Carvana Co. saw a significant surge in its stock price, with shares rising 31% in premarket trading on Wednesday. This comes after the used-car retailer exceeded sales expectations for the second quarter and announced a debt restructuring deal with noteholders.
Impressive Sales Performance
Carvana recorded $2.97 billion in sales for the second quarter, surpassing the FactSet consensus of $2.60 billion. Although this figure is lower than the $3.88 billion reported in the same period last year, it indicates a strong recovery for the company.
Joyous News for Investors
Investors will be pleased to learn that Carvana’s net loss for this quarter was $58 million, or 55 cents per share. In comparison, the company experienced a loss of $238 million, or $2.35 per share, during the same quarter last year. This improvement in financial performance is better than what analysts had predicted, as they projected a loss of $1.20 per share.
Expectations for the Third Quarter
Carvana anticipates reporting similar retail unit sales figures in the third quarter as it did in the second quarter. In June, the company sold 76,530 retail units, which is a 35% decrease compared to the previous year. Additionally, Carvana expects adjusted total gross profit per unit to exceed $5,000 in the third quarter, showcasing an optimistic outlook for profitability.
Debt Restructuring Agreement
In other news, Carvana revealed that it has reached an agreement with noteholders to restructure its debt. Through this arrangement, the company will reduce more than 83% of its 2025 and 2027 unsecured note maturities. Furthermore, Carvana’s required cash interest expense will decrease by over $430 million annually over the next two years. This move provides the company with improved financial flexibility, allowing it to drive profitability and return to growth.
Carvana’s remarkable performance throughout the year is evident by its stock price, which has risen over 700% so far. With strong sales and a strategic debt restructuring deal in place, the company is poised for further success in the future.