CVNA 8-K
Carvana Co. (CVNA)
8-K
2023-08-09
For: 2023-08-09
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Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2023
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure
On August 9, 2023, Carvana Co. (the “Company”) issued a press release (the "Press Release") providing an update to investors regarding the Company's financial and operational outlook for the third quarter of 2023, a copy of which is attached hereto as Exhibit 99.1 and the information contained therein is incorporated herein by reference. Further, on August 9, 2023, the Company is presenting information relating to its financial and operational outlook at the 2023 J.P. Morgan Automotive Conference. A copy of the presentation prepared by the Company (the "Presentation") in connection therewith is attached hereto as Exhibit 99.2 and the information contained therein is incorporated herein by reference. The outlook provided in the Press Release and Presentation is only an estimate of what the Company believes is realizable as of the date of this Current Report on Form 8-K. Actual results may vary from the outlook and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.
The information in this report furnished pursuant to Item 7.01, including exhibit 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing of the Company under the U.S. Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, except as shall be expressly set forth by specific reference in such a filing.
Forward-Looking Statements.
This Current Report on Form 8-K contains forward-looking statements within the federal securities laws. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Forward-looking statements include all statements that are not historical facts, and without limiting the generality of the foregoing, words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” or “likely,” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors. Among these factors are risks related to the “Risk Factors” identified in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | ||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | August 9, 2023 | CARVANA CO. | |||||||||||||||
By: | /s/ Paul Breaux | ||||||||||||||||
Name: | Paul Breaux | ||||||||||||||||
Title: | Vice President, General Counsel, and Secretary | ||||||||||||||||
Exhibit 99.1
Carvana Updates Q3 2023 Outlook Including Increasing Adjusted EBITDA Outlook by Over $75 Million and Provides Insights on Several Fundamental Drivers of Gross Profit Per Unit Improvements
•The Nation’s Largest Online Used Auto Retailer Expects To Achieve Adjusted EBITDA above $75 Million and Non-GAAP Total Gross Profit Per Unit above $5,500 in Q3 20231
•Carvana CFO Presents Updated Outlook and Details Fundamental Gains in Retail and Wholesale GPU During Annual J.P. Morgan Automotive Conference
PHOENIX (August 9, 2023) — Carvana Co. (NYSE: CVNA), the leading e-commerce platform for buying and selling used cars, today announced an improved Q3 2023 outlook based on fundamental progress in key business drivers and momentum early in the quarter:
| Initial Q3 2023 Outlook | Updated Q3 2023 Outlook2 | |||||||
| Adjusted EBITDA | Positive Adjusted EBITDA | Above $75MM Adjusted EBITDA | ||||||
| Non-GAAP Total GPU | Above $5,000 | Above $5,500 | ||||||
| Non-GAAP SG&A | Similar to Q2 2023 | No change from initial outlook | ||||||
| Retail Units | Similar to Q2 2023 | No change from initial outlook | ||||||
“In the first two quarters of 2023, Carvana posted best-ever quarterly GPU and adjusted EBITDA performances, and our continuing performance so far this quarter has led us to raise our Q3 outlook,” said Mark Jenkins, Carvana’s Chief Financial Officer. “Our strong execution is continuing to drive lasting business improvements, including significant fundamental gains in Retail and Wholesale GPU, that will power future results.
The Company discussed its recent progress and improved outlook at the J.P. Morgan Automotive Conference on Wednesday, August 9, 2023. A webcast of the presentation and a copy of the presentation materials focusing on improvements to Retail and Wholesale GPU will be available on the Company’s Investor Relations website.
1 In order to clearly demonstrate Carvana’s progress and highlight the most meaningful drivers within its business, Carvana continues to use forecasted Non-GAAP financial measures (forecasted Non-GAAP total gross profit per unit, Adjusted EBITDA, and Non-GAAP SG&A,) as it looks toward Q3 2023 and beyond. Carvana has not provided a quantitative reconciliation of forecasted GAAP measures to forecasted Non-GAAP measures within this communication because it is unable, without making unreasonable efforts, to calculate one-time or restructuring expenses. These items could materially affect the computation of forward-looking GAAP financial metrics.
2Outlook assumes a stable securitization market environment, approximately $300-$500 million of loan principal sold above loan principal originated, and no significant impacts from inventory allowance adjustments.
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 Carvana’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. Among these factors are risks related to the “Risk Factors” identified in our Annual Report on Form 10-K for 2022 and our Quarterly Reports on Form 10-Q. 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.
