0001564590-20-034511.txt : 20200730 0001564590-20-034511.hdr.sgml : 20200730 20200730073552 ACCESSION NUMBER: 0001564590-20-034511 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20200730 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20200730 DATE AS OF CHANGE: 20200730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Cars.com Inc. CENTRAL INDEX KEY: 0001683606 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 813693660 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37869 FILM NUMBER: 201059218 BUSINESS ADDRESS: STREET 1: 300 S. RIVERSIDE PLAZA STREET 2: SUITE 1000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 312-601-5000 MAIL ADDRESS: STREET 1: 300 S. RIVERSIDE PLAZA STREET 2: SUITE 1000 CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 cars-8k_20200730.htm 8-K cars-8k_20200730.htm
false 0001683606 0001683606 2020-07-30 2020-07-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

July 30, 2020

Date of Report (Date of earliest event reported)

 

Cars.com Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-37869

 

81-3693660

(State or other Jurisdiction

 

(Commission File Number)

 

(IRS Employer

of Incorporation)

 

 

 

Identification No.)

 

 300 S. Riverside Plaza, Suite 1000

Chicago, Illinois 60606

(Address of principal executive offices)

 

(312) 601-5000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

CARS

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


 


 

Item 2.02. Results of Operations and Financial Condition.

On July 30, 2020, Cars.com Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2020.  A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed to be incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly set forth by specific reference in such filing.

Item 9.01.Financial Statements and Exhibits.

(d)

Exhibits

Exhibit

No.

 

Exhibit

 

 

 

99.1

 

Cars.com Inc. Press Release, dated July 30, 2020

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2

 


 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Cars.com Inc.

 

 

 

 

Date:  July 30, 2020

By:

 

/s/ Sonia Jain

 

 

 

Sonia Jain

Chief Financial Officer

 

 

3

 

EX-99.1 2 cars-ex991_24.htm EX-99.1 cars-ex991_24.htm

EXHIBIT 99.1

CARS Reports Second Quarter 2020 Results

 

Double-Digit Traffic and Lead Growth Driven by Organic Strength

Growing Adoption of Buying and Selling Cars Online Plays to CARS’ Portfolio Strength

Strong Year-To-Date Cash Flow

CHICAGO, July 30, 2020 /PRNewswire/ -- Cars.com Inc. (NYSE: CARS) (“Cars.com,” “CARS” or the “Company”), a leading digital marketplace and solutions provider for the automotive industry, today released its financial results for the quarter ended June 30, 2020.

Q2 Financial Highlights

Revenue of $102.0 million, down $46.2 million, or 31% year over year primarily due to the invoice credits of 50% in April 2020 and 30% in May and June 2020 that we provided to our marketplace customers

GAAP Net Loss of $24.6 million, or $0.37 per diluted share, compared to GAAP Net Loss of $6.0 million, or $0.09 per diluted share in the prior year period

Adjusted Net Income of $8.0 million, or $0.12 per diluted share, compared to Adjusted Net Income of $20.0 million, or $0.30 per diluted share in the prior year period

Adjusted EBITDA of $23.2 million, or 23% of Revenue, down $20.3 million year over year

Net cash provided by operating activities of $57.6 million for the six months ended June 30, 2020

Free Cash Flow of $48.9 million for the six months ended June 30, 2020

$56.9 million of cash and cash equivalents on the balance sheet and total liquidity of $232.2 million, including availability under our revolving credit facility, as of June 30, 2020

Q2 Key Metrics Highlights 

Average Monthly Unique Visitors of 22.8 million, up 6% year over year

Traffic (visits) of 144.0 million, up 10% year over year

Mobile Traffic was 75% of total Traffic, compared to 71% in the second quarter of 2019

Dealer Customers declined from 18,938 at March 31, 2020, to 18,033 at June 30, 2020, primarily due to cancellations and lower sales of marketplace customers as a result of COVID-19, partially offset by growth in digital solutions customers

Monthly average revenue per dealer (“ARPD”) was $1,442, down 33% year over year, primarily due to financial relief given to dealer customers in the second quarter as a result of COVID-19

Operational Highlights

Brand strength, heightened consumer demand and efficiencies in marketing generated double digit year over year Traffic growth with substantially lower spending, demonstrating the value and durability of the CARS brand

