With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

This year's 100 Best Companies to Work For are rebuilding the social contract at work so people feel supported, trusted, and future-ready as they undergo that transition.

100 Best Places to Work 2026_CarMax

Employees say:"I love working for CarMax and I will retire with CarMax. CarMax truly cares about the individual, whether customer, associate or community. CarMax is more than a place to work and make money, it completely changed my life. I feel like my personal values align with the CarMax core values and CarMax truly embraces each associate for their own authentic self. I have grown my career from an hourly associate to a Senior Manager and I have felt so much support. I have built financial success in my life through CarMax valuing me as an individual, having honest conversations on where I can improve as well as recognizing me for the strengths I bring to the table. CarMax is the best place to work!"

Fortune 100 Best Companies to Work For

See which workplaces made this year's list.

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Employees say:"CarMax truly cares about innovation and allows employees the opportunity to present ideas and solutions as well as the time to prove out those ideas. Everyday I see people coming together to improve and develop new solutions that make this a great place to work for associates, and provide a better shopping experience for our customers."

Best Large Workplaces in Retail

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The top companies on our list have one thing in common: Staff largely trust leadership to see them as well-rounded people and reward them for a job well done.

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Employees say: "CarMax is very much driven to create a welcoming and associate-first culture. I am confident that company leadership wants to create a company and business model that is ethical and respects customers and employees, instead of chasing short-term profitability."

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

2025 Best Large Workplaces for Parents_CarMax_US1__68b9ad8e7757c3af0ca2bb8e_1

Employees say:"CarMax is, hands down, the best place I have worked in my long career. I truly feel valued here, and I believe my work makes a difference. My colleagues and managers are smart, competent, kind, and enjoyable to work with. Twice a year, we provide company feedback via a survey, and the company has made meaningful changes based on that feedback."

Best Large Workplaces for Parents

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Employees say:"CarMax is very much driven to create a welcoming and associate-first culture. I am confident that company leadership wants to create a company and business model that is ethical and respects customers and employees, instead of chasing short term profitability."

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-CarMax

This is the 20th year that CarMax, a used autos retailer, has appeared on the list.&nbsp;The company has started using AI to support business processes and consumer-facing content, such as car reviews, to help free up employees' time. In addition, CarMax is using AI to power multiple customer experiences, such as giving online offers to customers to sell their car to CarMax in minutes, and providing personalized car recommendations to help customers buy their next car from CarMax quickly. CarMax also invests in its virtual AI assistant, Skye, to help streamline its customer experience centers and support customers as they are shopping, through steps like vehicle shipping and appointment preparation and management. &nbsp;For CarMax, community involvement is big. One of its longest-lasting key relationships is with <a href="https://kaboom.org/">KABOOM!</a>, an accredited charity that builds playgrounds in underfunded and underinvested communities. Since the partnership formed in 2011, more than 11,000 employees have come together to build 206 play spaces.

The 200 companies on this list are transforming industries from the inside out.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-CarMax

The no-haggle retailer of used autos is appearing on the Best Companies to Work For list for the 19th time this year. 
<ul> 
 	<li>New hires receive a warm welcome even before their first day. As soon as someone accepts a job offer, the team leader calls to welcome them, and a mentor calls to answer any questions they might have before they start.</li> 
 	<li>Elaborate onboarding includes making sure new hires have clear direction about their schedule and are provided with smaller details, such as where they should park and what restaurants are nearby, before their first day.</li> 
 	<li>Workers can utilize the CarMax Connect web platform to get personalized information, aggregated news, and useful company resources.</li> 
 	<li>“It's the first company that I've worked for that makes you feel the company puts its employees first, and truly understands that it's the sum of its parts that make up the whole,” said one employee. “They're also very understanding when it comes to personal issues getting in the way of work and allowing you to take time off to address them, and not make you feel like you're letting the whole company down for doing so.”</li> 
</ul>

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

Fortune Global 500

GPTW 2023 Best Workplaces Retail Large CarMax_6

Employees say: 
 
"I truly feel I am an equal employee. This is the first place that I have worked at where all of management makes you feel equal to them. There are no favorites here, which makes it a very relaxed, amazing place to work."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

100-Best-2022-CarMax

CarMax, the nation’s leading used-car retailer, believes that good customer service begins with treating employees right. At the peak of the pandemic, every CarMax manager met with their associates to help them balance work and family life. As a result, some employees were able to modify their schedules or take a leave of absence that enabled them to continue receiving benefits. And CarMax aims to hold itself to a high standard; associates with concerns over safety or ethics are encouraged to speak up via an open door policy. “The most amazing thing about working here is our managers genuinely care about us,” says one employee. “They will put in extra time and effort to help us with anything we need, even if it’s something in our personal life.”

