud in the sale of a used vehicle, where the seller failed to disclose a major accident history, leading to a court ruling in favor of the consumer for a total of 144 million yuan in refunds and damages [1][2][3] Group 1: Case Details - A consumer purchased a used car for 720,000 yuan, with a down payment of 220,000 yuan, under the condition that the vehicle had no major accidents [1] - After discovering the vehicle had a significant accident history and extensive repairs amounting to approximately 1.202 million yuan, the consumer sought a refund and damages from the seller [1][2] - The court found that the seller had committed fraud by concealing the vehicle's true condition, thus violating the contract terms [2] Group 2: Legal Findings - The court identified the key issue as whether the seller engaged in fraudulent behavior during the sale process [2] - According to civil law, fraud involves intentionally providing false information or concealing true information to mislead the other party, which was established in this case [2] - The court ruled in favor of the consumer, ordering the seller to refund the purchase price and compensate for damages, confirming the seller's liability for fraud [3]

Market Movements - US stock index futures are all up ahead of the market opening, with Dow futures rising by 0.42%, S&P 500 futures by 0.45%, and Nasdaq futures by 0.56% [1] - European indices also show positive movements, with Germany's DAX up 0.15%, UK's FTSE 100 up 0.55%, France's CAC 40 up 0.05%, and the Euro Stoxx 50 up 0.06% [2][3] Oil Prices - WTI crude oil has decreased by 1.90%, trading at $64.47 per barrel, while Brent crude oil has fallen by 1.70%, priced at $68.04 per barrel [3][4] Economic News - The US government shutdown risk and non-farm payroll data are major concerns for investors this week, especially after optimistic GDP and consumer spending data were released [5] - The upcoming non-farm payroll data is crucial for market sentiment regarding potential interest rate cuts by the Federal Reserve [5] Company News - BMO Capital Markets has raised its year-end target for the S&P 500 to 7000 points, citing strong market performance and resilience [6] - Cleveland Fed President Loretta Mester expressed concerns about inflation remaining above target levels, opposing interest rate cuts [6] - Gold prices have surged to a new high, exceeding $3800, driven by strong demand from central banks and ETF investors [6] - OPEC+ is considering increasing oil production by at least 137,000 barrels per day in November, despite warnings of oversupply [6] Individual Stocks - MoonLake Immunotherapeutics' stock plummeted over 87% after disappointing trial results for its skin disease drug [7] - GlaxoSmithKline's CEO Emma Walmsley will step down after nine years, with Luke Miels set to take over in January 2026 [8] - Toyota's global sales rose for the eighth consecutive month, driven by strong demand in the US, with an overall increase of 2.2% [9] - Uxin Group reported a significant increase in retail transaction volume, up 153.9% year-over-year for Q2 [9]

