EX-99.1 2 cars-ex991_6.htm EX-99.1 cars-ex991_6.htm

EXHIBIT 99.1

 

 

CARS Reports Third Quarter 2020 Results

Dealer Customer Growth and Accelerated Adoption of Digital Solutions

Double-Digit Traffic Increase

Strong Year-Over-Year Growth in Operating Cash Flow

 

CHICAGO, November 9, 2020 -- Cars.com Inc. (NYSE: CARS) (“CARS” 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, 2020.

Q3 Financial Highlights

Revenue of $144.4 million, down $7.7 million, or 5% year over year

GAAP Net Loss of $12.3 million, or $0.18 per diluted share, compared to GAAP Net Loss of $426.2 million, or $6.38 per diluted share in the prior-year period.  The prior year GAAP net loss included a Goodwill and Intangible impairment charge of $431.3 million, net of tax

Adjusted Net Income of $34.6 million, or $0.50 per diluted share, compared to Adjusted Net Income of $21.3 million, or $0.32 per diluted share in the prior-year period

Adjusted EBITDA of $49.0 million, or 34% of Revenue, up $3.1 million, or 7% year over year

Net cash provided by operating activities of $96.9 million for the nine months ended September 30, 2020 up 20% compared to the prior year period

Free Cash Flow of $84.3 million for the nine months ended September 30, 2020, up 29% compared to the prior year period

$43.8 million of cash and cash equivalents and total liquidity of $258.8 million, including availability under our revolving credit facility, as of September 30, 2020

Q3 Key Metrics Highlights 

Average Monthly Unique Visitors of 25.3 million, up 10% year over year

Traffic (visits) of 158.8 million, up 10% year over year

Dealer Customers grew to 18,130 at September 30, 2020 from 18,033 at June 30, 2020 and included growth in both marketplace and solutions only customers

Monthly average revenue per dealer (“ARPD”) was $2,183, rebounding to pre-COVID levels and up slightly compared to the prior-year period

Operational Highlights

Continued robust organic traffic and lead generation leading to strong dealer retention and growth

Strong growth and increased penetration of Conversations, Online Shopper, and FUEL solutions leading to ARPD growth

Dealer Inspire remains on track to launch half of the contracted GM websites in 2020

 


 

In October 2020, refinanced our debt facilities on favorable terms extending maturity dates from 2022 to 2025 for the credit facility and 2028 for the new senior unsecured notes

 

“Revenue rebounded sequentially with meaningful growth in ARPD and increased dealer customers as dealers are more rapidly adopting digital solutions in response to accelerated consumer demand because of the COVID pandemic. The launch of new dealer websites, and further growth and penetration of our FUEL, Online Shopper, and Conversations solutions, are driving growth in both ARPD and dealer count which will allow us to start 2021 with strong momentum,” said Alex Vetter, President and Chief Executive Officer of CARS.

Q3 Results

Revenue for the third quarter of 2020 was $144.4 million, compared to $152.1 million in the prior-year period. The decrease was primarily due to a decline in National Advertising revenue and lower dealer count, largely COVID related, partially offset by continued growth in solutions revenue compared with the prior-year period.

Total operating expenses for the third quarter of 2020 were $125.3 million, 9% lower than the prior-year period when excluding a $461.5 million Goodwill and intangible asset impairment charge in that period. The decrease in Total Operating Expenses compared to the prior year period is primarily due to reduced marketing spending and the cessation of our Affiliate Revenue Share expense in the second quarter.  

 

Net loss for the third quarter of 2020 was $12.3 million, or $0.18 per diluted share, compared to Net loss of $426.2 million, or $6.38 per diluted share, in the third quarter of 2019.  The Net loss is primarily due to an approximately $30.9 million non-cash charge for the correction of an error related to the calculation of the valuation allowance for income taxes established in connection with an impairment recorded during the three months ended March 31, 2020. Net loss in the third quarter of 2019 included a Goodwill and Intangible asset impairment charge of $431.3 million, net of tax. Adjusted Net Income for the third quarter of 2020 was $34.6 million, or $0.50 per diluted share, compared to $21.3 million, or $0.32 per diluted share, in the third quarter of 2019.

