EX-99.1 2 cars-ex991_10.htm EX-99.1 EARNINGS RELEASE Q2 2018 cars-ex991_10.htm

EXHIBIT 99.1

 

Cars.com Reports Second Quarter 2018 Results

Growth in Revenue and Traffic and Substantial Progress on Strategic Priorities

Additional Affiliate Conversions, Cost Efficiency Initiatives Underway

2018 Revenue Guidance Revised

 

CHICAGO, August 8, 2018 – Cars.com Inc. (NYSE: CARS) (“CARS” or the “Company”), a leading digital automotive marketplace, today released its financial results for the quarter ended June 30, 2018.

 

Q2 Financial Highlights

 

Total revenue of $168.5 million, up $11.9 million, or 8% year-over-year

 

Net income of $12.7 million, or $0.18 per diluted share

 

Adjusted net income of $34.3 million, or $0.48 per diluted share

 

Adjusted EBITDA of $57.3 million, down $4.8 million year-over-year, driven by increased costs related to affiliate conversions, incremental public company costs and planned marketing investments

 

Net cash provided by operating activities of $70.6 million for the first six months of 2018 with free cash flow of $64.2 million

 

Dealer Inspire and Launch Digital Marketing (“LDM”) revenue grew 45% year-over-year on a pro forma basis

 

Q2 Key Metric Highlights

 

Average monthly unique visitors of 19.0 million, up 8% year-over-year

 

Traffic (visits) of 113.0 million, up 8% year-over-year

 

Mobile traffic grew 25% year-over-year and accounted for 67% of total traffic compared to 58% in the second quarter of 2017

 

Dealer customer count of 20,720 as of June 30, 2018, including 508 incremental Dealer Inspire dealer customers, compared to 20,474 as of March 31, 2018, which did not include Dealer Inspire; Affiliate dealer customers of 4,128 as of June 30, 2018 compared with 4,335 as of March 31, 2018

 

Direct monthly average revenue per dealer (“ARPD”) of $2,064, up 6% year-over-year

 

Total average vehicle listings of 4.8 million

 

Operational Highlights

 

Continued Affiliate Conversions: Converted the Washington, D.C. market effective August 1, bringing approximately 350 dealers into the Cars.com direct sales channel

 

Important senior hires address highest strategic priorities:

 

Doug Miller, Chief Revenue Officer. Doug is a seasoned marketplace executive with more than 20 years of experience driving growth and building high-performing teams.

 

Matthew Gold, Chief Strategy Officer. Matt’s experience developing strategies and partnerships to build and deploy commercial products will be critical as we continue to seek opportunities to capitalize on our data and intelligence and expand the business into new markets.

 

Realizing synergies from new acquisitions, launched CARS Social Solutions to tap into new channels and strong dealer demand:

 

Social Sales Drive, a powerful new product that enables automotive retailers to extend the reach of their Cars.com vehicle listings to the one million daily car shoppers on Facebook Marketplace, boosting exposure in front of a new audience

 


 

 

Cars Social, an ad product that serves native ads displaying real-time inventory to consumers on Facebook and Instagram. By using Cars.com’s first-party data, Cars Social positions inventory in front of Cars.com’s unique, unduplicated audience and targets shoppers who have previously researched vehicles on Cars.com.

 

Created early stage, undecided shopper experience in August to be supported by differentiated brand campaign, to help early stage shoppers narrow down their vehicle selection, supporting continued growth in traffic

 

Dealer Inspire secured two new OEM opportunities, including Porsche dealer website platform program as well as the INFINITI dealer program

 

Technology transformation under way to drive growth, reduce reliance on third-party services, optimize and migrate technology systems to drive cost efficiency

 

Utilized share repurchase program to purchase a total of 2 million shares, at an average price of $24.84, for a total of $50 million in the second quarter

 

