CHICAGO, Nov. 6, 2019 /PRNewswire/ -- Cars.com Inc. (NYSE:
CARS) ("Cars.com" or the "Company"), a leading digital marketplace
and solutions provider for the automotive industry, today released
its financial results for the quarter ended September 30, 2019.
Q3 Financial Highlights
- Revenue of $152.1 million, down
$17.2 million, or 10%,
year-over-year, in line with expectations
- Non-cash goodwill and intangible asset impairment charge of
$431.3 million, net of tax, triggered
by a decline in share price following the completion of the
strategic alternatives review, resulted in net loss of ($426.2) million, or ($6.38) per diluted share
- Adjusted Net Income of $21.3
million, or $0.32 per diluted
share, compared to Adjusted Net Income of $38.4 million, or $0.55 per diluted share, in the prior year
- Adjusted EBITDA of $45.9 million,
or 30% of revenue, down $16.3 million
year-over-year, in line with expectations
- Net cash provided by operating activities of $80.6 million for the nine months ended
September 30, 2019, with Free Cash
Flow of $65.1 million
- Completed amendment to existing credit facility, which
increases the maximum total net leverage to 4.50x from 3.75x,
increasing flexibility and further strengthening liquidity
position
Q3 Key Metrics and Highlights
- Average monthly unique visitors of 23.1 million, up 22%
year-over-year
- Traffic (visits) of 144.4 million, up 27% year-over-year
- Mobile traffic was 73% of total traffic, compared to 68% in the
third quarter of 2018
- Dealer customers of 18,635 as of September 30, 2019, down compared to 18,891 as of
June 30, 2019, driven by affiliate
conversions and a decline in direct marketplace customers,
partially offset by growth in digital solutions customers
- Direct monthly average revenue per dealer ("ARPD") was
$2,069, down 2% year-over-year,
excluding revenue from dealer websites and related digital
solutions from Dealer Inspire; when revenue from dealer websites
and related digital solutions is included, ARPD was $2,174 for the third quarter of 2019
Operational Highlights
- Drove audience market share gains, enabled by record organic
traffic and sector leadership in SEO; the third quarter of 2019
marked the strongest quarter for both SEO traffic and leads in 20
years
- Completed the final affiliate conversions, providing 100%
control over go-to market capabilities for the first time, expected
to unlock $50 million in incremental
Free Cash Flow impact beginning in 2020
- Achieved OEM certifications from General Motors, Hyundai Motor
America and Mitsubishi Motors North America endorsing Dealer
Inspire as a website provider, providing opportunity to sell to
over 5,000 dealers across North
America
- Strong Dealer Inspire revenue continues, achieving 25%
year-over-year growth in Q3
"With the affiliate conversions complete, our traffic and
solutions strategy ramping, the tech transformation progressing on
schedule, and our continued focus on operational efficiencies, we
remain on track to deliver our 2019 outlook," said Alex Vetter, President and Chief Executive
Officer of Cars.com.
Financial Results
Revenue for the third quarter of 2019 was $152.1 million, compared to $169.3 million in the prior year period. This
decrease was primarily due to a decline in dealer customers and a
$7.9 million decline in national
advertising revenue, resulting from a reduction in upfront
commitments for 2019 and lower close rates from OEMs. These
declines were partially offset by growth in digital solutions
revenue as well the uplift from affiliate conversions.
In the third quarter, the Company recorded a non-cash goodwill
and intangible asset impairment charge of $461.5 million, based on an assessment triggered
by a decline in share price following the completion of the
strategic alternatives review. The Company does not expect the
impairment charge to have any impact on future operations, affect
its liquidity, affect cash flows from operating activities, or
affect compliance with the financial covenants set forth in its
credit agreement. The cash benefit from the deductible goodwill for
tax purposes remains intact.
Total operating expenses for the third quarter of 2019 were
$599.8 million, or $138.3 million excluding the impairment charge,
compared to $141.0 million for the
prior year period. This decrease in expense was primarily due to
the Company's continued focus on operational efficiencies.
