Cars.com Inc 10-Q for FY2021 Q1

Cars.com Inc. (CARS)

10-Q 2021-05-06 For: 2021-03-31

Added on April 10, 2026

About this 10-Q

Cars.com Inc filed this 10-Q on May 6, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $153.3M; up 3.5% from $148.09M a year earlier
Net income: $5.28M; compared with a net loss of $787.43M a year earlier
Diluted EPS: $0.08; compared with -$11.76 a year earlier

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Delaware	81-3693660
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	CARS	New York Stock Exchange

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (unaudited):	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Income (Loss)	3
	Consolidated Statements of Comprehensive Income (Loss)	4
	Consolidated Statements of Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
Signatures		25

	March 31, 2021			December 31, 2020
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	53,724		$	67,719
Accounts receivable, net		93,238			93,649
Prepaid expenses		9,952			6,491
Other current assets		1,324			10,222
Total current assets		158,238			178,081
Property and equipment, net		43,479			41,323
Intangible assets, net		813,507			835,166
Investments and other assets, net		20,582			21,142
Total assets	$	1,035,806		$	1,075,712
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	22,891		$	16,512
Accrued compensation		9,178			18,319
Current portion of long-term debt		7,733			7,756
Other accrued liabilities		58,620			47,781
Total current liabilities		98,422			90,368
Noncurrent liabilities:
Long-term debt		524,260			576,143
Deferred tax liability		30,791			30,800
Other noncurrent liabilities		36,331			38,225
Total noncurrent liabilities		591,382			645,168
Total liabilities		689,804			735,536
Commitments and contingencies
Stockholders' equity:
Preferred Stock at par, $0.01 par value; 5,000 shares authorized; no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		—			—
Common Stock at par, $0.01 par value; 300,000 shares authorized; 68,531 and 67,387 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		685			674
Additional paid-in capital		1,529,830			1,530,493
Accumulated deficit		(1,178,909	)		(1,184,187	)
Accumulated other comprehensive loss		(5,604	)		(6,804	)
Total stockholders' equity		346,002			340,176
Total liabilities and stockholders' equity	$	1,035,806		$	1,075,712

	Three Months Ended March 31,
	2021			2020
Revenue:
Dealer	$	132,958		$	125,361
OEM and National		18,069			19,393
Other		2,268			3,340
Total revenue		153,295			148,094
Operating expenses:
Cost of revenue and operations		27,831			26,030
Product and technology		16,760			14,873
Marketing and sales		53,211			54,922
General and administrative		13,266			14,117
Affiliate revenue share		—			6,369
Depreciation and amortization		25,680			30,961
Goodwill and intangible asset impairment		—			905,885
Total operating expenses		136,748			1,053,157
Operating income (loss)		16,547			(905,063	)
Nonoperating expense:
Interest expense, net		(10,001	)		(7,526	)
Other income (expense), net		38			(9,501	)
Total nonoperating expense, net		(9,963	)		(17,027	)
Income (loss) before income taxes		6,584			(922,090	)
Income tax expense (benefit)		1,306			(134,656	)
Net income (loss)	$	5,278		$	(787,434	)
Weighted-average common shares outstanding:
Basic		67,787			66,938
Diluted		70,254			66,938
Earnings (loss) per share:
Basic	$	0.08		$	(11.76	)
Diluted		0.08			(11.76	)

	Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity
Balance at December 31, 2020		—	$	—		67,387	$	674	$	1,530,493		$	(1,184,187	)	$	(6,804	)	$	340,176
Net income		—		—		—		—		—			5,278			—			5,278
Other comprehensive income, net of tax		—		—		—		—		—			—			1,200			1,200
Shares issued in connection with stock-based compensation plans, net		—		—		1,144		11		(5,641	)		—			—			(5,630	)
Stock-based compensation		—		—		—		—		4,978			—			—			4,978
Balance at March 31, 2021		—	$	—		68,531	$	685	$	1,529,830		$	(1,178,909	)	$	(5,604	)	$	346,002

