Carvana (CVNA) 19 Jul 232023 Q2 Earnings call transcript

Good day, and welcome to the Carvana Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event today's note, being recorded. Please

now Meg Kehan would like go to to over conference the with turn ahead. I Investor Please Relations.

you on Call. website Please Good gentlemen, that company's this Carvana's Thank corporate ladies be note Relations Quarter for simultaneously section will thank the webcast Second Conference Rocco. on Investor joining at Earnings you, XXXX investors.carvana.com. call us the morning, and and of

letter shareholder also to is website. The second quarter the posted IR

QX, of our set be supplemental a which posted for and of can on tables page we IR Events the Additionally, found financial Presentations website.

call Joining me on Chief are the Officer. Jenkins, today Mark Officer; Chief Financial Executive and Garcia, Ernie

those securities I the recent market results A risks from the actual following like and materially here. statements and meaning financial forward-looking and be found most laws, section Before detailed remind results Risk you actual not federal future XX-Q. Form cause XX-K involve the would limited to, discussed that including, discussion in we opportunities Factors of results but from Carvana's contains of discussion to uncertainties that statements the that within factors can may Carvana's start, the that differ to to Form forward-looking of cause differ material

them otherwise. conference as statements and or and revise risks to a are The developments today, forward-looking current result new in call whether as obligation on or update of this of expectations based Carvana no assumes

adjusted the letter can today, GPU found to metrics for include references non-GAAP on SG&A our and IR today be will in Unless to website. a to specified, financial will copy references between Our Reconciliations our metrics. results reported metrics which EBITDA. can and non-GAAP be found EBITDA our of non-GAAP and commentary be issued otherwise shareholder all GAAP will be financial to all

Garcia. to And call now Ernie? to said, Ernie I'd turn that over with like the

Thanks, on call such Meg. notice. for everyone, thanks, short And joining the

a was quarter. we're Carvana, important great the end. and takeaways with It start in nowhere most me near quarter Let this the for

customer We progress quality strength are are rapid of our making because of our model, what The is the possible. the business our people. fundamentals power offering, the of it making of and

going focus sustain operational, aggressively a were into future that foreseeable demanded for XX maintaining the combined, with growth. embedding it of by XX we under the last We're We months market our operating hit for us combination and efforts. our impacts to were industry, macroeconomic, a our intensity of of culture. ago, put and capital positioned pressure then considerable when and months the further reprioritization

we So that's what did.

plan. with reoriented with the the positive to simple two, completing business steps drive number to a adjusted significant the three-step We business two, number And business three, growth. after economics. Number positive one and unit one, return drive EBITDA;

first completed step. second the quarter, we In the

year, speed the the of last of margin the proud this extremely million. this are taken We progress. and records business, over $XXX set $X.X annualized GPU EBITDA EBITDA of and we've billion in of dollars adjusted adjusted total with we In out expenses quarter,

we we past. million $XX collectively ever functioning from than items items, when to it better nonrecurring has. for than and controlling But efficient about were pace these significant These results numbers that ever Today, adjusted to $XXX a more benefited GPU nonrecurring is company improving the exceptional. EBITDA. have We're the added even at faster and the are in

us to the customer-facing our plan testing the a early keep company, buy improvement in same-day the more and that to customers inspection process our changes enable group up from product pace. making centers are that and business, cars across delivery that efficiently of every operating to markets developments us entire efficient we improvements, more more This to in improvements including of spans from subset have

how does the is changes structure capital plan? With and the results this natural discussed change question being a today,

that short it to to continue way with growth did drive We the The continue the in again attention once result efficiencies same to plan our in we there, will we our EBITDA. the to history. same urgency years is expect answer significantly adjusted to turn first we positive successfully as From that of doesn't. for operating sustainable eight

has is opportunity great ever Our as as it been.

largest love cars customers the Mark? replicate. millions and retailer. differentiated, business profitable and The per our Our firmly difficult march and selling year and our on highly offering is automotive becoming of to to remain to extremely path scalable, efficient, the continues. most We

and Ernie, you, all you thank joining for Thank us today.

exceeded company second record unit we quarter driving now significantly our our economics. profitability. free GPU. path for flow, goal to plan quarter positive significant in and positive to drive are results one significant on EBITDA of milestones driving These step our total complete progress two. of We we repeated adjusted and three-step and Our demonstrate a cash set step second

units continued $X.XXX Similar retail In inventory and reduced in of our second which size, quarters, was decrease a credit and to by focus and primary sold sequentially. four the billion, benchmark a rates reduced profitability decrease expected, quarter, decline initiatives. year-over-year and XX% executing XX% XX,XXX, advertising, retail year-over-year factors: our units increase on driven Total interest of an X% spreads, totaled of we increased sequentially. revenue was sold, past XX% a

in we the including that our on in financial expense, this team current to discussed, the sequential goal, flow. generate are adjusted progress service income to on and free of will remaining gross and profit, significant into metrics metrics. long-term non-GAAP In focus these driving nature term, changes EBITDA. financial Due focused near SG&A long-term cash non-GAAP a remains remarks environment, inputs non-GAAP dynamic previously goal, this set of is our key on As GAAP the we've our goal net management of

other an quarter, approximately retail the non-GAAP inventory [ph] $X,XXX approximately in by GPU QX nonrecurring QX. The adjustment of $XXX was positively benefits, increase an versus second Total a more described sequential detail impacted $X,XXX Retail increases to In was GPU. GPU remark. was total and our this driven retail in $X,XXX, in retail in included which $X,XXX, GPU Non-GAAP we to due allowance. benefit later in GPU $XXX by

of primarily depreciation wholesale were rates, inbound reconditioning retail changes by lower sale, and In in transport and between days market and average driven lower GPU costs. market spreads wider prices, retail addition, retail lower sequential