Net loss for the third quarter of 2019 was ($426.2) million, or ($6.38) per diluted share, compared to net income
of $15.8 million, or $0.23 per diluted share, in the third quarter of
2018. Adjusted Net Income for the third quarter of 2019 was
$21.3 million, or $0.32 per diluted share, compared to $38.4 million, or $0.55 per diluted share, in the third quarter of
2018.
Adjusted EBITDA for the third quarter of 2019 was $45.9 million, or 30% of revenue, compared to
$62.2 million, or 37% of revenue, for
the prior year period.
For the third quarter, average monthly unique visitors grew 22%
year-over-year and total traffic grew 27% year-over-year, supported
by product innovations and investments in and efficiencies gained
in SEO, brand awareness and paid channels. Mobile traffic grew 37%
year-over-year and accounted for 73% of total traffic compared to
68% in the prior year.
Dealer customers were 18,635 as of September 30, 2019, a decline of 1%, compared to
18,891 dealer customers as of June 30,
2019, primarily due to a decline of 198 affiliate customers,
as well as a decline in direct marketplace dealer customers,
partially offset by growth in digital solutions customers.
ARPD was $2,174 in the third
quarter of 2019. ARPD excluding revenue from dealer websites and
related digital solutions from Dealer Inspire was $2,069, down 2% year-over-year.
"Our results were in line with expectations this quarter. We
continue to generate significant Free Cash Flow, thanks to the
strength of our business model and continued focus on operational
efficiency. Additionally, the recent amendment to our credit
facility provides flexibility to respond to marketplace changes, if
and when they arise, and demonstrates the continuation of our
strong financial position," said Becky
Sheehan, Chief Financial Officer of Cars.com.
Cash Flow and Balance Sheet
Net cash provided by operating activities for the nine-month
period ended September 30, 2019 was
$80.6 million, compared to
$121.1 million in the prior year.
Free Cash Flow for the nine-month period ended September 30, 2019 was $65.1 million, compared to $111.1 million in the same period last year. Cash
flow was impacted in both periods by payments associated with the
early conversion of affiliate markets.
Cash and cash equivalents was $19.8
million and debt outstanding was $666.6 million as of September 30, 2019. During the nine-month period,
the Company paid down $29.7 million
of indebtedness, net of borrowings. Net leverage at September 30, 2019 was 3.4x, calculated in
accordance with the Company's credit agreement.
In October, the Company amended its existing credit agreement to
reset the total net leverage covenant during the remaining term of
the credit agreement while preserving the favorable pricing
structure from the original agreement. The amendment increased the
Company's maximum total net leverage ratio from 3.75x to 4.50x with
incremental step downs through the maturity of the term loan and
the revolving loan on May 31,
2022.
Outlook
The Company reaffirms the previously communicated 2019 outlook
of revenue declines between 6% and 9%, with Adjusted EBITDA margin
between 27% and 29%.
Q3 Earnings Call
As previously announced, management will hold a conference
call and webcast today at 9:00 a.m.
CST. This webcast may be accessed at investor.cars.com. A
replay of the webcast and the slideshow will be available at this
website following the conclusion of the call until November 20, 2019.
About Cars.com
Cars.com is a leading digital marketplace and
solutions provider for the automotive industry that connects car
shoppers with sellers. Launched in 1998 with the flagship
marketplace site Cars.com and headquartered in Chicago, the
Company empowers shoppers with the data, resources and digital
tools needed to make informed buying decisions and seamlessly
connect with automotive retailers. In a rapidly changing market,
Cars.com enables dealerships and OEMs with innovative
technical solutions and data-driven intelligence to better reach
and influence ready-to-buy shoppers, increase inventory turn and
gain market share. In 2018, Cars.com acquired Dealer
Inspire®, an innovative technology company building solutions
that future-proof dealerships with more efficient operations, a
faster and easier car buying process, and connected digital
experiences that sell and service more vehicles.
