CHICAGO, Feb. 28, 2019 /PRNewswire/ -- Cars.com Inc.
(NYSE: CARS) ("Cars.com" or the "Company"), a leading digital
automotive marketplace, today released its financial results for
the fourth quarter and full year ended December 31, 2018.
2018 Full Year Financial and Key Metric Highlights
- Revenues of $662.1 million, up
$35.9 million, or 6%, year-over-year,
consistent with our last guidance
- Net income of $38.8 million, or
$0.55 per diluted share
- Adjusted net income of $135.3
million, or $1.92 per diluted
share
- Adjusted EBITDA of $227.6
million, or 34% of revenues, consistent with guidance
- Net cash provided by operating activities of $163.5 million and free cash flow of $149.3 million
- Average monthly unique visitors of 18.8 million, up 12%
year-over-year
- Traffic (visits) of 445.3 million, up 11% year-over-year
- Mobile traffic accounted for 67% of total traffic compared to
59% in 2017
- Dealer customer count of 19,921 as of December 31, 2018, compared with 20,407 as of
September 30, 2018
- Direct monthly average revenue per dealer ("ARPD") of
$2,098, up 6% year-over-year
Q4 Financial and Key Metric Highlights
- Revenues of $164.3 million, up
$7.8 million, or 5%,
year-over-year
- Net income of $9.4 million, or
$0.14 per diluted share
- Adjusted net income of $34.1
million, or $0.50 per diluted
share
- Adjusted EBITDA of $61.1 million,
or 37% of revenues
- Average monthly unique visitors of 17.8 million, up 21%
year-over-year
- Traffic (visits) of 105.2 million, up 18% year-over-year
- Mobile traffic accounted for 67% of total traffic compared to
60% in the fourth quarter of 2017
- Direct monthly ARPD of $2,139, up
9% year-over-year
Operational Highlights
- Significant achievements against our digital solutions
strategy
-
- Dealer Inspire achieved $53.1
million in revenues, or 44% pro forma growth with
approximately 2,500 website customers as of December 31, 2018
- Sales Transformation – adapted go-to-market strategy to better
serve our customers and generate substantial cost efficiencies in
2019
- Technology Transformation – adapting technology stack to
enhance agility and to realize substantial cost efficiencies in
2019 and 2020
- Numerous product launches including Social Sales Drive,
Conversations, Online Shopper and AutoCorrected™
- Converted the majority of affiliate dealers, 16,674 dealer
customers now under direct control
- Strong, consistent growth in traffic, supported by strong
growth in SEO – twelve consecutive months of year-over-year traffic
growth and nine consecutive months of year-over-year SEO
growth
- Continued utilization of share repurchase program; 3.8 million
shares purchased in 2018, at an average price of $25.65, totaling $97.2
million
"2018 was a pivotal year for us as we achieved significant
progress against priority milestones that provide a solid
foundation for our multi-year digital solutions strategy. We also
introduced a number of new products that transformed the consumer
experience and delivered robust traffic growth," said Alex Vetter, President and Chief Executive
Officer of Cars.com. "While we've gained momentum, increased
investment in programs centered around dealer success in 2019 will
be instrumental to deliver dealer growth that will put us on the
path toward market leadership. We expect the combination of this
investment and the transformational actions already taken to
deliver revenue growth and double digit Adjusted EBITDA and Free
Cash Flow growth in 2020."
2018 Full Year Results
Revenues for 2018 were $662.1 million compared
to $626.3 million in 2017. This includes a contribution
of $53.1 million from Dealer Inspire
to direct revenues. Additionally, the conversions of the McClatchy,
tronc and Washington Post affiliate markets contributed
$88.9 million to direct revenues,
while reducing wholesale revenues $78.8
million ($18.7 million of
this 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 2018 were $578.2
million compared to $492.0 million for the prior
year. This increase was driven by the addition of Dealer Inspire
($58.6 million), a $17.4 million increase in non-recurring costs, a
$6.8 million increase in stock-based
compensation, as well as cost increases related to the affiliate
conversions and planned marketing investments. These increases were
partially offset by efficiencies in product and technology.