“We celebrated our 20th anniversary in June, but this past year has been more transformative than the prior 19. We are taking direct control of our affiliate markets by converting these agreements prior to their expirations, at the same time moving from a classified listings site to a digital automotive marketplace that simplifies buying and selling,” said Alex Vetter, President and Chief Executive Officer of Cars.com. “We have expanded into high-growth categories with Dealer Inspire products including the launch of our proprietary Social Solutions. I’m pleased with the positive momentum we’ve experienced with growth in traffic, unique visitors and now SEO, as well as our continued success in negotiating early affiliate conversions. However, our first-half subscription revenues are behind our plan, and as a result we have taken down our full-year outlook. As we welcome Doug Miller as Chief Revenue Officer, I am confident he will be instrumental in delivering our growth strategies to expand our suite of digital solutions and increase our customer network.”

 

Revenue for the second quarter of 2018 was $168.5 million, compared to $156.6 million in the prior year period. Dealer Inspire and LDM contributed $14.5 million to retail revenue. In addition, the conversions of affiliate markets contributed $21.2 million to retail revenue, while reducing wholesale revenue $18.9 million ($4.4 million of the reduction was related to the amortization of unfavorable contracts liability, which is now recorded as a reduction of affiliate revenue share expense).

Total operating expenses for the second quarter of 2018 were $144.0 million, compared to $127.8 million for the prior year period. This increase was driven by the addition of the Dealer Inspire and LDM businesses ($18.0 million), an increase in costs related to the affiliate conversions and planned increases in marketing spend, offset in part by a decrease in non-recurring costs.

Net income for the second quarter of 2018 was $12.7 million compared to $24.8 million in the second quarter of 2017. Adjusted net income for the quarter was $34.3 million compared to $50.5 million for the prior year period. These comparisons to prior year are impacted by changes in capital structure, including additions of interest and tax expense – which occurred in conjunction with the spin-off during the second quarter of 2017.

 

Adjusted EBITDA for the second quarter of $57.3 million, or 34.0% of revenue, compared to $62.1 million, or 39.7% of revenue, for the prior year period.

 

 


 

For the second quarter, both average monthly unique visitor count and total traffic grew 8% year-over-year. Mobile traffic grew 25% year-over-year and accounted for 67% of total traffic compared to 58% in the prior year. SEO traffic grew year-over-year in each month of the second quarter, accelerating toward expected double digit growth for the full year.

 

Dealer customers of 20,720 as of June 30, 2018 grew 1% compared to 20,474 as of March 31, 2018 due to the addition of 508 Dealer Inspire dealer customers. Excluding Dealer Inspire, dealer customers declined 1% compared to March 31, 2018. Excluding affiliate market conversions, 73% of this decline was attributable to fewer dealers in affiliate markets and dealer cancellations resulting from the sunsetting of a lower priced, legacy DealerRater baseline product. Direct dealer customers declined 72, an improvement from a decline of 231 in the first quarter.

 

The conversion of affiliate dealer customers, which provides direct access to new, larger markets with customers at higher price points, has resulted in 6% growth in direct ARPD compared to a year ago.

 

Cash Flow and Balance Sheet

 

Net cash provided by operating activities for the six-month period ended June 30, 2018 was $70.6 million compared with $96.7 million in the prior year. Free cash flow for the six-month period ended June 30, 2018 was $64.2 million, compared with $77.8 million in the same period last year. Impacting current year cash flow was incremental interest expense, additional non-recurring expenses, offset in part by lower capital expenditures.

 

Cash and cash equivalents was $18.4 million and debt outstanding was $727.5 million as of June 30, 2018. During the second quarter, the Company utilized $50 million to purchase 2.0 million shares under its share repurchase program, at an average price of $24.84. Net leverage at June 30, 2018 was 3.0x, calculated in accordance with the Company’s credit agreement.

 

“We’re encouraged to see continued rapid growth in our Dealer Inspire and LDM businesses and affiliate markets, and we will continue to utilize our flexible capital structure and strong balance sheet to reinvest in the Cars.com brand and product to drive long-term growth in the business,” said Becky Sheehan, Chief Financial Officer of Cars.com.

