Form 8-K Cars.com Inc. For: Feb 25

February 25, 2021 7:21 AM EST

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EXHIBIT 99.1

CARS Reports Fourth Quarter and Full Year 2020 Results

Fourth Quarter Year-Over-Year Revenue Growth Establishes Solid Footing for 2021

Second Consecutive Quarter of Growth in Dealer Customers and ARPD

Full-Year Cash Flow From Operations of $138.6 Million, Up 37% Year-Over-Year

CHICAGO, Feb. 25, 2021 -- 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 fourth quarter and year ended December 31, 2020.

Q4 Financial and Key Metric Highlights

Revenue of $153.0 million, up $0.8 million, or 1% year-over-year

GAAP net income of $7.2 million, or $0.10 per diluted share, compared to GAAP net loss of $4.1 million, or $0.06 per diluted share, in the prior year

Adjusted Net Income of $6.0 million, or $0.09 per diluted share, compared to Adjusted Net Income of $42.2 million, or $0.63 per diluted share, in the prior year

Adjusted EBITDA of $48.5 million, or 32% of revenue, up $9.2 million and 600 basis points as a percentage of revenue, year-over-year

Average Monthly Unique Visitors of 22.2 million, down 5% year-over-year

Traffic (visits) of 138.1 million, down 6% year-over-year

Monthly Average Revenue Per Dealer (“ARPD”) was $2,264, up 6% from $2,136 in the prior year period and up 4% compared to the third quarter of 2020

Dealer Customers of 18,372 as of December 31, 2020, up 242 compared to 18,130 as of September 30, 2020, driven by both strong retention and growth in new Dealer Customers

2020 Full Year Financial and Key Metric Highlights

Revenue of $547.5 million, down $59.2 million, or 10% year-over-year

GAAP net loss of $817.1 million, or $12.15 per diluted share, primarily due to non-cash goodwill and intangible asset impairment pre-tax charge of $905.9 million triggered by the COVID-19 pandemic and recorded in the first quarter

Adjusted Net Income of $70.3 million, or $1.02 per diluted share, compared to Adjusted Net Income of $104.2 million, or $1.55 per diluted share, in the prior year

Adjusted EBITDA of $155.9 million, or 28% of revenue, compared to $167.3 million, or 28% of revenue, in the prior year

Net cash provided by operating activities of $138.6 million, with Free Cash Flow of $121.9 million, compared to $101.5 million, and $80.2 million of Free Cash Flow, in the prior year

$67.7 million of cash and cash equivalents with total liquidity of $297.7 million, including availability under our revolving credit facility, as of December 31, 2020

Average Monthly Unique Visitors of 23.8 million, up 5% year-over-year

Traffic (visits) of 599.8 million, up 8% year-over-year

Operational Highlights

Growth in Dealer Customers in four out of the last five quarters

Growth in website customers continues, reaching approximately 4,400 at December 31, 2020

 


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Expanded digital advertising program; Dealer Inspire selected as a preferred digital advertising provider for U.S.-based FordDirect dealers

Momentum with new FUEL product continues to build and contribute to ARPD growth

Voluntary debt payment of $30 million in January 2021

“We are entering 2021 in a position of operational and financial strength. Our solutions allow dealers to meet consumers where they want to buy cars, either online or in physical showrooms. While 2020 was a challenging year, the COVID-19 pandemic has accelerated the importance of our digital solutions strategy and propelled our organic strength as a technology enabler for both buyers and sellers,” said Alex Vetter, President and Chief Executive Officer of CARS. “Our audience, customers and average revenue per dealer are all trending positively as we continue to invest in our dealer network and expand our solutions and services.”

Q4 Results

Revenue for the fourth quarter of 2020 was $153.0 million, up $0.8 million, or 1%, compared to the prior year period, due to growth in ARPD driven by increased solutions sales.

Total operating expenses for the fourth quarter of 2020 were $137.1 million, compared to $147.5 million for the prior year period. This decrease was driven by the cessation of our affiliate revenue share expense in the second half of 2020.

GAAP net income for the fourth quarter of 2020 was $7.2 million, or $0.10 per diluted share, compared to GAAP net loss of $4.1 million, or $0.06 per diluted share, in the fourth quarter of 2019. The current period net income was driven by tax benefits generated through an increase in the Company’s ability to carryback operating losses as a result of the CARES Act. Adjusted Net Income for the fourth quarter of 2020 was $6.0 million compared to $42.2 million in the fourth quarter of 2019.