Net income for 2018 was $38.8 million, compared
to $224.4 million in 2017. Recall that net income in 2017
includes a tax benefit of $131.0 million primarily
associated with the adjustment of deferred tax liabilities.
Adjusted net income for the year was $135.3 million, or
$1.92 per diluted
share, compared to $165.7 million, or $2.31 per diluted share, in the prior year
period, driven by increased interest and lower income before income
taxes.
Adjusted EBITDA for 2018 was $227.6 million, or 34% of
revenue, compared to $238.9 million, or 38% of revenues, in
the prior year period. See "Non-GAAP Financial Measures" below.
Traffic grew year-over-year for twelve consecutive months, and
December was a record-breaking month with traffic growing 21%
year-over-year as a result of strong growth in SEO and paid
channels in addition to growth in direct traffic. In 2018, average
monthly unique visitor count grew 12% and total traffic (visits)
increased 11% year-over-year. Cars.com continues its mobile
leadership, with 26% growth in mobile traffic year-over-year.
Mobile traffic represented 67% of total traffic in 2018 compared to
59% in the prior year.
Direct monthly ARPD grew 6% year-over-year in 2018, driven by an
increase in larger dealers that reside in larger markets which we
now control.
Dealer customers were 19,921 at the end of 2018, a decline of 2%
compared to 20,407 dealer customers as of September 30, 2018. Direct dealer customers of
16,674 were down 2% (excluding conversions) and affiliate dealer
customers of 3,247 were down 2% (excluding conversions) both
compared to September 30, 2018.
Q4 Results
Revenues for the fourth quarter of 2018 were $164.3 million, compared to $156.6 million in the prior year period. Dealer
Inspire contributed $17.1 million to
direct revenues. In addition, the conversions of affiliate markets
contributed $27.6 million to direct
revenues while reducing wholesale revenues $24.3 million ($5.8
million of this 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 fourth quarter of 2018 were
$140.5 million, compared to
$117.7 million for the prior year
period. This increase was driven by the addition of Dealer Inspire
($18.2 million), a $7.6 million increase in non-recurring costs, as
well as cost increases related to the affiliate conversions, offset
by a decrease in marketing costs.
Net income for the fourth quarter of 2018 was $9.4 million compared to $151.8 million in the fourth quarter of 2017.
Recall that net income in 2017 includes a tax benefit
of $131.0 million primarily associated with the
adjustment of deferred tax liabilities. Adjusted net income for the
quarter was $34.1 million, or
$0.50 per diluted share, compared to
$34.2 million, or $0.48 per diluted share, in the fourth quarter of
2017.
Adjusted EBITDA for the fourth quarter was $61.1 million, or 37% of revenues, compared to
$63.5 million, or 41% of revenue, for
the prior year period.
Average monthly unique visitor count grew 21% year-over-year
during the fourth quarter, and total traffic grew 18%
year-over-year. Mobile traffic grew 31% year-over-year.
Direct monthly ARPD grew 9% year-over-year in the fourth quarter
of 2018, driven by an increase in larger dealers that reside in
larger markets which we now control.
Cash Flow and Balance Sheet
Net cash provided by operating activities in 2018 was
$163.5 million, compared to
$185.9 million in the prior year.
Free cash flow in 2018 was $149.3
million, compared to $153.2
million in the prior year. Current year cash flow was
impacted by $25.5 million in payments
associated with the early conversion of affiliate markets.
Cash and cash equivalents was $25.5
million and debt outstanding was $696.3 million as of December 31, 2018. In addition, during the
twelve-month period, the Company borrowed $165 million to fund the acquisition of Dealer
Inspire and paid down $52.5 million
of indebtedness, net of revolver borrowings. Net leverage at
December 31, 2018 was 2.9x,
calculated in accordance with the Company's credit agreement.
"Our strong balance sheet and our ability to generate
significant free cash flow remain a key strategic advantage and
allowed us the flexibility to pursue strategic opportunities
throughout 2018," said Becky
Sheehan, Chief Financial Officer of Cars.com. She added, "We
have invested in a number of areas that are supporting our roadmap
to growth, including our acquisition of Dealer Inspire as well as
the early conversion of three affiliate agreements, while
continuing to deploy capital to support our share repurchase
program."