Cars.com properties include DealerRater®, Dealer Inspire®,
Auto.com™, PickupTrucks.com® and NewCars.com®. For more
information, visit www.Cars.com.
Non-GAAP Financial Measures
This earnings release discusses Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted Net Income, Adjusted Net Income per diluted share
and Free Cash Flow. These are not financial measures as defined by
GAAP. These financial measures are presented as supplemental
measures of operating performance because we believe they provide
meaningful information regarding our performance and provide a
basis to compare operating results between periods. In addition, we
use Adjusted EBITDA as a measure for determining incentive
compensation targets. Adjusted EBITDA also is used as a performance
measure under our credit agreement and includes adjustments such as
the items defined below and other further adjustments, which are
defined in the credit agreement. These non-GAAP financial measures
are frequently used by our lenders, securities analysts, investors
and other interested parties to evaluate companies in our industry.
For a reconciliation of the non-GAAP measures presented in this
earnings release to their most directly comparable financial
measure prepared in accordance with GAAP, see "Non-GAAP
Reconciliations" below.
Other companies may define or calculate these measures
differently, limiting their usefulness as comparative measures.
Because of these limitations, these non-GAAP financial measures
should not be considered in isolation or as substitutes for
performance measures calculated in accordance with GAAP.
Definitions of these non-GAAP financial measures and
reconciliations to the most directly comparable GAAP financial
measures are presented in the tables below.
We define Adjusted EBITDA as net income (loss) before (1)
interest expense (income), net, (2) income tax expense (benefit),
(3) depreciation, (4) amortization of intangible assets, (5)
stock-based compensation expense, plus (6) certain other items,
such as transaction-related costs, costs associated with the
stockholder activist campaign, severance, transformation and other
exit costs and write-off and impairments of goodwill, intangible
assets and other long-lived assets. Amortization of unfavorable
contracts liability is not adjusted out of Adjusted EBITDA.
We define Adjusted Net Income as net income (loss) excluding the
after-tax impact of (1) amortization of intangible assets, (2)
stock-based compensation expense, and (3) certain other items, such
as transaction-related costs, costs associated with the stockholder
activist campaign, severance, transformation and other exit costs
and write-off and impairments of goodwill, intangible assets and
other long-lived assets. Amortization of unfavorable contracts
liability is not adjusted out of Adjusted Net Income.
Transaction-related costs are certain expense items resulting
from actual or potential transactions such as business
combinations, mergers, acquisitions, dispositions, spin-offs,
financing transactions, and other strategic transactions,
including, without limitation, (1) transaction-related bonuses and
(2) expenses for advisors and representatives such as investment
bankers, consultants, attorneys and accounting firms.
Transaction-related costs may also include, without limitation,
transition and integration costs such as retention bonuses and
acquisition-related milestone payments to acquired employees, in
addition to consulting, compensation and other incremental costs
associated with integration projects.
We define Free Cash Flow as net cash provided by operating
activities less capital expenditures, including purchases of
property and equipment and capitalization of internal-use software
and website development costs.
Key Metric Definitions
Traffic (Visits). Traffic is critical to our
business. Traffic to the Cars.com network of websites and mobile
apps provides value to our advertisers in terms of audience,
awareness, consideration and conversion. In addition to tracking
traffic volume and sources, we monitor activity on our properties,
allowing us to innovate and refine our consumer-facing offerings.
Traffic is defined as the number of visits to Cars.com desktop and
mobile properties (responsive sites and mobile apps), using Adobe
Analytics. Visits refers to the number of times visitors accessed
Cars.com properties during the period, no matter how many visitors
make up those visits. Traffic provides an indication of our
consumer reach. Although our consumer reach does not directly
result in revenue, we believe our ability to reach in-market car
shoppers is attractive to our dealers and national advertisers.