 

Adjusted EBITDA for the third quarter of 2020 was $49.0 million, or 34% of revenue, an increase of 7% compared to $45.9 million, or 30% of revenue, for the prior-year period. The increase in Adjusted EBITDA is primarily due to reduced expenses, largely attributable to a prudent level of marketing spend in a period of strong organic traffic growth and the cessation of our Affiliate Revenue Share expense in the second quarter.  In the fourth quarter, we expect to increase marketing and product innovation spend as we shift to more normalized levels of investment, which we expect to drive long-term growth. We expect Q4 Adjusted EBITDA to be higher on a YoY basis with Adjusted EBITDA margin between 28-31%. 

 

 


 

For the third quarter, Average Monthly Unique Visitors and Traffic grew 10% year over year. Organic Traffic was 76% of total Traffic compared to 71% in the prior year period. Mobile traffic grew 11% year over year and accounted for 74% of total Traffic.

 

Dealer customers were 18,130 as of September 30, 2020, an increase of 1%, compared to 18,033 dealer customers at June 30, 2020.

 

ARPD was $2,183, snapping back to pre-COVID levels and up slightly compared to the prior-year period.

 

“Strong top-line trends, focused execution, and thoughtful cost discipline drove year-over-year growth in Adjusted EBITDA and free cash flow. Increased investments in the business coupled with continued growth in digital solutions will position us to exit the year with a strengthened competitive and financial position. In addition, the refinancing of our debt improves our flexibility to invest in and grow our business,” said Sonia Jain, Chief Financial Officer of CARS.

Cash Flow and Balance Sheet

Net cash provided by operating activities for the nine-month period ended September 30, 2020 was $96.9 million, compared to $80.6 million in the prior year. Free Cash Flow for the nine-month period ended September 30, 2020, was $84.3 million, compared to $65.1 million in the same period last year.

Cash and cash equivalents was $43.8 million and debt outstanding was $597.8 million as of September 30, 2020, after paying down $48.4 million in debt during the quarter. Net leverage at September 30, 2020 was 3.8x.

Q3 Earnings call

As previously announced, management will hold a conference call and webcast today at 9:00 a.m. Central Time. 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 23, 2020.

 

About CARS

 

CARS 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 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 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 addition to Cars.com, CARS companies include Dealer Inspire, a technology provider building solutions that future-proof dealerships with more efficient operations and connected digital experiences; FUEL, which gives dealers and OEMs the opportunity to harness the untapped power of digital video by leveraging Cars.com’s pure audience of in-market car shoppers, and DealerRater, a leading car dealer review and reputation management platform. 

 

The full suite of CARS properties includes Cars.com™, Dealer Inspire®, DealerRater®, FUEL™, 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 financial measures are not prepared in accordance with generally accepted accounting principles in the United States (“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, (6) unrealized mark-to-market adjustments related to derivative instruments, and (7) 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, (3) unrealized mark-to-market adjustments related to derivative instruments, and (4) 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 fundamental to our business. Traffic to the CARS 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 desktop and mobile properties (responsive sites and mobile apps), measured using Adobe Analytics. Traffic does not include traffic to Dealer Inspire websites. Visits refers to the number of times visitors accessed CARS 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 dealer customers 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 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 property on an individual device/browser combination or installs one of our mobile apps on an individual device. If a visitor 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. UVs do not include Dealer Inspire 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 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 monthly average number of direct dealer customers during the same period.

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 the impact of the COVID-19 pandemic on our industry, our dealer customers and our results of operations, our business strategies, strategic alternatives, plans and objectives, market potential, outlook, trends, future financial performance, planned operational and product improvements, potential strategic transactions, liquidity, including expense reduction and draws from our revolving credit facility, 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,” “outlook,” “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, current developments regarding the COVID-19 pandemic 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 and strategic actions 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 and strategic actions 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, 2019, our subsequent Quarterly Reports on Form 10-Q and 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 report are intended to be subject to the safe harbor protection provided by the federal securities laws.

 

CARS Investor Relations Contact:

Kamal Hamid

khamid@cars.com

312.601.5110

 

CARS Media Contact:

Marita Thomas

mthomas@cars.com

312.601.5692

 

Source: Cars.com Inc.

 

###

 

 

 

 


 

 

Cars.com Inc.