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Great Places to Work in Retail Large- 2022-CarMax_1000333-1

Employees say: 
 
“I feel that everyone here is welcoming and accepting of everyone. We are encouraged to develop relationships within our department as well as others. We are empowered to make decisions we feel are necessary in the moment whether it is business or customer related. I can be myself at work and that is a great feeling. I feel people have the best interests of everyone on a personal as well as professional level.”

This year’s Fortune 500 marks the 68th running of the list.

Our 2021 list of the 100 best companies to work for, as ranked by their employees. See which companies made the list.

100-best-companies-2021-37-Carmax

When closures led to furloughs of some employees, it wasn’t just hourly workers who felt the squeeze. “I appreciated that executives took a pay cut and that the board of trustees did not receive any compensation,” one employee writes. (Indeed, CEO William Nash took a 50% cut.) The company covered health insurance premiums for furloughed workers, and an associate disaster relief fund enabled employees to apply for help if they became ill or experienced a qualifying hardship. By the end of July 2020, CarMax no longer had any associates on furlough, and positions had been made available for approximately 99% of impacted employees.

See which retailers made this year's list.

Best-Workplaces-Retail-2021-CarMax

Employees say: 
 
“The culture at CarMax is by far the best out of all the companies I have worked for. I truly feel CarMax appreciates their associates and will go above and beyond to demonstrate that to them. I am proud to say CarMax when people ask where I work!”

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-136-CarMax

As the largest used car retailer in the United States, CarMax generates revenue from both the retail business and its wholesale auction house.

Our 2020 list of the 100 best companies as ranked by their employees. See which companies made the list.

Best-Workplaces-Retail-2020-CarMax

Employees say: 
 
"Carmax is the first company I've worked for that 'walks the walk.' Being a female in a male-dominated industry was difficult, but here I'm treated as an equal, and have had the opportunity to learn in stretch roles, and am now managing my own store!"

This year's Fortune 500 marks the 66th running of the list.

F500-2020-173-CarMax

Founded in 1993, the auto retailer buys and sells used vehicles in its more than 200 store locations across the U.S.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

World's Most Admired Companies

Our 2019 list of the 100 best companies as ranked by their employees. See which companies made the list.

From groceries to apparel to home decor, see which companies made the list.

CarMax-Best Workplaces in Retail 2019

Employees say: 
“I believe the people that are hired here are not just hired by credentials, but also integrity, which plays a big part in creating the Carmax atmosphere. There is plenty of room for growth and opportunity for many people.”

This year's Fortune 500 marks the 65th running of the list.

We surveyed tens of thousands of young employees to create this list of millennials’ favorite workplaces.

Carmax-best workplaces millennials 2019

Employees say: 
“At CarMax everyone cares for each other and is there for each other. We make friends and have a wonderful time at work. We share and help each other through any situation work related or not.”

100 Best Large Workplaces for Millennials

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

Our 2018 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 64th running of the list.

best-workplaces-millennials-2018-CarMax

Employees say: 
 
&nbsp; 
 
"CarMax really focuses on building skill levels vs. driving numbers. We all know that numbers are the bottom line, but here they focus more on behavior. From my sales experience, if you have the behaviors, and they're strong, the numbers always come." 
 
&nbsp; 
 
"I was hired as a detailer, I couldn't even drive as stick shift. An entry level mechanic position opened and I was afforded the opportunity. I went on to become a master mechanic. After 8 years with the company, I've just accepted an offer for an analyst position at home office. The room for advancement is incredible." 
 
