CarMax Inc. (NYSE:KMX) Q2 2021 Earnings Conference Call - Final Transcript

Sep 24, 2020 • 09:00 am ET

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CarMax Inc. (NYSE:KMX) Q2 2021 Earnings Conference Call - Final Transcript

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Presentation
Executive
Bill Nash

is built to provide a personalized multi-channel experience that empowers customers to buy car on their terms. It is designed as a world class in-store experience, a world class online experience and a seamless integration of the two, giving us the largest addressable market within the used car industry. No other used car retailer is in the position to deliver this kind of customer experience the way we can.

Now turning to our results. For the second quarter, we achieved a 3.9% increase in total used units sold and the used unit comp growth of 1.2%. In June, we experienced high-single digit negative used unit comp, which was more than offset by positive comps in both July and August. The improvement in sales was the result of a variety of factors including solid execution in operations, finance, and marketing. In addition to a strengthening used car sales environment.

In the quarter, we saw solid growth in web traffic, averaging approximately 29 million visits per month to carmax.com. During the second quarter, our salable inventory was below our targeted level, as we saw a rapid increase in demand from the first quarter. For the past three months, our teams have done a phenomenal job buying and producing vehicles at record levels, increasing salable inventory by more than 50% in the quarter.

Today, I'm pleased to report that we've successfully ramped inventory to targeted levels, providing customers with more than 55,000 vehicles nationwide, the largest of any used car retailer. We offer a broad selection of inventory, with a focus on zero to 10-year old vehicles. This quarter we saw five to 10-year-old vehicles increased to 27% compared with 22% last year as a percentage of our sales mix, reflecting customer demand for older and less expensive vehicles.

Gross profit per used unit for the quarter was $2,214, up $31 per unit from a year ago. For wholesale, performance was supported by strong appreciation in the market and excellent execution by our teams. Volume was up 5.1%, driven by one more auction date in the quarter and a record buy rate. We also achieved record gross profit per wholesale unit of $1,086 in the quarter. The result of strong appreciation and operational execution. By the end of the quarter, we saw depreciation return to the marketplace. As a reminder, all auctions continue to run virtually throughout the quarter.

As our result showed, we have achieved a substantial recovery in our business. Over the past several months our talented workforce has demonstrated incredible agility and ability to drive change in one of the most challenging environments that we've ever faced. We are proud to say that by the end of July, our team was back together again and we no longer had associates on furlough. We are now actively hiring across the country as we continue to grow our core business, enhance our omni-channel offerings and pursue new opportunities.

At this point, I'd like to turn the call over to Enrique to provide