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CARVANA CO. 8-K Report, Financial Results (Jul 31, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed July 31, 2024
Period End
July 31, 2024
Security
CVNA
In the record · 2017–202610-K910-Q298-K131

CVNA filed 9 annual reports (10-K), 29 quarterly reports (10-Q) and 131 current reports (8-K) between 2017 and 2026.

  1. Leadership change8-K · May ’17May ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Material agreement8-K · Jan ’23Jan ’23
  4. Material agreement8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.

Carvana (CVNA) reported Q2 2024 results on July 31, 2024, featuring 101,440 retail units sold (up 33% year-over-year) and revenue of $3.41 billiona (up 15%).

The company posted net income of $48 millionb (1.4% net margin, versus a 3.5% loss a year earlier) and a record Adjusted EBITDA of $355 million (10.4% margin, versus 5.2%). GAAP operating income reached a company record of $259 million. Per-unit profitability improved meaningfully, with total GAAP gross profit per unit rising to $7,049 (up $529 year-over-year) and Carvana Operations SG&A per unit falling to $1,696 from $1,850 sequentially.

Net income was helped by a $53 millionc unrealized gain on Root warrants for the half-year, though Q2 itself absorbed a roughly $22 million negative warrant impact. Management guided to a sequential increase in retail units in Q3 2024 and full-year 2024 Adjusted EBITDA of $1.0 to $1.2 billion, compared with $339 million in 2023. The guidance is conditioned on a stable operating environment, and the company did not provide a GAAP reconciliation for the forward Adjusted EBITDA figure, citing the difficulty of forecasting one-time and restructuring items.

Investors should note that the year-over-year unit growth partly reflects a weak Q2 2023 comparison, when inventory was cut sharply, and that Carvana still carries about $5.4 billiond of long-term debt with interest expense of $173 million in the quarter. Total liquidity resources stood at $4.1 billion at June 30, 2024.

The filing is largely a shareholder letter and press release furnished under Item 2.02, so its figures are unaudited and are not deemed 'filed' under Section 18 of the Exchange Act. Its Adjusted EBITDA and GPU metrics are non-GAAP measures that differ from GAAP results, and investors should weigh them alongside the GAAP statements.

02—Key points

Key Highlights

  1. Retail units sold rose 33% year-over-year to 101,440, while revenue grew 15% to $3.41 billion, indicating that pricing declines partly offset volume growth.
  2. Record Adjusted EBITDA of $355 million and a 10.4% Adjusted EBITDA margin, up from 5.2% a year earlier and described as the highest for any public automotive retailer.
  3. Net income of $48 million (1.4% margin) versus a $105 million loss in Q2 2023; Q2 included a roughly $22 million negative impact from Root warrant fair value declines.
  4. Total GAAP gross profit per retail unit rose to $7,049 from $6,520, with retail GPU at a company record of $3,421 and wholesale marketplace GPU up year-over-year.
  5. Carvana Operations SG&A per unit fell to $1,696 from $1,850 sequentially, and overhead SG&A declined $3 million, reflecting operating leverage on fixed costs.
  6. Full-year 2024 Adjusted EBITDA guidance of $1.0 to $1.2 billion versus $339 million in 2023, plus an expected sequential increase in Q3 retail units, both conditioned on a stable environment.
  7. Liquidity improved to $4.1 billion in total liquidity resources at June 30, 2024, up from $3.1 billion at year-end 2023, though long-term debt remained about $5.4 billion.

03—Questions

Frequently Asked Questions

  1. How profitable was Carvana in Q2 2024 on a GAAP basis?

    Carvana reported GAAP net income of $48 million, a 1.4% net margin, compared with a $105 million net loss in Q2 2023. GAAP operating income was a company-record $259 million, up $217 million year-over-year. Net income attributable to Carvana Co. shareholders was $18 million.

  2. What is the company guiding for the rest of 2024?

    Carvana expects a sequential increase in retail units in Q3 2024 compared with Q2 and full-year 2024 Adjusted EBITDA of $1.0 to $1.2 billion. Both expectations are conditioned on the operating environment remaining stable. The company did not provide a GAAP reconciliation for the Adjusted EBITDA forecast.

  3. Why is Adjusted EBITDA a concern to some investors, and how does it differ from GAAP?

    Adjusted EBITDA excludes interest, taxes, depreciation and amortization, share-based compensation, and other items, and it removes Root warrant revenue and the 2023 debt extinguishment gain. Investors should compare it with GAAP net income, which is far smaller at $48 million for the quarter. Carvana carries substantial debt, so interest expense of $173 million in Q2 is a significant cost that Adjusted EBITDA does not capture.

  4. Was the year-over-year unit growth driven by a weak prior-year comparison?

    Partly. The letter notes that Q2 2023 retail units declined sequentially because Carvana cut inventory by 12% sequentially and 55% year-over-year as part of its 2023 profitability initiatives. Management acknowledged that the 33% growth benefited from this favorable comparison, while Q1 2024 growth was 16%.

  5. What are the key risks highlighted in the filing?

    The forward-looking statements cite risks including the ability to use infrastructure capacity and scale the business, consumer demand and macroeconomic conditions, the ability to raise capital given substantial indebtedness, a history of losses, competition, changes in new and used vehicle prices, and inventory normalization. The filing refers investors to the Risk Factors section of the 2023 Form 10-K.

04—Continue

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