01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Carvana Co. (CVNA) reported its 2023 annual results, highlighting a significant shift towards profitability driven by operational efficiencies and cost reductions, although retail unit sales decreased by 24.1%a year-over-year to 312,847 units.
Despite the lower sales volume, total gross profit per unit increased substantially to $5,511,b up from $3,022 in the prior year, indicating improved unit economics. The company successfully reduced its selling, general, and administrative (SG&A) expenses by 34% to $1.8 billion, largely due to headcount reductions and real estate optimization. Financially, Carvana managed its debt by completing an exchange offer that reduced outstanding principal by $1.3 billion and accrued cash interest expense.
The company ended the year with $530 millionc in cash and cash equivalents, and $1.0 billion in availability under revolving facilities, providing a total of $1.5 billion in committed liquidity resources. While the company experienced a net income of $150 million for the year, this was significantly influenced by a substantial gain on debt extinguishment. Investors should monitor the company's ability to reignite sales growth while maintaining its focus on profitability and managing its substantial debt load.
02—Key points
Key Highlights
- Retail unit sales decreased by 24.1% to 312,847 in 2023 compared to 2022, reflecting a strategic focus on profitability and macroeconomic headwinds.
- Total gross profit per unit significantly improved, increasing by 82.4% to $5,511 in 2023 from $3,022 in 2022, showcasing enhanced unit economics.
- Selling, General, and Administrative (SG&A) expenses were reduced by 34% year-over-year to $1.8 billion, driven by efficiency initiatives and cost controls.
- The company successfully executed a debt exchange, reducing outstanding principal and near-term cash interest expense, and ended the year with improved liquidity.
- Despite a reported net income of $150 million, a significant portion was due to an $878 million gain on debt extinguishment.
- Total net sales and operating revenues decreased by 20.8% to $10.8 billion in 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Carvana Co. kept $0.04.
- Revenue$10.77B100.0%
- Cost of revenue−$9.05B84.0%
- Gross profit$1.72B16.0%
- Operating costs−$1.80B16.7%
- Operating income−$80.0M0.7%
- Interest, other & tax$530.0M4.9%
- Net income$450.0M4.2%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $10.77B$13.60B | −20.8% |
| Cost of Revenue | $9.05B$12.36B | −26.8% |
| Gross Profit | $1.72B$1.25B | +38.4% |
| SG&A Expenses | $1.80B$2.74B | −34.4% |
| Operating Income | -$80.00M-$2.35B | +96.6% |
| Interest Expense | $632.00M$486.00M | +30.0% |
| Net Income | $450.00M-$1.59B | +128.4% |
| EPS (Basic) | $0.82$-3.15 | +126.2% |
| EPS (Diluted) | $0.15$-3.15 | +104.8% |
| Shares Outstanding (Basic) | 546.62M504.14M | +8.4% |
| Shares Outstanding (Diluted) | 1.00B504.14M | +98.9% |
05—Questions
Frequently Asked Questions
What was Carvana's net income in 2023?
Carvana reported a net income of $150 million for the year ended December 31, 2023. However, this figure was significantly boosted by an $878 million gain on debt extinguishment. Excluding this one-time gain, the company's operational performance would show a different picture.
How did Carvana's unit sales perform in 2023?
Carvana's retail unit sales decreased by 24.1% in 2023 to 312,847 units, down from 412,296 units in 2022. This decline is attributed to the company's strategic focus on profitability, improved efficiency, and challenging macroeconomic conditions such as higher interest rates and inflation affecting vehicle affordability.
What is the current state of Carvana's debt and liquidity?
Carvana has been actively managing its debt, notably completing an exchange offer that reduced its outstanding principal and near-term cash interest expense. As of December 31, 2023, the company had $530 million in cash and cash equivalents and $1.0 billion in availability under its revolving facilities, resulting in total committed liquidity resources of $1.5 billion. The company ended the year with total debt, net of issuance costs and premium, of $6.3 billion.
Did Carvana improve its profitability per unit?
Yes, Carvana demonstrated a significant improvement in profitability per unit. Total gross profit per unit increased by 82.4% to $5,511 in 2023, up from $3,022 in 2022. This improvement is a key indicator of the company's success in enhancing its unit economics through cost efficiencies and operational improvements.
06—Continue