CarMax Inc

Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the CarMax fiscal 2021 second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Stacey Froehli, Vice President, Investor Relations.

Thank you. Good morning, and thank you for joining our fiscal 2021 second quarter earnings conference call. I'm here today with Bill Nash, our president and CEO, Tom Reedy, our executive vice president of finance, Enrique Mayor Mora, our senior vice president and CFO, and John Daniels, our senior vice president, CAF operations. Let me remind you our comments Today, regarding the company's future business plans, prospects, and financial performance, our 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 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 Form 8K issued this morning and its annual report on Form 10K for the fiscal year ended February 29, 2020, filed with the SEC. Should you have any follow-up questions after the call, please feel free to contact our Investor Relations Department at 804- extension 7865. I also would like to thank you in advance for asking only one question and getting back in the queue for more follow-up. Lastly, I want to take a moment to personally thank Celeste Gunter, who is retiring from CarMax. Celeste has been an integral part of our IR program for almost 20 years, and I'm sure you will all agree she will be deeply missed. Celeste, we wish you all the joy and happiness retirement can bring. Bill?

Great. Thank you, Stacey. Good morning, everyone, and thanks for joining us. As you read in earnings release this morning, we delivered a record quarter with sales up 3.3% to $5.37 billion, net earnings up 27% to $297 million, and EPS up 27.9% to $1.79. This performance was the result of strength across all aspects of our business, retail, wholesale, and CAF. We are proud to be the nation's largest and most profitable retailer of used cars. I'm also proud to say that this quarter we completed the rollout of our omnichannel offerings. This has been years in the making and has required a remarkable level of focus and change across our entire organization. During this time, we have evolved nearly every aspect of our business, from how we support and interact with our customers, to how we structure our staffing, to how we buy, sell, and deliver cars. Our omni-channel experience is built to provide a personalized, multi-channel experience that empowers customers to buy a 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 iconic 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 a used unit comp growth of 1.2%. In June, we experienced a 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 saleable 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 saleable 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 increase 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 $22.14, 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 results show, 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 omnichannel offerings, and pursue new opportunities. At this point, I'd like to turn the call over to Enrique to provide more information on our second quarter financial performance, and Tom, who will provide additional detail around customer financing. Enrique?