This retail business fundamental improvements well in as was several market by QX driven some our in GPU end as tailwinds. seasonal

rate, FY On retail the driven customer fundamental inbound normalizing revenue side, by several as size including higher GPU well was additional improvement and gain key services, lower a compared XXXX, of and sourcing as from areas reconditioning higher inventory costs. transport to

GPU. side, the average, QX On on the quarter year of dynamics and strongest the is seasonal for market retail

profit of was spreads between a retail and period which changes in addition, retail QX wholesale equal. benefited depreciation, wholesale compared impacted QX. gross GPU things were primarily $X,XXX us by followed sold GPU by market other which by prices sold wholesale handle units versus wholesale in more Non-GAAP in saw rates In high allowed largely driven vehicle volume. wholesale to to $X,XXX GPU and wholesale that operational Sequential QX, offset in this QX negatively wholesale unit being higher lower-than-expected year market retail per depreciation improvements

QX a GPU higher-than-normalized being loans Sequential approximately versus held $X,XXX of GPU GPU by sold a was that and compared of sold was in to volume driven in other QX $XXX, improvement greater other We equal. QX. QX. increased $X,XXX volume things other in primarily by loans estimate in other Non-GAAP

by also relative were $XX reductions benchmark size. to interest QX, in GPU other continued in higher rates SG&A average driven interest lowering driven to we make by by In expenses, sequentially, reducing and primarily changes higher million continue non-GAAP progress expenses. rates origination loan non-advertising Sequential SG&A expense

Advertising flat expenses compared in were QX QX. approximately to

all believe cost low and over near-term as point volume past expense to to We the we've we achieved to areas. We realize and spend optimize on profitability. our year balance expect unit our quarterly are to QX reductions efficiencies further long-lasting seek we we have continue be believe advertising sustainable, to and the in

to forward, unit reduce we primary drivers per see retail Looking SG&A sold. three

First, two per manual operations pipeline we expenses completing opportunities a work, among which of funnel plan, three-step to deep of see sold other basis optimize to projects continue unit routing, on unit in our initiatives. and drive retail automate reduce to is conversion economics, staffing step significant our increased by

two our basis reduce a expenses of zero-based to dollar also through budgeting our plan, three-step opportunities continue optimize absolute see step and technology an on on focus facilities to Second, continued and and corporate in other we gains. efficiency

at returned expense Third, three-step is plan, in to basis to higher see step leverage retail we sold volumes. a leading per a base, leverage which facilities significant opportunity growth, significant and on of three our corporate unit technology to our

our including $XXX from EBITDA additional the of EBITDA described benefit retail The $XX selling to a million nonrecurring was approximately loans million QX holding in adjusted a impact and revenue. of $XX million positive from $XX inventory was X.X% allowance. items or previously benefit and million, Adjusted

our Moving outlook. now to third quarter

stable. expense toward QX. to currently QX, we macroeconomic expect be $X,XXX. compared environment we retail as On as to QX and non-GAAP industry units environment GPU, currently the expect following looking the SG&A, in retail GPU On remains units, to non-GAAP expect On long expect QX sold similar above in While total QX. we continues uncertain, the compared similar SG&A

We time. non-GAAP reduce continue to over see opportunities SG&A further expenses to

within second upside in date our numbers, GPU positive positive adjusted generate free early given to EBITDA plan the adjusted we to for electing QX three-step flow. total the We in expect first we this these consecutive quarter, further conservative Finally, call provide earnings see demonstrating the EBITDA outlook. cash to step the of toward and quarter, are a but

of those senior notes June agreement we notes $X.X resources unsecured XX, than we XXXX. $X support with unpledged revolving including ADESA. availability senior exchange real from transaction in our in the assets, $X.X XXXX cash billion Today, acquired through had and unsecured secured billion billion new with liquidity billion including holders December of maturities notes of $X approximately total approximately and in ranging and of to On XX% estate more with real other for estate billion over senior June $X.X announced

The for the debt over $XXX The million than driving our senior our significant over strong and next in maturities, reduces us extends noteholders. opportunity XXXX our execute and our transaction XXXX its business of Carvana reduces by free of presented an years, $X.X giving senior unsecured more note two flow. flexibility total a expense cash interest per our billion, positive XXXX performance year and unsecured plan win-win by XX% cash over toward to transaction for

attention. your for Thank you

will questions. now take We

Thank you.