Outlook
Our achievements in 2018 put into place transformative product,
technology, sales and go-to-market changes essential to underpin a
successful, differentiated strategy. Increased investments in
programs centered around dealer success will be instrumental to
convert our growing traffic to automobile sales to dealers and
overcome the impact of starting 2019 with a lower dealer count. In
2019, we expect to benefit from the rapid scaling of Dealer Inspire
revenue and an improved dealer count despite a cyclical downturn in
new car sales. In 2020 and 2021, which will include the full year
benefit of an increasing dealer count and cost savings, combined
with additional digital solutions sales as well as the contractual
uplift from conversion of the remaining affiliates, we expect
increased revenue, Adjusted EBITDA and Free Cash Flow.
In 2019, based on lower dealer count to start the year, the
Company expects a revenue range between a 5% decline and 2% growth
with Adjusted EBITDA margins between 30% and 31%. In both 2020 and
2021 the Company expects to achieve year-over-year revenue growth
between 5% and 12% and Adjusted EBITDA margins between 32% and 34%.
In both years and under all scenarios, the Company expects
double-digit Adjusted EBITDA growth.
Company Announcement to Pursue Strategic Alternatives
The previously announced process to explore strategic
alternatives to enhance shareholder value is ongoing and we are
engaged with multiple parties. We have not set a timetable for the
conclusion of the review and we do not intend to comment further
unless our Board has approved a specific course of action or we
determine further disclosure is appropriate or required by
law.
Q4 Earnings Call
As previously announced, management will hold a conference call
and webcast today at 7:30 a.m. CST.
This webcast may be accessed at investor.cars.com. A replay of the
webcast and the slideshow will be available at this website
following the conclusion of the call until March 13, 2019.
About Cars.com
Cars.com is a leading two-sided digital automotive
marketplace that connects car shoppers with sellers. Launched in
1998 and headquartered in Chicago,
the company empowers shoppers with the data, resources and digital
tools needed to make informed buying decisions and seamlessly
connect with automotive retailers. In a rapidly changing market,
Cars.com enables automotive dealers and manufacturers with
innovative technical solutions and data-driven intelligence to
better reach and influence ready-to-buy shoppers, increase
inventory turn and gain market share. In 2018, Cars.com
acquired Dealer Inspire®, an innovative technology company building
solutions that future-proof dealerships with more efficient
operations, a faster and easier car buying process, and connected
digital experiences that sell and service more vehicles.
Cars.com properties
include DealerRater®, 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 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. For a reconciliation
of the non-GAAP measures presented in the 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.
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 and website development costs.
Key Metric Definitions
Traffic (Visits). Traffic 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 mobile applications). Visits refers 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 provides
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.
Average Monthly Unique Visitors ("UVs"). Measuring
unique visitors is important to us because our revenues depend in
part on our ability to enable dealer customers and Original
Equipment Manufacturers ("OEMs") to connect with consumers. Growth
in unique visitors and consumer traffic to our mobile applications
and websites increases the number of impressions, clicks, leads,
and other events we can monetize to generate revenue. We count UVs
in a given month as the number of distinct visitors that engage
with our platform during that month. Visitors are identified when a
user first visits an individual Cars.com property on an individual
device/browser combination or installs one of our mobile apps on an
individual device. If an individual accesses more than one of
our web properties or apps or uses more than one device or browser,
each of those unique property/browser/application/device
combinations counts towards the number of UVs. We measure UVs
using Adobe Analytics.
Dealer Customers. Our value to consumers tracks to
our ability to showcase the inventory of our dealer and 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 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. Beginning June 30,
2018, this key operating metric now includes incremental
Dealer Inspire dealer customers.