 

2018 Outlook

 

Due to lower subscription revenue in the first half of the year and lower growth in our national advertising business, the Company is revising its full year 2018 guidance. The Company now expects approximately 6 to 7% revenue growth with Adjusted EBITDA margin of approximately 34%.

 

Second Quarter Earnings Call

 

As previously announced, management will hold a conference call and webcast today at 7:30 a.m. CDT. 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 August 23, 2018.

 

About Cars.com

 

 


 

Cars.comis a leading two-sided digital automotive marketplace that creates meaningful connections between buyers and sellers. Launched in 1998 and headquartered in Chicago, the Company empowers consumers with resources and information to make informed buying decisions and enables advertising partners with innovative digital solutions and data-driven intelligence to increase inventory turn and gain market share. A pioneer in online automotive classifieds, the Company has evolved into one of the largest digital automotive platforms, connecting thousands of local dealers across the country with millions of consumers. In 2018, Cars.com acquired Dealer Inspire®, a company that builds technology that helps future-proof dealerships for changing consumer behaviors and makes the car buying process faster and easier.

 

Cars.com properties include DealerRater®, DealerInspire®, Auto.com™, PickupTrucks.com™ and NewCars.com®.

 

Non-GAAP Financial Measures

 

This earnings release discusses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income 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 the Company’s 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.

 

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.

 

The Company defines 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, restructuring and other exit costs, costs related to the headquarters move 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.

 

The Company defines 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, restructuring and other exit costs, costs related to the headquarters move 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.

 

The Company defines 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 development costs.

 

Key Metric Definitions

 

Traffic (Visits). Traffic (visits) and our ability to generate traffic are key to our business. Tracking our traffic performance is a critical measure. 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 an internal metric representing the number of visits to Cars.com desktop and mobile properties (web browser and apps). Visits refer to the number of times visitors accessed Cars.com properties during the period, no matter how many visitors make up those visits. We measure traffic using Adobe Analytics. Traffic (visits) numbers provide an indication of our consumer reach. Although our consumer reach does not directly result in revenue, we believe our ability to reach diverse demographic audiences is attractive to our dealer customers and national advertisers.

 

Dealer Customers. Our value to consumers tracks to our ability to showcase the inventory of our dealer and Original Equipment Manufacturer (“OEM”) customers. The larger the advertiser base, the more inventory and options that are available for consumers to review. Dealer Customers represents the car dealerships using our products as of the end of each reporting period. Each 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 Vehicle Listings. Our value to consumers tracks to our ability to showcase the inventory of our dealer and OEM customers. The more vehicle listings that are available for consumers to review, the more traffic we attract and the higher the consumer engagement. Average Vehicle Listings represents the daily average of vehicles listed for sale on Cars.com properties. The daily average is calculated on a monthly basis and averaged for the reporting period.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including those statements under “2018 Outlook.” All statements other than statements of historical facts are forward-looking statements. Forward-looking statements include information concerning our business strategies, plans and objectives, market potential, future financial performance, planned operational and product improvements, liquidity and other matters. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “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, 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. 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 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.

 

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. Such risks, uncertainties, and other important factors include, among others, risks related to our business, our separation from our parent company and our common stock.  For a detailed discussion of many of these risks and uncertainties, see Part I, Item 1A – “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission. All forward-looking statements contained in this press release are qualified by these cautionary statements. The forward-looking statements contained in this press release 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. 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.  

 

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 Media Contact:

Marita Thomas

312-601-5692

mthomas@cars.com

 

Cars.com Investor Relations Contact:

Jandy Tomy

312-601-5115

ir@cars.com

 

[Source: Cars.com Inc]

# # #

 

 


 

Cars.com Inc.

