CVNA 10-Q

Carvana Co. (CVNA)

10-Q 2021-11-04 For: 2021-09-30

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Added on April 11, 2026

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Delaware			81-4549921
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1930 W. Rio Salado Parkway	Tempe	Arizona	85281
(Address of principal executive offices)			(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, Par Value $0.001 Per Share	CVNA	New York Stock Exchange


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	2
	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2021 and 2020	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54


	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	297	$	301
Restricted cash	107		28
Accounts receivable, net	178		79
Finance receivables held for sale, net	368		275

Vehicle inventory	2,285		1,036
Beneficial interests in securitizations	312		131
Other current assets, including $10 and $6, respectively, due from related parties	143		73
Total current assets	3,690		1,923
Property and equipment, net	1,333		909
Operating lease right-of-use assets, including $20 and $22, respectively, from leases with related parties	273		156
Intangible assets, net	5		6
Goodwill	9		9
Other assets, including $7 and $4, respectively, due from related parties	50		32
Total assets	$	5,360	$	3,035
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities, including $23 and $16, respectively, due to related parties	$	700	$	342
Short-term revolving facilities	455		40
Current portion of long-term debt	74		65
Other current liabilities, including $4 and $3, respectively, from leases with related parties	32		20
Total current liabilities	1,261		467
Long-term debt, excluding current portion	3,134		1,617
Operating lease liabilities, excluding current portion, including $15 and $19, respectively, from leases with related parties	256		148
Other liabilities	1		1
Total liabilities	4,652		2,233
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $0.01 par value - 50,000 shares authorized; none issued and outstanding as of September 30, 2021 and December 31, 2020	—		—
Class A common stock, $0.001 par value - 500,000 shares authorized; 85,569 and 76,512 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	—		—
Class B common stock, $0.001 par value - 125,000 shares authorized; 87,200 and 95,592 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	—		—
Additional paid-in capital	785		742
Accumulated deficit	(400)		(354)
Total stockholders' equity attributable to Carvana Co.	385		388
Non-controlling interests	323		414
Total stockholders' equity	708		802
Total liabilities & stockholders' equity	$	5,360	$	3,035


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Sales and operating revenues:
Used vehicle sales, net	$	2,650	$	1,289	$	6,954	$	3,245
Wholesale vehicle sales, including $15, $1, $37, and $1, respectively, from related parties	552		130		1,349		259
Other sales and revenues, including $52, $26, $143, and $69, respectively, from related parties	278		125		758		256
Net sales and operating revenues	3,480		1,544		9,061		3,760
Cost of sales, including $17, $1, $21, and $3, respectively, to related parties	2,957		1,282		7,648		3,210
Gross profit	523		262		1,413		550
Selling, general and administrative expenses, including $7, $5, $19, and $14, respectively, to related parties	546		269		1,413		784
Interest expense, including $0, $0, $0, and $1, respectively, to related parties	48		20		121		69
Other (income) expense, net	(3)		(9)		(16)		5
Net loss before income taxes	(68)		(18)		(105)		(308)
Income tax provision	—		—		—		—
Net loss	(68)		(18)		(105)		(308)
Net loss attributable to non-controlling interests	(36)		(11)		(59)		(200)
Net loss attributable to Carvana Co.	$	(32)	$	(7)	$	(46)	$	(108)



Net loss per share of Class A common stock, basic and diluted	$	(0.38)	$	(0.10)	$	(0.56)	$	(1.73)



Weighted-average shares of Class A common stock, basic and diluted (1)	84,779		70,005		81,427		62,244


	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interests		Total Stockholders' Equity
Balance, December 31, 2019	50,507	$	—	101,219	$	—	$	281	$	(183)	$	94	$	192
Net loss	—	—		—	—		—		(60)		(124)		(184)
Exchanges of LLC Units	116	—		(19)	—		—		—		—		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		2		—		—		2
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(2)		—		—		(2)

Issuance of Class A common stock to settle vested restricted stock units	38	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(8)	—		—	—		(2)		—		—		(2)
Options exercised	7	—		—	—		—		—		—		—
Equity-based compensation	—	—		—	—		7		—		—		7
Balance, March 31, 2020	50,660	$	—	101,200	$	—	$	286	$	(243)	$	(30)	$	13
Net loss	—	—		—	—		—		(41)		(65)		(106)
Issuance of Class A common stock, net of underwriters' discounts and commissions and offering expenses	18,333	—		—	—		1,059		—		—		1,059
Adjustments to the non-controlling interests related to equity offering	—	—		—	—		(643)		—		643		—
Exchanges of LLC Units	285	—		—	—		1		—		(1)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		21		—		—		21
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(21)		—		—		(21)

Issuance of Class A common stock to settle vested restricted stock units	61	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(26)	—		—	—		(4)		—		—		(4)
Options exercised	101	—		—	—		3		—		—		3


Equity-based compensation	—	—		—	—		8		—		—		8
Balance, June 30, 2020	69,414	$	—	101,200	$	—	$	710	$	(284)	$	547	$	973
Net loss	—	—		—	—		—		(7)		(11)		(18)
Exchanges of LLC Units	1,039	—		—	—		5		—		(5)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		47		—		—		47
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(47)		—		—		(47)

Issuance of Class A common stock to settle vested restricted stock units	30	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(2)	—		—	—		(3)		—		—		(3)
Options exercised	57	—		—	—		2		—		—		2
Equity-based compensation	—	—		—	—		7		—		—		7
Balance, September 30, 2020	70,538	$	—	101,200	$	—	$	721	$	(291)	$	531	$	961


