Cars.com(US:CARS)2020-02-26 21:07Financial Performance - Total revenue for 2019 was $606,682 thousand, a decrease of 8.4% from $662,127 thousand in 2018 [260]. - Retail revenue decreased to $572,311 thousand in 2019 from $579,188 thousand in 2018, a decline of 1.5% [260]. - The company reported a net loss of $445,324 thousand in 2019, compared to a net income of $38,809 thousand in 2018 [263]. - Basic and diluted loss per share for 2019 was $(6.65), a significant decline from earnings of $0.55 per share in 2018 [260]. - Operating loss for 2019 was $(446,060) thousand, contrasting with an operating income of $83,924 thousand in 2018 [260]. - Comprehensive loss for 2019 was $(452,966) thousand, compared to $38,809 thousand in 2018 [263]. - The net loss for the year ended December 31, 2019, was $445.3 million, compared to a net income of $38.8 million in 2018 [271]. - The company reported a loss before income taxes of $475.3 million for the year ended December 31, 2019, compared to a profit of $56.9 million in 2018 [14]. - Total net loss for 2019 reached $426.16 million, significantly higher than the net income of $15.8 million in 2018 [415]. Assets and Liabilities - As of December 31, 2019, Cars.com Inc. reported total assets of $2,027.99 million, a decrease from $2,600.55 million in 2018, reflecting a decline of approximately 22% [256]. - Total current liabilities decreased from $110.71 million in 2018 to $98.81 million in 2019, a reduction of approximately 11% [256]. - Long-term debt decreased from $665.31 million in 2018 to $611.28 million in 2019, indicating a decline of about 8% [256]. - The company has fixed 53.7% of its interest rates through an interest rate swap, locking in a fixed rate of 2.96% on a notional amount of $300 million [237]. - The fair value of the interest rate swap was recorded as an unrealized loss of $10.2 million as of December 31, 2019 [237]. - The company incurred $461,463 thousand in goodwill and intangible asset impairment in 2019, which was not present in 2018 [260]. - The Company had $505.9 million of goodwill as of December 31, 2019, resulting from acquisitions including TEGNA's acquisition of Cars.com in 2014 [303]. - The net carrying amount of definite-lived intangible assets decreased from $638.1 million in 2018 to $539.5 million in 2019, a reduction of about 15.4% [345]. Revenue Sources - The company’s primary revenue source is marketplace subscription advertising, which is recognized ratably over the contract term [285]. - The primary source of revenue is marketplace subscription advertising, which totaled $476.0 million in 2019, down from $508.0 million in 2018 [344]. - The Company recognized revenue from pay-per-lead primarily on a per-lead basis at the point in time the lead has been delivered, recorded in Retail and Wholesale revenue [292]. Operating Expenses - Total operating expenses surged to $1,052,742 thousand in 2019, up from $578,203 thousand in 2018, representing an increase of 82% [260]. - Total operating expenses included $217,432 thousand in marketing and sales, down from $226,740 thousand in 2018, a decrease of 4.7% [260]. - Advertising expenses for the years ended December 31, 2019, 2018, and 2017 were $115.8 million, $109.2 million, and $104.6 million, respectively [318]. - Amortization expenses for the years ended December 31 were $98.6 million in 2019, $91.0 million in 2018, and $77.9 million in 2017, indicating a consistent increase in amortization costs [348]. Cash Flow - Net cash provided by operating activities was $101.5 million, a decrease from $163.5 million in the previous year [271]. - Cash used in investing activities was $21.9 million, significantly lower than $171.4 million in 2018 [271]. - The company reported a net cash outflow from financing activities of $91.5 million, compared to an inflow of $12.7 million in the previous year [271]. - Cash and cash equivalents at the end of the period were $13.5 million, down from $25.5 million at the end of 2018 [271]. Impairment and Goodwill - The company's goodwill decreased from $884.45 million in 2018 to $505.88 million in 2019, representing a reduction of about 43% due to an impairment charge of $379.2 million recorded in Q3 2019 [247]. - The Company recorded a goodwill impairment of $379.2 million and an impairment of $82.3 million related to indefinite-lived intangible assets in Q3 2019 [344]. - The company performed a quantitative impairment analysis of goodwill and indefinite-lived intangible assets, indicating that the estimated fair value exceeded the carrying value as of December 31, 2019 [247][250]. Taxation - Total current income tax expense for 2019 was $2.4 million, an increase from $1.4 million in 2018 [14]. - The effective tax rate for 2019 was 6.3%, significantly lower than the federal statutory rate of 21% due to various factors including goodwill impairment [14]. - The company has approximately $7.1 million in federal net operating loss (NOL) carryforwards and $1.5 million in state NOL carryforwards, which can be utilized indefinitely [399]. - Deferred tax assets related to federal and state research and development tax credit carryforwards amount to $1.8 million and $0.8 million, respectively [400]. Shareholder Information - The company repurchased and retired 1.7 million shares for $40 million during the year ended December 31, 2019 [373]. - Stock-based compensation expense for the year ended December 31, 2019 was $7.588 million, with an income tax benefit of $2.840 million related to this expense [374]. - As of December 31, 2019, there were 15.1 million common stock shares available for future grants under the Omnibus Plan [374]. - The company has a maximum of 3 million shares available for issuance under the Employee Stock Purchase Plan (ESPP), with 2.8 million shares available as of December 31, 2019 [383].