will Josey We Instructions]. question-and-answer the Ron [Operator ahead. session. with Today's question comes go first Citi. begin Please now from

get Mark inventory. question. the to I'm and about for just December, that wondering of Thanks most we'll overall, talk believe was that just you stable restructuring, energy companies I'm sure out overall, guess, are any the inventory improving, you, guys. I demand as dynamics, supply macro but of helpful. insights that car for [indiscernible] compares I Great. trends my the days demand there seeing taking I would that And about use be want is into talk you to the debt to any I how down in Ernie think more signs just with on broader overall environment, Thank -- question. the

with Sure. start question. Well, the component let's of inventory that

think It into volumes. And can I align by that over the We've over down something benefits in to flowing of an is retail see really pushing again our I year-over-year inventory think through been XX%. size that the you down really effort quarter-over-quarter. inventory that I believe down sales XX%. GPU. was in with

measure, incredible had retail we think I a GPU any by pretty quarter.

and components one inventory nine kind largest, the times sales therefore, number last think volumes turn a aligning the to faster where could certainly of our there months depreciation. We have are inventory less six of of I of and that, been has but over reducing was. with And

I elevated and difficult environment more and rates for the prices elevated of environment think affordability remains customers. an interest

of I think depreciation. there signs today are certainly

very depreciation probably than year, to I faster last looks a happening it's month. forward little similar pulled depreciation think been now It's right although a year. maybe last

the think rest that year. so, see how I And through unfolds this we'll of

view our would scenario is the best-case for that our on depreciation think be that probably -- is pretty significant business I foreseen.

least the the leads business And sure have customers. for with affordability at that's enables to that buy at also it can where ton perspective, to more depreciation broader are hope would aligned way. in and I'm margins what to we're cars to a absorb I weekly organize right think market the demand wholesale in better foreseen not you then signs that doesn't From a add. for a think I think we market But high material the we depreciation, to sufficiently that. I impact that kind and seeing of now

Ernie, one that's just inventory And a on helpful. front users. super real quick

and you to XXXX think you're I helped said there. has back above process levels improvement

Speaking improvement. insights about that inventory, any stock on

Yes.

think significantly is XXXX. normalized that it inventory levels. more what And since So, has size on inventory, ratio now I to our very volumes. the relative That size now back beginning reduced sales placed of has we've much done is inventory

call we shareholder I letter. think the it in

end you second quarter range that past. in If units the is just term normal had of hand in quarter about operated we the second a that on which sold retails is in the sort days, inventory time at we've compare ratio in, that implied the the to XX of

today Thank Please Montani Michael comes you. next go from And Evercore ahead. our question ISI. with

we is quarter. additional for X depreciation the for taking GPU produced you're [ph] $X,XXX on to ask, Thanks total terms of that if question. of than Or I market. see what $XXX could over for the is I the less in mentioned seeing again roughly my morning. quarter, nonrecurring Yes. side. basically basically, wholesale just had this could, some just wanted on you front, you in first nonrecurring? just Good the off, what And updates

Sure.

depreciation quickly the So side. really on

I think before. is elevated as discussed clearly depreciation

I and to an think in of is to that orderly seems retail through like absorb pass the then wholesale happened it far, to and so that's market kind way, be that able market. positioned depreciation the

seen yet that spreads impacting meaningful. in would haven't be retail that way we a So,

have I number And $XXX the this interest a we that quarter benefit more and just into items those nonrecurring inventory then of for from so think GPU originated think the truly included components first allowance incredible then ended did about and result being did of that than retail up as benefit. that a go earned we is We it. of a we of sold GPU additional we there well many I holding release also those receivables receivables as $XXX about that are receivables fact on number,

extremely perspective so we've I removing think improvements the of think that, got majority business. number I was when even and vast in the But across the six which unimaginable our on way that from cadence shipping aspect the of to we're ways that shipping to we're months completely still way trucks, operating ago, and was to the acquiring that we're on those the cars, there's ways reconditioning incredible that get reoriented We has in three cars, managing distances a different history efficiency the unimaginable business for been teams it And an months of we're the program. that that many that we're every have focused $X,XXX the our put is really from how cars, ago. business cars the cars finance many

business, of GPU and We've In number are wholesale as a a ADESA. improvements and a They're made made of through utilizing on had enhancements. to great has that's quarter. also number great enhancements the a path, ADESA additional and we've well. better flowing

see turning general, many the as the around think ADESA in also is improve market start least I in like market, seen seeming the we've sense there not to both come from the to it's volume activity fleets, that and to business market clearly rental business starting starts we're the be just even dealer ADESA in over get normal to future, last though share distant likely a starting And commercial at there more the months. quite off-lease normalize and we're could not-too and yet. back we

our that out just We improvements the seasonality. think as and But benefited think I were through based well retail improvements, well. in in particular, -- those that good and And for GPU as There see were we're is are sustainable. our a you a plan, at lot of the benefits seeing, majority kind believe items. that flowed of us $XXX called was we that wasn't sustainable, the there so think year. the gains bit other So, on early majority there in that in quarter QX some some of are business, then we do a vast the generally I least of that appreciation across nonrecurring unexpected that can and outlook. expectation

