Carmax Inc · NYSE:KMX
Carmax — Investor Day (May 2021)
41 slides from Carmax's investor day presentation, May 7, 2021
Slide 1: Analyst Day
Analyst Day
Slide 2: President and Chief Executive Officer
President and Chief Executive Officer
Slide 3: CarMax is Positioned for Growth
CarMax is Positioned for Growth @ Leader in massive, highly fragmented market, with ongoing opportunity to gain share @ Differentiated scale, technology, data and talent drive significant competitive advantage 3 Ornni-channel strategy enhances most customer-centric offering in used auto industry 4 E
Slide 4: We Have a Foundation to Support Future Growth
We Have a Foundation to Support Future Growth Retail Finance Our leading, world-class buying and selling experience, paired with our auto finance business, is unparalleled and built upon transparency, no haggle pricing and high integrity Wholesale This foundation sets us apart from all other retaile
Slide 5: CarMax is the Largest Seller and Buyer of Used Autos to and from Consumers
CarMax is the Largest Seller and Buyer of Used Autos to and from Consumers Retail Used Auto Sales 752K CarMax FY21 vs Public Peers in CY2020 The powerful integration of our online and in-person experiences gives us access to the largest addressable market in the used auto industry l] l] [| i | = + A
Slide 6: Unmatched National Footprint and Infrastructure
Unmatched National Footprint and Infrastructure Locations Nationwide
Slide 7: Technology and Data Advantages
Technology and Data Advantages Data Depth Process More Than me 1M oxo . — Value . More Than Credit Applications ore Than Vehicle 300M 8M ie Digital Interactions ! t Vehicles ANNUALLY Recondition Transport More Than More Than 825K 2M ane Website Vehicles Vehicles Activity Data Breadth rail Images Ope
Slide 8: Enhancing the most customer-centric offering on the market
Enhancing the most customer-centric offering on the market Independent Omni-Channel Strategy * Allows customers to engage with us how, where & when they want Remote asojo dp * Customer's data comes with them as they transition across channels With Help Ability to offer a seamless, personalized exper
Slide 9: Expanding Our Reach in the Used Auto Ecosystem
Expanding Our Reach in the Used Auto Ecosystem A driver of long-term growth Service Titling Warranty Valuation will come from our position and unique strengths to Dealers Logistics Retail Merchandising create new products that better address needs, bridge gaps or define and claim adjacencies to our
Slide 10: Driving Long-Term Growth and Shareholder Value
Driving Long-Term Growth and Shareholder Value 2 Million Combined retail and wholesale units by Ou r d IVErse business Fiscal Year 2026 model generates a significant amount of >5% g Expected U.S. used auto market cash providing flexibility share in Calendar Year 2025 to invest in business . ue and r
Slide 11: Deliver Growth Enabled by Digital Transformation
Deliver Growth Enabled by Digital Transformation Own the Customer We approach our business with the view that to succeed during our digital transformation, we need to own the ear, own the customer, and own the experience Experience This means providing all customers with a best-in-class digital expe
Slide 12: Embracing Digital to Expand our Leadership Position
Embracing Digital to Expand our Leadership Position People Success is dependent on your people and your culture. Highly engaged and diverse associates are important enablers of customer experience and shareholder value. Process Building digital and hybrid processes to accommodate customers in whatev
Slide 13: Enrique Mayor-Mora, SVP, Chief Financial Officer
Enrique Mayor-Mora SVP, Chief Financial Officer
Slide 14: Slide 14
Slide 15: History of Solid Execution with Meaningful Growth Ahead
History of Solid Execution with Meaningful Growth Ahead Omnni-channel transformation has positioned us for accelerated topline growth Continued penetration of largest addressable market within the used auto industry Continued enhancements of digital offerings and use of data, machine learning and Al
Slide 16: Diligent Focus on Efficiency and Effectiveness
Diligent Focus on Efficiency and Effectiveness Improvements driving cost savings and higher sale conversions Enhanced digital capabilities Cloud based platforms, Al and Lower production costs giving enable self progression, driving machine learning improve CEC flexibility to lower retail higher sale
Slide 17: Business Model Generates Exceptional Cash Flow
Business Model Generates Exceptional Cash Flow Cash generation underpinned by strong balance sheet and low debt leverage Provides financial flexibility to aggressively invest in our associates and our businesses, and pursue strategic partnerships and acquisitions
Slide 18: Strong Results Driven by Disciplined Capital Allocation
Strong Results Driven by Disciplined Capital Allocation Strategic plan will enable our continued trajectory as a growth company Revenue Earnings per share Billions $22B $5.75 11% CAGR | | | ull $0.00 ill 16% CAGR FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20FY21 FY10 FY11 FY12 FY13 FY14 FY1
Slide 19: Our Capital Allocation Strategy
Our Capital Allocation Strategy Invest for growth Pursue growth across our core opportunities that businesses meet our investment hurdles Return excess cash to shareholders
Slide 20: Capital Expenditure Priorities
Capital Expenditure Priorities Investing in growth and technology across retail, wholesale and CAF Technology Spend as a % of CapEx 8% “33% FY17 FY18 FY19 FY20 FY21 FY22E