&nbsp;

Our 2017 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 63rd running of the list.

best workplaces for millennials 2017 CarMax

Employees say: 
 
&nbsp; 
 
"Although I perform the same business functions every day, no two days are the same at CarMax. The employees are a diverse group of people, which makes it especially enjoyable to work here. I have worked at CarMax for over 5 years and plan on working here for many more years to come!" 
 
&nbsp; 
 
"[The company] will not only teach you what you need to or want to know, but will also give you the opportunity to advance yourself by helping pay for schooling. CarMax teaches you a lot about yourself as a person by helping you work on your skills ... They inspire me to be a better person every day." 
 
&nbsp;

Google/Alphabet is the No. 1 place to work for the seventh time in 10 years. Six newcomers include Veterans United at No. 30, Hilton Hotels at No. 56, and Slalom Consulting at No. 100. IKEA’s U.S. arm returns to the list, along with GoDaddy and Sheetz.

This year's Fortune 500 marks the 62nd running of the list.

The second annual ranking of the best employers for workers 35 and under.

best workplaces for millennials 2016- CarMax

"I always enjoy the camaraderie and family feel. CarMax allows me to grow knowing mistakes will happen, making the environment a positive one to work in. The exposure and trainings I have received have given me valuable skill sets that will stick with me for the rest of my life. I also feel that I am a person and not a number!" says one millennial worker. 
 
&nbsp; 
 
"Management really cares about employee development. My manager works closely to help me improve in preparation for a promotion. I am also encouraged to focus on projects and types of work that interest me," explains another millennial. 
 
&nbsp; 
 
Read the .

This year’s list marks Fortune's 18th year of partnering with Great Place to Work. Google ranks No.1 for the sixth time, and 16 new companies make impressive debuts, including Acuity (No. 3), Twitter (No. 24), and Riot Games (No. 13).

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Google tops the list once again, marking its eighth appearance and fifth time as No. 1.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Best Workplaces For Parents

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Best Workplaces In Retail

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CarMax started as a solution for consumers who dreaded a trip to the car dealer. Emphasizing a stress-free experience, it introduced the concept of “no-haggle” purchasing through slogans like “You shouldn’t have to argue to get a fair price.” Now CarMax is the largest U.S. retailer for used cars with 250 stores nationwide and a portfolio of assets worth nearly $18 billion. In its fiscal year ended February 2025, the company sold roughly 790,000 pre-owned vehicles and another 540,000 wholesale vehicles at auctions.

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CarMax (KMX): Company Profile, Stock Price, News, Rankings

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CarMax

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Ladies and gentlemen, thank you for standing by. Welcome to the second quarter fiscal year 2026 CarMax earnings release conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. 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, Vice President, Investor Relations. Please go ahead.

Thank you, Nikki. Good morning, everyone. Thank you for joining our fiscal 2026 second quarter earnings conference call. I'm here today with Bill Nash, our President and CEO, Enrique Mayor-Mora, our Executive Vice President and CFO, and Jon Daniels, our Executive Vice President, CarMax Auto Finance. Let me remind you, our statements today that are not statements of historical fact, including but not limited to statements regarding the company's future business plans, prospects, and financial performance, are forward-looking statements we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current knowledge, expectations, and assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, we disclaim any intent or obligation to update them.

For additional information on important factors and risks that could affect these expectations, please see our Form 8-K filed with the SEC this morning, our annual report on Form 10-K for fiscal year 2025, and our quarterly reports on Form 10-Q previously filed with the SEC. Please note, in addition to our earnings release, we have also prepared a quarterly investor presentation, and both documents are available on the Investor Relations section of our website. Should you have any follow-up questions after the call, please feel free to contact our Investor Relations department at 804-747-0422, extension 7865. Lastly, let me thank you in advance for asking only one question and getting back in the queue for more follow-ups. Bill?

Great, thank you, David. Good morning, everyone, and thanks for joining us. Today, I want to start with our priorities. While our second quarter results fell short of our expectations, we remain focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth for years to come. We have a differentiated and best-in-class omnichannel customer experience and are focused on maximizing that advantage by driving operational efficiency and sharpening our go-to-market approach. With this mindset, our key priorities include: First, focusing on price and selection. This includes maintaining competitive prices while minimizing macro factor impact and having the cars consumers are looking for at CarMax's high-quality standards. Second, driving consumer awareness of our differentiated experience. This includes not only our new brand campaign, Wanna Drive, but also enhancing the conversion waterfall from web traffic all the way to the ultimate buy and/or sell decision.