 


 

 

Leads increased 17% year over year in this pandemic-impacted quarter, providing greater value and ROI to dealers

Conversion rates, from promotional to paid, on our digital solutions were strong; Online Shopper, our digital retail tool, saw over 50% conversion and our chat tool, Conversations, had a greater than 30% conversion rate

Received website endorsements from  Nissan and others; roll-out of GM websites began in Q2

Continued successful traction of FUELTM In-Market Video product, positively contributing to both revenue and ARPD

Named retail and technology industry financial veteran Sonia Jain as CFO; elevated seasoned executive Marita Thomas to Chief Communications Officer

“We executed extremely well in a difficult period by continuing to deliver efficient vehicle sales, industry-leading digital solutions, high-value organic traffic, and an essential online marketplace as consumers and dealers gravitate online. This quarter’s results also benefited from swift management actions taken to reduce operating expenses and strengthen our liquidity, while still providing our dealers meaningful financial support, aligned with our longstanding dealer advocacy,” said Alex Vetter, President and Chief Executive Officer of CARS.

“Although business conditions remain uncertain, we are confident in the demand for cars as a preferred mode of transport, with new and used car sales bouncing back sequentially during the quarter. This trend is likely to continue with the Centers for Disease Control’s recent advisory recommending private car use as a healthier alternative to ride sharing and mass transit. The continued traction of CARS’ solutions strategy, including our progress in launching committed GM websites, the contractual uplift from the end of affiliate conversion payments, our liquidity and the flexibility afforded by our recently amended credit agreement, enable us to enter the second half of the year from a position of relative strength.”

CARS Commitment to Equality, Diversity, Inclusion and Belonging 

CARS has long embraced diversity and inclusion in its core mission and business strategy. We have further committed to making a more profound difference with tangible and sustainable actions in our company, our industry and local communities. We are focused on driving more diverse representation in our industry by partnering with the National Association of Minority Automobile Dealers (NAMAD) to advance its mission in helping Black-owned dealerships thrive through technology and retail solution-based education sessions and training; prioritizing our very important work around diversity, inclusion and belonging by creating a more diverse pipeline of talent and continuing our laser-focus on equitable hiring practices and salary structure at every level. We have also launched CARS Action, which provides volunteer resources and connections to assist our employees in helping to rebuild and revitalize under-resourced communities. 

Q2 Results

 


 

 

Revenue for the second quarter of 2020 was $102.0 million, compared to $148.2 million in the prior year period. The decrease was primarily due to the invoice credits of 50% in April 2020 and 30% in May and June 2020 that we provided to our marketplace customers. National advertising revenue declined 17%, primarily due to higher cancellations principally due to the COVID-19 pandemic and related restrictions.

 

Total operating expenses for the second quarter of 2020 were $119.2 million compared to $147.2 million for the prior year period. This decrease was primarily due to our actions taken to align expenses with revenue in an uncertain COVID-19 environment driven by lower marketing spend and actions taken to reduce headcount related expenses, including temporary wage cuts, furloughing employees and a reduction in force.  

 

Net loss for the second quarter of 2020 was $24.6 million, or $0.37 per diluted share, compared to Net loss of $6.0 million, or $0.09 per diluted share, in the second quarter of 2019. Adjusted Net Income for the second quarter of 2020 was $8.0 million, or $0.12 per diluted share, compared to $20.0 million, or $0.30 per diluted share, in the second quarter of 2019.

Adjusted EBITDA for the second quarter of 2020 was $23.2 million, or 23% of revenue, compared to $43.5 million, or 29% of revenue, for the prior year period. Lower revenue of $46.2 million was partially offset by cost control measures that resulted in $28.0 million decrease in operating expenses year over year. Additionally, the prior year period included a $6.3 million benefit from the non-cash amortization from the unfavorable contract liability associated with our Affiliate contracts.

For the second quarter, Average Monthly Unique Visitors grew 6% year over year and Traffic grew 10% year over year. Despite the reduced marketing spend, we continue to deliver strong traffic, and high-quality leads to our dealer and OEM customers due to greater efficiencies in performance marketing. Mobile traffic grew 16% year over year and accounted for 75% of total Traffic compared to 71% in the prior year.