Average Monthly Unique Visitors ("UVs"). Growth in
unique visitors and consumer traffic to our network of websites and
mobile apps increases the number of impressions, clicks, leads and
other events we can monetize to generate revenue. We define UVs in
a given month as the number of distinct visitors that engage with
our platform during that month. Visitors are identified when a user
first visits an individual Cars.com property on an individual
device/browser combination or installs one of our mobile apps on an
individual device. If an individual accesses more than one of our
web properties or apps or uses more than one device or browser,
each of those unique property/browser/app/device combinations
counts towards the number of UVs. We measure UVs using Adobe
Analytics.
Dealer Customers. Dealer Customers represent
dealerships using our products as of the end of each reporting
period. Each physical or virtual dealership location is counted
separately, whether it is a single-location proprietorship or part
of a large consolidated dealer group. Multi-franchise dealerships
at a single location are counted as one dealer.
Average Revenue Per Dealer ("ARPD"). We believe
that our ability to grow ARPD is an indicator of the value
proposition of our products. We define ARPD as Direct retail
revenue during the period divided by the average number of direct
Dealer Customers during the same period. Beginning the first
quarter of 2019, this key operating metric includes revenue from
dealer websites and related digital solutions. ARPD prior to the
first quarter of 2019 has not been recast to include Dealer Inspire
as it would be impracticable to do so.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the federal securities laws. All statements other
than statements of historical facts are forward-looking statements.
Forward-looking statements include information concerning our
business strategies, strategic alternatives review process, plans
and objectives, market potential, outlook, trends, future financial
performance, planned operational and product improvements,
potential strategic transactions, liquidity and other matters and
involve known and unknown risks that are difficult to predict. As a
result, our actual financial results, performance, achievements,
strategic actions or prospects may differ materially from those
expressed or implied by these forward-looking statements. These
statements often include words such as "believe," "expect,"
"project," "anticipate," "intend," "strategy," "plan," "estimate,"
"target," "seek," "will," "may," "would," "should," "could,"
"forecasts," "mission," "strive," "more," "goal" or similar
expressions. Forward-looking statements are based on our current
expectations, beliefs, strategies, estimates, projections and
assumptions, based on our experience in the industry as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we think are appropriate.
Such forward-looking statements are necessarily based upon
estimates and assumptions that, while considered reasonable by the
Company and its management based on their knowledge and
understanding of the business and industry, are inherently
uncertain. These statements are expressed in good faith and we
believe these judgments are reasonable. However, you should
understand that these statements are not guarantees of strategic
action, performance or results. Our actual results could differ
materially from those expressed in the forward-looking statements.
Given these uncertainties, forward-looking statements should not be
relied on in making investment decisions. Comparisons of results
between current and prior periods are not intended to express any
future trends, or indications of future performance, unless
expressed as such, and should only be viewed as historical data.
Whether or not any such forward-looking statement is in fact
achieved will depend on future events, some of which are beyond our
control.
Forward-looking statements are subject to a number of risks,
uncertainties and other important factors, many of which are beyond
our control, that could cause our actual results to differ
materially from those expressed in the forward-looking statements
contained in this press release. For a detailed discussion of many
of these and other risks and uncertainties, see our Annual Report
on Form 10-K for the year ended December 31,
2018, our subsequent Quarterly Reports on Form 10-Q, our
Current Reports on Form 8-K and our other filings with the
Securities and Exchange Commission available on our website at
investor.cars.com or via EDGAR at www.sec.gov. All forward-looking
statements contained in this press release are qualified by these
cautionary statements. You should evaluate all forward-looking
statements made in this press release in the context of these risks
and uncertainties. The forward-looking statements contained in this
press release are based only on information currently available to
us and speak only as of the date of this press release. We
undertake no obligation, other than as may be required by law, to
update or revise any forward-looking or cautionary statements to
reflect changes in assumptions, the occurrence of events,
unanticipated or otherwise, or changes in future operating results
over time or otherwise.
The forward-looking statements in this press release are
intended to be subject to the safe harbor protection provided by
the federal securities laws.