And additional then point hit one just there. to

nonrecurring let that me talk should about receivables about asked that more finance for items our expect. there On a we You note, balance. are moment just

billion we QX receivables our finance had $X.X of and X/XX, basically about that up on had balance So, QX. sheet over built we on

down still sell $X.X do certainly billion we As would loans of was have is – revenue continue higher additional of -- additional nonrecurring X/XX over to the we so, GPU. can that yield than have to billion. we That that normalized. coming that quarters $X.X sort in

with Thank comes you. go ahead. Wedbush And Securities. today from our next Seth Basham question Please

giving the you're including Can security, came of interest agreement you debt it's this you how In the bondholders higher best from company? help rates your value morning. ADESA more business. to some and interest us assets tapping the how core Good exchange, understand in and

first we're do great extremely for a excited win-win created both I agreement would of performance and for came lot us. it's And But the of about that life. to Well, say, trivially of we in a the it all, think Sure. to, I believe we win-win. believe room given never the thing a simple I of business, we think getting a is

think years debt And to to secured an had do debt the to there do ago, we we when we notes, preserve unsecured our achieve I to at time try and either it is unsecured debt so, like always to and took or initial option when unsecured we out collateral. that work

be interest that I our the But lower. a preserve expense to valuable think believe several certain is in this And years would we decided debt, valuable. collateral because have could where that unsecured collateral is with Had we circumstances. much over last been it circumstance

debt that a burden we maturities as of to then were especially with from to their that overall do solution some able and extend and find use stronger, we us reduce a work them over of freedom the bondholders for our works bonds lot also And years take together interest give and and benefit we next what several make to financially, well were is so, our an perspective. that to our collateral able

So, also for overall, note that great And about I be us. I didn't it. with. very I that's think I remiss I would group work that think a deal was think was productive to We're extremely -- excited the bondholders if

and people respect say solution make world I got course, that providers. fair of And the that, wanted intelligent to And dealing the but you're we everyone was I very not with optimizers a they is were in solution sure to there. read full a think came is that solution will I for And not They what much oriented. of you everyone. great incredibly course, correct. Someone of once that deal enough media

That's helpful. quickly how billion And are to of as terms just And $X to that? a as much could the plan equity, short your as very we in sell aiming you term? see follow-up do in

Sure.

kind for into companies. has we plan a approximately of put of true most corporate equity, the into proceeds out believe to our that, there'll of that's just we company of kind is a for our It's we $XXX terms into true do do of in of built $XXX family the company certainly business plan. -- million that's We've as that going So, as in market. which for as stock out and do. and ATM, use general million high-quality price. larger $XXX good about be a the And housekeeping would think million is inside built as ours volatile also

those we came notes. is the of noteholders Another desirable to highly we capabilities built agreement prepayment aspect have into with

us the that's us. got in of that of I optionality options to extent of But kind front that time, the we've more gives over the commitment raise lot decreases. so, a we family think And

from ahead. with question today go Please Ben Sandler. And our Johnson next comes Piper

And main ability Can to guys kind rather customers little than vehicles of talk source more of wholesale? what's the bit driver a from your that? you about

a business. think this Sure. important And fundamentally element our I of is

that I to go of many process a many, think, website data traffic extremely on a flow a us we've minute access all that we built different cars and those a of foremost, tremendous for amount benefits enables we to have from interest customers. website get first in experience of accurate that valuing customers many amount tremendous and gets to in the to built transactional that a then And value that all get can that on a allows and is car cars. customers our the of their and

selling that phone, And we process then a computer or they can value a got a to they the about up. on where the pick-up, their as car pick a think, be their them, button as and on get we've then I we is process, schedule desirable it click for come a and customer

centers. We've enable those benefits customers. on and And have better prepare asset much enhancements we then number process We cars where a to back we to we cars. also we us and differentiate pass of to vehicle them of value we some we have plan us and efficient our to of retail take them then those bring retail. buy made wholesale ADESA more in plan and them inspection built and we can if now those to for our them, And those that that dispose take then them the cars, go

platform so, that valuable is think, think I extremely platform. I And an overall,

I disposition benefits the channel. fundamentally very transactions. benefits and replicate. hard of It channel, existence existence benefits think much the basically retail reverse from ADESA the to very disposition the from it from retail of It it's

quarter. benefits that our incredibly to what well and business And that I positioned to the that you're think seeing in So, think retail wholesale that continue our the we're numbers business that strength we this numbers of grow business. and of GPU

comes next Please Baker today our question And Mike at D.A. Davidson. ahead. from go

Hi. Thanks, guys.

