Enrique Mayor-Mora
Senior Vice President and Chief Financial Officer at CarMax
Thanks, Bill, and good morning everyone. Total gross profit was $837 million, up 32% from last year's record third quarter. This was driven by wholesale vehicle margin of $212 million, which was up 85% and used vehicle margin of $508 million, which was up 21% from last year's third quarter. Other gross profit was $116 million, up 18% from last year's third quarter. Favorability in the quarter included $20 million of margin contribution from Edmunds.
Other gross profit also benefited from a $12 million improvement in third-party finance fees with income of $1.6 million compared to a $10.6 million cost last year. This was driven by renegotiated third-party finance fees and lower Tier 3 volume compared with last year. Also positively impacting other gross profit, EPP was up $5 million or 4.8%. While penetration was stable at approximately 60%, this year's third quarter reflects a $6 million unfavorable return reserve adjustment compared to a $3 million favorable return reserve adjustment during the prior year's quarter. Partially offsetting gross profit favorability, service was down $21 million from the prior year's quarter. This was driven by pressure primarily related to our efforts to grow technician staffing as well as a shift in some retail service capacity, to instead support used car reconditioning. Service gross profit versus the prior year period improved in each month during the quarter, and we anticipate that results will continue to improve into the fourth quarter.
On the SG&A front, expenses for the third quarter increased to $576 million, up 34% from the prior year's quarter due to costs related to unit volume growth and continued investment in our strategic initiatives. SG&A as a percent of gross profit was roughly flat at 68.8% compared to 68.2% during the third quarter last year. The increase in SG&A dollars over the last year was primarily driven by three main factors. First, a $100 million increase in total compensation and benefits, driven by a strong ramp in staffing, a $23 million increase in stock-based compensation, unit volume related commissions and the inclusion of Edmunds payroll this quarter versus a year ago.
Second, a $22 million increase in other overhead, which includes our receipt of a $23 million settlement from a class action lawsuit. The remainder of the change primarily reflects investments to advance our technology platform, strategic initiatives and the impact of COVID related cost savings in the prior year quarter. And third, a $17 million increase in advertising expense as previously communicated to drive customer acquisition and to amplify the CarMax brand by continuing to build awareness of our omni-channel offerings.
For the first nine months of fiscal year '22, SG&A as a percent of gross profit was 66.1%, leveraging approximately 3 points over last year's nine-month percentage of 68.9%. We remain committed to ensuring that we are efficient and effective in our spend and we expect that our targeted areas of focus will continue to deliver results over time.
During the third quarter, from an efficiency and effectiveness perspective, we saw solid improvements in the service levels of our CDCs and their conversion of web leads. This was despite the record level of volume that are CDCs handled in the third quarter. This improvement was due to a combination of successful staffing ramps and ongoing utilization of our AI and machine learning processes that drive the right work to the right associates. We also continue to see efficiency gains in our buying organization. The combination of our instant offer program along with the investments we've made in data science, automation and AI continue to materially drive down our costs per buy.
From a capital structure perspective, we ended the quarter with an adjusted debt-to-capital ratio in the middle of our targeted range of 35% to 45%. During the quarter, we entered into a $700 million term loan agreement, primarily to support the growth of our total inventory dollars. In regard to our share repurchase program, we remain committed to returning excess capital to shareholders and repurchased approximately 850,000 shares in the quarter for approximately $115 million.
Now I'd like to turn the call over to Jon.