10-QPeriod: Q3 FY2022

CARVANA CO. Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:CVNA

Summary

Carvana Co. (CVNA) reported its third quarter 2022 financial results, showing a significant increase in total assets to $9.62 billion from $7.02 billion at the end of 2021, largely driven by the acquisition of ADESA. However, this growth came with a substantial increase in total liabilities to $9.25 billion from $6.49 billion. The company's net sales and operating revenues for the quarter were $3.39 billion, a slight decrease from $3.48 billion in the prior year, while the net loss attributable to Carvana Co. widened significantly to $283 million from $32 million in the same period of 2021. This performance was impacted by macroeconomic headwinds, including rising interest rates and inflation, which reduced vehicle affordability and led to fewer retail unit sales, although the average selling price per retail unit increased.

Financial Highlights

42 data points
Beta

Revenue

$3.39B

10.6% Gross Margin

Net Income

-$283.00M

-8.4% Net Margin

EPS (Diluted)

$-0.53

Total Assets

$9.62B

Cash & Equivalents

$316.00M

Free Cash Flow

-$188.00M

Financial Statements
Beta
Revenue$3.39B
Cost of Revenue$3.03B
Gross Profit$359.00M
SG&A Expenses$656.00M
Interest Expense$153.00M
Net Income-$283.00M
EPS (Basic)$-0.53
EPS (Diluted)$-0.53
Shares Outstanding (Basic)529.28M

Key Highlights

  • 1Total assets increased significantly to $9.62 billion, driven by the acquisition of ADESA, while total liabilities also rose substantially to $9.25 billion.
  • 2Net sales and operating revenues for the third quarter decreased by 2.7% to $3.39 billion, compared to $3.48 billion in the prior year period.
  • 3The company reported a net loss attributable to Carvana Co. of $283 million for the third quarter, a substantial increase from a net loss of $32 million in the same period of 2021.
  • 4Retail vehicle sales decreased by 6.0% to $2.49 billion, primarily due to a 8.4% decline in retail unit sales, influenced by macroeconomic factors like rising interest rates and inflation.
  • 5Wholesale sales and revenues increased by 26.3% to $697 million, boosted by the ADESA acquisition, which contributed significantly to wholesale marketplace units sold and revenue.
  • 6Gross profit decreased by 31.4% to $359 million, with retail vehicle gross profit per unit declining by 36.1% due to higher acquisition, reconditioning, and transport costs.
  • 7Interest expense more than tripled to $153 million from $48 million, reflecting increased debt from recent note issuances and sale-leaseback financing.

Frequently Asked Questions

Carvana reported a net loss attributable to Carvana Co. of $283 million for the third quarter of 2022, a significant increase from $32 million in the prior year. Revenue slightly decreased to $3.39 billion from $3.48 billion, impacted by a decline in retail vehicle sales due to macroeconomic headwinds. The company's asset base grew substantially due to the ADESA acquisition, but liabilities also increased significantly.

The acquisition of ADESA's U.S. physical auction business for approximately $2.2 billion significantly increased Carvana's total assets and property and equipment. It also contributed to a substantial rise in wholesale sales and revenues, with the inclusion of wholesale marketplace units sold and revenue from the acquired operations. However, it also added to the company's debt and integration-related expenses.

Carvana is facing significant macroeconomic challenges, including heightened inflation and rising interest rates, which are impacting vehicle affordability and leading to a decrease in retail unit sales. The company also experienced an increase in acquisition, reconditioning, and inbound transport costs, which negatively affected retail vehicle gross profit per unit. Additionally, interest expenses have risen considerably due to increased debt levels.

As of September 30, 2022, Carvana had total liquidity resources of $4.39 billion, including cash and cash equivalents of $316 million, and significant availability under short-term revolving facilities. The company stated that its current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement issuance date.