Financial Data and Key Metrics Changes - The second quarter net earnings per diluted share was $0.64, down from $0.85 a year ago, primarily driven by lower volume and a CarMax Auto Finance (CAF) loss provision adjustment [17][18] - Total gross profit was $718 million, a decrease of 6% from the previous year's second quarter [18] - Retail gross profit per used unit was $2,216, consistent with historical averages, while wholesale gross profit per unit was $993, showing a slight decrease [18][19] Business Line Data and Key Metrics Changes - Total sales for the quarter were $6.6 billion, down 6% year-over-year, with retail unit sales declining by 5.4% and used unit comps down 6.3% [8][9] - Wholesale unit sales decreased by 2.2% compared to the second quarter last year, but the average wholesale selling price increased by approximately $125 per unit to $7,900 [9][10] - CarMax Auto Finance originated over $2 billion, resulting in a sales penetration of 42.6%, which was 60 basis points above last year [13] Market Data and Key Metrics Changes - The average selling price of used vehicles was $26,000, reflecting a year-over-year decrease of approximately $250 per unit [9] - The company noted a pullback in demand from mid to high FICO customers, indicating a potential strain on consumer sentiment [75][94] Company Strategy and Development Direction - The company is focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth, with key priorities including price competitiveness, consumer awareness, and SG&A reductions of at least $150 million over the next 18 months [5][7][11] - The "Wanna Drive?" brand campaign aims to enhance the omnichannel customer experience and increase brand awareness [10][11] - The company plans to continue investing in technology and operational efficiencies to support its growth objectives while maintaining a disciplined approach to pricing [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the second quarter results fell short of expectations but expressed confidence in the strategy and earnings model, projecting high teens EPS growth with mid-single-digit retail unit growth [5][21] - The management highlighted that while the consumer environment remains aggressive, they are positioned well to gain market share and improve sales performance in the upcoming quarters [75][76] Other Important Information - The company repurchased approximately 2.9 million shares for a total expenditure of $180 million during the second quarter, with $1.56 billion remaining in the repurchase authorization [22] - The deployment of AI technology, such as the Sky virtual assistant, has led to significant improvements in operational efficiency and customer experience [19][20] Q&A Session Summary Question: Impact of pull forward demand on used unit sales - Management indicated that both inventory depreciation and pull forward demand were significant factors affecting sales, with September showing stronger performance compared to the second quarter [27][28] Question: Pricing strategy and market competitiveness - Management confirmed a renewed focus on competitive pricing, acknowledging that they were less competitive in the previous quarter but are now in a better position [31][32] Question: Update on CarMax Auto Finance income expectations - Management revised expectations for CAF income to be flat to slightly down year-over-year due to a larger provision impact this quarter [38][39] Question: Areas of cost reduction in SG&A - Management emphasized that cost reductions would not impact growth strategy and would be reinvested into areas that drive sales, such as marketing [43][48] Question: Consumer sentiment and market conditions - Management noted that mid to high FICO customers are currently more cautious, impacting app volume and sales, but they remain committed to gaining market share [75][94] Question: Reserved inventory policy and its effects on sales - Management clarified that reserved inventory is beneficial for customer interest but acknowledged the need to manage how long a vehicle can be held in reserve [99][100]

Group 1 - The article discusses tax incentives for purchasing new energy vehicles, including exemption from vehicle purchase tax for purchases made between January 1, 2024, and December 31, 2025, with a maximum exemption of 30,000 yuan per vehicle [3] - For purchases made between January 1, 2026, and December 31, 2027, the vehicle purchase tax will be halved, with a maximum reduction of 15,000 yuan per vehicle [3] - The policies are based on the announcement from the Ministry of Finance, State Administration of Taxation, and the Ministry of Industry and Information Technology [3] Group 2 - The article outlines tax benefits for used car sales, allowing registered car sales enterprises to issue reverse invoices for used cars purchased from individuals since October 1, 2022 [3] - From now until December 31, 2027, used car dealers can apply a reduced VAT rate of 0.5% instead of the standard 3% on the sale of acquired used cars [3] - The policies are based on notifications from the Ministry of Commerce and the Ministry of Finance [3] Group 3 - The article highlights tax policies for recognized advanced technology service enterprises, which can benefit from a reduced corporate income tax rate of 15% [12][14] - To qualify as an advanced technology service enterprise, companies must meet specific criteria, including having over 50% of employees with at least a college degree and generating at least 50% of total revenue from recognized advanced technology services [17][21] - The policies are based on notifications from the Ministry of Finance, State Administration of Taxation, and other relevant departments [21]

Core Viewpoint - Carvana's stock surged nearly 16% in pre-market trading following the release of its Q2 2025 financial results, which exceeded Wall Street expectations in both revenue and earnings per share [1] Financial Performance - Carvana reported revenue of $4.84 billion for Q2 2025, representing a year-over-year increase of 42%, surpassing the Wall Street estimate of $4.58 billion [1] - The company's earnings per share (EPS) for the same period was $1.28, exceeding the expected EPS of $1.03 [1]