Average Revenue per Dealer ("ARPD"). We believe that
our ability to grow ARPD is an indicator of the value proposition
of our products and the return on investment our dealer customers
realize from our products. We define ARPD as Direct retail revenue
during the period divided by the average number of direct dealer
customers during the same period. Dealer Inspire is not included in
ARPD.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical facts
are forward-looking statements. Forward-looking statements include
information concerning our business strategies, strategic
alternatives review process, plans and objectives, market
potential, future financial performance, planned operational and
product improvements, liquidity and other matters. These statements
often include words such as "believe," "expect," "project,"
"anticipate," "consider," "explore," "potential," "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 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.
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 period
ended December 31, 2017, our
Quarterly reports on Form 10-Q for the three-month periods ended
March 31, 2018, June 30, 2018 and September 30, 2018, respectively, our Current
Reports on Form 8-K and our other filings 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
Inc.
|
Consolidated and
Combined Balance Sheets
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
December
31,
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
25,463
|
|
$
20,563
|
Accounts receivable,
net
|
|
108,921
|
|
100,857
|
Prepaid
expenses
|
|
9,264
|
|
11,408
|
Other current
assets
|
|
10,289
|
|
9,811
|
Total current
assets
|
|
153,937
|
|
142,639
|
Property and
equipment, net
|
|
41,482
|
|
39,740
|
Goodwill
|
|
884,449
|
|
788,107
|
Intangible assets,
net
|
|
1,510,410
|
|
1,529,500
|
Investments and other
assets
|
|
10,271
|
|
11,053
|
Total
assets
|
|
$
2,600,549
|
|
$
2,511,039
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
11,631
|
|
$
6,581
|
Accrued
compensation
|
|
16,821
|
|
14,185
|
Unfavorable contracts
liability
|
|
18,885
|
|
25,200
|
Current portion of
long-term debt
|
|
26,853
|
|
21,158
|
Other accrued
liabilities
|
|
36,520
|
|
23,025
|
Total current
liabilities
|
|
110,710
|
|
90,149
|
Noncurrent
liabilities:
|
|
|
|
|
Unfavorable contracts
liability
|
|
—
|
|
18,885
|
Long-term
debt
|
|
665,306
|
|
557,194
|
Deferred tax
liability
|
|
177,916
|
|
146,482
|
Other noncurrent
liabilities
|
|
19,694
|
|
19,201
|
Total noncurrent
liabilities
|
|
862,916
|
|
741,762
|
Total
liabilities
|
|
973,626
|
|
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 December 31, 2018 and December 31,
2017
|
|
—
|
|
—
|
Common Stock at par,
$0.01 par value; 300,000 shares authorized; 68,262 and 71,628
shares issued and outstanding as of December 31, 2018 and December
31, 2017, respectively
|
|
683
|
|
716
|
Additional paid-in
capital
|
|
1,508,001
|
|
1,501,830
|
Retained
earnings
|
|
118,239
|
|
176,582
|
Total stockholders'
equity
|
|
1,626,923
|
|
1,679,128
|
Total liabilities and
stockholders' equity
|
|
$
2,600,549
|
|
$
2,511,039
|
Cars.com
Inc.
