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A glass tower of Carvana is lit up on February 23, 2022, in Oak Brook, Illinois.
Armando L. Sanchez | Tribune News Service | Getty Images
Mobile home It said Thursday that it expects to report positive adjusted earnings during the second quarter of this year — earlier than many expected — as the used-car retailer implements a restructuring that focuses on cutting costs and profits over growth.
The stock rose more than 25% in extended trading Thursday to just over $9 a share. Carvana closed Thursday at $7.20 per share.
The company, which previously reported first-quarter results in March, beat Wall Street expectations for adjusted losses per share, posting a loss of $1.51 per share, versus Refinitiv consensus estimates of $2. Revenue of $2.61 billion came in exactly in line with Refinitiv’s expectations.
The cornered used car retailer reduces costs, reduces losses, and increases profits per vehicle. The company’s stock is down nearly 98% last year as it exceeded spending to increase sales and increase vehicle inventory amid weak demand.
Carvana said on Thursday that it early achieved a previously announced reduction in selling, general and administrative expenses of $1 billion quarterly.
The company last year announced plans to achieve a positive EBITDA rate this year, however it has withdrawn that guidance due to “current industry and macroeconomic conditions.” Carvana last reported positive adjusted earnings of $20 million during the third quarter of 2021.
“Q1 was a big step in the right direction and there is more to come. Given our strong start to the year, we expect positive adjusted EBITDA in the second quarter of 2023,” said in the earnings statement. “Our strategy and execution are clearly working as evidenced by our 61% increase in gross profit per unit, the best graphics processor first quarter in company history.”
Wall Street has been watching additional steps in the company’s restructuring as well as improvements in overall gross profit per unit in particular. GPU was $4,303, an increase of 52% compared to the first quarter of 2022.
Sales also beat expectations, at 79,240 units, compared to a previously announced forecast of 76,000 to 79,000 units. Sales during the same quarter last year were 105,000 units.
In the first quarter, Carvana posted 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 in the prior year and narrower than its loss of $291 million during the fourth quarter.
“I think we’ve proven that we can do a lot better than we’ve done in the past,” Garcia said Thursday on a conference call with investors.
The Carvana has been a sought-after stock during the Covid pandemic, as consumers have moved towards buying cars online and the used car market has soared due to a lack of new vehicle inventory. But the company failed to take advantage of the right time and started to restructure the business.
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