Carvana Co. Announces Estimated Q1 2018 Operating Results, Including $360 Million in Revenue
April 23 2018 - 04:19PM
Business Wire
Carvana Co. (NYSE: CVNA), a leading eCommerce platform for
buying used cars (“Carvana” or the “Company”), today announced
certain preliminary estimates of its operating results for the
three months ended March 31, 2018 compared to its actual operating
results for the three months ended March 31, 2017.
The preliminary financial data included below has been prepared
by, and is the responsibility of, Carvana’s management. Carvana’s
independent auditors have not audited, reviewed, compiled or
performed any procedures with respect to such preliminary financial
data. These preliminary operating results are not a comprehensive
statement of Carvana’s financial results as of and for the three
months ended March 31, 2018, and should not be viewed as a
substitute for full consolidated financial statements prepared in
accordance with accounting principles generally accepted in the
United States.
Carvana is providing the following preliminary estimates of its
operating results for the three months ended March 31, 2018:
- For the three months ended March 31,
2018, Carvana expects retail units sold to be approximately 18,450
units, as compared to 8,334 retail units sold for the three months
ended March 31, 2017. This increase in retail units sold was driven
in part by increased penetration in existing markets, as well as
Carvana’s business participating in 56 markets as of March 31, 2018
from 23 markets as of March 31, 2017.
- For the three months ended March 31,
2018, Carvana expects total net sales and operating revenues to be
approximately $360 million, as compared to total net sales and
operating revenues of $159.1 million for the three months ended
March 31, 2017. The increase in total net sales and operating
revenues was primarily the result of the increase in retail units
sold.
- For the three months ended March 31,
2018, Carvana expects cost of sales to be approximately $326
million, as compared to cost of sales of $149.3 million for the
three months ended March 31, 2017. The increase in cost of sales
was primarily the result of the increase in retail units sold.
- For the three months ended March 31,
2018, Carvana expects gross profit to be approximately $34 million,
as compared to gross profit of $9.7 million for the three months
ended March 31, 2017.
- For the three months ended March 31,
2018, Carvana expects total gross profit per unit to be
approximately $1,850, as compared to total gross profit per unit of
$1,169 for the three months ended March 31, 2017. The increase in
total gross profit per unit is primarily due to higher retail gross
profit per unit, which was mostly driven by lower average days to
sale, and an increase in other gross profit primarily generated
from higher premiums on loans sold as well as sales of GAP waiver
coverage, which Carvana began offering customers in certain markets
in the second quarter of 2017.
- For the three months ended March 31,
2018, Carvana expects selling, general and administrative expenses
to be approximately $83 million, including $4.6 million of
depreciation and amortization expense, as compared to selling,
general and administrative expenses of $45.9 million, including
$2.1 million of depreciation and amortization expense, for the
three months ended March 31, 2017. The increase in selling, general
and administrative expenses is primarily a result of Carvana’s
expansion to additional markets and includes increased advertising
and compensation expense associated with Carvana’s new markets and
additional headcount.
- For the three months ended March 31,
2018, Carvana expects interest expense to be approximately $3.5
million, as compared to interest expense of $2.1 million for the
three months ended March 31, 2017. The increase in interest expense
is primarily due to increased borrowings under Carvana’s floor plan
facility year over year to expand the inventory available to
customers and long-term debt Carvana incurred in 2017 to finance
certain property and equipment.
- For the three months ended March 31,
2018, Carvana expects net loss to be approximately $53 million, as
compared to net loss of $38.4 million for the three months ended
March 31, 2017 and net loss margin to be (14.7%) for the three
months ended March 31, 2018, as compared to net loss margin of
(24.2%) for the three months ended March 31, 2017. The increase in
net loss is primarily due to an increase in selling, general and
administrative expenses partially offset by an increase in gross
profit, each as described above.
- For the three months ended March 31,
2018, Carvana expects EBITDA to be approximately $(45) million, as
compared to EBITDA of $(34.3) million for the three months ended
March 31, 2017 and EBITDA margin to be (12.5%) for the three months
ended March 31, 2018, as compared to EBITDA margin of (21.6%) for
the three months ended March 31, 2017. The improvement in EBITDA
margin is primarily due to increased scale and improved operating
leverage.