|
Consolidated and
Combined Statements of Income
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
Three Months Ended December 31,
|
|
Year Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
Direct
|
|
$
121,130
|
|
$
83,836
|
|
$
457,651
|
|
$
333,248
|
National
advertising
|
|
23,226
|
|
28,799
|
|
105,381
|
|
114,178
|
Other
|
|
4,004
|
|
3,865
|
|
16,156
|
|
15,854
|
Retail
|
|
148,360
|
|
116,500
|
|
579,188
|
|
463,280
|
Wholesale
|
|
15,986
|
|
40,065
|
|
82,939
|
|
162,982
|
Total
revenues
|
|
164,346
|
|
156,565
|
|
662,127
|
|
626,262
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues and operations
|
|
26,443
|
|
15,923
|
|
92,367
|
|
65,541
|
Product and
technology
|
|
17,768
|
|
17,301
|
|
73,970
|
|
74,162
|
Marketing and
sales
|
|
51,239
|
|
49,567
|
|
232,884
|
|
209,813
|
General and
administrative
|
|
14,075
|
|
10,539
|
|
59,684
|
|
44,903
|
Affiliate
revenue share
|
|
4,295
|
|
2,111
|
|
15,488
|
|
8,948
|
Depreciation
and amortization
|
|
26,656
|
|
22,296
|
|
103,810
|
|
88,639
|
Total operating
expenses
|
|
140,476
|
|
117,737
|
|
578,203
|
|
492,006
|
Operating income
|
|
23,870
|
|
38,828
|
|
83,924
|
|
134,256
|
Nonoperating
(expense) income:
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
|
(7,412)
|
|
(5,211)
|
|
(27,717)
|
|
(12,371)
|
Other income,
net
|
|
646
|
|
78
|
|
722
|
|
277
|
Total nonoperating expense,
net
|
|
(6,766)
|
|
(5,133)
|
|
(26,995)
|
|
(12,094)
|
Income before
income taxes
|
|
17,104
|
|
33,695
|
|
56,929
|
|
122,162
|
Income tax
expense (benefit)
|
|
7,747
|
|
(118,063)
|
|
18,120
|
|
(102,281)
|
Net income
|
|
$
9,357
|
|
$
151,758
|
|
$
38,809
|
|
$
224,443
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
68,583
|
|
71,724
|
|
70,318
|
|
71,661
|
Diluted
|
|
68,856
|
|
71,857
|
|
70,547
|
|
71,727
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.14
|
|
$
2.12
|
|
$
0.55
|
|
$
3.13
|
Diluted
|
|
0.14
|
|
2.11
|
|
0.55
|
|
3.13
|
Cars.com
Inc.
|
Consolidated and
Combined Statements of Cash Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
38,809
|
|
$
224,443
|
Adjustments to
reconcile Net income to Net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
12,820
|
|
10,770
|
Amortization of
intangible assets
|
|
90,990
|
|
77,869
|
Amortization of
unfavorable contracts liability
|
|
(25,200)
|
|
(25,200)
|
Stock-based
compensation expense
|
|
9,423
|
|
2,627
|
Deferred income
taxes
|
|
16,693
|
|
(108,845)
|
Provision for
doubtful accounts
|
|
4,391
|
|
2,452
|
Amortization of debt
issuance costs
|
|
1,307
|
|
810
|
Other, net
|
|
1,053
|
|
1,618
|
Changes in operating
assets and liabilities, net of Acquisition:
|
|
|
|
|
Accounts
receivable
|
|
(1,164)
|
|
(5,006)
|
Prepaid
expenses
|
|
2,464
|
|
(8)
|
Other current
assets
|
|
(552)
|
|
(8,593)
|
Other
assets
|
|
782
|
|
734
|
Accounts
payable
|
|
2,512
|
|
(432)
|
Accrued
compensation
|
|
2,569
|
|
(6,946)
|
Other accrued
liabilities
|
|
8,358
|
|
6,021
|
Other noncurrent
liabilities
|
|
(1,707)
|
|
(2,173)
|
Cash received from
lessor for lease incentives
|
|
—
|
|
15,788
|
Net cash provided by
operating activities
|
|
163,548
|
|
185,929
|
Cash flows from
investing activities:
|
|
|
|
|
Payment for Acquisition,
net
|
|
(157,153)
|
|
—
|
Purchase of property and
equipment
|
|
(14,233)
|
|
(32,774)
|
Proceeds from sale of
property and equipment
|
|
11
|
|
—
|
Net cash used in
investing activities
|
|
(171,375)
|
|
(32,774)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from issuance of
long-term debt
|
|
195,000
|
|
675,000
|
Payments of debt issuance
costs and other fees
|
|
—
|
|
(6,208)
|
Payments of long-term
debt
|
|
(82,500)
|
|
(91,250)
|
Stock-based compensation
plans, net
|
|
377
|
|
—
|
Repurchases of common
stock
|
|
(97,190)
|
|
—
|
Cash distribution to TEGNA
related to Separation
|
|
—
|
|
(650,000)
|
Transactions with TEGNA,
net
|
|
(2,960)
|
|
(69,030)
|
Net cash provided by
(used in) financing activities
|
|
12,727
|
|
(141,488)
|
Net increase in cash
and cash equivalents
|
|
4,900
|
|
11,667
|
Cash and cash
equivalents at beginning of period
|
|
20,563
|
|
8,896
|
Cash and cash
equivalents at end of period
|
|
$
25,463
|
|
$
20,563
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
Cash paid for income
taxes, net of refunds
|
|
$
7
|
|
$
11,531
|
Cash paid for
interest
|
|
26,780
|
|
11,761
|
Cars.com
Inc.