Cars.com
Inc.
|
Consolidated
Statements of (Loss) Income
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
|
Direct
|
|
$
122,878
|
|
$
119,510
|
|
$
349,162
|
|
$
336,521
|
National
advertising
|
|
20,161
|
|
28,107
|
|
59,752
|
|
82,155
|
Other
|
|
3,642
|
|
4,010
|
|
11,215
|
|
12,152
|
Retail
|
|
146,681
|
|
151,627
|
|
420,129
|
|
430,828
|
Wholesale
|
|
5,409
|
|
17,685
|
|
34,366
|
|
66,953
|
Total
revenue
|
|
152,090
|
|
169,312
|
|
454,495
|
|
497,781
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenue and operations
|
|
25,089
|
|
23,808
|
|
74,987
|
|
64,293
|
Product and
technology
|
|
14,923
|
|
15,616
|
|
48,125
|
|
51,215
|
Marketing and
sales
|
|
50,789
|
|
55,825
|
|
164,872
|
|
180,168
|
General and
administrative
|
|
13,414
|
|
15,131
|
|
59,265
|
|
53,704
|
Affiliate
revenue share
|
|
5,158
|
|
4,097
|
|
9,788
|
|
11,193
|
Depreciation
and amortization
|
|
28,970
|
|
26,504
|
|
86,761
|
|
77,154
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
—
|
|
461,463
|
|
—
|
Total operating
expenses
|
|
599,806
|
|
140,981
|
|
905,261
|
|
437,727
|
Operating (loss) income
|
|
(447,716)
|
|
28,331
|
|
(450,766)
|
|
60,054
|
Nonoperating
(expense) income:
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
|
(7,712)
|
|
(7,005)
|
|
(22,989)
|
|
(20,305)
|
Other income,
net
|
|
1,402
|
|
65
|
|
1,530
|
|
76
|
Total nonoperating expense,
net
|
|
(6,310)
|
|
(6,940)
|
|
(21,459)
|
|
(20,229)
|
(Loss) income
before income taxes
|
|
(454,026)
|
|
21,391
|
|
(472,225)
|
|
39,825
|
Income tax
(benefit) expense
|
|
(27,869)
|
|
5,594
|
|
(31,011)
|
|
10,373
|
Net (loss) income
|
|
$
(426,157)
|
|
$
15,797
|
|
$
(441,214)
|
|
$
29,452
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
66,769
|
|
69,652
|
|
67,043
|
|
70,900
|
Diluted
|
|
66,769
|
|
70,029
|
|
67,043
|
|
71,153
|
(Loss) earnings
per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(6.38)
|
|
$
0.23
|
|
$
(6.58)
|
|
$
0.42
|
Diluted
|
|
(6.38)
|
|
0.23
|
|
(6.58)
|
|
0.41
|
Cars.com
Inc.
|
Consolidated
Balance Sheets
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
|
|
(unaudited)
|
|
|
Assets:
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
19,773
|
|
$
25,463
|
Accounts receivable,
net
|
|
101,782
|
|
108,921
|
Prepaid
expenses
|
|
7,592
|
|
9,264
|
Other current
assets
|
|
425
|
|
10,289
|
Total current
assets
|
|
129,572
|
|
153,937
|
Property and
equipment, net
|
|
42,857
|
|
41,482
|
Goodwill
|
|
505,885
|
|
884,449
|
Intangible assets,
net
|
|
1,354,777
|
|
1,510,410
|
Investments and other
assets
|
|
26,788
|
|
10,271
|
Total
assets
|
|
$
2,059,879
|
|
$
2,600,549
|
Liabilities and
stockholders' equity:
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
6,280
|
|
$
11,631
|
Accrued
compensation
|
|
14,588
|
|
16,821
|
Unfavorable contracts
liability
|
|
—
|
|
18,885
|
Current portion of
long-term debt
|
|
32,518
|
|
26,853
|
Other accrued
liabilities
|
|
68,419
|
|
36,520
|
Total current
liabilities
|
|
121,805
|
|
110,710
|
Noncurrent
liabilities:
|
|
|
|
|
Long-term
debt
|
|
630,913
|
|
665,306
|
Deferred tax
liability
|
|
125,175
|
|
177,916
|
Other noncurrent
liabilities
|
|
40,501
|
|
19,694
|
Total noncurrent
liabilities
|
|
796,589
|
|
862,916
|
Total
liabilities
|
|
918,394
|
|
973,626
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred Stock at
par, $0.01 par value; 5,000 shares authorized; no shares
issued and outstanding as of September 30, 2019 and December
31, 2018,
respectively
|
|
—
|
|
—
|
Common Stock at par,
$0.01 par value; 300,000 shares authorized; 66,678
and 68,262 shares issued and outstanding as of September 30,
2019 and
December 31, 2018, respectively
|
|
667
|
|
683
|
Additional paid-in
capital
|
|
1,512,713
|
|
1,508,001
|
(Accumulated deficit)
retained earnings
|
|
(362,957)
|
|
118,239
|
Accumulated other
comprehensive loss
|
|
(8,938)
|
|
—
|
Total stockholders'
equity
|
|
1,141,485
|
|
1,626,923
|
Total liabilities and
stockholders' equity
|
|
$
2,059,879
|
|
$
2,600,549
|
Cars.com
Inc.