Non-GAAP Financial Measures
As appropriate, Carvana supplements its results of operations determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with - and discusses forward looking guidance with - certain non-GAAP financial measurements that are used by management, and which Carvana believes are useful to investors, as supplemental operational measurements to evaluate our financial performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of Carvana operations that provide a more complete understanding of its business. Carvana strongly encourages investors to review its consolidated financial statements included in publicly filed reports in their entirety and not rely solely on any one, single financial measurement or communication.
Carvana refers to the following non-GAAP measures in this press release: Adjusted EBITDA, Total gross profit per retail unit, non-GAAP, and SG&A, non-GAAP.
Adjusted EBITDA is defined as net loss plus income tax expense, interest expense, other (income) expense, net, depreciation and amortization in cost of sales and SG&A, share-based compensation including the CEO Milestone Gift in cost of sales and SG&A, and restructuring costs, minus revenue related to Carvana’s Root warrants.
Gross profit, non-GAAP is defined as GAAP gross profit plus depreciation and amortization in cost of sales and share-based compensation including the CEO Milestone Gift in cost of sales, minus revenue related to Carvana’s Root warrants. Total gross profit per retail unit, non-GAAP is Gross profit, non-GAAP divided by retail vehicle unit sales.
SG&A, non-GAAP is defined as GAAP SG&A minus depreciation and amortization in SG&A, share-based compensation including the CEO Milestone Gift in SG&A, and restructuring costs.
Carvana believes that these metrics are useful measures to it and to its investors because they exclude certain financial, capital structure, and non-cash items that it does not believe directly reflects its core operations and may not be indicative of Carvana recurring operations, in part because they may vary widely across time and within its industry independent of the performance of its core operations. Carvana believes that excluding these items enables it to more effectively evaluate its performance period-over-period and relative to its competitors.
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Investor Relations:
Carvana
Mike Mckeever
Media Relations:
Carvana
Kristin Thwaites
About Carvana
Carvana (NYSE: CVNA) is an industry pioneer for buying and selling used vehicles online. As the fastest growing used automotive retailer in U.S. history, its proven, customer-first ecommerce model has positively impacted millions of people's lives through more convenient, accessible and transparent experiences. Carvana.com allows someone to purchase a vehicle from the comfort of their home, completing the entire process online, benefiting from a 7-day money back guarantee, home delivery, nationwide inventory selection and more. Customers also have the option to sell or trade-in their vehicle across all Carvana locations, including its patented Car Vending Machines, in more than 300 U.S. markets. Carvana brings a continued focus on people-first values, industry-leading customer care, technology and innovation, and is the No. 2 automotive brand in the U.S., only behind Ford, on the Forbes 2022 Most Customer-Centric Companies List. Carvana is one of the four fastest companies to make the Fortune 500 and for more information, please visit www.carvana.com and follow us @Carvana.
Carvana also encourages investors to visit its Investor Relations website as financial and other company information is posted.
August 2023 J.P. Morgan Automotive Conference August 9, 2023 ©2023 Carvana, LLC
©2023 Carvana, LLC Confidential Document Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Carvana’s current expectations and projections with respect to, among other things, our 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. Among these factors are risks related to the “Risk Factors” identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our Quarterly Reports on Form 10-Q. 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. Market and Industry Data This presentation includes information concerning economic conditions, the Company’s industry, the Company’s markets and the Company’s competitive position that is based on a variety of sources, including information from independent industry analysts and publications, as well as Carvana’s own estimates and research. Carvana’s estimates are derived from publicly available information released by third party sources, as well as data from its internal research, and are based on such data and the Company’s knowledge of its industry, which the Company believes to be reasonable. The independent industry publications used in this presentation were not prepared on the Company’s behalf. While the Company is not aware of any misstatements regarding any information in this presentation, forecasts, assumptions, expectations, beliefs, estimates and projects involve risk and uncertainties and are subject to change based on various factors. 2 Safe Harbor
©2023 Carvana, LLC Confidential Document ● Cut ~$1.1B of annualized SG&A expense resulting in a leaner, more efficient Carvana. ● Achieved best ever first quarter GPU and Adjusted EBITDA margin in Q1. ● Set all-time company records for best ever total GPU and Adj. EBITDA in Q2, completing Step 1 of our 3-step plan. ● Launched Step 2 of our 3-step plan to drive significant positive Adjusted EBITDA per unit (also referred to as drive significant positive unit economics). ● Disrupted a $1T highly fragmented industry by offering a simple and seamless car buying experience. ● Customer proposition includes best experience, best selection and best value. ● Grew at 170% CAGR over 8 year period leading to one of the fastest companies to reach the Fortune 500 with only Amazon and Google making it to the list faster. ● Became the 2nd largest used car retailer in the U.S. – offering home delivery to 81% of the population. ● Unforeseen macroeconomic and industry dynamics including snarled automotive supply chains and historically rapidly rising interest rates. ● We entered 2022 overbuilt for an industry negatively impacted by affordability issues as the year progressed. ● Shifted priorities away from growth and began re-positioning the business for profitability at lower volumes. 3 History of Carvana 2013 - 2021: The Growth Phase 2023: Profitability Focus2022: Challenges1 2 3
©2023 Carvana, LLC Confidential Document 4 2023: Getting Back on Trend Continued focus on more profitable transactions, operational efficiencies, and cost reductions drove improvements in our Q2 2023 financial results.
