CarMax(KMX) - 2025 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - In FY 2025, the company spent approximately $425 million on share buybacks, with an expectation of a step-up in FY 2026 [21] - The first quarter of FY 2026 saw $200 million allocated for share buybacks, indicating a positive trend in free cash flow [21] Business Line Data and Key Metrics Changes - The company is focusing on diversifying inventory sourcing to ensure competitive pricing for consumers, which is crucial in the current economic environment [27] - Efforts are being made to improve efficiency measures that will impact both cost of goods sold and selling, general, and administrative expenses [27] Market Data and Key Metrics Changes - The impact of tariffs has been somewhat muted so far, with no significant inflation in parts observed, which is beneficial for the used car market [23][24] - As new car prices rise, the used car industry is expected to benefit, making used cars more affordable for consumers [23] Company Strategy and Development Direction - The company is committed to enhancing customer experience by ensuring the largest total addressable market compared to competitors [26] - New funding tools and strategies are being implemented to increase profits, which can be reinvested into the business [27] - The focus on ancillary profits, such as extended service plans, is part of the strategy to drive both top-line and bottom-line growth [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the dynamic environment due to tariffs but remains optimistic about the company's ability to manage costs effectively [23][24] - The company believes that continued growth in the past four quarters will positively influence stock performance [28] Other Important Information - The board of directors recommended voting against a shareholder proposal for special shareholder meeting rights, stating it is not in the best interest of the company [15] - The preliminary voting results indicated that all director nominees were elected, and the appointment of KPMG as auditors was ratified [18] Q&A Session Summary Question: How much was spent on share buybacks in 2024 and how much is expected in 2025? - The company spent approximately $425 million on share buybacks in FY 2025 and expects a step-up in FY 2026 [21] Question: How is the company positioning itself to handle tariffs? - The impact of tariffs has been muted, with no inflation in parts observed, and the company is focused on sourcing at the best prices [23][24] Question: What can be done to reward CarMax shareholders given the stock price comparison with Carvana? - The company is focusing on customer experience, diversifying inventory sourcing, and improving efficiency to drive growth and positively impact stock performance [26][27][28]