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
Net (loss)
income
|
|
$
(441,214)
|
|
$
29,452
|
Adjustments to
reconcile Net (loss) income to Net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
13,427
|
|
9,195
|
Amortization of
intangible assets
|
|
73,334
|
|
67,959
|
Amortization of
unfavorable contracts liability
|
|
(18,885)
|
|
(18,900)
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
—
|
Stock-based
compensation
|
|
5,258
|
|
7,495
|
Deferred income
taxes
|
|
(52,741)
|
|
7,137
|
Provision for
doubtful accounts
|
|
3,844
|
|
3,451
|
Amortization of debt
issuance costs
|
|
959
|
|
971
|
Other, net
|
|
411
|
|
762
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
3,295
|
|
1,119
|
Prepaid
expenses
|
|
1,672
|
|
66
|
Other current
assets
|
|
9,992
|
|
330
|
Other
assets
|
|
(16,517)
|
|
602
|
Accounts
payable
|
|
(5,363)
|
|
(2,397)
|
Accrued
compensation
|
|
(2,233)
|
|
(3,363)
|
Other accrued
liabilities
|
|
28,627
|
|
18,306
|
Other noncurrent
liabilities
|
|
15,221
|
|
(1,104)
|
Net cash provided by
operating activities
|
|
80,550
|
|
121,081
|
Cash flows from
investing activities:
|
|
|
|
|
Purchase of property and
equipment
|
|
(15,409)
|
|
(9,966)
|
Payment for DI Acquisition,
net
|
|
—
|
|
(157,153)
|
Other, net
|
|
(599)
|
|
—
|
Net cash used in
investing activities
|
|
(16,008)
|
|
(167,119)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from issuance of
long-term debt
|
|
10,000
|
|
195,000
|
Payments of long-term
debt
|
|
(39,688)
|
|
(71,875)
|
Stock-based compensation
plans, net
|
|
(352)
|
|
(477)
|
Repurchases of common
stock
|
|
(40,000)
|
|
(76,681)
|
Transactions with TEGNA,
net
|
|
(192)
|
|
(2,683)
|
Net cash (used in)
provided by financing activities
|
|
(70,232)
|
|
43,284
|
Net decrease in cash
and cash equivalents
|
|
(5,690)
|
|
(2,754)
|
Cash and cash
equivalents at beginning of period
|
|
25,463
|
|
20,563
|
Cash and cash
equivalents at end of period
|
|
$
19,773
|
|
$
17,809
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for income
taxes, net of refunds
|
|
$
168
|
|
$
500
|
Cash paid for
interest
|
|
22,413
|
|
19,472
|
Cars.com
Inc.