I on ask I line. hopefully, to based internal hear what do me. is how think top based And do market? words, you your So much forward? other you it initiatives think is How right In I'm getting How -- going profitability? can think changed? do you decline of on to is much And about now? the you markets your about guess, just wanted your at about how that how on more focus has

Sure.

me this. start with Let

per time existence, approximately XXX% I year, flat. of the a X think at market years when company for our we grew first was at we the

very think that high was customer I because quality. so, our is offering possible And that,

Our to market of business quickly do great experience business, And time a over is itself. making that that lot very incredible the have sure us of the a to sustained grow I think people enabled the across scalable. is we without very tailwinds a very, great. And job customer period from

over dramatically, X.X significantly focus years, getting situation the that our I significantly. change benefits we as on and pretty last seeing focus lot unit And you're better pretty think well. economics. to we reprioritize the of a And

about of You I see had in at that I economics don't what their growth unit six business from out ago, to $XXX this in -- months time. high that if think is was to that the EBITDA shifted million quality -- we just that just there from know printed that there this think model quarter perspective and of anyone that way profitability. that fundamentals very that that one its And I has think goal the

to but And quickly. they to very do to those back think I how as growth, a group different think that. knows is in kind it's very, fundamental line this time through item, of a people that benefits flow a of And through flowed turn when result, I

up to lends and the scalability a a that, us very, of is experience through business it intensive. this hard well. as the years do is everything X.X business It else customer lined It's replicate. and hard that this is I to has taught to something of last very complicated. get to capital the It's think think model I model business that as well the quality the both through itself

time, when think be well it's I we'll very positioned. So,

the over that baseline. used car don't I additional our to Now it. probably are below X.X way headwinds focus. probably think in in reasonable shift years. the sales their think provided aside the last total Today, do market It's XX% from some are I that a But biggest has those drivers think about

significant be the that at that don't should some tailwind, be plan know it a So, I that will normalizes, relative to which that get we nice, benefits will go but point, to the ourselves. market when be

the impacted market last been think then more strong the that independent that than has arguments market franchise there's the And X.X I over years.

has I think our argument so, XX%. that that more of actually And market impacted kind there's an that than been direct

and So, comes as car back. I normalize affordability think prices point, at and normalize some interest rates

that push there did to importantly, broader control growth we like I most we'll think be our control rebound on time our before. grow, in destiny that, as it's we'll the have will take market. own own, the when likely think past, I we of and in we'll But and a

If follow demand up, talked Okay. is not the GPU but right so spread is one-time and talked this but Very you about helpful. it that I -- sustainable could spread one-time I the retail you think the at than pricing normalize now prices that item, two seeing you're about is between and wholesale GPU items, your prices, in how the Does high continue expected indexed some Or outlook? years. been is in lower it's to point? that a

one. that take I'll

some gains quarter well strong but strong QX, there were quarter that have there's the I I also So pointed QX. retail market from obviously, alluded a GPU just think for in fundamental that reasons tailwinds to as very that we another GPU there, as important. And are that of some expect to. in we've we reasons retail real had made out do think we do of some you

allowance in do quarter we strong we Obviously, that won't in the have had GPU. a QX. for expect retail benefit QX we But

I them just a in call. again, fundamental from we're success having think think this of enumerate I on sourcing some earlier to that Ernie touched cars of customers. those gains lot

customers. the lot side on really we've the to additional we our that a of provide some We had of are cost from revenue services success of And generating retail GPU.

reconditioning inventory year, the last logistics efficiency We're really we've really reconditioning pushed unit more per the improving So, been -- our network to teams make teams cost efficient. been been costs. focused our working on retail the in inbound have over inspection ever We've cost and centers, fulfillment teams the sold. have down and transport really the the

right all way operating in full year those but that capacity, a we're order at, only in such work around on and was XX% that the in what say, below So, and maybe Even costs those more the centers inspection that, yet the of magnitude, are reconditioning probably levels. below down is down 'XX. it year than of full little bit centers order XXXX

fundamental those I that real some think GPU. success we So, stories drive strength are believe in will retail

go next with Chris BNP from Paribas. comes our question Please And today ahead. Bottiglieri

for Thanks my Hi. question. taking

I kind $XXX roughly You're million you all, gap. give billion debt of a clarify of summation, equity million, of -- that million raising $XXX Can $X.X just leaves the to $XXX net you retiring? cap debt us want have of First structure.

You're pay going that's you $X.X million But to have some like and to you on to between maybe the there's down balance of some cash used million, gap can do I can't if ATM and $XXX the receivables clarify in the the the still, obviously, being tell sheet. debt. and just future. sell kind

to trying bridge the two. we how think Just

Yes. Sure.

let structure me is into One talking pieces. talking just then capital about liquidity the two resources. break that about is So, and second

first, to as structure. it So relates capital

So, laid I the correct. think out you framework is that basic

raising million which support of agreement. we of then part million transaction put comes have of this to cash So, with there $XXX committed $X.X equity just to to have in notes. will the to of the -- of component billion. basically, And million have consideration notes That's Garcia transaction $XXX value we're will elsewhere. is over by $XXX committed noteholders A total the $XXX paid exchanging Again, of be equity that of certain committed raise where reduce And that's in million. in. the we some face agreement the slightly support retire committed

notes the that And of part remainder a of notes. tranches new form basically exchanging secured for exchange. the senior then is of consideration existing will cash is just the exchange that senior so unsecured the And

talked secured to about I perspective really some eliminating notes, benefit a maturities. senior of I XXXX from -- our is those the we're benefits -- we two pick interest and this valuable bit the XXXX call, of but for think also largely on one and essentially think to pay option years