Part 1: Fundamental Gains in Retail GPU
©2023 Carvana, LLC Confidential Document • Over the last three quarters, we have made significant gains normalizing our inventory size and selling through aged inventory, leading to a ~40 day sequential reduction in average days to sale (ADTS) on retail units sold in Q2 and an expected further reduction in Q3. • ADTS impacts retail GPU through its impact on the cumulative depreciation on vehicles before they sell: • Historical: est. $10/day, with seasonal fluctuations. • Recently (post-pandemic): Significant swings in daily depreciation ranging from appreciation to >$20/day depreciation. • We view low-to-mid 60s ADTS as a reasonable operating range in the near term. 6 #1: Normalizing retail inventory size
©2023 Carvana, LLC Confidential Document • Retail reconditioning and inbound transport cost reductions vs. FY 2021 have been driven by several fundamental improvements, including: • (1) in-sourcing third-party services, • (2) staffing normalization, • (3) process standardization, • (4) proprietary software development, • (5) logistics network utilization, and • (6) lower inbound transport distance. • Notably, quality metrics have remained consistent during this period of significant cost reduction. #2: Significant and sustainable cost improvements 7
©2023 Carvana, LLC Confidential Document Our seamless online and mobile appraisal offering and efficient local delivery network has led to significant gains in retail customer-sourcing over the past several years. #3: Expanding buying cars from customers • Since FY 2021, in addition to growing our customer-sourced ratio, we have also made fundamental improvements to our product offering, operational processes, and data and algorithms to ensure we are acquiring the right cars in the right locations. • We estimate fundamental gains in this area at $100-$200 per unit since FY 2021. • We view our current customer-sourced ratio as near the upper end of the optimal range, so we plan to focus our efforts from here on improvements in customer experience and unit economics. 8
©2023 Carvana, LLC Confidential Document Our first-party logistics network makes industry-leading selection available to our customers, while also enabling additional revenue streams from long-distance shipping and delivery services. #4: Enabling additional revenue streams from value-added services 1 1 Local market inventory sourced from CarGurus.com on 8/3/2023. 9
©2023 Carvana, LLC Confidential Document Since FY 2021, we have made significant fundamental gains that positively impact Retail GPU, and we see further opportunities from here. Retail GPU Fundamental Gains Summary 10
Part 2: Fundamental Gains in Wholesale GPU
©2023 Carvana, LLC Confidential Document The ADESA wholesale marketplace platform has grown since our acquisition, and our teams are making significant progress leveraging the ADESA footprint to drive efficiencies in Carvana’s wholesale vehicle sales. #1: Leveraging our wholesale platform ADESA Acquisition FY21 avg. In order to clearly demonstrate our progress and highlight the most meaningful drivers within our business, we continue to reference Non-GAAP financial measures (Wholesale GPU, Non-GAAP) as we look toward Q3 2023 and beyond. We have not provided a quantitative reconciliation of forecasted GAAP measures to forecasted Non-GAAP measures within this communication because we are unable, without making unreasonable efforts, to calculate one-time or restructuring expenses. These items could materially affect the computation of forward-looking GAAP financial metrics. 12
©2023 Carvana, LLC Confidential Document We currently source and sell ~30% as many wholesale units as the largest U.S. dealer wholesaler, up from less than 10% in 2019. We see a significant opportunity to expand our wholesale offering to serve more individual and dealer customers. • Expanding wholesale volume requires local delivery and customer care capacity but does not require retail inventory or significant long-distance logistics capacity. • Owning the nation’s 2nd largest used vehicle auction infrastructure provides an opportunity to efficiently intake, inspect, and store many more wholesale units. • At a target $800-$1,000 gross profit per wholesale unit, 400k+ incremental wholesale units sold is a more than $300MM+ annual opportunity. • Achieving this level will take a great amount of work, will be difficult, and will not happen in a straight line, but it is an opportunity we plan to go after. #2: Significant customer-sourced wholesale vehicle volume and GPU opportunity 1 Carvana wholesale units sold for the twelve months ending June 30, 2023. Largest dealer wholesaler wholesale units sold for the twelve months ending May 31, 2023. 13