|
Non-GAAP
Reconciliations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Reconciliation of
Net (loss) income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(426,157)
|
|
$
15,797
|
|
$
(441,214)
|
|
$
29,452
|
Interest expense,
net
|
|
7,712
|
|
7,005
|
|
22,989
|
|
20,305
|
Income tax (benefit)
expense
|
|
(27,869)
|
|
5,594
|
|
(31,011)
|
|
10,373
|
Depreciation and
amortization
|
|
28,970
|
|
26,504
|
|
86,761
|
|
77,154
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
—
|
|
461,463
|
|
—
|
Stock-based
compensation
|
|
(1,160)
|
|
3,019
|
|
5,404
|
|
7,495
|
Severance,
transformation and other exit costs
|
|
2,114
|
|
175
|
|
9,625
|
|
1,272
|
Costs associated with
the stockholder activist campaign
|
|
905
|
|
2,869
|
|
8,825
|
|
7,766
|
Transaction-related
costs
|
|
—
|
|
897
|
|
4,623
|
|
12,030
|
Write-off of
long-lived assets and other
|
|
(111)
|
|
330
|
|
529
|
|
691
|
Adjusted
EBITDA*
|
|
$
45,867
|
|
$
62,190
|
|
$
127,994
|
|
$
166,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net (loss) income to Adjusted net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(426,157)
|
|
$
15,797
|
|
$
(441,214)
|
|
$
29,452
|
Amortization of
intangible assets
|
|
24,621
|
|
23,212
|
|
73,334
|
|
67,959
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
—
|
|
461,463
|
|
—
|
Stock-based
compensation
|
|
(1,160)
|
|
3,019
|
|
5,404
|
|
7,495
|
Severance,
transformation and other exit costs
|
|
2,114
|
|
175
|
|
9,625
|
|
1,272
|
Costs associated with
the stockholder activist campaign
|
|
905
|
|
2,869
|
|
8,825
|
|
7,766
|
Transaction-related
costs
|
|
—
|
|
897
|
|
4,623
|
|
12,030
|
Write-off of
long-lived assets and other
|
|
(111)
|
|
330
|
|
529
|
|
691
|
Tax impact of
adjustments
|
|
(40,347)
|
|
(7,879)
|
|
(60,565)
|
|
(25,504)
|
Adjusted net
income*
|
|
$
21,328
|
|
$
38,420
|
|
$
62,024
|
|
$
101,161
|
Adjusted net income
per share, diluted
|
|
$
0.32
|
|
$
0.55
|
|
$
0.92
|
|
$
1.42
|
Weighted-average
common shares outstanding, diluted**
|
|
66,935
|
|
70,029
|
|
67,395
|
|
71,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net cash provided by operating activities to Free cash
flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
29,795
|
|
$
50,457
|
|
$
80,550
|
|
$
121,081
|
Purchase of property
and equipment
|
|
(6,055)
|
|
(3,549)
|
|
(15,409)
|
|
(9,966)
|
Free cash
flow
|
|
$
23,740
|
|
$
46,908
|
|
$
65,141
|
|
$
111,115
|
|
|
|
|
|
|
|
|
|
* Amortization of
unfavorable contracts liability is not adjusted out of Adjusted
EBITDA or Adjusted net income.
|
** Weighted-average
common shares outstanding, diluted, includes shares excluded from
GAAP loss per share due to the net loss position for the three and
nine months ended September 30, 2019.
|
Cars.com
Inc.