Adjusted EBITDA for the fourth quarter of 2020 was $48.5 million, or 32% of revenue, compared to $39.3 million, or 26% of revenue, for the prior year period. Looking forward to 2021, we expect to increase our investment in the business, with a particular focus on marketing to support opportunistic consumer traffic acquisition and the CARS brand. Additionally, we expect to invest in resources to accelerate product innovation. These investments will result in lower sequential Adjusted EBITDA margins. We expect Adjusted EBITDA for the first quarter to be up on a year over year basis with margins between 27% and 30%.

While we delivered record Traffic and lead growth in 2020, Average Monthly Unique Visitors in the fourth quarter declined 5% year-over-year and total traffic declined 6% compared to the fourth quarter of 2019. In the fourth quarter, we increased our brand investments to support longer term consumer growth. While we are always seeking to further optimize our marketing mix, our decision in the fourth quarter to make long-term marketing investments was based on our double-digit year over year lead growth. Organic traffic was 73% of total traffic and grew 1% year-over-year, a testament to the consistent, high-quality traffic that we deliver to our Dealer Customers.

Fourth quarter 2020 ARPD was $2,264, up 6% year over year and up 4% compared to the third quarter of 2020. The ARPD growth was driven by continued growth in solutions products.

 


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Dealer Customers were 18,372 at the end of 2020, 242 higher than Dealer Customers of 18,130 at the end of the third quarter of 2020. This increase came from growth in both marketplace and solutions only Dealer Customers. Compared to December 31, 2019, Dealer Customers were down 462.

2020 Full Year Results

Revenue for 2020 was $547.5 million, compared to $606.7 million in 2019. This decrease was primarily due to invoice credits that we provided to marketplace customers as COVID-19 relief in the second quarter, second quarter Dealer Customers declines, and a decline in national advertising revenue, partially offset by growth in solutions products.

Total operating expenses for 2020 were $1.4 billion, or $528.9 million excluding the 2020 goodwill and intangible asset impairment charge, compared to $1.1 billion, or $591.3 million excluding the 2019 goodwill and intangible asset impairment charge, in the prior year. This decrease in expenses was due to the actions taken to align expenses with revenue in an uncertain COVID-19 environment. These actions included lower marketing spend and measures taken to reduce headcount related expenses, primarily during the second quarter of 2020. In addition, affiliate revenue share expenses ended in the second half of 2020.

GAAP net loss for 2020 was $817.1 million, or $12.15 per diluted share, compared to GAAP net loss of $445.3 million, or $6.65 per diluted share, in 2019. Adjusted Net Income for the year was $70.3 million, or $1.02 per diluted share, compared to $104.2 million, or $1.55 per diluted share in the prior year period.

Adjusted EBITDA for 2020 was $155.9 million, or 28% of revenue, compared to $167.3 million, or 28% of revenue, in the prior year period.

We delivered record Traffic and leads in 2020. Average Monthly Unique Visitors grew 5% and Traffic grew 8%. Traffic and lead growth were supported by our brand strength, heightened consumer demand and consumer gravitation toward online marketplaces, particularly in the second and third quarters, and a focus on driving high quality organic traffic. Organic traffic was 73% of total traffic and grew 10% year-over-year. Mobile traffic grew 12% year-over-year and accounted for 75% of total traffic, compared to 72% in the prior year.

Cash Flow and Balance Sheet

Net cash provided by operating activities in 2020 was $138.6 million, compared to $101.5 million in the prior year. Free Cash Flow in 2020 was $121.9 million, compared to $80.2 million in 2019.

Total liquidity was $297.7 million, including cash and cash equivalents of $67.7 million and $230 million of revolver capacity, as of December 31, 2020. The Company made $50.6 million in debt repayments during 2020, net of borrowings, bringing total debt outstanding to $597.5 million as of December 31, 2020. Net leverage at December 31, 2020 was 3.4x and secured leverage was 1.3x, compared to maximum allowable secured leverage of 3.5x, in accordance with the Company's recently amended credit agreement. In addition, the Company made a $30 million voluntary debt payment in January 2021.

 


Page 4

During the fourth quarter the Company refinanced its debt facilities on favorable terms extending the maturity date from 2022 to 2025 for the credit facility and establishing a 2028 maturity date for the new senior unsecured notes. This new structure improves the Company’s flexibility to invest in and grow the business.

“Our solutions driven model delivered in the second half of 2020 with strong top line trends, profitability and cash flow. We maintained cost discipline, made focused investments in marketing and continued to invest organically in our digital platform. Solid performance and a strengthened financial position give us ample flexibility to pay down debt, pursue opportunistic acquisitions and invest in marketing and technology innovations setting us up for growth in 2021,” said Sonia Jain, Chief Financial Officer of CARS.