 

Consolidated Statements of Loss

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Direct

 

$

123,955

 

 

$

122,878

 

 

$

332,558

 

 

$

349,162

 

  National advertising

 

 

17,753

 

 

 

20,161

 

 

 

53,167

 

 

 

59,752

 

  Other

 

 

2,684

 

 

 

3,642

 

 

 

8,770

 

 

 

11,215

 

    Retail

 

 

144,392

 

 

 

146,681

 

 

 

394,495

 

 

 

420,129

 

    Wholesale

 

 

 

 

 

5,409

 

 

 

 

 

 

34,366

 

       Total revenue

 

 

144,392

 

 

 

152,090

 

 

 

394,495

 

 

 

454,495

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of revenue and operations

 

 

25,434

 

 

 

25,089

 

 

 

74,376

 

 

 

74,987

 

  Product and technology

 

 

15,455

 

 

 

14,923

 

 

 

42,359

 

 

 

48,125

 

  Marketing and sales

 

 

45,776

 

 

 

50,789

 

 

 

132,734

 

 

 

164,872

 

  General and administrative

 

 

13,289

 

 

 

13,414

 

 

 

43,866

 

 

 

59,265

 

  Affiliate revenue share

 

 

 

 

 

5,158

 

 

 

10,970

 

 

 

9,788

 

  Depreciation and amortization

 

 

25,375

 

 

 

28,970

 

 

 

87,529

 

 

 

86,761

 

  Goodwill and intangible asset impairment

 

 

 

 

 

461,463

 

 

 

905,885

 

 

 

461,463

 

       Total operating expenses

 

 

125,329

 

 

 

599,806

 

 

 

1,297,719

 

 

 

905,261

 

         Operating income (loss)

 

 

19,063

 

 

 

(447,716

)

 

 

(903,224

)

 

 

(450,766

)

Nonoperating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest expense, net

 

 

(10,779

)

 

 

(7,712

)

 

 

(26,229

)

 

 

(22,989

)

  Other income (expense), net

 

 

1,957

 

 

 

1,402

 

 

 

(6,987

)

 

 

1,530

 

     Total nonoperating expense, net

 

 

(8,822

)

 

 

(6,310

)

 

 

(33,216

)

 

 

(21,459

)

       Income (loss) before income taxes

 

 

10,241

 

 

 

(454,026

)

 

 

(936,440

)

 

 

(472,225

)

       Income tax expense (benefit)

 

 

22,502

 

 

 

(27,869

)

 

 

(112,101

)

 

 

(31,011

)

          Net loss

 

$

(12,261

)

 

$

(426,157

)

 

$

(824,339

)

 

$

(441,214

)

Weighted-average common shares outstanding:

 

Basic

 

 

67,295

 

 

 

66,769

 

 

 

67,163

 

 

 

67,043

 

Diluted

 

 

67,295

 

 

 

66,769

 

 

 

67,163

 

 

 

67,043

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.18

)

 

$

(6.38

)

 

$

(12.27

)

 

$

(6.58

)

Diluted

 

 

(0.18

)

 

 

(6.38

)

 

 

(12.27

)

 

 

(6.58

)

 

 

 


 

 

Cars.com Inc.

 

Consolidated Balance Sheets

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

43,769

 

 

$

13,549

 

Accounts receivable, net

 

 

89,094

 

 

 

101,762

 

Prepaid expenses

 

 

10,615

 

 

 

6,526

 

Other current assets

 

 

10,571

 

 

 

603

 

Total current assets

 

 

154,049

 

 

 

122,440

 

Property and equipment, net

 

 

41,072

 

 

 

43,696

 

Goodwill

 

 

 

 

 

505,885

 

Intangible assets, net

 

 

857,055

 

 

 

1,329,499

 

Investments and other assets

 

 

16,274

 

 

 

26,471

 

Total assets

 

$

1,068,450

 

 

$

2,027,991

 

Liabilities and stockholders' equity:

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

19,896

 

 

$

12,431

 

Accrued compensation

 

 

16,949

 

 

 

16,738

 

Current portion of long-term debt

 

 

32,654

 

 

 

31,391

 

Other accrued liabilities

 

 

43,377

 

 

 

38,246

 

Total current liabilities

 

 

112,876

 

 

 

98,806

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

558,720

 

 

 

611,277

 

Deferred tax liability

 

 

30,865

 

 

 

132,996

 

Other noncurrent liabilities

 

 

43,616

 

 

 

43,844

 

Total noncurrent liabilities

 

 

633,201

 

 

 

788,117

 

Total liabilities

 

 

746,077

 

 

 

886,923

 

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, 2020 and December 31, 2019,

   respectively

 

 

 

 

 

Common Stock at par, $0.01 par value; 300,000 shares authorized; 67,206 and

   66,764 shares issued and outstanding as of September 30, 2020 and

   December 31, 2019, respectively

 

672

 

 

 

668

 

Additional paid-in capital

 

 

1,525,114

 

 

 

1,515,109

 

Accumulated deficit

 

 

(1,191,406

)

 

 

(367,067

)

Accumulated other comprehensive loss

 

 

(12,007

)

 

 

(7,642

)

Total stockholders' equity

 

 

322,373

 

 

 

1,141,068

 

Total liabilities and stockholders' equity

 

$

1,068,450

 

 

$

2,027,991

 

 

 

 


 

 

Cars.com Inc.