Third, delivering incremental SG&A reductions of at least $150 million over the next 18 months. This will be broad-based, and it includes leveraging technology to drive efficiencies and our net promoter score to new heights. Finally, generating additional profit through components of our diversified business. This includes increasing CAF penetration and profitability in a responsible and thoughtful way. It also includes pursuing other opportunities across our business to drive incremental flow-through to our bottom line. We are already making progress across these fronts and are confident in our strategy and our earnings model, which will produce high team EPS growth with mid-single-digit retail unit growth. During our first quarter call, I mentioned that we saw an uptick in sales volume in March and April due to the tariff speculation. This impacted our performance in the second quarter in two ways.

First, we ramped our inventory ahead of the second quarter to support this growth. Across the back half of May through the end of June, we saw about $1,000 in depreciation, which natively impacted our price competitiveness and our sales. Second, while hard to quantify, we believe there was a pull forward of demand into the first quarter. In the second quarter, we responded by lowering retail margins to drive sell-through, and we intentionally slowed buys to balance our inventory with sales. This strategy has worked as both price competitiveness and inventory position have improved since that time and have put us in a better position for the third quarter. During the quarter, we delivered total sales of $6.6 billion, down 6% compared to last year, reflecting lower volume. In our retail business, total unit sales declined 5.4%, and used unit comps were down 6.3%.

Pressured performance across our age 0 to 5 inventory was partially offset by increased sales in older, higher-mileage vehicles. Average selling price was $26,000, a year-over-year decrease of approximately $250 per unit. Second quarter retail gross profit per used unit was similar to last year, but down approximately $200 from the first quarter. The sequential decline was more than twice our historical average, reflecting the actions that I mentioned earlier. We will continue to focus on maintaining our price competitiveness, and we will remain disciplined yet nimble in leveraging selection and margin to drive sales. Wholesale unit sales were down 2.2% versus the second quarter last year. Average wholesale selling price increased approximately $125 per unit to $7,900, and wholesale gross profit per unit was historically strong and similar to last year. We bought approximately 293,000 vehicles during the quarter, down 2% from last year.

We purchased approximately 262,000 vehicles from consumers, with more than half of those buys coming through our online instant appraisal experience. With the support of our Edmund sales team, we sourced the remaining approximately 31,000 vehicles through dealers, which is slightly up from last year. This quarter's buy performance is a direct result of our decision to pull back offers to right-size inventory. We are no longer intentionally slowing buys and expect to see year-over-year improvement in the third quarter. At the end of August, we launched our new Wanna Drive brand positioning campaign that brings to light our unique omnichannel experience. Our net promoter score is the highest it's been since we rolled out our digital capabilities nationwide, driven by record high satisfaction among customers purchasing online as well as those using our omnichannel experience.

Wanna Drive spotlights this unique offering, empowering customers to buy their way with the clarity, confidence, and control to navigate the journey on their terms. Wanna Drive appears across TV, streaming, social, digital, and audio, and represents the first phase of a sustained multiphase strategy. This approach, which we will complement with increased advertising spend, demonstrates our commitment to long-term brand investment that supports our growth objectives. As previously discussed, we've been focused on driving SG&A efficiencies. We're pleased with our progress so far and have line of sight to at least an incremental $150 million in SG&A reductions over the next 18 months. This does not impact our growth strategy, as we will continue to invest in initiatives that position us for the future. Later, Enrique will comment on the anticipated scope of our efforts and the likely timing.

At this time, I will now turn the call over to Jon to provide more detail on CarMax Auto Finance and our continuing focus on full credit spectrum expansion. Jon?

