A Carvana glass tower is illuminated February 23, 2022 in Oak Brook, Illinois.
Armando L. Sanchez | Tribune News Service | Getty Images
carvana On Thursday, he said he expects to turn in a positive adjusted profit in the second quarter of this year – earlier than expected – as the used-car retailer executes a restructuring focused on cutting costs and profits rather than growth.
The stock rose more than 25% in extended trading Thursday to more than $9 per share. Carvana closed Thursday at $7.20 per share.
The company, which pre-announced first-quarter results in March, beat Wall Street expectations for adjusted losses per share, posting a loss of $1.51 per share, versus Refinitiv’s consensus estimate of $2. $. Revenue of $2.61 billion is exactly in line with Refinitiv’s projections.
The struggling used-car retailer has been scrambling to cut costs, limit losses and increase profit per vehicle. The company’s stock fell about 98% last year as it overspent to boost sales and increase vehicle inventory amid weaker demand.
Carvana said Thursday it achieved a previously announced reduction in selling, general and administrative expenses of $1 billion a quarter earlier.
Last year, the company announced its intention to achieve positive Adjusted EBITDA this year, but withdrew that guidance due to “current industry and macroeconomic conditions”. Carvana last reported positive adjusted EBITDA of $20 million in the third quarter of 2021.
“The first quarter was a big step in the right direction and more steps are to come. Given our strong start to the year, we expect to achieve positive Adjusted EBITDA in the second quarter of 2023,” said the Carvana CEO, Ernie Garcia. said in an earnings release. “It’s clear that our strategy and execution are working, as evidenced by our 61% increase in gross profit per unit, the best GPU in the first quarter in company history.”
Wall Street was eyeing further steps in corporate restructuring as well as improvements in total gross profit per unit, in particular. The GPU was $4,303, a 52% increase from Q1 2022.
Sales also exceeded expectations, at 79,240 units, against a previously announced forecast of between 76,000 and 79,000 units. Sales in the same quarter last year were 105,000 units.
For the first quarter, Carvana reported a net loss of $286 million, down from a loss of $506 million a year earlier. On an adjusted basis, the company lost $24 million, down from a loss of $348 million a year earlier and narrower than its loss of $291 million in the fourth quarter.
“I think we’ve proven that we can do a lot better than we ever have in the past,” Garcia said on a call with investors Thursday.
Carvana was a coveted stock during the Covid pandemic as consumers shifted to buying cars online and the used car market soared due to a lack of new vehicle inventory. But the company failed to capitalize at the right time and launched corporate restructuring.