 

Consolidated Statements of Cash Flows

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

Net loss

 

$

(824,339

)

 

$

(441,214

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

15,085

 

 

 

13,427

 

Amortization of intangible assets

 

 

72,444

 

 

 

73,334

 

Amortization of unfavorable contracts liability

 

 

 

 

 

(18,885

)

Goodwill and intangible asset impairment

 

 

905,885

 

 

 

461,463

 

Impairment of non-marketable security

 

 

9,447

 

 

 

 

Unrealized gain on interest rate swap

 

 

(2,482

)

 

 

 

Amortization of accumulated other comprehensive loss on interest rate swap

 

 

2,101

 

 

 

 

Stock-based compensation

 

 

10,338

 

 

 

5,258

 

Deferred income taxes

 

 

(102,199

)

 

 

(52,741

)

Provision for doubtful accounts

 

 

3,854

 

 

 

3,844

 

Amortization of debt issuance costs

 

 

2,420

 

 

 

959

 

Other, net

 

 

121

 

 

 

411

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

8,814

 

 

 

3,295

 

Prepaid expenses

 

 

(4,089

)

 

 

1,672

 

Other current assets

 

 

(9,968

)

 

 

9,992

 

Other assets

 

 

819

 

 

 

(16,517

)

Accounts payable

 

 

7,465

 

 

 

(5,363

)

Accrued compensation

 

 

211

 

 

 

(2,233

)

Other accrued liabilities

 

 

4,349

 

 

 

28,627

 

Other noncurrent liabilities

 

 

(3,410

)

 

 

15,221

 

Net cash provided by operating activities

 

 

96,866

 

 

 

80,550

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

     Purchase of property and equipment

 

 

(12,603

)

 

 

(15,409

)

     Other, net

 

 

 

 

 

(599

)

Net cash used in investing activities

 

 

(12,603

)

 

 

(16,008

)

Cash flows from financing activities:

 

     Proceeds from revolving loan borrowings

 

 

165,000

 

 

 

10,000

 

     Payments of debt issuance costs and other fees

 

 

(3,402

)

 

 

 

     Payments of long-term debt

 

 

(215,312

)

 

 

(39,688

)

     Stock-based compensation plans, net

 

 

(329

)

 

 

(352

)

     Repurchases of common stock

 

 

 

 

 

(40,000

)

     Other

 

 

 

 

 

(192

)

Net cash used in financing activities

 

 

(54,043

)

 

 

(70,232

)

Net increase (decrease) in cash and cash equivalents

 

 

30,220

 

 

 

(5,690

)

Cash and cash equivalents at beginning of period

 

 

13,549

 

 

 

25,463

 

Cash and cash equivalents at end of period

 

$

43,769

 

 

$

19,773

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes, net of refunds

 

$

478

 

 

$

168

 

Cash paid for interest

 

 

21,512

 

 

 

22,413

 

 

 

 


 

 

Cars.com Inc.

 

Non-GAAP Reconciliations

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Net loss to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,261

)

 

$

(426,157

)

 

$

(824,339

)

 

$

(441,214

)

Interest expense, net

 

 

10,779

 

 

 

7,712

 

 

 

26,229

 

 

 

22,989

 

Income tax expense (benefit)

 

 

22,502

 

 

 

(27,869

)

 

 

(112,101

)

 

 

(31,011

)

Depreciation and amortization

 

 

25,375

 

 

 

28,970

 

 

 

87,529

 

 

 

86,761

 

Goodwill and intangible asset impairment

 

 

 

 

 

461,463

 

 

 

905,885

 

 

 

461,463

 

Stock-based compensation

 

 

4,189

 

 

 

(1,160

)

 

 

10,476

 

 

 

5,404

 

Write-off of long-lived assets and other

 

 

2

 

 

 

(111

)

 

 

9,580

 

 

 

529

 

Severance, transformation and other exit costs

 

 

289

 

 

 

2,114

 

 

 

6,457

 

 

 

9,625

 

Transaction-related costs

 