Slide 21: Expanding Our Industry Leading Footprint
Expanding Our Industry Leading Footprint We are further extending our reach and staying close to our customers through new location growth 10 New Locations Targeted in Fiscal 2022
Slide 22: Creating Value by Returning Capital to Shareholders
Creating Value by Returning Capital to Shareholders $5B+ 38% $1.34B share repurchases since share count authorizations program inception in 2013 reduction remaining As a growth company with significant cash generation, we will continue to have capacity to aggressively invest in growth and create inc
Slide 23: Slide 23
Slide 24: New KPIs to Track Progress on our Path Forward
New KPIs to Track Progress on our Path Forward These new metrics will be used to track our progress on a quarterly and annual basis 1 2 3 4 Percent of Percent of Online SG&A as a Used Units Revenue from Appraisal Percentage of Sold Online Online Buys Gross Profit + Transactions
Slide 25: SG&A as a Percentage of Gross Profit
SG&A as a Percentage of Gross Profit: As we continue to grow and expand into the broader used auto ecosystem, SG&A is supporting more than just our retail business This new metric captures the broader economics of our business model and areas of growth Expected to improve slightly in FY 2022 as we c
Slide 26: Long-Term Nationwide Market Share Growth
Long-Term Nationwide Market Share Growth 0- to 10-Year-Old Vehicles >5% Expected market share growth 50% increase driven by leading position and fromev opportunity to capture the largest 34% 3.4% total addressable market for 31% buying and selling used autos, due to the breadth of our capabilities,
Slide 27: Long-Term Total Unit Sales Growth
Long-Term Total Unit Sales Growth Combined Retail and Wholesale Units Digital transformation investments expected to result 2M 10%+ CAGR in 2 million combined retail and 1am 12M 2 aM a wholesale units sold in fiscal 2026, representing a 70% increase from fiscal 2021 FY18 FY19 FY20 FY21 FY26E Investm
Slide 28: Long-Term Total Revenue Growth
Long-Term Total Revenue Growth Total Revenue $33B Total revenues expected to be aver approximately $33 billion in $208 aoe wa fiscal 2026, representing a $i7e $888 75% increase over the next five years FY18 FY19 FY20 FY21 FY26E Diverse business model positioned for long-term growth
Slide 29: We expect double-digit revenue and unit increases over the next 5 years
We expect double-digit revenue and unit increases over the next 5 years, with industry-leading profitability and shareholder value creation through growth and return of capital
Slide 30: President and Chief Executive Officer
President and Chief Executive Officer
Slide 31: Positioned for Growth in the Used Auto Ecosystem
Positioned for Growth in the Used Auto Ecosystem Growth opportunities . beyond retail as we build on: Retail Foundational investments in Wholesale omni-channel Proprietary, integrated Financing technology stack Strong brand reputation
Slide 32: CAF will Continue to Grow with CarMax
CAF will Continue to Grow with CarMax Today's CAF Tomorrow's CAF CAF's Significant Role in Our it Omnni-Channel Experience “ON $14 billion finance Top used auto Digitizing fi licati company finance provider fe Mralaefiiie Neo Cleo lietehifern and approval processes ») & QE Moving financing decision
Slide 33: Wholesale Auctions are a Competitive Strength
Wholesale Auctions are a Competitive Strength meet retail standards don't meet retail standards sold to customers sold at our auctions Sourcing cars means better retail profitability or great profit through wholesale
Slide 34: Online Instant Offer Makes it Easy to Reach any Seller
Online Instant Offer Makes it Easy to Reach any Seller “25M customers sell a car annually “10M will sell peer- $230B in Wholesale TAM to-peer Our online instant appraisal and competitive offers with a 7-day guarantee allow customers ready access to dispose of their vehicles cARMAX _ | Analyst Day
Slide 35: Expanding Auto Ecosystem
; f 7 Expanding Auto Ecosystem
Slide 36: Vast Opportunity in the Broader Used Auto Ecosystem
Vast Opportunity in the Broader Used Auto Ecosystem Service Titling Warranty Valuation Dealers Logistics Retail Merchandising More than $1 Trillion market opportunity across broader used Listings Buying Financing Marketing auto ecosystem Selling Customer Service Wholesale Technology Customer Acquisi
Slide 37: Focused on Opportunities that Leverage Our Strengths and Capabilities
Focused on Opportunities that Leverage Our Strengths and Capabilities Ar oe oH <> ° Leverage our Generate additional logistics scale and Piloting new ways to value fromm our data, Leverage capabilities to benefit buy used autos proprietary unmatched footprint wholesale dealers directly from dealers
Slide 38: Edmunds as a Springboard for New Initiatives
Edmunds as a Springboard for New Initiatives #3 edmunds Further expands our digital footprint and brings us closer to a broader set of consumers
Slide 39: Partnering, building and buying
Partnering, building and buying new capabilities, offerings and businesses to drive 7 additional long-term growth el MU RERET PIERS
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Slide 41: SG&A as a Percentage of Gross Profit
SG&A as a Percentage of Gross Profit Non-GAAP Reconciliation Non-GAAP Reconciliation of SG&A Expenses, Excluding Depreciation and Amortization, as a % of Gross Profit (In thousands) FY21 SG&A expenses, as reported 1,898,775 Less: depreciation and amortization 194,356) SG&A expenses, excluding deprec