Q4 Earnings Call

As previously announced, management will hold a conference call and webcast today at 9:00 a.m. CST. This webcast may be accessed at investor.cars.com. A replay of the webcast will be available at this website following the conclusion of the call until March 11, 2021.

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 brands 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 brands include Cars.com™, Dealer Inspire®, FUEL™, DealerRater®, 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

 


Page 5

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, net, (2) income tax (benefit) expense, (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. Traffic provides an indication of our consumer reach. Although our

 


Page 6

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 toward 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 that 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 draws from our revolving credit facility, expense management 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

 


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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, our 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:

ir@cars.com  

 

CARS Media Contact:

Marita Thomas

mthomas@cars.com  

312.601.5692

 

###

 

 

 

 


 

 

 

Cars.com Inc.

 

Consolidated Statements of Income (Loss)

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Direct

 

$

130,460

 

 

$

127,933

 

 

$

463,018

 

 

$

477,095

 

  National advertising

 

 

20,009

 

 

 

21,022

 

 

 

73,176

 

 

 

80,774

 

  Other

 

 

2,539

 

 

 

3,227

 

 

 

11,309

 

 

 

14,442

 

    Retail

 

 

153,008

 

 

 

152,182

 

 

 

547,503

 

 

 

572,311

 

    Wholesale

 

 

 

 

 

5

 

 

 

 

 

 

34,371

 

       Total revenue

 

 

153,008

 

 

 

152,187

 

 

 

547,503

 

 

 

606,682

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Cost of revenue and operations

 

 

27,160

 

 

 

24,562

 

 

 

101,536

 

 

 

99,549

 

  Product and technology

 

 

18,305

 

 

 

14,734

 

 

 

60,664

 

 

 

62,859

 

  Marketing and sales

 

 

50,714

 

 

 

52,560

 

 

 

183,448

 

 

 

217,432

 

  General and administrative

 

 

15,185

 

 

 

14,507

 

 

 

59,051

 

 

 

73,772

 

  Affiliate revenue share

 

 

 

 

 

11,002

 

 

 

10,970

 

 

 

20,790

 

  Depreciation and amortization

 

 

25,747

 

 

 

30,116

 

 

 

113,276

 

 

 

116,877

 

  Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

905,885

 

 

 

461,463

 

       Total operating expenses

 

 

137,111

 

 

 

147,481

 

 

 

1,434,830

 

 

 

1,052,742

 

         Operating income (loss)

 

 

15,897

 

 

 

4,706

 

 

 

(887,327

)

 

 

(446,060

)

Nonoperating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest expense, net

 

 

(11,627

)

 

 

(7,785

)

 

 

(37,856

)

 

 

(30,774

)

  Other (expense) income, net

 

 

(4,239

)

 

 

25

 

 

 

(11,226

)

 

 

1,555

 

     Total nonoperating expense, net

 

 

(15,866

)

 

 

(7,760

)

 

 

(49,082

)

 

 

(29,219

)

       Income (loss) before income taxes

 

 

31

 

 

 

(3,054

)

 

 

(936,409

)

 

 

(475,279

)

       Income tax (benefit) expense

 

 

(7,188

)

 

 

1,056

 

 

 

(119,289

)

 

 

(29,955

)

          Net income (loss)

 

$

7,219

 

 

$

(4,110

)

 

$

(817,120

)

 

$

(445,324

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

67,477

 

 

 

66,850

 

 

 

67,241

 

 

 

66,995

 

Diluted

 

 

70,312

 

 

 

66,850

 

 

 

67,241

 

 

 

66,995

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

(0.06

)

 

$

(12.15

)

 

$

(6.65

)

Diluted

 

 

0.10

 

 

 

(0.06

)

 

 

(12.15

)

 

 

(6.65

)

 

 

 


 

 

 

Cars.com Inc.

 

Consolidated Balance Sheets

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets:

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,719

 

 

$

13,549

 

Accounts receivable, net

 

 

93,649

 

 

 

101,762

 

Prepaid expenses

 

 

6,491

 

 

 

6,526

 

Other current assets

 

 

10,222

 

 

 

603

 

Total current assets

 

 

178,081

 

 

 

122,440

 

Property and equipment, net

 

 

41,323

 

 

 

43,696

 

Goodwill

 

 

 

 

 

505,885

 

Intangible assets, net

 

 

835,166

 

 

 

1,329,499

 

Investments and other assets

 

 

21,142

 

 

 

26,471

 

Total assets

 

$

1,075,712

 

 

$

2,027,991

 

Liabilities and stockholders' equity:

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

16,512

 

 

$

12,431

 

Accrued compensation

 