to on step of the three a lot meaningful of of so economics it. it that step over many don't be success We've standpoint. step maturity lot plan December executing horizon and this And unit had it an So, exchange, to a year that's really note after flexibility -- flexibility and one volume. think I to three-step and really XXXX. to our tremendous be time positive and completing -- from And until far of plan. driving very We have amount two moving will a have obviously we a completed a executing business of we growth. awful then significant returned great

turning Now your liquidity. to question about

we just cash ended liquidity availability total under of just existing in billion resources on million mix of and with quarter that $X.X over $X approximately was So, a of $XXX revolvers. billion -- the

total liquidity committed our to that I think stepped actually our -- up is resources number one thing quarter-over-quarter. note about

quarter. we increased in our actually liquidity second So, the

so, feel plan a I a think our with a And we like time over good many flexibility to execute in position year very lot of horizon. we're liquidity

cash a tell And It's debt. Chris, is from you're debt how in thing The that reduction is for not just clear couldn't billion because basically to interpreting make the it of majority face exchange I sure of just of one paydown. the question. reduction of $X.X collateral

reduction is collateral out cash So, of that billion created -- just that tie is we need the providing don't to kind full the to $X.X bond. of value kind by the majority of that's with

That's just follow-up. what quick And was I a asking.

do You on for next It moving like that? paydown? advantage have would this seems How do volatility. the raise debt this positive think $X wiggle future forward EBITDA generate that of there because ATM a more you do reported take theoretically year. of FCF about you to you Pick of if feature, you equity retire could your debt? billion that think probably could you of you about levels Is room they allow How depending the

Yes. Sure.

aspects think notes decreasing multiple leverage. I facilitate of secured there So, new senior that the are do

no-call is one-year have the notes XXXX only a period. one think I

year. can those par plus called be after only a coupon one half so at And

I think and then the notes a paid XXXX than at par period, slightly also that but have could debt no-call shorter coupon. just plus be half period, no-call a two-year a typical

are And think a of features. so, I those couple

from another think equity. I do the enables That's feature that be with proceeds allow XXXX notes; notes prepayments the the and also deleveraging. made XXXX to

And from some aspects and of that I've structure the worked components. this the there's financial capital of flexibility. so, well think debt think I talked I interest many of standpoint exchange about

maturities. to another, reduce reduction efficiently the in ability desire. also I so of if think, about elimination debt the overall We leverage talked reasonably is But and we near-term

from comes question JPMorgan. today Gupta go next And Rajat Please our with ahead.

Great. Good for my question. morning. taking Thanks

questions. XQ retail to of on to that backlog wanted not Just correct? the $X,XXX clarification choose one prior do -- And The comment. clearance. GPU backlog assume upside further for a does to you of that Is and clarify Just that? that, additional receivables that if that's do

Yes. Sure.

specific $X,XXX with didn't GPU GPU greater outlook. than we outlook specify volume loans than greater a $X,XXX for the total associated sold of with that, QX, So,

EBITDA same the we upside number. However, GPU positive $X,XXX the the well. we we But to quarter. letter noted to see the also early shareholder that we adjusted in think that at in did I outlook as we're upside And do note time, see

just figures above we nice gave that of round we both them. believe we'll So, be those

provides little And so color. hopefully, that a of bit

really business the the a good strength about perspective. we Obviously, of from feel GPU

at past, levels lot at any the case. a meaningfully GPU have there's we than of operating the are We why point higher that's in reasons fundamental

Got it. That's helpful.

Just SG&A. on

flattish was sequentially. SG&A other The

surprised opportunities cost like volume around I remain timing Is basis benefits? talked was we Is reduction. on the to should despite something flat more forward? unit reduction. infrastructure-related some second that see like You a about see how to expect going of -- corporate and you in it the those about think quarter the per that other

about So we just the should curious how there? think opportunity

Did positive and Let only in you number come not then find provide on? please entire in a me the Rajat, jump answer. report, first, the Mark, better

-- was I lower I mean a had I there. number

see to [indiscernible]. wanted just I if So,

Mark. Go ahead.

Let me on hit question other your SG&A.

that do up to So, it and but was a from certainly so we little opportunities a recurring -- where basis. QX. reduce that basis, push bit, QX a things there see But time. do I a further think basically it We I SG&A on nonrecurring opportunities basis, that to around reduce it a quarter-by-quarter can and continue to meaningful it over on see flat little on push a down bounce can be in do think -- other was quarter-over-quarter. little there

how can Got some you've in progress numbers us recon positive it. on I like ask past, of terms side the the logistics made more in like are the think going recon things. I given you've the tremendous the path mean, If of Curious, a feel good we like I opportunity side, one retail more GPU much glide there in is on opportunity there about there there? expenses How was left. forward? and or on utilization you logistics

Sure. Yes.

answer we of despite include certainly reconditioning to that made. progress opportunities there see and and we we've inbound significant simple So see very would the continue there opportunities throughout that business, the transport, more retail all is areas

And our ahead. comes RBC Brad next from question Erickson Capital go today with Markets. Please

here? kind unit So getting sheet, going catalyze returning balance just the ultimately, this growth of it of just kind those I Is of what's quarterly growth to through more driving two, some a function process, at saying it maybe to a to growth? point? Or restructuring to return retail stabilizing unit is inventory Or important retail rebound your guess, the between of which is a sales to market? kind more

