CarMax Inc

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter fiscal year 2027 CarMax earnings release conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To register to ask a question at any time, please press star 1 on your telephone. We do ask that you please limit yourself to one question. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. David Lowenstein, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Bo. Good morning, everyone. Thank you for joining our fiscal 2027 first quarter earnings conference call. I'm here today with Keith Barr, President and CEO, Enrique Mayormora, Executive Vice President and CFO, and John Daniels, Executive Vice President, CarMax Auto Finance. Let me remind you, our statements today that are not statements of historical fact, including but not limited to statements 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 our current knowledge, expectations, and assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from our expectations. In providing projections and other forward-looking statements, we disclaim any intent or obligation to update them. For additional information on important factors and risks that could affect these expectations, please see our Form 8-K, filed with the SEC this morning, and our annual report on Form 10-K for fiscal year 2026 previously filed with the SEC. Please note, in addition to our earnings release, we have also prepared a quarterly investor presentation, and both documents are available on the investor relations section of our website. 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. Keith?

Thank you, David. Good morning, everyone, and thanks for joining us. Since our earnings call last quarter, I've continued spending my time across the entirety of our business, listening and learning, while engaging with our associates, customers, and investors. These conversations have reinforced my understanding of both the strengths that differentiate CarMax from our competition and the opportunities we have to execute better, strengthen our performance, and reach our full potential. We have an award-winning, people-first culture, an iconic brand, an irreplaceable national footprint, and meaningful digital capabilities. No company can replicate these assets at scale. When fully harnessed, this combination enhances our competitive advantage and will drive our market share growth and financial returns in one of the largest consumer markets in America and one that remains highly fragmented. Our objective is clear. Deliver strong unit and earnings growth that enables us to consistently reward our shareholders. However, it is also clear there are some areas that have impeded our ability to perform to our full potential. Our core operations are not yet fast and efficient enough. Retail prices and selection must continue to improve, and our costs remain too high. Further, our digital experience is too complex and not seamlessly connected to the in-person experience. When a customer arrives at one of our stores, we do not make it as easy for them as it should be given all the steps they have taken online. This has put friction in the customer experience ultimately impacting conversion and preventing us from fully leveraging our unmatched scale and store network. We know exactly what needs to change and we're moving forward with urgency. Today, I'm introducing our strategy for growth built around four pillars that place the customer at the center of everything we do and are designed to meaningfully improve how we operate at scale and support consistently strong performance. The first pillar of our strategy is great offering. we will give customers every reason to choose CarMax. We will ensure our pricing remains competitive across demand cycles while we both grow our saleable inventory and provide customers faster access to our vehicles. For example, to further improve our price competitiveness, we are incorporating competitive market insights within our pricing algorithms more granularly with a stronger emphasis on local data points. Additionally, we are expanding comparison points across a broader set of vehicles to sharpen our individual unit pricing. Our second pillar is easy experience. We will make it easy to do business with us through a seamless experience. Industry research, as well as our own, shows that customers want digital convenience combined with an in-store connection. Buying a car is one of the biggest financial decisions someone makes, and they have a strong desire to see touch, and test drive a vehicle that will be part of their daily lives for years to come. We see significant opportunities to better integrate our digital capabilities with our stores to improve conversion and the customer experience. Our near-term focus is to simplify communication with customers before they arrive in store, to enhance their readiness to progress upon arrival, and to provide associates with the tools they need to drive conversion. Our stores reach 85% of the U.S. population, which gives us access to the largest total addressable market. As a result of this initiative, we expect more customers will visit our stores and we will sell more cars. Our third pillar is to add value on each transaction. This pillar focuses on growing profitability by maximizing value across all aspects of our business and incorporates our CAF Full Spectrum's ambition as well as the extended protection plan redesign initiatives that are already underway. Regarding CAF full spectrum, progress will be measured by our ability to grow penetration and drive longer-term profitability. For EPP, progress will be measured by margin expansion over time. On both, we have shown progress this quarter and I expect it to continue. Our final pillar is run lean. We will reimagine our cost structure to enable a great offering. Initiatives already in flight include reducing reconditioning costs through technology and operational efficiency while continuing to deliver the high-quality vehicles customers expect from CarMax. We are also working to enhance our logistics network and are continuing to reduce our SG&A. Our focus is to self-fund more competitive vehicle prices through more efficient operations rather than a combination of lower GPUs and efficiency gains, as we are doing this year. We continue to make progress in this area. In terms of logistics, we are focused on reducing unproductive transfers, resetting our network design, and optimizing fleet utilization across CARMACs and third parties. We intend to reduce costs and improve our network for increased speed. Regarding SG&A, last quarter we increased our fiscal year 27 exit rate savings target from $150 million to $200 million. We remain on track to achieve this target and will continue to drive for expense efficiencies. We are moving at pace with this strategy. While this work will take time, we are encouraged that the progress our teams have been making across the four pillars is already translating into improved trends that we expect will continue this year. In respect to our first quarter, retail unit sales reflect the near-term steps we have been taking across pricing, marketing, and conversion to strengthen the business and drive performance. On a year-over-year basis and against our strongest quarter from fiscal 2026, we delivered slight growth. Additionally, we leveraged SG&A on a total unit basis, expanded CarMax auto finance penetration, and increased extended protection plan margin, all while improving our year-over-year EPS trend. Enrique and John will speak to our first quarter performance in detail in a few moments. As I previously stated, our objective is clear. Deliver strong unit and earnings growth that enables us to consistently reward our shareholders. This begins with improving our unit growth by enhancing our customer value proposition through greater affordability, broader selection, and higher conversion. At the same time, we will strengthen earnings power through an improved digital and in-store experience, with our stores serving as a structural moat. we'll have a more efficient operating model, deeper customer relationships, and better utilization of our differentiated scale advantages. Together, these outcomes will strengthen our market position and create long-term value for both our customers and shareholders. We plan to hold a strategic update this fall, where we'll provide more detail on key initiatives and milestones. I'm excited about our strategic plan, and I'm confident about the opportunity that lies ahead. Now I'd like to turn it over to Enrique to discuss our first quarter financial performance in more detail. Enrique.