Thanks, Bill, and good morning, everyone. During the second quarter, CarMax Auto Finance originated over $2 billion, resulting in sales penetration of 42.6%, net of three-day payoffs, which was 60 basis points above last year. The weighted average contract rate charged to new customers was 11.2% versus 11.4% last quarter and reflects downward rate testing executed within the quarter. While CAF's full quarter increase in penetration appears modest, we believe the tariff pull forward in Q1 negatively impacted CAF share during the early part of the quarter. Since the beginning of the fiscal year, we have made underwriting adjustments that translate to 100 to 200 basis points of growth, but the full realization of this growth can be impacted by non-controllable factors such as customer credit mix and partner lender behavior.

It is important to note that more than half of the impact from these adjustments comes from recaptured Tier 1 segments, but with additional criteria overlaid to reduce risk, while the remainder comes from within the top half of the Tier 2 space, which we have been testing over the past year. Third-party Tier 2 and Tier 3 penetration in the quarter combined for 23.8% of sales versus 24.4% last year, as CAF's growth had an impact on partner volume. CAF income for the quarter was $103 million, down $13 million from FY25. Net interest margin on the portfolio was 6.6%, up over 50 basis points from last year and relatively in line with last quarter. CAF's loan loss provision of $142 million results in a total reserve balance of $507 million for 3.02% of managed receivables exclusive of auto loans held for sale.

Of the $142 million, $71 million is attributed to new originations within the quarter, while the remaining $71 million is an adjustment to the loss expectation of the existing portfolio. Also of note, as was seen in the first quarter, there was a reduction on the required provision stemming from $16 million in the reserve allocated to loans booked prior to Q2, now classified as held for sale. The primary driver of the $71 million adjustment on the existing portfolio comes from additional losses anticipated within the 2022 and 2023 vintages. Recall, these customers have been the most impacted by the convergence of rapidly increasing vehicle prices and broader inflation. Despite the observed worsening, these vintages still remain highly profitable at an estimated lifetime profit of $1,500 per unit versus $1,800 contemplated at origination.

Additionally, they continue to shrink in size in contribution to the overall portfolio as they are replaced with more recently originated Tier 1 receivables at significantly lower loss rates. Note that 2024 and 2025 post-contraction vintages continue to be right in line with our original loss expectations. Regarding the funding aspect of our full spectrum efforts, yesterday we closed our 25B transaction, our second non-prime securitization of the year. This was upsized to $900 million in total notes and for the first time included the sale of most of the residual financial interest in the transaction to third-party investors, thus resulting in off-balance sheet treatment. We expect the gain on sale to be approximately $25 to $30 million in third quarter income.

We also expect to receive approximately $40 to $45 million in additional CAF income related to servicing fees and the retained beneficial interest over the life of the transaction. As a reminder, going forward, there will be no loss allowance or provision for this pool of loans. Now I'd like to turn the call over to Enrique to discuss our second quarter financial performance in more detail. Enrique?

Thanks, Jon, and good morning, everyone. The second quarter net earnings per diluted share was $0.64 versus $0.85 a year ago. The decrease was driven primarily by lower volume and the CAF loss provision adjustment. Total gross profit was $718 million, down 6% from last year's second quarter. Used retail margin of $443 million decreased by 8%, with lower volume and relatively stable per unit margins. Retail gross profit per used unit was $2,216, in line with historical average. Wholesale vehicle margin of $137 million decreased by less than 1% from a year ago, with lower volume partially offset by a slight increase in per unit margins. Wholesale gross profit per unit was $993. Other gross profit was $138 million, down 4% from a year ago. This was driven primarily by extended protection plans, which decreased by $6 million, driven by lower retail unit volume.

Service recorded a $4 million margin, reflecting a small improvement over last year's second quarter. Continued efficiency and cost coverage improvements were partially offset by the deleverage inherent in the lower year-over-year second quarter sales. On the SG&A front, expenses for the second quarter were $601 million, down 2% from the prior year, driven primarily by lower stock-based compensation. We continued to realize expense savings, but they were offset by cost pressures in the quarter. SG&A to gross profit deleveraged 350 basis points to 84%, as lower volume more than offset lower costs. The continued deployment of AI technology remains a key driver of efficiency gains and experience enhancements across our operations. For example, this quarter, Sky, our AI-powered virtual assistant, continued to deliver year-over-year double-digit % improvements in containment rate, Customer Experience Consultants' productivity, and web and phone response rate SLAs.

