The vehicles will be on display at a Carvana dealership in Austin, Texas on February 20, 2023.
Brandon Bell | Getty Images
Shares of caravan rose more than 30% during after-hours trading on Wednesday after the automaker reported record results and swung to a profit in the first quarter.
Here’s how the company performed in the first quarter compared to LSEG’s average estimates:
- Earnings per share: 23 cents – it was not immediately clear whether it was comparable to the expected loss of 74 cents
- Revenue: $3.06 billion versus expected $2.67 billion
Carvana reported a record first-quarter net profit of $49 million, compared with a loss of $286 million in the year-ago period. An all-time best performance was also achieved adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA of $235 million, compared to a loss of $24 million a year ago.
The company’s gross profit per unit (GPU) closely watched by investors was $6,432. Carvana’s adjusted EBITDA profit margin for the quarter was 7.7%.
Carvana’s net income included a gain of approximately $75 million on the fair value of Carvana’s warrants to be acquired Root Inc. Common shares. This had no impact on GPU or Adjusted EBITDA.
“In the first quarter, we delivered our best results in the company’s history, confirming our long-held belief that Carvana’s online retail model can drive industry-leading profitability while delivering industry-leading customer experiences,” Carvana CEO and Chairman Ernie Garcia III said in a release.
Garcia said the company’s performance was due to efficiencies in its operations, particularly reconditioning of vehicles for sale, as well as selling, general and administrative expenses and other areas.
Garcia said Carvana expects to continue to increase its adjusted EBITDA profit margin as the company continues to grow. He declined to disclose how much the company believes it can increase those results.
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Carvana’s stock in 2024
“I really think just one quarter is significant about what the future holds for us. If we do it right, I think this is probably our biggest quarter and it feels great,” Garcia said in a phone interview with CNBC on Wednesday evening.
The company expects to continue to reduce costs or improve efficiencies to increase profitability in areas such as advertising and overhead and operating costs.
Garcia said Carvana is also working to increase vehicle detailing and profitably rebuild its vehicle inventory, which neared an all-time monthly low of 13 days of supply in March. Last year, the company increased its preparation capacity for vehicles ready for sale by around 60%.
“Inventory acquisition generally appears to be relatively easy to scale, but expanding processing capacity is difficult,” he told CNBC. “Inventory today is certainly tighter than we would like. We are working hard to rebuild it, but we are extremely well positioned to do so.”
The results are the result of a major restructuring of the company over the past two years to focus on profitability rather than growth following bankruptcy fears when Carvana shares lost almost all of their value in 2022.
Since then, the company’s shares have recovered. They were up about 67% year to date before the company reported its first-quarter results. The stock closed Wednesday up about 5% at $87.09 per share.
A joint letter to shareholders from Garcia and CFO Mark Jenkins said the company prioritized growth while prioritizing profitability.
“We are now focused on our long-term phase as we drive profitable growth and pursue our goal of becoming the largest and most profitable car dealer, buying and selling millions of cars,” the shareholder letter said.
For the second quarter, the company expects a sequential increase in the year-over-year retail space growth rate and a sequential increase in adjusted earnings before interest, taxes, depreciation and amortization.
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2024-05-02 00:59:08
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