 

18,319

 

 

 

16,738

 

Current portion of long-term debt

 

 

7,756

 

 

 

31,391

 

Other accrued liabilities

 

 

47,781

 

 

 

38,246

 

Total current liabilities

 

 

90,368

 

 

 

98,806

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

576,143

 

 

 

611,277

 

Deferred tax liability

 

 

30,800

 

 

 

132,996

 

Other noncurrent liabilities

 

 

38,225

 

 

 

43,844

 

Total noncurrent liabilities

 

 

645,168

 

 

 

788,117

 

Total liabilities

 

 

735,536

 

 

 

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 December 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

Common Stock at par, $0.01 par value; 300,000 shares authorized; 67,387 and 66,764 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

 

674

 

 

 

668

 

Additional paid-in capital

 

 

1,530,493

 

 

 

1,515,109

 

Accumulated deficit

 

 

(1,184,187

)

 

 

(367,067

)

Accumulated other comprehensive loss

 

 

(6,804

)

 

 

(7,642

)

Total stockholders' equity

 

 

340,176

 

 

 

1,141,068

 

Total liabilities and stockholders' equity

 

$

1,075,712

 

 

$

2,027,991

 

 

 

 


 

 

Cars.com Inc.

 

Consolidated Statements of Cash Flows

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

Net loss

 

$

(817,120

)

 

$

(445,324

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

18,943

 

 

 

18,266

 

Amortization of intangible assets

 

 

94,333

 

 

 

98,611

 

Amortization of unfavorable contracts liability

 

 

 

 

 

(18,885

)

Goodwill and intangible asset impairment

 

 

905,885

 

 

 

461,463

 

Impairment of non-marketable security

 

 

9,447

 

 

 

 

Amortization of accumulated other comprehensive loss on interest rate swap

 

8,623

 

 

 

 

Stock-based compensation

 

 

15,155

 

 

 

7,588

 

Deferred income taxes

 

 

(103,582

)

 

 

(44,920

)

Provision for doubtful accounts

 

 

4,380

 

 

 

4,897

 

Amortization of debt issuance costs

 

 

5,108

 

 

 

1,573

 

Other

 

 

181

 

 

 

496

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

3,733

 

 

 

2,262

 

Prepaid expenses

 

 

35

 

 

 

2,738

 

Other current assets

 

 

(9,592

)

 

 

9,835

 

Other assets

 

 

43

 

 

 

(16,201

)

Accounts payable

 

 

3,993

 

 

 

874

 

Accrued compensation

 

 

1,581

 

 

 

(83

)

Other accrued liabilities

 

 

7,614

 

 

 

(1,378

)

Other noncurrent liabilities

 

 

(10,144

)

 

 

19,672

 

Net cash provided by operating activities

 

 

138,616

 

 

 

101,484

 

Cash flows from investing activities:

 

     Purchase of property and equipment

 

 

(16,712

)

 

 

(21,257

)

     Other

 

 

 

 

 

(599

)

Net cash used in investing activities

 

 

(16,712

)

 

 

(21,856

)

Cash flows from financing activities:

 

     Proceeds from revolving loan borrowings and issuance of long-term debt

 

 

565,000

 

 

 

10,000

 

     Payments of debt issuance costs and other fees

 

 

(17,344

)

 

 

(2,940

)

     Payments of long-term debt

 

 

(615,625

)

 

 

(58,125

)

     Stock-based compensation plans, net

 

 

235

 

 

 

(286

)

     Repurchases of common stock

 

 

 

 

 

(40,000

)

     Other

 

 

 

 

 

(191

)

Net cash used in financing activities

 

 

(67,734

)

 

 

(91,542

)

Net increase (decrease) in cash and cash equivalents

 

 

54,170

 

 

 

(11,914

)

Cash and cash equivalents at beginning of period

 

 

13,549

 

 

 

25,463

 

Cash and cash equivalents at end of period

 

$

67,719

 

 

$

13,549

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes, net of refunds

 

$

805

 

 

$

1,740

 

Cash paid for interest and swap

 

 

26,433

 

 

 

29,654

 

 

 

 


 

 

Cars.com Inc.

