Vehicles are seen on display at a Carvana dealership in Austin, Texas, on February 20, 2023.
Brandon Bell | fake images
Actions of carvana rose more than 30% during after-hours trading on Wednesday after the used car retailer reported record results and posted a profit for the first quarter.
Here's how the company performed in the first quarter, compared to average estimates compiled by LSEG:
- 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 vs. $2.67 billion expected
Carvana reported record first-quarter net income of $49 million, compared to a loss of $286 million during the prior-year period. He also recorded the best result of all time. adjusted earnings before interest, taxes, depreciation and amortization, o EBITDA, of 235 million dollars, compared to a loss of 24 million dollars the previous year.
The company's gross profit per unit, or GPU, which investors watch closely, was $6,432. Carvana's adjusted EBITDA profit margin for the quarter was 7.7%.
Carvana's net proceeds included a gain of approximately $75 million in the fair value of Carvana's warrants to acquire root inc. common actions. This did not affect its GPU or its adjusted EBITDA.
“In the first quarter, we delivered the best results in the company's history, validating our long-held belief that Carvana's online retail model can drive industry-leading profitability while delivering industry-leading customer experiences.” industry,” Carvana CEO and President Ernie Garcia III said in a release.
García said the company's performance was driven by efficiency gains in its operations, especially in the reconditioning of vehicles for sale, as well as in selling, general and administrative expenses, among other areas.
Carvana expects to continue increasing its adjusted EBITDA profit margin as the company continues to grow, according to Garcia. He declined to reveal how much the company believes it can boost those results.
Carvana Stock in 2024
“I really think in terms of a single quarter that has meaning about what the future holds. If we execute it properly, I think this is probably our most important quarter and it feels amazing,” Garcia told CNBC during a phone interview Wednesday. at night. .
The company anticipates further cost reductions or efficiency gains to increase profitability through areas such as advertising, as well as general and operating expenses.
Garcia said Carvana is also working to increase vehicle reconditioning and profitably rebuild its vehicle inventory, which was nearing a record monthly low of 13-day supply in March. It has increased its capacity to recondition vehicles to prepare them for sale by approximately 60% over the past year.
“Inventory acquisition, generally speaking, seems relatively easy to scale, but increasing remanufacturing capacity is difficult,” he told CNBC. “Inventory today is certainly tighter than we would like it to be. We are working hard to rebuild it, but we are very well positioned to do so.”
The results follow a major restructuring of the company over the past two years to focus on profitability rather than growth, following bankruptcy concerns when Carvana shares lost almost all of their value in 2022.
The company's shares have since 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 has prioritized growth, but at the same time profitability.
“We are now focused on our long-term phase of driving profitable growth and pursuing our goal of becoming the largest and most profitable automobile retailer and buying and selling millions of cars,” the letter to shareholders reads.
For the second quarter, the company said it expects a sequential increase in its year-over-year growth rate in retail units and a sequential increase in adjusted earnings before interest, taxes, depreciation and amortization.
CORRECTION: Carvana, a used car retailer, reported record results and turned a profit for the first quarter. An earlier version misstated the company's business.
