CarMax, Inc. KMX
Q1 2013 Earnings Call Transcript

Operator: Good morning. My name is Christy, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal Year 2013 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

I will now turn the conference over to Ms. Katherine Kenny.

Katharine Kenny - VP, IR: Good morning. Thank you for joining our fiscal 2013 first quarter earnings conference call. On the call with me today as usual are Tom Folliard, our President and Chief Executive Officer; and Tom Reedy, our Executive Vice President and CFO.

Before we begin, let me remind you that our statements today regarding the Company's future business plans, prospects, and financial performance are forward-looking statements that we make pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current knowledge and assumptions about future events, that involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, the Company disclaims any intent or obligation to update them.

For additional information on important factors that could affect these expectations, please see the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 2012 filed with the SEC.

Before I turn the call over Tom, let me remind you that after our prepared remarks, we ask that you limit your questions to just one per caller in order to give everyone a chance to ask a question. Please feel free to return to the queue with any further questions and thanks for your understanding. Tom?

Tom Folliard - President and CEO: Thank you, Katharine. Good morning, everyone. Thanks for joining us today. Used unit comps for the first quarter were flat compared to last year. Excluding appraisal-only traffic, we believe our traffic was somewhat lower than last year, but we are pleased that continued strength of our overall execution allowed us to maintain our solid per unit gross profit for both used and wholesale vehicles.

Our focus on new store growth continues to gain momentum. In the first quarter, non-comp stores drove our overall 3% growth in used units. Total used vehicle gross profit grew by 3% and used vehicle gross profit per unit was similar to last year's strong first quarter at $2,221. Overall appraisal traffic grew, but wholesale unit sales decreased by 2% this was largely due to three factors. Extremely difficult comparisons in the last two first quarters, 52% and 32% growth, slightly lower buy rate and a shift in the calendar that resulted in one last Tuesday which is one of our auction days. Excluding this calendar shift we estimate wholesale units would have been flat to last year.

Our wholesale gross profit per unit declined somewhat from our all-time high of over $1,000 last year, but at $980 represents the second highest in the Company's history. CAF quarterly income continues to be a strong contributor growing by 8% to $75 million. During the quarter sales of 5 year and older vehicles as a percentage of our total sales remained at historic highs, above 25%. Sales of SUVs and trucks remained about the same as a percentage of our total quarter-over-quarter and year-over-year. As we've discussed before, our mix of vehicles will continue to vary based on consumer demand.