|
Supplemental
Information
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense category
for the Three Months Ended September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenue and
operations
|
|
$
25,089
|
|
$
—
|
|
$
79
|
|
$
25,168
|
Product and
technology
|
|
14,923
|
|
—
|
|
893
|
|
15,816
|
Marketing and
sales
|
|
50,789
|
|
—
|
|
(172)
|
|
50,617
|
General and
administrative
|
|
13,414
|
|
(4,308)
|
|
360
|
|
9,466
|
Affiliate revenue
share
|
|
5,158
|
|
—
|
|
—
|
|
5,158
|
Depreciation and
amortization
|
|
28,970
|
|
—
|
|
—
|
|
28,970
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
(461,463)
|
|
—
|
|
—
|
Total operating
expenses
|
|
$
599,806
|
|
$
(465,771)
|
|
$
1,160
|
|
$
135,195
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
6,310
|
|
$
1,400
|
|
$
—
|
|
$
7,710
|
|
|
|
|
|
|
|
|
|
(1)
Includes write-off and impairments of goodwill, intangible assets
and other long-lived assets and other, severance,
transformation and other exit costs and costs associated with the
stockholder activist campaign.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Three Months Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenue and
operations
|
|
$
23,808
|
|
$
—
|
|
$
(76)
|
|
$
23,732
|
Product and
technology
|
|
15,616
|
|
—
|
|
(571)
|
|
15,045
|
Marketing and
sales
|
|
55,825
|
|
—
|
|
(583)
|
|
55,242
|
General and
administrative
|
|
15,131
|
|
(4,271)
|
|
(1,789)
|
|
9,071
|
Affiliate revenue
share
|
|
4,097
|
|
—
|
|
—
|
|
4,097
|
Depreciation and
amortization
|
|
26,504
|
|
—
|
|
—
|
|
26,504
|
Goodwill and
intangible asset impairment
|
|
—
|
|
—
|
|
—
|
|
—
|
Total operating
expenses
|
|
$
140,981
|
|
$
(4,271)
|
|
$
(3,019)
|
|
$
133,691
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
6,940
|
|
$
—
|
|
$
—
|
|
$
6,940
|
|
|
|
|
|
|
|
|
|
(1)
Includes costs associated with the stockholder activist campaign,
transaction-related costs, write-off of long-lived
assets and other, and severance, transformation and other exit
costs.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Nine Months Ended September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenue and
operations
|
|
$
74,987
|
|
$
—
|
|
$
(68)
|
|
$
74,919
|
Product and
technology
|
|
48,125
|
|
—
|
|
(658)
|
|
47,467
|
Marketing and
sales
|
|
164,872
|
|
—
|
|
(1,170)
|
|
163,702
|
General and
administrative
|
|
59,265
|
|
(25,002)
|
|
(3,508)
|
|
30,755
|
Affiliate revenue
share
|
|
9,788
|
|
—
|
|
—
|
|
9,788
|
Depreciation and
amortization
|
|
86,761
|
|
—
|
|
—
|
|
86,761
|
Goodwill and
intangible asset impairment
|
|
461,463
|
|
(461,463)
|
|
—
|
|
—
|
Total operating
expenses
|
|
$
905,261
|
|
$
(486,465)
|
|
$
(5,404)
|
|
$
413,392
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
21,459
|
|
$
1,400
|
|
$
—
|
|
$
22,859
|
|
|
|
|
|
|
|
|
|
(1)
Includes write-off and impairments of goodwill, intangible assets
and other long-lived assets and other, severance,
transformation and other exit costs, costs associated with the
stockholder activist campaign and transaction-related
costs.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Nine Months Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenue and
operations
|
|
$
64,293
|
|
$
—
|
|
$
(175)
|
|
$
64,118
|
Product and
technology
|
|
51,215
|
|
—
|
|
(1,386)
|
|
49,829
|
Marketing and
sales
|
|
180,168
|
|
—
|
|
(1,351)
|
|
178,817
|
General and
administrative
|
|
53,704
|
|
(21,759)
|
|
(4,583)
|
|
27,362
|
Affiliate revenue
share
|
|
11,193
|
|
—
|
|
—
|
|
11,193
|
Depreciation and
amortization
|
|
77,154
|
|
—
|
|
—
|
|
77,154
|
Goodwill and
intangible asset impairment
|
|
—
|
|
—
|
|
—
|
|
—
|
Total operating
expenses
|
|
$
437,727
|
|
$
(21,759)
|
|
$
(7,495)
|
|
$
408,473
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
20,229
|
|
$
—
|
|
$
—
|
|
$
20,229
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes transaction-related costs, costs associated with the
stockholder activist campaign, severance,
transformation and other exit costs, write-off of long-lived assets
and other.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/carscom-reports-third-quarter-2019-results-300952449.html
SOURCE Cars.com Inc.