Cars.com(US:CARS)2023-11-01 16:00Financial Performance - Net income for the three months ended September 30, 2023, was $4,491 thousand, compared to a net loss of $2,941 thousand for the same period in 2022, representing a significant turnaround [9]. - For the nine months ended September 30, 2023, net income was $110,096 thousand, a substantial increase from $6,944 thousand in the same period of 2022 [9]. - Comprehensive income for the nine months ended September 30, 2023, was $110,096 thousand, compared to $8,229 thousand for the same period in 2022, indicating strong performance [9]. - Total revenue for the three months ended September 30, 2023, was $174.3 million, a 5.3% increase from $164.6 million in the same period of 2022 [24]. - For the nine months ended September 30, 2023, total revenue was $509.6 million, an increase of $23.9 million or 5% compared to $485.7 million for the same period in 2022 [126]. - The company’s diluted earnings per share for the nine months ended September 30, 2023, was $1.61, compared to $0.10 for the same period in 2022 [179]. - The company’s basic earnings per share for the nine months ended September 30, 2023, was $1.65, compared to $0.10 in the same period of 2022 [203]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2023, was $91,580 thousand, slightly up from $91,291 thousand in the same period of 2022 [13]. - The company reported a net cash used in investing activities of $15,575 thousand for the nine months ended September 30, 2023, compared to $79,169 thousand in the same period of 2022, showing improved cash management [13]. - Cash and cash equivalents at the end of the period were $49,085 thousand, up from $31,920 thousand at the end of September 30, 2022 [13]. - The company had cash and cash equivalents of $49.1 million and total liquidity of $279.1 million as of September 30, 2023 [134]. - The company reported a net change in cash and cash equivalents of $17.37 million for the nine months ended September 30, 2023, compared to a decrease of $7.15 million for the same period in 2022 [158]. Expenses and Costs - Stock-based compensation for the nine months ended September 30, 2023, was $20,930 thousand, an increase from $17,103 thousand in the same period of 2022 [13]. - Total operating expenses increased by $15.3 million or 11% to $160.0 million, primarily due to higher costs in marketing and sales, product and technology, and depreciation [119]. - Marketing and sales expense represented 35% of total revenue for the nine months ended September 30, 2023, up from 34% in the same period of 2022, driven by higher compensation and marketing costs [101]. - Product and technology expenses represented 15% of total revenue for the nine months ended September 30, 2023, increasing due to higher compensation and third-party costs [129]. Revenue Breakdown - Subscription advertising and digital solutions revenue for the nine months ended September 30, 2023, reached $419.9 million, up 4.0% from $403.1 million in 2022 [24]. - Dealer revenue, which represents 90% of total revenue, increased by $11.7 million or 8% to $157.1 million, driven by growth in solutions revenue and marketplace initiatives [119]. - Display advertising revenue increased by 18.9% to $26.8 million for the three months ended September 30, 2023, compared to $22.7 million in 2022 [24]. - Other revenue decreased by $2.8 million or 24% to $8.8 million, primarily due to the expiration of an Accu-Trade license agreement [128]. Acquisitions and Goodwill - The company recorded goodwill of $76.9 million from the Accu-Trade acquisition, primarily due to expected sales growth and the value of the acquired workforce [37]. - The company acquired D2C Media Inc. for CA$105 million (approximately USD $76 million) and may pay an additional CA$35 million (approximately USD $25 million) based on performance [78]. - The company incurred total acquisition costs of $2.0 million for the nine months ended September 30, 2023, with $1.1 million recorded in the same period of 2022 [34]. Debt and Financing - As of September 30, 2023, the company had total indebtedness of $455.0 million, with an effective interest rate of 6.5% [106]. - The Company issued $400.0 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2028 [58]. - The company entered into a Fourth Amendment to its Credit Agreement in Q2 2023, replacing LIBOR with SOFR and adjusting credit spread terms [42]. - As of September 30, 2023, the outstanding principal amount under the Term Loan was $55.0 million with an interest rate of 7.4% [57]. - The Company made $11.3 million in Term Loan payments during the nine months ended September 30, 2023 [57]. - The company reported a total of $1,103.188 million in assets as of September 30, 2023, an increase from $1,024.870 million as of December 31, 2022 [197]. Taxation - The effective income tax rate differed from the statutory federal income tax rate of 21% due to the release of a valuation allowance of $103.3 million as of December 31, 2022 [77]. - The income tax benefit for the nine months ended September 30, 2023, was $93.9 million, primarily due to the release of a significant portion of the valuation allowance for deferred tax assets [132]. - The net income for the nine months ended September 30, 2023, was primarily related to the release of a significant portion of the valuation allowance for deferred tax assets [85]. Share Repurchase - The company repurchased 1.3 million shares for $23.6 million at an average price of $18.30 during the nine months ended September 30, 2023, as part of its $200 million share repurchase program [107]. - The total number of shares that may yet be purchased under the announced share repurchase program is approximately $127.42 million [167]. - For the nine months ended September 30, 2023, the company repurchased 1.3 million shares for $23.6 million at an average price of $18.30 per share, compared to 3.5 million shares for $40.0 million at an average price of $11.47 per share in the same period of 2022 [185].