Sure.

takes around everything. our ago. that So, time least quickly say, making reprioritization big at a is business importantly pretty result that. in the and of progress pretty pivot And XX we And most as I months to a reorient of effort we're XX, opinion, incredible underwent would inside

is I point, pretty the think this at clear. math

you variable supposed as basically in If spot a possible, are tell a a going in we're it's and great great to in because spot. grow GPU you quickly costs that put is it the as spreadsheet, to our

also approximately by we're the continuing I to from business and rapidly holding But I units efficiencies. And simplicity focusing we're on flat in benefiting think make think progress. the

plan a we that get basically that adjusted so, Step build positive exact business plan unit much are larger the to position had much, is maintain before. that very positive to operating than incredible was we good economics two, we to and is the that Step sustainable completed today. maintaining that EBITDA. an time to pushing over We significant And one but same in cadence, today. puts us

will growth. And step three then be return to

there's a number transition. of will factors think I that that drive

think, I think helpful. is named you several, business. progress inside very I the The that clearly

fast. capital But structure very, think the changes operational I think clearly progress I most are making we're importantly, helpful. very is

and about more to transition which And want for comfortable so, a Carvana discipline is and how maintain been the thoughtful back we footing. foot to majority has over life, normal what our be of growth the we

are pivot, not due we to. certainly time, we in So, making plan yet but that

And a it. then maybe Got just follow-up.

all run rate? back production with to here little and right, Mark be you like of run Historically, where demand that's just sales think stuff. so how kind OpEx I up about that fast, struggling kind kind were the incurred a rebound, we to -- you hot was to the as start when costs that kind of the efficiencies control that running have you think little mentioned most morning, catch to rates how people just all what when What just leverage almost. because efficiencies always we you of throttled a and costs about capacity, you've guys increase math, you spoken ramp to maybe as the how have are this but up bit as bridge struggling You and think the understand to of rebound with will bit growing are to degree.

it forward as that's last spend yourself will And for we've $X, think that I preparation gains extra cost $X, it think to the you're of positioning the an element into dollar of I growth an I costs the costs growth company, Well, ahead have for built a the make the year a grow that more sell is most that the positioning right? car, can you to it $X.XX result over an you're so extra efficiency costs you if Sure. efficiently. positioning of it efficiency you time. important and a inside basically think increase sell business dollar car, and in $X might level we the If to $X.XX function you for you of

spot relative a in now history, fixed. expenses we're of to that say disproportionate are our our also would where portion I a

as I math growth. beneficial think pretty so, And is to it the relates

probably view the grow, and variable is larger so, component when to an that fixed perspective think from the time more than component probably will mechanical I expense of And a our component. be because it's it helpful is

we positioned are think many also other in I some undeniably There growth. And look to well we're associated growth I I investments that that the it. investments of investments it. for would to be with when I time, growth. think I say think for But think capital will forward So, of is prepare very that

more centers, to to inspection have centers. inspection build you build bigger have You

have logistics more of built. is A that lot You to build pathways.

company ADESA to what also the means the think millions the investments in a I it of decrease because that of acquisition just that and build, want and that to we cars order in business, way people not is are tremendously company it means about, to going build cars. we the changes what sells remains our for core buy just necessary that but remain to which the forward infrastructure excited something us

business the it. That otherwise by remains to is so increases, the improvements very our will -- and likely that our some for vision, be positioned think the think dwarfed I belief opportunity goal, our There well will think fixed it leveraging we of undeniably cost we're but our and be due they in we costs.

And question at Nagel Oppenheimer. Please our next go ahead. from comes Brian

question. taking morning. good Thanks Hi, my for

effective, congratulations. very repositioning mean First been off, swift the so very I has congratulations. and

about in life. our public third believe that's congratulations our I

So that you than us means know. to more

follow-up my question is a to -- that, congratulations. just So,

There.

it said again. You

That's the fourth.

look business. balance But and operationally further -- in is the or it okay, from a And operational repositioning again, back, can both we an model a environment that expect done? grow very is this either recognizing should as guess, we we and efforts of As fluid you you debt from and look all here? the side? that's the here the you are at Or well the you're now been balance step repositioning, type Are I done sheet. at still on we with again young as Carvana, a, position on sheets,

you say debt sorry, the on I'm the the not but on -- operationally you how finished question? that's And side,

looking debt, and as that debt to forward side. the we're Yes. right, I'm both operational sorry, on

Yes.

