CarMax (KMX) investor relations material

Executive summary

• Net sales and operating revenues rose 19.5% year-over-year to $7.88 billion in Q2 FY27, with net earnings up 73.3% to $165.3 million and diluted EPS up 81.3% to $1.16, driven by strong retail and wholesale unit sales growth, improved price competitiveness, and operational efficiencies.

• Retail used unit sales grew 13.8% and wholesale unit sales rose 15.9% year-over-year, with comparable store used unit sales up 13.0%.

• Leadership team strengthened with new EVP, Chief Digital and Customer Officer, and SVP, Strategy to accelerate digital and strategic initiatives.

• The company executed its Shift into GEAR strategy, focusing on price competitiveness, customer experience, value-added products, and operational efficiency.

• Announced plans to resume share repurchases in Q3 FY27, with $1.31 billion remaining under authorization.

Financial highlights

• Total net revenues reached $7.88 billion, up 19.5% year-over-year, with combined retail and wholesale unit sales of 387,735, up 14.7%.

• Gross profit increased 11.4% to $799.5 million; SG&A expenses rose 4.6% to $628.6 million, but SG&A per unit improved by 8.8% to $1,621.

• Net earnings were $165.3 million, up 73.3% year-over-year; net earnings per diluted share were $1.16, up from $0.64 last year.

• CarMax Auto Finance (CAF) income increased 32.1% to $135.6 million, supported by lower loan loss provisions and gains on loan sales.

• Extended Protection Plan (EPP) and service gross profit rose 33%, with EPP margin per retail unit up $46 to $623.

Outlook and guidance

• Full-year retail margins expected to be down less than $200 per unit compared to FY 2026, with continued optimization.

• SG&A savings of $200 million targeted for FY 2027 exit rate, with full impact expected in FY 2028.

• CAF FY 2027 income anticipated to be slightly lower than FY 2026, with nearly $1 billion in tier two originations planned.

• Share repurchases to resume in Q3 FY27 at a modest pace, below pre-pause levels.

• Strategic Update scheduled for November 3rd to provide further details on growth initiatives.