 

59

 

 

 

 

 

 

176

 

 

 

4,623

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

905

 

 

 

 

 

 

8,825

 

Unrealized gain on interest rate swap

 

 

(1,924

)

 

 

 

 

 

(2,482

)

 

 

 

Adjusted EBITDA*

 

$

49,010

 

 

$

45,867

 

 

$

107,410

 

 

$

127,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net loss to Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,261

)

 

$

(426,157

)

 

$

(824,339

)

 

$

(441,214

)

Amortization of intangible assets

 

 

21,889

 

 

 

24,621

 

 

 

72,444

 

 

 

73,334

 

Goodwill and intangible asset impairment

 

 

 

 

 

461,463

 

 

 

905,885

 

 

 

461,463

 

Stock-based compensation

 

 

4,189

 

 

 

(1,160

)

 

 

10,476

 

 

 

5,404

 

Write-off of long-lived assets and other

 

 

2

 

 

 

(111

)

 

 

9,580

 

 

 

529

 

Severance, transformation and other exit costs

 

 

289

 

 

 

2,114

 

 

 

6,457

 

 

 

9,625

 

Transaction-related costs

 

 

59

 

 

 

 

 

 

176

 

 

 

4,623

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

905

 

 

 

 

 

 

8,825

 

Unrealized gain on interest rate swap

 

 

(1,924

)

 

 

 

 

 

(2,482

)

 

 

 

Tax impact of adjustments

 

 

22,323

 

 

 

(40,347

)

 

 

(113,903

)

 

 

(60,565

)

Adjusted net income*

 

$

34,566

 

 

$

21,328

 

 

$

64,294

 

 

$

62,024

 

Adjusted net income per share, diluted

 

$

0.50

 

 

$

0.32

 

 

$

0.94

 

 

$

0.92

 

Weighted-average common shares outstanding, diluted**

 

 

68,903

 

 

 

66,935

 

 

 

68,147

 

 

 

67,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

39,237

 

 

$

29,795

 

 

$

96,866

 

 

$

80,550

 

Purchase of property and equipment

 

 

(3,878

)

 

 

(6,055

)

 

 

(12,603

)

 

 

(15,409

)

Free cash flow

 

$

35,359

 

 

$

23,740

 

 

$

84,263

 

 

$

65,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* There was no unfavorable contract liability amortization during 2020 as it was fully amortized as of September 30, 2019. Additionally for 2019, 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, 2020 and September 30, 2019.

 

 

 

 

 


 

Cars.com Inc.

 

Supplemental Information

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense category for the Three Months Ended September 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

25,434

 

 

$

 

 

$

(165

)

 

$

25,269

 

Product and technology

 

 

15,455

 

 

 

 

 

 

(943

)

 

 

14,512

 

Marketing and sales

 

 

45,776

 

 

 

 

 

 

(1,010

)

 

 

44,766

 

General and administrative

 

 

13,289

 

 

 

(350

)

 

 

(2,071

)

 

 

10,868

 

Affiliate revenue share

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

25,375

 

 

 

 

 

 

 

 

 

25,375

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

125,329

 

 

$

(350

)

 

$

(4,189

)

 

$

120,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(8,822

)

 

$

 

 

$

 

 

$

(8,822

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes severance, transformation and other exit costs, transaction-related costs, and write-off of long-lived assets and other.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Nine Months Ended September 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

74,376

 

 

$

 

 

$

(366

)

 

$

74,010

 

Product and technology

 

 

42,359

 

 

 

 

 

 

(2,430

)

 

 

39,929

 

Marketing and sales

 

 

132,734

 

 

 

 

 

 

(2,489

)

 

 

130,245

 

General and administrative

 

 

43,866

 

 

 

(6,766

)

 

 

(5,191

)

 

 

31,909

 

Affiliate revenue share

 

 

10,970

 

 

 

 

 

 

 

 

 

10,970

 

Depreciation and amortization

 

 

87,529

 

 

 

 

 

 

 

 

 

87,529

 

Goodwill and intangible asset impairment

 

 

905,885

 

 

 

(905,885

)

 

 

 

 

 

 

Total operating expenses

 

$

1,297,719

 

 

$

(912,651

)

 

$

(10,476

)

 

$

374,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(33,216

)

 

$

9,447

 

 

$

 

 

$

(23,769

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes write-off and impairments of goodwill, intangible assets and other long-lived assets and other, severance, transformation and other exit costs, and transaction-related 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.