©2023 Carvana, LLC Confidential Document The wholesale used vehicle auction industry is beginning to rebound from lows so far in 2023. A return to pre-pandemic volume would mean +50% industry unit growth from 2022 levels. This plus opportunities to gain market share yield significant opportunities for growth at ADESA. • ADESA wholesale marketplace unit volume was 441k in 1H23, up 10% and gaining market share vs. 1H22. 1H23 marketplace Adj. EBITDA was $23MM, excluding all synergies with Carvana. • We estimate $250+ of incremental Adj. EBITDA per unit, meaning each 100k of annual unit growth contributes $25MM+ Adj. EBITDA. • A 50% volume recovery alongside the industry would yield $100MM+ Adj. EBITDA, before other improvements and market share gains. #3: Large volume and profit opportunity at ADESA Source for industry data: National Auto Auction Association (NAAA) annual survey. Global Financial Crisis & Recovery Global Pandemic & Recovery In order to clearly demonstrate our progress and highlight the most meaningful drivers within our business, we continue to reference Non-GAAP financial measures (Adjusted EBITDA and Adjusted EBITDA per unit) as we look toward Q3 2023 and beyond. We have not provided a quantitative reconciliation of forecasted GAAP measures to forecasted Non-GAAP measures within this communication because we are unable, without making unreasonable efforts, to calculate one-time or restructuring expenses. These items could materially affect the computation of forward-looking GAAP financial metrics. 14
©2023 Carvana, LLC Confidential Document 15 Initial Q3 2023 Outlook Updated Q3 2023 Outlook Retail Units Similar to Q2 2023 No change from initial outlook Non-GAAP Total GPU Above $5,000 Above $5,500 Non-GAAP SG&A Similar to Q2 2023 No change from initial outlook Adjusted EBITDA Positive Adjusted EBITDA Above $75MM Adjusted EBITDA Updated Q3 2023 Outlook We are seeing positive operating and loan sales trends early in the quarter and as a result are updating our third quarter outlook: In order to clearly demonstrate our progress and highlight the most meaningful drivers within our business, we continue to use forecasted Non-GAAP financial measures (forecasted Non-GAAP Total GPU, Non-GAAP SG&A, and Adjusted EBITDA) as we look toward Q3 2023 and beyond. We have not provided a quantitative reconciliation of forecasted GAAP measures to forecasted Non-GAAP measures within this communication because we are unable, without making unreasonable efforts, to calculate one-time or restructuring expenses. These items could materially affect the computation of forward-looking GAAP financial metrics. Note: Outlook assumes a stable securitization market environment, approximately $300-$500 million of loan principal sold above loan principal originated in the quarter, and no significant impacts from inventory allowance adjustments.
©2023 Carvana, LLC Confidential Document 16 Non-GAAP Financial Measures As appropriate, we supplement our results of operations determined in accordance with U.S. generally accepted accounting principles (“GAAP”) with and discuss forward looking guidance with certain non-GAAP financial measurements that are used by management, and which we believe are useful to investors, as supplemental operational measurements to evaluate our financial performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements included in publicly filed reports in their entirety and not rely solely on any one, single financial measurement or communication. We refer to the following non-GAAP measures in this presentation: Adjusted EBITDA, Adjusted EBITDA Margin, Wholesale Marketplace Adjusted EBITDA, Total gross profit per retail unit, non-GAAP, and Wholesale gross profit per retail unit, non-GAAP. Adjusted EBITDA is defined as net loss plus income tax expense, interest expense, other (income) expense, net, depreciation and amortization in cost of sales and SG&A, goodwill impairment, share-based compensation including the CEO Milestone Gift in cost of sales and SG&A, and restructuring costs, minus revenue related to our Root warrants. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of total revenues. Gross profit, non-GAAP is defined as GAAP gross profit plus depreciation and amortization in cost of sales, share-based compensation including the CEO Milestone Gift in cost of sales, and restructuring costs, minus revenue related to our Root warrants. Total gross profit per retail unit, non-GAAP is Gross profit, non-GAAP divided by retail vehicle unit sales. We believe that these metrics are useful measures to us and to our investors because they exclude certain financial, capital structure, and non-cash items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations, in part because they may vary widely across time and within our industry independent of the performance of our core operations. We believe that excluding these items enables us to more effectively evaluate our performance period-over-period and relative to our competitors.
©2023 Carvana, LLC Confidential Document 17 Non-GAAP Financial Measures
©2023 Carvana, LLC Confidential Document 18 Non-GAAP Financial Measures
©2023 Carvana, LLC Confidential Document 19 Non-GAAP Financial Measures
©2023 Carvana, LLC Confidential Document 20 Non-GAAP Financial Measures