 

Consolidated and Combined Statements of Income

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Direct

 

$

115,533

 

 

$

83,273

 

 

$

217,011

 

 

$

166,908

 

  National advertising

 

 

27,230

 

 

 

28,441

 

 

 

54,048

 

 

 

53,377

 

  Other

 

 

4,095

 

 

 

3,996

 

 

 

8,142

 

 

 

7,670

 

    Retail

 

 

146,858

 

 

 

115,710

 

 

 

279,201

 

 

 

227,955

 

    Wholesale

 

 

21,654

 

 

 

40,914

 

 

 

49,268

 

 

 

81,843

 

       Total revenues

 

 

168,512

 

 

 

156,624

 

 

 

328,469

 

 

 

309,798

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of revenues and operations

 

 

22,804

 

 

 

15,540

 

 

 

41,890

 

 

 

31,442

 

  Product and technology

 

 

17,951

 

 

 

19,522

 

 

 

40,284

 

 

 

38,439

 

  Marketing and sales

 

 

59,527

 

 

 

50,512

 

 

 

125,562

 

 

 

109,513

 

  General and administrative

 

 

13,148

 

 

 

17,445

 

 

 

31,264

 

 

 

25,184

 

  Affiliate revenue share

 

 

3,813

 

 

 

2,355

 

 

 

7,096

 

 

 

4,716

 

  Depreciation and amortization

 

 

26,712

 

 

 

22,377

 

 

 

50,650

 

 

 

44,450

 

       Total operating expenses

 

 

143,955

 

 

 

127,751

 

 

 

296,746

 

 

 

253,744

 

         Operating income

 

 

24,557

 

 

 

28,873

 

 

 

31,723

 

 

 

56,054

 

Nonoperating (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest expense, net

 

 

(7,343

)

 

 

(1,770

)

 

 

(13,300

)

 

 

(1,729

)

  Other income, net

 

 

27

 

 

 

51

 

 

 

11

 

 

 

135

 

     Total nonoperating expense, net

 

 

(7,316

)

 

 

(1,719

)

 

 

(13,289

)

 

 

(1,594

)

       Income before income taxes

 

 

17,241

 

 

 

27,154

 

 

 

18,434

 

 

 

54,460

 

       Income tax expense

 

 

4,515

 

 

 

2,345

 

 

 

4,779

 

 

 

2,763

 

          Net income

 

$

12,726

 

 

$

24,809

 

 

$

13,655

 

 

$

51,697

 

Earnings per share, basic

 

$

0.18

 

 

$

0.35

 

 

$

0.19

 

 

$

0.72

 

Weighted-average common shares outstanding, basic

 

 

71,119

 

 

 

71,716

 

 

 

71,531

 

 

 

71,716

 

Earnings per share, diluted

 

$

0.18

 

 

$

0.35

 

 

$

0.19

 

 

$

0.72

 

Weighted-average common shares outstanding, diluted

 

 

71,330

 

 

 

71,780

 

 

 

71,721

 

 

 

71,780

 

 

 


 

Cars.com Inc.

Consolidated and Combined Balance Sheets

(In thousands, except per share data)

 

 

 

June 30, 2018

 

 

December 31, 2017

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,394

 

 

$

20,563

 

Accounts receivable, net

 

 

105,184

 

 

 

100,857

 

Prepaid expenses

 

 

13,772

 

 

 

11,408

 

Other current assets

 

 

10,567

 

 

 

9,811

 

Total current assets

 

 

147,917

 

 

 

142,639

 

Property and equipment, net

 

 

40,907

 

 

 

39,740

 

Goodwill

 

 

884,480

 

 

 

788,107

 

Intangible assets, net

 

 

1,556,654

 

 

 

1,529,500

 

Investments and other assets

 

 

10,439

 

 

 

11,053

 

Total assets

 

$

2,640,397

 

 

$

2,511,039

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,505

 

 

$

6,581

 

Accrued compensation

 

 

12,610

 

 

 

14,185

 

Unfavorable contracts liability

 

 

25,200

 

 

 

25,200

 

Current portion of long-term debt

 