Dealer customers were 18,033 as of June 30, 2020, a decrease of 5%, compared to 18,938 dealer customers at March 31, 2020, primarily due to COVID-related cancellations of marketplace customers and lower incremental sales partially offset by growth in digital solutions customers.

ARPD was $1,442 in the second quarter of 2020, down 33% from the prior year period. The decrease was primarily due to the invoice credits of 50% in April 2020 and 30% in May and June 2020 that we provided to our marketplace customers.  

“We are pleased with how well we performed during this difficult period. Our performance demonstrates the value of our brand strength, organic traffic delivery and diversified revenue streams,” said Sonia Jain, Chief Financial Officer of CARS.

 


 

 

She continued, We believe that the operating environment may remain uncertain given the continuing COVID-19 pandemic. We demonstrated a commitment to implementing cost efficiencies in Q2 and remain focused on maximizing free cash flow.  However, we will reinvest in the business through increased marketing spend and selective hiring to drive growth in the second half.

Cash Flow and Balance Sheet

Net cash provided by operating activities for the six-month period ended June 30, 2020 was $57.6 million, compared to $50.8 million in the prior year. Free Cash Flow for the six-month period ended June 30, 2020, was $48.9 million, compared to $41.4 million in the same period last year.

We also secured substantial liquidity and balance sheet flexibility through an amendment to our credit facility which waives our net leverage and interest coverage covenants for the remainder of 2020.

 

Cash and cash equivalents was $56.9 million and debt outstanding was $646.3 million as of June 30, 2020. Net leverage at June 30, 2020 was 4.1x. Under the terms of our amended credit facility, our net leverage and interest coverage ratios are waived for the balance of 2020.

Outlook

The effects of the COVID-19 pandemic have and will continue to negatively impact our results of operations, cash flow and financial position; however, the extent of the impact remains highly uncertain and depends on the duration of the pandemic, any subsequent resurgence and severity of the measures taken to address the pandemic and the resulting economic consequences. Accordingly, on March 23, 2020, the Company suspended its 2020 guidance.

Q2 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 August 13, 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 2018, CARS 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 properties include Cars.com, DealerRater®, DealerInspire®, 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 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 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Direct

 

$

83,242

 

 

$

111,190

 

 

$

208,603

 

 

$

226,284

 

  National advertising

 

 

16,021

 

 

 

19,296

 

 

 

35,414

 

 

 

39,591

 

  Other

 

 

2,746

 

 

 

3,624

 

 

 

6,086

 

 

 

7,573

 

    Retail

 

 

102,009

 

 

 

134,110

 

 

 

250,103

 

 

 

273,448

 

    Wholesale

 

 

 

 

 

14,097

 

 

 

 

 

 

28,957

 

       Total revenue

 

 

102,009

 

 

 

148,207

 

 

 

250,103

 

 

 

302,405

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of revenue and operations

 

 

22,912

 

 

 

24,319

 

 

 

48,942

 

 

 

49,898

 

  Product and technology

 

 

12,031

 

 

 

15,339

 

 

 

26,904

 

 

 

33,202

 

  Marketing and sales

 

 

32,036

 

 

 

53,740

 

 

 

86,958

 

 

 

114,083

 

  General and administrative

 

 

16,460

 

 

 

21,963

 

 

 

30,577

 

 

 

45,851

 

  Affiliate revenue share

 

 

4,601

 

 

 

2,176

 

 

 

10,970

 

 

 

4,630

 

  Depreciation and amortization

 

 

31,193

 

 

 

29,666

 

 

 

62,154

 

 

 

57,791

 

  Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

905,885

 

 

 

 

       Total operating expenses

 

 

119,233

 

 

 

147,203

 

 

 

1,172,390

 

 

 

305,455

 

         Operating (loss) income

 

 

(17,224

)

 

 

1,004

 

 

 

(922,287

)

 

 

(3,050

)

Nonoperating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest expense, net

 

 

(7,924

)

 

 

(7,711

)

 

 

(15,450

)

 

 

(15,277

)

  Other income (expense), net

 

 

557

 

 

 

9

 

 

 

(8,944

)

 

 

128

 

     Total nonoperating expense, net

 

 

(7,367

)

 

 

(7,702

)