 

Non-GAAP Reconciliations

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Net income (loss) to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

7,219

 

 

$

(4,110

)

 

$

(817,120

)

 

$

(445,324

)

Interest expense, net

 

 

11,627

 

 

 

7,785

 

 

 

37,856

 

 

 

30,774

 

Income tax (benefit) expense

 

 

(7,188

)

 

 

1,056

 

 

 

(119,289

)

 

 

(29,955

)

Depreciation and amortization

 

 

25,747

 

 

 

30,116

 

 

 

113,276

 

 

 

116,877

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

905,885

 

 

 

461,463

 

Stock-based compensation

 

 

4,974

 

 

 

2,332

 

 

 

15,450

 

 

 

7,736

 

Write-off of long-lived assets and other

 

 

2,602

 

 

 

177

 

 

 

9,700

 

 

 

706

 

Severance, transformation and other exit costs

 

 

1,462

 

 

 

963

 

 

 

7,919

 

 

 

10,588

 

Transaction-related costs

 

 

2,029

 

 

 

959

 

 

 

2,205

 

 

 

5,582

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

 

 

 

 

 

8,825

 

Adjusted EBITDA*

 

$

48,472

 

 

$

39,278

 

 

$

155,882

 

 

$

167,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net income (loss) to Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

7,219

 

 

$

(4,110

)

 

$

(817,120

)

 

$

(445,324

)

Amortization of intangible assets

 

 

21,889

 

 

 

25,277

 

 

 

94,333

 

 

 

98,611

 

Goodwill and intangible asset impairment, net of tax

 

 

 

 

 

 

 

 

677,051

 

 

 

431,225

 

Stock-based compensation

 

 

4,974

 

 

 

2,332

 

 

 

15,450

 

 

 

7,736

 

Write-off of long-lived assets and other

 

 

2,602

 

 

 

177

 

 

 

9,700

 

 

 

706

 

Severance, transformation and other exit costs

 

 

1,462

 

 

 

963

 

 

 

7,919

 

 

 

10,588

 

Transaction-related costs

 

 

2,029

 

 

 

959

 

 

 

2,205

 

 

 

5,582

 

Costs associated with the stockholder activist campaign

 

 

 

 

 

 

 

 

 

 

 

8,825

 

Valuation allowance

 

 

(6,389

)

 

 

 

 

 

121,659

 

 

 

 

Tax impact of adjustments

 

 

(27,754

)

 

 

16,570

 

 

 

(40,871

)

 

 

(13,757

)

Adjusted net income*

 

$

6,032

 

 

$

42,168

 

 

$

70,326

 

 

$

104,192

 

Adjusted net income per share, diluted

 

$

0.09

 

 

$

0.63

 

 

$

1.02

 

 

$

1.55

 

Weighted-average common shares outstanding, diluted**

 

 

70,312

 

 

 

67,153

 

 

 

69,049

 

 

 

67,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

41,750

 

 

$

20,934

 

 

$

138,616

 

 

$

101,484

 

Purchase of property and equipment

 

 

(4,109

)

 

 

(5,848

)

 

 

(16,712

)

 

 

(21,257

)

Free cash flow

 

$

37,641

 

 

$

15,086

 

 

$

121,904

 

 

$

80,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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 year ended December 31, 2020 and the three months and year ended December 31, 2019.

 

 

 

 

 

 


 

 

Cars.com Inc.

 

Supplemental Information

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense category for the Three Months Ended December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

27,160

 

 

$

 

 

$

(242

)

 

$

26,918

 

Product and technology

 

 

18,305

 

 

 

 

 

 

(993

)

 

 

17,312

 

Marketing and sales

 

 

50,714

 

 

 

 

 

 

(1,233

)

 

 

49,481

 

General and administrative

 

 

15,185

 

 

 

(1,810

)

 

 

(2,506

)

 

 

10,869

 

Affiliate revenue share

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

25,747

 

 

 

 

 

 

 

 

 

25,747

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

137,111

 

 

$

(1,810

)

 

$

(4,974

)

 

$

130,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(15,866

)

 

$

4,283

 

 

$

 

 

$

(11,583

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense category for the Three Months Ended December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

Adjustments (1)

 

 

Stock-Based Compensation

 

 

As Adjusted

 

Cost of revenue and operations

 

$

24,562

 

 

$

 

 

$

(23

)

 

$

24,539

 

Product and technology

 

 

14,734

 

 

 

 

 

 

(487

)

 

 

14,247

 

Marketing and sales

 

 

52,560

 

 

 

 

 

 

(391

)

 

 

52,169

 

General and administrative

 

 

14,507

 

 

 

(2,099

)

 

 

(1,431

)

 

 

10,977

 

Affiliate revenue share

 

 

11,002

 

 

 

 

 

 

 

 

 

11,002

 

Depreciation and amortization

 

 

30,116

 

 

 

 

 

 

 

 

 

30,116

 

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

147,481

 

 

$

(2,099

)

 

$

(2,332

)

 

$

143,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonoperating expense, net

 

$

(7,760

)

 

$

 

 

$

 

 

$

(7,760

)