 

21,211

 

 

 

21,158

 

Other accrued liabilities

 

 

37,905

 

 

 

23,025

 

Total current liabilities

 

 

104,431

 

 

 

90,149

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Unfavorable contracts liability

 

 

6,285

 

 

 

18,885

 

Long-term debt

 

 

701,534

 

 

 

557,194

 

Deferred tax liability

 

 

164,368

 

 

 

146,482

 

Other noncurrent liabilities

 

 

19,678

 

 

 

19,201

 

Total noncurrent liabilities

 

 

891,865

 

 

 

741,762

 

Total liabilities

 

 

996,296

 

 

 

831,911

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred Stock at par, $0.01 par value; 5,000 shares authorized; no shares

   issued and outstanding as of June 30, 2018 and December 31, 2017

 

 

 

 

 

 

Common Stock at par, $0.01 par value; 300,000 shares authorized; 69,896 and

   71,628 shares issued and outstanding as of June 30, 2018 and

   December 31, 2017, respectively

 

 

699

 

 

 

716

 

Additional paid-in capital

 

 

1,503,145

 

 

 

1,501,830

 

Retained earnings

 

 

140,257

 

 

 

176,582

 

Total stockholders' equity

 

 

1,644,101

 

 

 

1,679,128

 

Total liabilities and stockholders' equity

 

$

2,640,397

 

 

$

2,511,039

 

 

 


 

Cars.com Inc.

Consolidated and Combined Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

13,655

 

 

$

51,697

 

Adjustments to reconcile Net income to Net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

5,903

 

 

 

5,515

 

Amortization of intangible assets

 

 

44,747

 

 

 

38,935

 

Amortization of unfavorable contracts liability

 

 

(12,600

)

 

 

(12,600

)

Stock-based compensation expense

 

 

4,476

 

 

 

481

 

Deferred income taxes

 

 

3,145

 

 

 

1,731

 

Provision for doubtful accounts

 

 

2,164

 

 

 

1,627

 

Amortization of debt issuance costs

 

 

643

 

 

 

112

 

Other, net

 

 

500

 

 

 

1,247

 

Changes in operating assets and liabilities, net of Acquisition:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

4,934

 

 

 

6,614

 

Prepaid expenses

 

 

(2,044

)

 

 

(2,035

)

Other current assets

 

 

(545

)

 

 

(10,469

)

Other assets

 

 

614

 

 

 

684

 

Accounts payable

 

 

(1,541

)

 

 

(1,778

)

Accrued compensation

 

 

(1,792

)

 

 

(9,205

)

Other accrued liabilities

 

 

10,088

 

 

 

10,026

 

Other noncurrent liabilities

 

 

(1,723

)

 

 

9,075

 

Cash received from lessor for lease incentives

 

 

 

 

 

5,075

 

Net cash provided by operating activities

 

 

70,624

 

 

 

96,732

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

     Payment for Acquisition, net

 

 

(156,968

)

 

 

 

     Purchase of property and equipment

 

 

(6,417

)

 

 

(18,910

)

Net cash used in investing activities

 

 

(163,385

)

 

 

(18,910

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

     Proceeds from issuance of long-term debt

 

 

190,000

 

 

 

675,000

 

     Payments of debt issuance costs and other fees

 

 

 

 

 

(5,918

)

     Payments of long-term debt

 

 

(46,250

)

 

 

 

     Payments related to stock-based compensation plans, net

 

 

(475

)

 

 

 

     Repurchases of common stock

 

 

(50,000

)

 

 

 

     Cash distribution to TEGNA related to Separation

 

 

 

 

 

(650,000

)

     Transactions with TEGNA, net

 

 

(2,683

)

 

 

(69,200

)

Net cash provided by (used in) financing activities

 

 

90,592

 

 

 

(50,118

)

Net (decrease) increase in cash and cash equivalents

 

 

(2,169

)

 

 

27,704

 

Cash and cash equivalents at beginning of period

 

 

20,563

 

 

 

8,896

 

Cash and cash equivalents at end of period

 

$

18,394

 

 

$

36,600

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for income taxes, net of refunds

 

$

293

 

 

$

 

Cash paid for interest

 

 

12,487

 

 

 

574

 

 

 


 

Cars.com Inc.