 

 

(24,394

)

 

 

(15,149

)

       Loss before income taxes

 

 

(24,591

)

 

 

(6,698

)

 

 

(946,681

)

 

 

(18,199

)

       Income tax expense (benefit)

 

 

53

 

 

 

(672

)

 

 

(134,603

)

 

 

(3,142

)

          Net loss

 

$

(24,644

)

 

$

(6,026

)

 

$

(812,078

)

 

$

(15,057

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

67,256

 

 

 

66,779

 

 

 

67,095

 

 

 

67,181

 

Diluted

 

 

67,256

 

 

 

66,779

 

 

 

67,095

 

 

 

67,181

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.37

)

 

$

(0.09

)

 

$

(12.10

)

 

$

(0.22

)

Diluted

 

 

(0.37

)

 

 

(0.09

)

 

 

(12.10

)

 

 

(0.22

)

 

 

 


 

Cars.com Inc.

 

Consolidated Balance Sheets

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

56,945

 

 

$

13,549

 

Accounts receivable, net

 

 

74,553

 

 

 

101,762

 

Prepaid expenses

 

 

7,065

 

 

 

6,526

 

Other current assets

 

 

2,959

 

 

 

603

 

Total current assets

 

 

141,522

 

 

 

122,440

 

Property and equipment, net

 

 

40,674

 

 

 

43,696

 

Goodwill

 

 

 

 

 

505,885

 

Intangible assets, net

 

 

878,943

 

 

 

1,329,499

 

Investments and other assets

 

 

16,503

 

 

 

26,471

 

Total assets

 

$

1,077,642

 

 

$

2,027,991

 

Liabilities and stockholders' equity:

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

14,404

 

 

$

12,431

 

Accrued compensation

 

 

10,796

 

 

 

16,738

 

Current portion of long-term debt

 

 

29,780

 

 

 

31,391

 

Other accrued liabilities

 

 

40,019

 

 

 

38,246

 

Total current liabilities

 

 

94,999

 

 

 

98,806

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

609,066

 

 

 

611,277

 

Deferred tax liability

 

 

 

 

 

132,996

 

Other noncurrent liabilities

 

 

44,796

 

 

 

43,844

 

Total noncurrent liabilities

 

 

653,862

 

 

 

788,117

 

Total liabilities

 

 

748,861

 

 

 

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 June 30, 2020 and December 31, 2019, respectively

 

 

 

 

 

 

Common Stock at par, $0.01 par value; 300,000 shares authorized; 67,200 and 66,764 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

 

 

672

 

 

 

668

 

Additional paid-in capital

 

 

1,521,062

 

 

 

1,515,109

 

Accumulated deficit

 

 

(1,179,145

)

 

 

(367,067

)

Accumulated other comprehensive loss

 

 

(13,808

)

 

 

(7,642

)

Total stockholders' equity

 

 

328,781

 

 

 

1,141,068

 

Total liabilities and stockholders' equity

 

$

1,077,642

 

 

$

2,027,991

 

 

 

 


 

Cars.com Inc.

 

Consolidated Statements of Cash Flows

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(812,078

)

 

$

(15,057

)

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

 

Depreciation

 

 

11,599

 

 

 

9,078

 

Amortization of intangible assets

 

 

50,555

 

 

 

48,713

 

Amortization of unfavorable contracts liability

 

 

 

 

 

(12,600

)

Goodwill and intangible asset impairment

 

 

905,885

 

 

 

 

Impairment of non-marketable security

 

 

9,447

 

 

 

 

Unrealized gain on interest rate swap

 

 

(558

)

 

 

 

Amortization of accumulated other comprehensive loss on interest rate swap

 

 

300

 

 

 

 

Stock-based compensation

 

 

6,266

 

 

 

6,329

 

Deferred income taxes

 

 

(133,064

)

 

 

(18,260

)

Provision for doubtful accounts

 

 

2,846

 

 

 

2,165

 

Amortization of debt issuance costs

 

 

1,377

 

 

 

632

 

Other, net

 

 

142

 

 

 

495

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

24,363

 

 

 

11,559

 

Prepaid expenses

 

 

(540

)

 

 

1,348

 

Other current assets

 

 

(2,368

)

 

 

10,225

 