I we to operationally, our gains. to So, and in is think gains, make think continue position continue to to make I are plan

significant excited we We've different was about of out had. year think all that about, where aiming -- the this a different similar QX at targets. over the was the yet we're we year rolled plan and that ago out so, next program be an gains aiming that that that a we've rolled think we're incredibly groups I for to And there's internal successful, are business very

in we're clearly to more I we to efficient continue continue think that to there an And of significantly that in cash yesterday. higher think we're in to is and balance a were flexibility push quick expense. lower development. expect to the that's addition spot and make over exciting From And better perspective, leverage I think going just a interest terms longer maturities, of operationally. being I gains kind more the than much less, to get time So, sheet and prepayment, today we

So, I that pace be I although about think time, which at further think, well to over the improvements also, positioned going we're the think forward, there delever are occurs. thoughtful we'll of I multi-dimensional sort

think but grand your are not think at that done balance changes we I things. scheme with I that it in of frame So, the sheet depends on do you're there, time looking

very think business position. I a the is in good

generate time positioned well we're over think positive I to cash. significant

also a other of us we've that give today I that of lot And flexibility. then number think options outlined options. us gives also that I think a

That's your standpoint. very second a just helpful. And of then a what from sector question, bigger you're -- picking picture, I seeing brain also as kind guess, a

acceleration now consumers, Do affordability I used for do Or these starting cars car you see we think core as you of to maybe a environment? the higher you think of there's elevated think some still factor? on pricing? is used affordability, about bigger guess depreciation is lot So, it there in the But think debate maybe. out rate it's as about we're your part a about what affordability,

over with we've view that cash rate a of buy their in is intersection. U.S. I kind be car car in a rate The the then obviously, a in historically, think and financing. most the of I two vast down I you upfront think would buy environments. the our majority rates and payment of people, function I way see it's monthly And of things and are car be expected consumers function car of those the for environments, move both of decision payment the think to time. think a kind would price tend a seen different those prices to light many And

over very back year were of depreciating rapidly pretty half is unique rates I and half think rising this saw 'XX, they quickly year, early and prices the at and appreciated car depreciating but kind or we they're in we now today. what's of while high so then a last level they been the very saw also

just time. about I interest rates those prices think dropping two affordability the car over sum things, and of is

at there So, And less. monthly is the on that, payment price is least that and customers car I average side signs, think that occurring. are

last depreciation markets. it As or in I month about and year retail year, started the both although a depreciation this earlier, take, said, lot give wholesale a looks like

And at by earlier. which it's last that's was reasons for so far, us even long than the is it little least, I markets, a year, more that severe probably great for discussed think foreseen as as

comes Please Jones next JMP our Securities. from question with Nick go And ahead.

to your plan, one, step of Any be more first Great. question. plan growth. when the may incrementally two would all three-part now Thank your guess kind part of there you're you as for my of I we in triangulate great. this color is maybe taking challenging try return Part to than you that

Sure.

what it's think set think I of everything I more but we've I challenging, up. it's same is matters think of that the

was probably think from growth I to transition thing that the through company challenging unit the on improving went focus at economics. most a we the

new different and was kind quickly. reorientation kinds all and new very, that required processes that of management very new it think of was focus a I made and big and things. patterns

I made as transition, result. think now very we're outcomes happy But that and we a I the think about observing that we're that

looks the in the targets of think that terms for year year way that last different a lot I inside business. the the aiming next like we're

I that particularly setup difficult. is know the don't And so,

got think difficult, people. very but think I we've I very making progress is capable good always and plans

we've that think good set. I the very And on and we about the targets we're feel that trend lines

as I goals. setup think I can good to efficiency is straightforward. made over a the ever But as growth, comfortable be that scalability but then one And more we're will that's and So, pretty well that path those as we to gains think on be infrastructure to think is pivot turning even of continue a us I again, past that and pivot our for make that nothing another business it's I our achieve our that as the think given when easy, we've given a time time.

So, it. all none think of and that to plan is be going easy, to we but it's achievable, we achieve

costs reconditioning reconditioned Great. you it on kind buying? maybe follow-up from those you're two you then there getting this driven Is is are down. a smarter you've In any of costs have your ago? years as reconditioning Is would customers And not what feedback than -- maybe process, items driving there down?

Yes.

driven. the gains and answer So, there not are the process simple is driven, technology quality

savings at than better various were talked before we team for much That's has investing that enhanced generates cost and we've I an for that in system think I parts inventory to the that been inventory us outsourced. but think makes we've opportunities absolutely we've managing before, in-sourcing services efficiencies. something management been historically example, about spend,

efficient inspection think we're the centers. in with I mean, and reconditioning more much rightsized definitely and the staffing teams I and

So, the technology-driven they're very certainly broad-based, process-driven not have been gains but quality and driven. and reconditioning in

concludes the this our management back like to team turn question-and-answer any I'd And remarks. the ladies closing conference gentlemen, Thank session. and over you. to for

the this in parts at taking of and appreciate least time. notice, a We country. the you Well, the know really early morning, thanks, I everyone. short was it's for many

so never to really kept along jumping amount get the over So, of The the light is you incredible, that. that cannot with in express just that with fact for and each -- on. I guys amazing, everyone do a other gone that's to and gratitude of and you this comes doubt it. year to that something shoulder doesn't stood spot team. just lot I blinked shoulder and is pushing absolutely last fully thank the much. To Thank of thank is in you work cannot Carvana

thank all you so much. So,

And near pushing But today done, we a down. to you, as is guys. we're say, going nowhere Thank that later be this always are keep pedal then and moment moment to proud. a keep is pushing. to We

and you Thank you, concludes presentation. conference thank sir. ladies all call. And this for today's gentlemen, We today's attending

and lines, now have day. disconnect may a your wonderful You