 

Non-GAAP Reconciliations

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Reconciliation of Net income to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,726

 

 

$

24,809

 

 

$

13,655

 

 

$

51,697

 

Interest expense, net

 

 

7,343

 

 

 

1,770

 

 

 

13,300

 

 

 

1,729

 

Income tax expense

 

 

4,515

 

 

 

2,345

 

 

 

4,779

 

 

 

2,763

 

Depreciation and amortization

 

 

26,712

 

 

 

22,377

 

 

 

50,650

 

 

 

44,450

 

Stock-based compensation expense

 

 

2,876

 

 

 

481

 

 

 

4,476

 

 

 

481

 

Transaction-related costs

 

 

1,026

 

 

 

 

 

 

11,133

 

 

 

 

Costs associated with the stockholder activist campaign

 

 

1,112

 

 

 

 

 

 

4,897

 

 

 

 

Restructuring and other exit costs

 

 

590

 

 

 

1,671

 

 

 

1,097

 

 

 

1,671

 

Write-off of long-lived assets and other

 

 

401

 

 

 

1,385

 

 

 

361

 

 

 

1,389

 

Separation-related costs

 

 

 

 

 

4,558

 

 

 

 

 

 

4,658

 

Costs related to the headquarters move

 

 

 

 

 

2,731

 

 

 

 

 

 

3,428

 

Adjusted EBITDA*

 

$

57,301

 

 

$

62,127

 

 

$

104,348

 

 

$

112,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net income to Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,726

 

 

$

24,809

 

 

$

13,655

 

 

$

51,697

 

Amortization of intangible assets

 

 

23,570

 

 

 

19,468

 

 

 

44,747

 

 

 

38,935

 

Stock-based compensation expense

 

 

2,876

 

 

 

481

 

 

 

4,476

 

 

 

481

 

Transaction-related costs

 

 

1,026

 

 

 

 

 

 

11,133

 

 

 

 

Costs associated with the stockholder activist campaign

 

 

1,112

 

 

 

 

 

 

4,897

 

 

 

 

Restructuring and other exit costs

 

 

590

 

 

 

1,671

 

 

 

1,097

 

 

 

1,671

 

Write-off of long-lived assets and other

 

 

401

 

 

 

1,385

 

 

 

361

 

 

 

1,389

 

Separation-related costs

 

 

 

 

 

4,558

 

 

 

 

 

 

4,658

 

Costs related to the headquarters move

 

 

 

 

 

2,731

 

 

 

 

 

 

3,428

 

Tax impact of adjustments

 

 

(8,020

)

 

 

(4,563

)

 

 

(17,625

)

 

 

(5,079

)

Adjusted net income*

 

$

34,281

 

 

$

50,540

 

 

$

62,741

 

 

$

97,180

 

Adjusted net income per share, diluted

 

$

0.48

 

 

$

0.70

 

 

$

0.87

 

 

$

1.35

 

Weighted-average common shares outstanding, diluted

 

 

71,330

 

 

 

71,780

 

 

 

71,721

 

 

 

71,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net cash provided by operating activities to Free cash flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

43,963

 

 

$

53,016

 

 

$

70,624

 

 

$

96,732

 

Purchase of property and equipment

 

 

(3,904

)

 

 

(13,301

)

 

 

(6,417

)

 

 

(18,910

)

Free cash flow

 

$

40,059

 

 

$

39,715

 

 

$

64,207

 

 

$

77,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Amortization of unfavorable contracts liability is not adjusted out of Adjusted EBITDA or Adjusted net income.

 

 

 


 

Cars.com Inc.