	September 30, 2021		December 31, 2020

	(in millions)
Land and site improvements	$	268	$	132
Buildings and improvements	609		477
Transportation fleet	274		190
Software	155		113
Furniture, fixtures and equipment	79		60
Total property and equipment excluding construction in progress	1,385		972
Less: accumulated depreciation and amortization on property and equipment	(259)		(171)
Property and equipment excluding construction in progress, net	1,126		801
Construction in progress	207		108
Property and equipment, net	$	1,333	$	909


	Useful Life	September 30, 2021		December 31, 2020

		(in millions)
Intangible assets:
Developed technology	7 years	$	9	$	9
Non-compete agreements	5 years	1		1
Intangible assets, acquired cost		10		10
Less: accumulated amortization		(5)		(4)
Intangible assets, net		$	5	$	6

Goodwill	N/A	$	9	$	9


	Expected Future Amortization
	(in millions)
Remainder of 2021	$	1
2022	1
2023	1
2024	1
2025	1

Thereafter	—
Total	$	5


	September 30, 2021				December 31, 2020
	Carrying Value		Total Exposure		Carrying Value		Total Exposure

	(in millions)
Rated notes	$	229	$	229	$	98	$	98
Certificates and other assets	83		83		33		33
Total unconsolidated VIEs	$	312	$	312	$	131	$	131


	September 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

	(in millions)
Rated notes	$	228	$	229	$	96	$	98
Certificates and other assets	76		83		28		33
Total securities available for sale	$	304	$	312	$	124	$	131


			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total

	(in millions)
Remainder of 2021	$	13	$	1	$	12	$	13	$	26
2022	46		5		46		51		97
2023	43		5		42		47		90
2024	34		4		36		40		74
2025	25		3		35		38		63
Thereafter	13		6		218		224		237
Total minimum lease payments	174		24		389		413		587
Less: amount representing interest	(17)		(5)		(120)		(125)		(142)

Total lease liabilities	$	157	$	19	$	269	$	288	$	445


	As of September 30,
	2021		2020
Weighted-average remaining lease terms (years)
Operating leases	9.2		10.6
Finance leases	4.4		4.3
Weighted-average discount rate
Operating leases	7.5	%	8.3	%
Finance leases	5.4	%	5.3	%


	September 30, 2021
	Carrying Value		Level 1		Level 2		Level 3

	(in millions)
Assets:
Money market funds (1)	$	1	$	1	$	—	$	—

Beneficial interests in securitizations	312		—		65		247


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Retail units sold	111,949			64,414			312,221			171,939
Population coverage	80.6		%	73.2		%	80.6		%	73.2		%
Average monthly unique visitors (in thousands)	20,071			9,183			16,632			8,005
Number of IRCs	13			9			13			9
Total website units	56,054			26,897			56,054			26,897




Total gross profit per unit	$	4,672		$	4,056		$	4,526		$	3,198


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change

	(in millions, except unit and per unit amounts)						(in millions, except unit and per unit amounts)
Net sales and operating revenues:
Used vehicle sales, net	$	2,650	$	1,289	105.6	%	$	6,954	$	3,245	114.3	%
Wholesale vehicle sales (1)	552		130		324.6	%	1,349		259		420.8	%
Other sales and revenues (2)	278		125		122.4	%	758		256		196.1	%
Total net sales and operating revenues	$	3,480	$	1,544	125.4	%	$	9,061	$	3,760	141.0	%
Gross profit:
Used vehicle gross profit	$	198	$	120	65.0	%	$	528	$	268	97.0	%
Wholesale vehicle gross profit (1)	47		17		176.5	%	127		26		388.5	%
Other gross profit (2)	278		125		122.4	%	758		256		196.1	%
Total gross profit	$	523	$	262	99.6	%	$	1,413	$	550	156.9	%









Unit sales information:
Used vehicle unit sales	111,949		64,414		73.8	%	312,221		171,939		81.6	%
Wholesale vehicle unit sales	50,204		15,375		226.5	%	123,296		33,406		269.1	%
Per unit selling prices:
Used vehicles	$	23,671	$	20,013	18.3	%	$	22,273	$	18,874	18.0	%
Wholesale vehicles	$	10,995	$	8,450	30.1	%	$	10,941	$	7,752	41.1	%
Per retail unit gross profit:
Used vehicle gross profit	$	1,769	$	1,857	(4.8)	%	$	1,691	$	1,559	8.5	%
Wholesale vehicle gross profit	$	420	$	265	58.4	%	$	407	$	150	171.3	%
Other gross profit	$	2,483	$	1,934	28.4	%	$	2,428	$	1,489	63.0	%
Total gross profit	$	4,672	$	4,056	15.2	%	$	4,526	$	3,198	41.5	%
Per wholesale unit gross profit:
Wholesale vehicle gross profit	$	936	$	1,113	(15.9)	%	$	1,030	$	775	32.9	%


	September 30, 2021		December 31, 2020		September 30, 2020		December 31, 2019

	(in millions)
Cash and cash equivalents	$	297	$	301	$	174	$	76
Restricted cash (1)	107		28		22		42
Total cash, cash equivalents and restricted cash	$	404	$	329	$	196	$	118


Exhibit No.			Description
4.1			Indenture, dated August 16, 2021, among Carvana Co., each of the guarantors party thereto and U.S. Bank National Association, as trustee, related to the 4.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to Carvana's Current Report on Form 8-K files with the SEC on August 16, 2021).
4.2			F orm of 4.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.2 to Carvana's Current Report on Form 8-K filed with the SEC on A ugust 16, 2021 ).
10.1			Eighteenth Amendment to the Amended and Restated Master Purchase and Sale Agreement, dated September 28 , 2021, among Carvana Auto Receivables 2016-1 LLC, Ally Bank, and Ally Financial Inc., filed herewith.
31.1			Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith.
31.2			Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith.
32.1			Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, furnished herewith.
32.2			Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, furnished herewith.
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