|
Non-GAAP
Reconciliations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliation of
Net income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
9,357
|
|
$
151,758
|
|
$
38,809
|
|
$
224,443
|
Interest expense,
net
|
|
7,412
|
|
5,211
|
|
27,717
|
|
12,371
|
Income tax expense
(benefit)
|
|
7,747
|
|
(118,063)
|
|
18,120
|
|
(102,281)
|
Depreciation and
amortization
|
|
26,656
|
|
22,296
|
|
103,810
|
|
88,639
|
Stock-based
compensation expense
|
|
1,928
|
|
1,134
|
|
9,423
|
|
2,627
|
Transaction-related
costs
|
|
1,152
|
|
637
|
|
13,182
|
|
5,616
|
Costs associated with
the stockholder activist campaign
|
|
2,040
|
|
—
|
|
9,806
|
|
—
|
Restructuring and
other exit costs
|
|
4,499
|
|
—
|
|
5,771
|
|
1,951
|
Write-off of
long-lived assets and other
|
|
277
|
|
554
|
|
968
|
|
2,002
|
Costs related to the
headquarters move
|
|
—
|
|
—
|
|
—
|
|
3,558
|
Adjusted
EBITDA*
|
|
$
61,068
|
|
$
63,527
|
|
$
227,606
|
|
$
238,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net income to Adjusted net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
9,357
|
|
$
151,758
|
|
$
38,809
|
|
$
224,443
|
Amortization of
intangible assets
|
|
23,031
|
|
19,467
|
|
90,990
|
|
77,869
|
Stock-based
compensation expense
|
|
1,928
|
|
1,134
|
|
9,423
|
|
2,627
|
Transaction-related
costs
|
|
1,152
|
|
637
|
|
13,182
|
|
5,616
|
Costs associated with
the stockholder activist campaign
|
|
2,040
|
|
—
|
|
9,806
|
|
—
|
Restructuring and
other exit costs
|
|
4,499
|
|
—
|
|
5,771
|
|
1,951
|
Write-off of
long-lived assets and other
|
|
277
|
|
554
|
|
968
|
|
2,002
|
Costs related to the
headquarters move
|
|
—
|
|
—
|
|
—
|
|
3,558
|
Tax impact of
adjustments
|
|
(8,190)
|
|
(8,365)
|
|
(33,694)
|
|
(21,425)
|
Discrete deferred
income tax adjustments
|
|
—
|
|
(130,985)
|
|
—
|
|
(130,985)
|
Adjusted net
income*
|
|
$
34,094
|
|
$
34,200
|
|
$
135,255
|
|
$
165,656
|
Adjusted net income
per share, diluted
|
|
$
0.50
|
|
$
0.48
|
|
$
1.92
|
|
$
2.31
|
Weighted-average
common shares outstanding, diluted
|
|
68,856
|
|
71,857
|
|
70,547
|
|
71,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net cash provided by operating activities to Free cash
flow
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
42,467
|
|
$
38,733
|
|
$
163,548
|
|
$
185,929
|
Purchase of property
and equipment
|
|
(4,267)
|
|
(5,143)
|
|
(14,233)
|
|
(32,774)
|
Free cash
flow
|
|
$
38,200
|
|
$
33,590
|
|
$
149,315
|
|
$
153,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amortization of
unfavorable contracts liability is not adjusted out of Adjusted
EBITDA or Adjusted net income.
|
Cars.com
Inc.