 

Supplemental Information

 

(In thousands)

 

(Unaudited)

 

Operating expense category for the Three Months Ended June 30, 2018:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenues and operations

 

$

22,804

 

 

$

(304

)

 

$

(73

)

 

$

22,427

 

Product and technology

 

 

17,951

 

 

 

(260

)

 

 

(550

)

 

 

17,141

 

Marketing and sales

 

 

59,527

 

 

 

(591

)

 

 

(471

)

 

 

58,465

 

General and administrative

 

 

13,148

 

 

 

(1,974

)

 

 

(1,782

)

 

 

9,392

 

Affiliate revenue share

 

 

3,813

 

 

 

 

 

 

 

 

 

3,813

 

Depreciation and amortization

 

 

26,712

 

 

 

 

 

 

 

 

 

26,712

 

Total operating expenses

 

$

143,955

 

 

$

(3,129

)

 

$

(2,876

)

 

$

137,950

 

(1) Includes costs associated with the stockholder activist campaign, transaction-related costs, restructuring and other exit costs, write-off of long-lived assets and other.

 

Operating expense category for the Three Months Ended June 30, 2017:

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenues and operations

 

$

15,540

 

 

$

 

 

$

 

 

$

15,540

 

Product and technology

 

 

19,522

 

 

 

 

 

 

 

 

 

19,522

 

Marketing and sales

 

 

50,512

 

 

 

 

 

 

 

 

 

50,512

 

General and administrative

 

 

17,445

 

 

 

(10,345

)

 

 

(481

)

 

 

6,619

 

Affiliate revenue share

 

 

2,355

 

 

 

 

 

 

 

 

 

2,355

 

Depreciation and amortization

 

 

22,377

 

 

 

 

 

 

 

 

 

22,377

 

Total operating expenses

 

$

127,751

 

 

$

(10,345

)

 

$

(481

)

 

$

116,925

 

(1) Includes separation-related costs, costs related to the headquarters move, restructuring and other exit costs, write-off of long-lived assets and other.

 

Operating expense category for the Six Months Ended June 30, 2018:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenues and operations

 

$

41,890

 

 

$

(1,405

)

 

$

(99

)

 

$

40,386

 

Product and technology

 

 

40,284

 

 

 

(4,685

)

 

 

(815

)

 

 

34,784

 

Marketing and sales

 

 

125,562

 

 

 

(1,219

)

 

 

(768

)

 

 

123,575

 

General and administrative

 

 

31,264

 

 

 

(10,179

)

 

 

(2,794

)

 

 

18,291

 

Affiliate revenue share

 

 

7,096

 

 

 

 

 

 

 

 

 

7,096

 

Depreciation and amortization

 

 

50,650

 

 

 

 

 

 

 

 

 

50,650

 

Total operating expenses

 

$

296,746

 

 

$

(17,488

)

 

$

(4,476

)

 

$

274,782

 

(1) Includes transaction-related costs, costs associated with the stockholder activist campaign, restructuring and other exit costs, write-off of long-lived assets and other.

 

Operating expense category for the Six Months Ended June 30, 2017:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenues and operations

 

$

31,442

 

 

$

 

 

$

 

 

$

31,442

 

Product and technology

 

 

38,439

 

 

 

 

 

 

 

 

 

38,439

 

Marketing and sales

 

 

109,513

 

 

 

 

 

 

 

 

 

109,513

 

General and administrative

 

 

25,184

 

 

 

(11,146

)

 

 

(481

)

 

 

13,557

 

Affiliate revenue share

 

 

4,716

 

 

 

 

 

 

 

 

 

4,716

 

Depreciation and amortization

 

 

44,450

 

 

 

 

 

 

 

 

 

44,450

 

Total operating expenses

 

$

253,744

 

 

$

(11,146

)

 

$

(481

)

 

$

242,117

 

(1) Includes separation-related costs, costs related to the headquarters move, restructuring and other exit costs, write-off of long-lived assets and other.