8-KRegulation FDOther EventsExhibits & Filings

CARVANA CO. 8-K Report, Regulation FD Disclosure (Mar 30, 2020)

Filed March 30, 2020For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on March 30, 2020, to address the significant impact of the COVID-19 pandemic on its business. The company withdrew its previously issued 2020 financial guidance due to the high degree of uncertainty surrounding the pandemic's effects on consumer demand and capital markets. Carvana is implementing cost-saving measures by pausing new market openings, reducing discretionary spending on hiring, travel, and IT investments, and rebalancing marketing, staffing, and purchasing to align with current demand. Despite the challenges, Carvana highlighted its well-positioned business model for scaling up when demand recovers, emphasizing its touchless delivery process as a safe way for customers to purchase vehicles. The company also announced an amendment to its Master Purchase and Sale Agreement with Ally, increasing Ally's commitment to purchase up to $2.0 billion of finance receivables through March 2021, providing crucial financing flexibility. Additionally, Carvana disclosed pricing for a registered direct offering of 13,333,333 shares of its Class A common stock on March 30, 2020.

Key Highlights

  • 1Withdrawal of 2020 financial guidance due to COVID-19 uncertainty.
  • 2Temporary pause on new market openings and vending machine launches.
  • 3Significant reduction in discretionary growth expenditures, including hiring, travel, and IT investments.
  • 4Emphasis on touchless delivery process as a safe and effective sales model during the pandemic.
  • 5Amendment to the Ally financing agreement, increasing purchase commitment for finance receivables to $2.0 billion through March 2021.
  • 6Announcement of a registered direct offering of 13,333,333 shares of Class A common stock priced on March 30, 2020.
  • 7Digital shareholder meeting to replace the previously scheduled live meeting on April 21, 2020, to protect health and safety.

Frequently Asked Questions

COVID-19 is significantly impacting Carvana's business by creating uncertainty in consumer demand and capital markets. As a result, the company has withdrawn its previously issued 2020 financial guidance and is adjusting its operations to be leaner and more flexible.

Carvana is pausing new market openings and vending machine launches, reducing discretionary growth expenditures, and rebalancing marketing, staffing, and purchasing levels to align with current demand. They are also implementing enhanced health and safety measures for employees and customers, including touchless deliveries.

The amended Master Purchase and Sale Agreement with Ally upsizes the purchase commitment for finance receivables by approximately $1.6 billion, to a total of up to $2.0 billion through March 23, 2021. This provides Carvana with significant financial flexibility to serve customers during this period of heightened uncertainty.

Carvana is leveraging its online sales model and touchless delivery process, which allows customers to buy a car without physical contact. This is presented as a safe and convenient option that aligns with public health recommendations and customer needs.