A reconciliation of EBITDA to net loss, the most directly
comparable GAAP measure, and the calculation of EBITDA margin are
as follows:
Actual Estimated Three
Months Ended March 31, 2017
2018 (in thousands) Net loss $ (38,439 ) $
(53,000 ) Depreciation and amortization expense 2,061 4,600
Interest expense 2,059 3,500 EBITDA $
(34,319 ) $ (44,900 ) Total revenues $ 159,073 $
360,000
EBITDA Margin (21.6 %) (12.5 %)
About Carvana Co.
Founded in 2012 and based in Phoenix, Carvana’s (NYSE: CVNA)
mission is to change the way people buy cars. By removing the
traditional dealership infrastructure and replacing it with
technology and exceptional customer service, Carvana offers
consumers an intuitive and convenient online automotive retail
platform. Carvana.com enables consumers to quickly and easily buy a
car online, including finding their preferred vehicle, qualifying
for financing, getting a trade-in value, signing contracts, and
receiving as-soon-as-next-day delivery or pickup of the vehicle
from one of Carvana’s proprietary automated Car Vending
Machines.
Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect the Company’s
current expectations and projections with respect to, among other
things, its financial condition, results of operations, plans,
objectives, future performance, and business. These statements may
be preceded by, followed by or include the words “aim,”
“anticipate,” “believe,” “estimate,” “expect,” “forecast,”
“intend,” “likely,” “outlook,” “plan,” “potential,” “project,”
“projection,” “seek,” “can,” “could,” “may,” “should,” “would,”
“will,” the negatives thereof and other words and terms of similar
meaning. Forward-looking statements include all statements that are
not historical facts. Such forward-looking statements are subject
to various risks and uncertainties. Accordingly, there are or will
be important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. There
is no assurance that any forward-looking statements will
materialize. You are cautioned not to place undue reliance on
forward-looking statements, which reflect expectations only as of
this date. Carvana does not undertake any obligation to publicly
update or review any forward-looking statement, whether as a result
of new information, future developments, or otherwise.
Use of Non-GAAP Financial Measures
The information in this press release includes EBITDA and EBITDA
Margin, non-GAAP financial measures within the meaning of
applicable SEC rules and regulations. EBITDA and EBITDA Margin are
non-GAAP supplemental measures of operating performance that do not
represent and should not be considered an alternative to net loss
or cash flow from operations, as determined by U.S. generally
accepted accounting principles. EBITDA is defined as net loss
before interest expense, income tax expense and depreciation and
amortization expense. EBITDA Margin is EBITDA as a percentage of
total revenues.
Carvana uses EBITDA to measure the operating performance of its
business and EBITDA Margin to measure its operating performance
relative to its total revenues. Carvana believes that EBITDA and
EBITDA Margin are useful measures to it and its investors because
they exclude certain financial and capital structure items that
Carvana does not believe directly reflect its core operations and
may not be indicative of its recurring operations, in part because
they may vary widely across time and within Carvana’s industry
independent of the performance of Carvana’s core operations.
Carvana believes that excluding these items enables it to more
effectively evaluate Carvana’s performance period over period and
relative to its competitors. EBITDA and EBITDA Margin may not be
comparable to similarly titled measures provided by other companies
due to potential differences in methods of calculations.
EBITDA and EBITDA Margin have limitations as an analytical tool,
and you should not consider them in isolation, or as a substitute
for analysis of Carvana’s results as reported under GAAP. Some of
these limitations are:
- EBITDA and EBITDA Margin do not reflect
changes in, or cash requirements for, Carvana’s working capital
needs;
- EBITDA and EBITDA Margin do not reflect
Carvana’s interest expense, or the cash requirements necessary to
service interest or principal payments, on its debt and finance
lease obligations;
- although depreciation and amortization
charges are non-cash in nature, the assets being depreciated and
amortized will often have to be replaced in the future, EBITDA and
EBITDA Margin do not reflect the cash requirements to acquire or
replace intangible assets or property and equipment; and
- EBITDA and EBITDA Margin do not reflect
historical cash expenditures or future requirements for capital
expenditures or contractual commitments.
Because of these limitations, these non-GAAP measures should not
be considered as a replacement for net loss or as measures of
discretionary cash available to Carvana to service its indebtedness
or invest in its business. Carvana compensates for these
limitations by relying primarily on GAAP results and using non-GAAP
measures only for supplemental purposes.
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version on businesswire.com: https://www.businesswire.com/news/home/20180423006454/en/
Investor Relations:CarvanaMike Levininvestors@carvana.comorMedia
Contact:CarvanaKate Carvercarvana@olson.com
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