01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
Carvana Co. (CVNA) operates as an e-commerce platform for buying and selling used cars.
For the fiscal year ended December 31, 2022, the company experienced a 3.0% decrease in retail unit sales to 412,296 vehicles, compared to 425,237 in 2021, largely attributed to macroeconomic headwinds such as rising interest rates and inflation impacting consumer demand and affordability. This decline in unit sales, coupled with increased vehicle depreciation and reconditioning costs, led to a significant decrease in gross profit per unit, down 33.4% year-over-year to $3,022a. Despite revenue growth driven by an increase in the average selling price of retail vehicles and the acquisition of ADESA, Carvana reported a substantial net loss of $2.9 billion for 2022, significantly wider than the $287 million loss in 2021.
This loss was impacted by an $847 millionb goodwill impairment charge related to the ADESA acquisition and increased interest expenses. The company ended the year with total liquidity resources of $3.9 billion, including cash and equivalents, and availability under revolving facilities, providing a buffer for ongoing operations. However, the substantial debt load remains a key concern for investors.
02—Key points
Key Highlights
- Retail unit sales decreased by 3.0% to 412,296 in 2022, attributed to macroeconomic headwinds affecting consumer affordability.
- Total gross profit per retail unit significantly declined by 33.4% to $3,022 in 2022, reflecting higher vehicle depreciation and reconditioning costs.
- The company reported a substantial net loss of $2.9 billion for fiscal year 2022, a significant increase from the $287 million net loss in 2021.
- A goodwill impairment charge of $847 million was recorded in 2022, primarily related to the ADESA acquisition.
- Total debt increased to $8.4 billion as of December 31, 2022, driven by the ADESA acquisition and new senior note issuances.
- Despite the challenges, total liquidity resources stood at $3.9 billion as of December 31, 2022, providing some financial flexibility.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Carvana Co. lost $0.12.
- Revenue$13.60B100.0%
- Cost of revenue−$12.36B90.8%
- Gross profit$1.25B9.2%
- Operating costs−$3.60B26.4%
- Operating income−$2.35B17.3%
- Interest, other & tax$764.0M5.6%
- Net income−$1.59B11.7%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $13.60B$12.81B | +6.2% |
| Cost of Revenue | $12.36B$10.88B | +13.5% |
| Gross Profit | $1.25B$1.93B | −35.4% |
| SG&A Expenses | $2.74B$2.03B | +34.6% |
| Operating Income | -$2.35B— | — |
| Interest Expense | $486.00M$176.00M | +176.1% |
| Net Income | -$1.59B-$135.00M | −1075.6% |
| EPS (Basic) | $-3.15$-0.33 | −865.6% |
| EPS (Diluted) | $-3.15$-0.33 | −865.6% |
| Shares Outstanding (Basic) | 504.14M414.02M | +21.8% |
| Shares Outstanding (Diluted) | 504.14M414.02M | +21.8% |
05—Questions
Frequently Asked Questions
What were Carvana's key financial performance indicators for fiscal year 2022?
In fiscal year 2022, Carvana's retail unit sales decreased by 3.0% to 412,296 vehicles. The company reported a total gross profit per unit of $3,022, a 33.4% decrease from the prior year. Net sales and operating revenues increased by 6.2% to $13.6 billion, but this was overshadowed by a significant net loss of $2.9 billion.
What factors contributed to Carvana's increased net loss in 2022?
The significant increase in net loss for 2022 was primarily driven by a substantial goodwill impairment charge of $847 million related to the ADESA acquisition, a significant increase in interest expense (up $310 million to $486 million), and lower gross profit per unit due to macroeconomic factors impacting the used vehicle market.
How did the ADESA acquisition impact Carvana's financial position?
The acquisition of ADESA for approximately $2.2 billion in May 2022 significantly expanded Carvana's infrastructure but also contributed to the company's financial challenges. It led to the recognition of $838 million in goodwill and incurred integration costs. The acquisition also contributed to a substantial goodwill impairment charge of $847 million in 2022.
What is Carvana's current liquidity situation?
As of December 31, 2022, Carvana reported total liquidity resources of $3.9 billion, including cash and cash equivalents of $434 million and $1.4 billion in availability under short-term revolving facilities. While this provides a buffer, the company's substantial debt load of $8.4 billion remains a significant concern.
06—Continue