Other assets

 

 

589

 

 

 

(16,550

)

Accounts payable

 

 

1,973

 

 

 

1,909

 

Accrued compensation

 

 

(5,942

)

 

 

(6,231

)

Other accrued liabilities

 

 

(933

)

 

 

10,301

 

Other noncurrent liabilities

 

 

(2,230

)

 

 

16,699

 

Net cash provided by operating activities

 

 

57,629

 

 

 

50,755

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

     Purchase of property and equipment

 

 

(8,725

)

 

 

(9,354

)

     Other, net

 

 

 

 

 

(599

)

Net cash used in investing activities

 

 

(8,725

)

 

 

(9,953

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

     Proceeds from revolving loan borrowings

 

 

165,000

 

 

 

10,000

 

     Payments of debt issuance costs and other fees

 

 

(3,324

)

 

 

 

     Payments of long-term debt

 

 

(166,875

)

 

 

(26,250

)

     Stock-based compensation plans, net

 

 

(309

)

 

 

(295

)

     Repurchases of common stock

 

 

 

 

 

(40,000

)

     Other

 

 

 

 

 

(181

)

Net cash used in financing activities

 

 

(5,508

)

 

 

(56,726

)

Net increase (decrease) in cash and cash equivalents

 

 

43,396

 

 

 

(15,924

)

Cash and cash equivalents at beginning of period

 

 

13,549

 

 

 

25,463

 

Cash and cash equivalents at end of period

 

$

56,945

 

 

$

9,539

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes, net of refunds

 

$

318

 

 

$

53

 

Cash paid for interest

 

 

13,889

 

 

 

14,916

 

 

 


 

Cars.com Inc.

 

Non-GAAP Reconciliations

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Net loss to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(24,644

)

 

$

(6,026

)

 

$

(812,078

)

 

$

(15,057

)

Interest expense, net

 

 

7,924

 

 

 

7,711

 

 

 

15,450

 

 

 

15,277

 

Income tax expense (benefit)

 

 

53

 

 

 

(672

)

 

 

(134,603

)

 

 

(3,142

)

Depreciation and amortization

 

 

31,193

 

 

 

29,666

 

 

 

62,154

 

 

 

57,791

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

905,885

 

 

 

 

Stock-based compensation

 

 

4,376

 

 

 

3,465

 

 

 

6,287

 

 

 

6,564

 

Write-off of long-lived assets and other

 

 

95

 

 

 

529

 

 

 

9,578

 

 

 

640

 

Severance, transformation and other exit costs

 

 

4,764

 

 

 

1,058

 

 

 

6,168

 

 

 

7,511

 

Transaction-related costs

 

 

20

 

 

 

2,579

 

 

 

117

 

 

 

4,623

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

5,225

 

 

 

 

 

 

7,920

 

Unrealized gain on interest rate swap

 

 

(558

)

 

 

 

 

 

(558

)

 

 

 

Adjusted EBITDA*

 

$

23,223

 

 

$

43,535

 

 

$

58,400

 

 

$

82,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net loss to Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(24,644

)

 

$

(6,026

)

 

$

(812,078

)

 

$

(15,057

)

Amortization of intangible assets

 

 

25,277

 

 

 

24,621

 

 

 

50,555

 

 

 

48,713

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

905,885

 

 

 

 

Stock-based compensation

 

 

4,376

 

 

 

3,465

 

 

 

6,287

 

 

 

6,564

 

Write-off of long-lived assets and other

 

 

95

 

 

 

529

 

 

 

9,578

 

 

 

640

 

Severance, transformation and other exit costs

 

 

4,764

 

 

 

1,058

 

 

 

6,168

 

 

 

7,511

 

Transaction-related costs

 

 

20

 

 

 

2,579

 

 

 

117

 

 

 

4,623

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

5,225

 

 

 

 

 

 

7,920

 

Unrealized gain on interest rate swap

 

 

(558

)

 

 

 

 

 

(558

)

 

 

 

Tax impact of adjustments

 

 

(1,366

)

 

 

(11,501

)

 

 

(136,226

)

 

 

(20,218

)

Adjusted net income*

 

$

7,964

 

 

$

19,950

 

 

$

29,728

 

 

$

40,696

 