We recently fully rolled out Sky 2.0, which leverages Agentic AI, and expect this release will drive even more efficiency and experience improvements. As Bill noted, we are committed to further reducing our SG&A by continuing to deliver efficiency gains across the business. The investments in technology, systems, and processes that we have made as part of our omni-transformation will allow us to substantially reduce spend through several key initiatives: modernizing and consolidating our technology infrastructure, automating manual processes, renegotiating and reducing third-party contracts, and eliminating redundancies across the organization. The goal of at least $150 million in SG&A reductions over the next 18 months represents a material improvement in our cost profile and reflects the execution on a plan that we have been developing with outside support.

While we expect to realize some of these savings this fiscal year, we expect the vast majority will materialize in our exit rate by the end of fiscal 2027. In addition to offsetting inflationary pressures, these ongoing savings will provide additional flexibility to reinvest in areas that directly drive sales, while also serving as a tailwind to our already robust earnings model of a high teens EPS growth CAGR when retail unit growth is in the mid-single digits. We will continue to provide updates on this initiative during future earnings calls. Looking forward, I'll cover a few items. Regarding marketing, we expect an increase in per total unit spend in the back half of the year, particularly in the third quarter, as we appropriately support our new brand positioning launch. We expect service margin to face pressure in the back half of the year due to seasonal sales volumes.

For the full year, we still expect to deliver positive margin, which is a direct result of our efficiency improvements and cost coverage measures. Turning to capital allocation, during the second quarter, we continued our share repurchases at an accelerated pace, buying back approximately 2.9 million shares for a total expenditure of $180 million. As of the end of the quarter, we had approximately $1.56 billion of our repurchase authorization remaining. Now I'll turn the call back over to Bill.

Thank you, Enrique and Jon. Our customer-centric car buying and selling experience is a key differentiator in a very large and fragmented market and positions us well for the future. We are intently focused on driving this differentiated and best-in-class experience and doing so at greater efficiency. As you heard from us today, we're actively executing on our key priorities, which include driving sales, advancing innovations to improve customer and associate experiences, bolstering our marketing efforts, increasing company-wide efficiencies, and expanding CAF participation across the credit spectrum. All of these priorities will give us added flexibility and strengthen us for the future. With that, we will be happy to take your questions. Operator?

Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question from the queue by pressing star two. Once again, to ask a question, please press the star and one on your telephone keypad. Your first question comes from the line of Brian William Nagel with Oppenheimer & Co. Inc. Please go ahead. Your line is open.

Morning. The first question I want to ask, just with regard to used unit sales. Bill, if I heard you correctly, it seemed like the most disruptive factor here in fiscal Q2 was a clearer pull forward in demand into the fiscal first quarter. The question I have is, are there numbers you can give us to size that better, that disruption? As we look through the quarter, I know you typically don't discuss sales trends of the quarter, but following that pull forward impact, has the business or have sales got back to a more normal run rate? What is that?

Yeah. Brian, first of all, like I said, it's actually, we think, two factors. I would put the other factor probably first because it is hard to quantify exactly how much each one is. My commentary around buying inventory up and then seeing that depreciation happen, I would say that is probably the most impactful and then the pull forward. Again, it's hard to quantify exactly how much each of those are. For the quarter, each month was down year over year, and each month got a little weaker throughout the quarter. What I'll tell you for September and month to date is that it is stronger than the quarter and any of the months in the second quarter. When I look at it from a year over year, it's still a little soft from a year over year standpoint.

Certainly, we put ourselves in a better position with the start of this quarter, both on an inventory position as well as from a pricing standpoint.

Just with regard to pricing, CarMax has for a long time talked about having attractive pricing within the market. It seems to me, listening to your comments, that you're focusing on this more now. Is that the case? The question I have is, are you seeing something in the marketplace or are other competitors getting more price aggressive that CarMax may have to change some of its stance here?

