Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 75

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7
Chunk 75
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 $17,391.8 $16,767.9 Total average managed receivables$17,683.9 $17,313.2 $16,304.3 Allowance for loan losses$458.7 $482.8 $507.2 Allowance for loan losses as a percentage of ending managed receivables2.61 %2.78 %3.02 %Net credit losses on managed receivables$358.8 $334.9 $242.8 Net credit losses as a percentage of total average managed receivables2.03 %1.93 %1.49 %Past due accounts as a percentage of ending managed receivables4.85 %5.44 %5.00 %Average recovery rate (1)47.2 %53.0 %64.2 %

(1)    The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions.  While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 71%, and it is primarily affected by the wholesale market environment.

Fiscal 2025 Versus Fiscal 2024.

•CAF income increased $13.5 million, or 2.4%, reflecting increases in the net interest margin percentage and average managed receivables, partially offset by an increase in the provision for loan losses.

•Total interest margin increased as a percentage of average managed receivables to 6.2% in fiscal 2025 compared with 6.0% in fiscal 2024.  The increase was primarily driven by higher customer rates, partially offset by higher funding costs.

•Provision for Loan Losses

◦The current year provision of $334.7 million increased from $310.5 million in the prior fiscal year.

◦The increase in the provision for loan losses in fiscal 2025 was primarily driven by unfavorable loss performance.  We experienced higher losses for receivables originated in 2022 and 2023, when average selling prices were elevated and these customers were later challenged with the macro-inflationary environment.  In addition, we experienced higher losses pertaining to a segment of customers generally concentrated at the lower end of Tier 1, which we addressed through further