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net income (loss)	$	5,278		$	(787,434	)
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:
Depreciation		4,021			5,683
Amortization of intangible assets		21,659			25,278
Goodwill and intangible asset impairment		—			905,885
Impairment of non-marketable security		—			9,447
Amortization of accumulated other comprehensive income on interest rate swap		1,417			—
Stock-based compensation		4,978			1,971
Deferred income taxes		(226	)		(133,064	)
Provision for doubtful accounts		129			1,606
Amortization of debt issuance costs		834			556
Other, net		(34	)		75
Changes in operating assets and liabilities:
Accounts receivable		282			5,087
Prepaid expenses		(3,461	)		(1,566	)
Other current assets		8,915			(218	)
Other assets		328			458
Accounts payable		6,438			5,133
Accrued compensation		(9,141	)		(7,682	)
Other accrued liabilities		10,839			(1,661	)
Other noncurrent liabilities		(1,894	)		(662	)
Net cash provided by operating activities		50,362			28,892
Cash flows from investing activities:
Purchase of property and equipment		(6,219	)		(5,755	)
Net cash used in investing activities		(6,219	)		(5,755	)
Cash flows from financing activities:
Proceeds from revolving loan borrowings		—			165,000
Payments of long-term debt		(52,500	)		(13,438	)
Stock-based compensation plans, net		(5,630	)		(904	)
Payments of debt issuance costs and other fees		(8	)		—
Net cash (used in) provided by financing activities		(58,138	)		150,658
Net (decrease) increase in cash and cash equivalents		(13,995	)		173,795
Cash and cash equivalents at beginning of period		67,719			13,549
Cash and cash equivalents at end of period	$	53,724		$	187,344
Supplemental cash flow information:
Cash (received) paid for income taxes, net of refunds	$	(9,045	)	$	124
Cash paid for interest and interest rate swap		3,503			6,956

	Three Months Ended March 31,
Major products and services	2021		2020
Subscription advertising and digital solutions	$	125,446	$	117,263
Display advertising		21,957		23,359
Pay per lead		3,760		5,743
Other		2,132		1,729
Total revenue	$	153,295	$	148,094

	Number of RSUs and Restricted Stock			Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020		4,061		$	8.31
Granted		1,351			15.17
Vested and delivered		(1,171	)		8.20
Forfeited		(37	)		8.54
Outstanding as of March 31, 2021 ⁽¹⁾⁽²⁾		4,204			10.54

	Number of PSUs			Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2020		730		$	9.28
Granted		—			—
Vested and delivered		(588	)		5.74
Forfeited		—			—
Outstanding as of March 31, 2021		142			23.98

	Number of Options		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2020		513	$	2.80		9.22	$	3,028
Granted		291		9.63		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Outstanding as of March 31, 2021		804		5.27		9.33		3,880
Exercisable as of March 31, 2021		—		—		—		—

	2021			2020
Risk-free interest rate		1.15	%		1.01	%
Weighted-average volatility		69.00	%		53.08	%
Dividend yield		0	%		0	%
Expected years until exercise	6.5			6.5

(In thousands, except percentages)	Three Months Ended March 31, 2021
Income tax provision at statutory rate	$	1,383		21.0	%
State income taxes, net of federal income tax benefit		236		3.6
Stock-based compensation		(2,679	)	(40.7	)
Uncertain tax positions		870		13.2
Valuation allowance		1,802		27.3
Other, net		(306	)	(4.6	)
Income tax expense	$	1,306		19.8	%

	Three Months Ended March 31,
(in thousands)	2021		2020
Revenue	$	153,295	$	148,094
Net income (loss) ⁽¹⁾		5,278		(787,434	)


	March 31, 2021		March 31, 2020		% Change			December 31, 2020		% Change
Dealer Customers		18,823		18,938		(1	)%		18,372		2	%
Monthly Average Revenue Per Dealer	$	2,268	$	2,092		8	%	$	2,264		0	%

Exhibit Number		Description
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included with Exhibit 101 attachments)

	Cars.com Inc.

Date: May 6, 2021	By:	/s/ T. Alex Vetter
		T. Alex Vetter
		President and Chief Executive Officer

Date: May 6, 2021	By:	/s/ Sonia Jain
		Sonia Jain
		Chief Financial Officer