CarMax 1Q18 Earnings Call Notes

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Bill Nash – President and CEO

Tom Reedy

Not planning to take more risk in financing

“I don’t think we’re in a position to start talking about taking any more risks on CAF. As we talked about last quarter, we enacted some tightening. But pretty much, what flows to CAF, what flows to Tier 2 and Tier 3 is going to be based on what comes through the door. And as we’ve all talked about, look at Tier 3 business as incremental. Obviously, it’s more — it’s less profitable and more volatile. But on ongoing basis, it would do very little to what CAF is going to be, just maybe it will have an impact on the mix of penetration between the various players.”

We have the best channel for originating used car loans

“Absolutely, I think, we’ve talked about before that we believe we have the best channel for originating used car loans. I don’t think any of our partners would disagree with that. As far as performance in the quarter, we continue to be happy with how they’re performing. Tier 2 lenders, we look at collectively, because all of them see every customer and they’re able to make a competitive offer. As you saw, they’re up about half a point year-over-year in the quarter. So we’re happy with the conversion we’re seeing out of that group. Tier 3, as we mentioned, we saw some tightening in Q1 of last year, but relatively consistent performance. Since then and the way we measure performances, how many sales that we get out of the applications that they see. So, nothing except good things to report on that front.”