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 third 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. I would now like to turn the call over to Stacey Froehle, Vice President, Investor Relations.

Thank you, Carol. Good morning. Thank you for joining our fiscal 2021 third quarter earnings conference call. I'm here today with Bill Nash, our president and CEO, Tom Reedy, our executive vice president of finance, Enrique Maimora, our senior vice president and CFO, and John Daniels, our senior vice president, CAF operations. Let me remind you, our statements today 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 the 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 FCC. 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, Stacey. Good morning, everyone, and thanks for joining us. You may have seen in our announcement in this morning's 8K that Tom will retire on February 28th. Before we get started, I want to take a moment to congratulate and thank him for his tremendous contributions to CarMax. Tom's expertise, strategic focus, and leadership have helped us build a best-in-class finance organization, and he has been instrumental in guiding us through the largest transformation in our company's history. Tom, thank you for all that you've done. We wish you the very best in your well-earned retirement. John Daniels, who many of you already know, will continue leading our CarMax Auto Finance team and will begin reporting directly to me. On today's call, we'll first discuss our third quarter financial performance and then turn to an update on our omni-channel experience and other strategic initiatives before opening it up for questions. Our diversified business model spanning retail, wholesale, and auto finance, combined with strong execution by our teams and disciplined cost management, delivered another great quarter of strong EPS growth, even as retail sales were hampered in the back part of the quarter due to macro factors. CarMax Auto Finance, or CAF, continued to deliver solid results this quarter with income up 55%. In addition, CAF and our partner lenders delivered strong conversion in all credit tiers. John will provide more details on customer financing and CAF contributions shortly. Our wholesale business also delivered strong results with volumes up 10.8%, which was driven by a record third quarter appraisal buy rate. The strength of our buyers, our algorithms, and extensive data sets enabled these results with only a slight year-over-year decrease in wholesale gross profit per unit to $906. This is despite sharp depreciation in the broader market. All auctions were run virtually throughout the quarter. Total retail used unit sales were up 1% compared with the same period a year ago, while used unit comps were down less than 1%. Gross profit per retail used unit for the quarter was $21.51, comparable with last year's third quarter. However, this view doesn't really paint a full picture of how the macro environment impacted our retail business. For the first part of the quarter, we achieved mid-single-digit comp growth, continuing the positive momentum from the end of the second quarter. However, as the election approached and there was another surge in COVID-19 cases which tightened occupancy restrictions and shelter-in-place orders, we saw demand soften. As a result, sales trended down in the back part of the quarter. This trend has continued into the first two weeks of December, with sales down approximately 4% year-over-year. As a reminder, last year we had a strong fourth quarter and an added benefit of leap day. Looking ahead, we're confident the sales trends we experienced in the latter part of the third quarter and into December are shorter-term in nature. Today, approximately half of our stores have occupancy restrictions in place due to state and local government mandates. Of these, more than 40 stores have mandates limiting capacity to 25% or less. Even with these restrictions, our omnichannel experience is allowing customers to connect and transact with us in more ways than ever. As we continue investing in our systems, our people, and our offerings, we're confident the experience we offer will continue to attract more customers to CarMax and better serve all their needs, whether that's online, through our CECs, in-store, or through whatever combination they choose. I'll speak to the ongoing enhancements to our Omnichannel experience later, but first I'd like to turn the call over to Enrique to provide more information on our third quarter financial performance, and then to John, who will provide additional detail around consumer financing. Enrique? Thanks, Bill, and good morning, everyone.