|
Supplemental
Information
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense category
for the Three Months Ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenues and
operations
|
|
$
26,443
|
|
$
(303)
|
|
$
(70)
|
|
$
26,070
|
Product and
technology
|
|
17,768
|
|
(194)
|
|
(480)
|
|
17,094
|
Marketing and
sales
|
|
51,239
|
|
(4,667)
|
|
(282)
|
|
46,290
|
General and
administrative
|
|
14,075
|
|
(3,604)
|
|
(1,096)
|
|
9,375
|
Affiliate revenue
share
|
|
4,295
|
|
—
|
|
—
|
|
4,295
|
Depreciation and
amortization
|
|
26,656
|
|
—
|
|
—
|
|
26,656
|
Total operating
expenses
|
|
$
140,476
|
|
$
(8,768)
|
|
$
(1,928)
|
|
$
129,780
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
6,766
|
|
$
800
|
|
$
—
|
|
$
7,566
|
|
|
|
|
|
|
|
|
|
(1)
Includes restructuring and other exit costs, costs associated with
the stockholder activist campaign, transaction-related costs,
write-off of long-lived assets and other.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Three Months Ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenues and
operations
|
|
$
15,923
|
|
$
—
|
|
$
—
|
|
$
15,923
|
Product and
technology
|
|
17,301
|
|
—
|
|
—
|
|
17,301
|
Marketing and
sales
|
|
49,567
|
|
—
|
|
—
|
|
49,567
|
General and
administrative
|
|
10,539
|
|
(1,191)
|
|
(1,134)
|
|
8,214
|
Affiliate revenue
share
|
|
2,111
|
|
—
|
|
—
|
|
2,111
|
Depreciation and
amortization
|
|
22,296
|
|
—
|
|
—
|
|
22,296
|
Total operating
expenses
|
|
$
117,737
|
|
$
(1,191)
|
|
$
(1,134)
|
|
$
115,412
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
5,133
|
|
$
—
|
|
$
—
|
|
$
5,133
|
|
|
|
|
|
|
|
|
|
(1)
Includes transaction-related costs, write-off of long-lived assets
and other.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Year Ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenues and
operations
|
|
$
92,367
|
|
$
(1,934)
|
|
$
(245)
|
|
$
90,188
|
Product and
technology
|
|
73,970
|
|
(5,181)
|
|
(1,866)
|
|
66,923
|
Marketing and
sales
|
|
232,884
|
|
(6,144)
|
|
(1,633)
|
|
225,107
|
General and
administrative
|
|
59,684
|
|
(17,268)
|
|
(5,679)
|
|
36,737
|
Affiliate revenue
share
|
|
15,488
|
|
—
|
|
—
|
|
15,488
|
Depreciation and
amortization
|
|
103,810
|
|
—
|
|
—
|
|
103,810
|
Total operating
expenses
|
|
$
578,203
|
|
$
(30,527)
|
|
$
(9,423)
|
|
$
538,253
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
26,995
|
|
$
800
|
|
$
—
|
|
$
27,795
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
Expense category
for the Year Ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustments
(1)
|
|
Stock-Based
Compensation
|
|
As
Adjusted
|
Cost of revenues and
operations
|
|
$
65,541
|
|
$
—
|
|
$
—
|
|
$
65,541
|
Product and
technology
|
|
74,162
|
|
(231)
|
|
—
|
|
73,931
|
Marketing and
sales
|
|
209,813
|
|
—
|
|
—
|
|
209,813
|
General and
administrative
|
|
44,903
|
|
(12,896)
|
|
(2,627)
|
|
29,380
|
Affiliate revenue
share
|
|
8,948
|
|
—
|
|
—
|
|
8,948
|
Depreciation and
amortization
|
|
88,639
|
|
—
|
|
—
|
|
88,639
|
Total operating
expenses
|
|
$
492,006
|
|
$
(13,127)
|
|
$
(2,627)
|
|
$
476,252
|
|
|
|
|
|
|
|
|
|
Total nonoperating
expense, net
|
|
$
12,094
|
|
$
—
|
|
$
—
|
|
$
12,094
|
|
|
|
|
|
|
|
|
|
(1)
Includes transaction-related costs, costs related to the
headquarters move, write-off of long-lived assets and other,
restructuring and other exit costs.
|
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SOURCE Cars.com Inc.