Adjusted net income per share, diluted

 

$

0.12

 

 

$

0.30

 

 

$

0.44

 

 

$

0.60

 

Weighted-average common shares outstanding, diluted**

 

 

67,875

 

 

 

67,007

 

 

 

67,563

 

 

 

67,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

28,737

 

 

$

12,366

 

 

$

57,629

 

 

$

50,755

 

Purchase of property and equipment

 

 

(2,970

)

 

 

(5,991

)

 

 

(8,725

)

 

 

(9,354

)

Free cash flow

 

$

25,767

 

 

$

6,375

 

 

$

48,904

 

 

$

41,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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 six months ended June 30, 2020 and June 30, 2019.

 

 

 

 

 


 

Cars.com Inc.

 

Supplemental Information

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

22,912

 

 

$

 

 

$

(164

)

 

$

22,748

 

Product and technology

 

 

12,031

 

 

 

 

 

 

(921

)

 

 

11,110

 

Marketing and sales

 

 

32,036

 

 

 

 

 

 

(983

)

 

 

31,053

 

General and administrative

 

 

16,460

 

 

 

(4,879

)

 

 

(2,308

)

 

 

9,273

 

Affiliate revenue share

 

 

4,601

 

 

 

 

 

 

 

 

 

4,601

 

Depreciation and amortization

 

 

31,193

 

 

 

 

 

 

 

 

 

31,193

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

119,233

 

 

$

(4,879

)

 

$

(4,376

)

 

$

109,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(7,367

)

 

$

 

 

$

 

 

$

(7,367

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense category for the Three Months Ended June 30, 2019:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

24,319

 

 

$

 

 

$

(80

)

 

$

24,239

 

Product and technology

 

 

15,339

 

 

 

 

 

 

(788

)

 

 

14,551

 

Marketing and sales

 

 

53,740

 

 

 

 

 

 

(553

)

 

 

53,187

 

General and administrative

 

 

21,963

 

 

 

(9,391

)

 

 

(2,044

)

 

 

10,528

 

Affiliate revenue share

 

 

2,176

 

 

 

 

 

 

 

 

 

2,176

 

Depreciation and amortization

 

 

29,666

 

 

 

 

 

 

 

 

 

29,666

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

147,203

 

 

$

(9,391

)

 

$

(3,465

)

 

$

134,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(7,702

)

 

$

 

 

$

 

 

$

(7,702

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense category for the Six Months Ended June 30, 2020:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

48,942

 

 

$

 

 

$

(201

)

 

$

48,741

 

Product and technology

 

 

26,904

 

 

 

 

 

 

(1,487

)

 

 

25,417

 

Marketing and sales

 

 

86,958

 

 

 

 

 

 

(1,479

)

 

 

85,479

 

General and administrative

 

 

30,577

 

 

 

(6,416

)

 

 

(3,120

)

 

 

21,041

 

Affiliate revenue share

 

 

10,970

 

 

 

 

 

 

 

 

 

10,970

 

Depreciation and amortization

 

 

62,154

 

 

 

 

 

 

 

 

 

62,154

 

Goodwill and intangible asset impairment

 

 

905,885

 

 

 

(905,885

)

 

 

 

 

 

 

Total operating expenses

 

$

1,172,390

 

 

$

(912,301

)

 

$

(6,287

)

 

$

253,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(24,394

)

 

$

9,447

 

 

$

 

 

$

(14,947

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 Six Months Ended June 30, 2019:

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

49,898

 

 

$

 

 

$

(147

)

 

$

49,751

 

Product and technology

 

 

33,202

 

 

 

 

 

 

(1,551

)

 

 

31,651

 

Marketing and sales

 

 

114,083

 

 

 

 

 

 

(998

)

 

 

113,085

 

General and administrative

 

 

45,851

 

 

 

(20,694

)

 

 

(3,868

)

 

 

21,289

 

Affiliate revenue share

 

 

4,630

 

 

 

 

 

 

 

 

 

4,630

 

Depreciation and amortization

 

 

57,791

 

 

 

 

 

 

 

 

 

57,791

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

305,455

 

 

$

(20,694

)

 

$

(6,564

)

 

$

278,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(15,149

)

 

$

 

 

$

 

 

$

(15,149

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

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