Yeah, I think the pricing commentary, first of all, is you're right. We're always focused on pricing. We want to be competitive. I think in the quarter, we fell into a spot where we weren't as competitive. I feel better about where we are now. The only other thing I would add to that is I think we just need to continue to be as nimble as possible when it comes to pricing. I mean, you saw in the quarter, we saw that $1,000 depreciation over a month period, and we started acting on it very quickly. There's a lot that goes into that decision, as far as what do you do with your prices when you see depreciation, that kind of thing. I think the takeaway that I want you to hear is that we're always focused on competitive pricing.

Certainly, the focus as we go forward is to continue to be as nimble as possible because it is an aggressive environment out there.

Right. I appreciate all the comments. Thanks.

Thank you. Our next question comes from Rajat Gupta with JPMorgan Chase & Co. Please go ahead. Your line is open.

Great. Thanks for taking the question. I just got a couple. First one on CAF. Last quarter, you had mentioned that you expect CAF income to be up year over year for the full year. Could you give us an update on that and if it has changed? I'm just surprised by the magnitude of the provision pickup, because we had your last earnings call just two months ago. Curious how it could have changed so dramatically in such a short period of time. Any color there would be helpful. I have a quick follow-up on SG&A.

Sure, Rajat. Appreciate your question. First, let's touch on the CAF income. Obviously, as mentioned, there's a larger provision impact this quarter. Also, we mentioned we're excited about the $25 billion transaction, which will yield gain during Q3. You put all that together. We did highlight that we thought there would be an increase year over year in CAF income. I think we're going to be flat to down. Obviously, two more quarters to go, but flat to slightly down. I think there's some nice trade-offs that are occurring there. Obviously, all disclaimers with how does the consumer perform, how sales come in, because that would yield provision originations for us. Hopefully, that gives you a little flavor on the income cadence. Regarding provision, it's certainly a fair question. I'll give a little color on what we saw for the quarter beyond what I did in my prepared remark.

Let's highlight the 2022 and 2023 vintages. That customer, as I mentioned, high ASP, certainly a higher APR environment, higher overall payment they were seeing. They come into the purchasing cycle with excess cash from COVID, and they hadn't fully experienced inflation yet. We had a lot to learn about that customer. Initially, we saw some, and again, we're coming off of incredibly low trough loss rates of 2019, 2020, 2021 vintages. Hard to gauge how those 2022 and 2023 vintages were going to perform. We saw an increase in losses initially, but that's not surprising because it's coming off of trough lower vintages of those previous years. As we watched that customer perform, we saw it and thought maybe it was a pull forward in losses, ultimately, as we saw a little increase. Maybe a timing curve adjustment.

We watched that customer begin to struggle and continue to struggle a little bit. We made some adjustments that we thought were very smart for the consumer and smart for us, and that has proven to be the case. That was we adjusted our extension policy in the fall. We saw more payments come in had we otherwise not done that. We were pleased to see that, but we had to watch that play through. We saw some of those customers coming back into delinquency and loss during Q1. It's obviously a tax time season as well, so it's a little muddied. We did make an adjustment in Q1, and we wanted to watch it all play through. We saw some good performance initially with, again, those extensions. We wanted to see how much was going to come back in delinquency.

Unfortunately, during the quarter, we saw more revert back to delinquency and loss. That being said, we've made a significant adjustment this quarter, as you see. We made what we would say a sizable adjustment last quarter. I think we have a much better handle on where these guys are going to land because we've watched these extensions play through almost completely at this point. Also, if you look at the totality of those vintages, you're about two-thirds of the way through those vintages. There's about a third left. It's really going to ultimately play through. There's more to come, but it really has played through. If you look at these 2024 and 2025 vintages, we are extremely pleased with those. We're watching those losses early on. We're now 12, 15 months through there, and that stuff is right on the mark from what we expected.

Hated to have to make an additional adjustment. I think there are a lot of confounding factors that had to play out. We feel like we have a much better understanding of them. I'll end with, and again, just as a reminder, these things are incredibly still profitable. $1,800 versus was maybe what we anticipated, $1,500 because of these loss adjustments. Roughly $0.5 billion we're going to achieve in lifetime value across the 2022 and 2023 vintages. A lot to say there because I wanted to explain what was going on there, but hopefully that answers your question.

CarMax (KMX) Q2 2026 Earnings Call Transcript

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