Cars.com(CARS) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis Financial Statements (unaudited) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and accompanying notes Consolidated Balance Sheets As of September 30, 2022, total assets increased to $1.05 billion, primarily due to goodwill, while total liabilities grew to $673.6 million Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,050,168 | $1,007,205 | | Cash and cash equivalents | $31,920 | $39,069 | | Goodwill | $102,477 | $26,227 | | Intangible assets, net | $726,247 | $769,424 | | Total Liabilities | $673,641 | $609,185 | | Long-term debt, net | $482,740 | $457,383 | | Total Stockholders' Equity | $376,527 | $398,020 | Consolidated Statements of (Loss) Income The company reported a Q3 2022 net loss of $2.9 million, a shift from prior year net income, primarily due to a nonoperating expense Income Statement Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $164,595 | $156,553 | $485,675 | $465,378 | | Operating Income | $19,899 | $12,074 | $46,225 | $44,276 | | Net (Loss) Income | ($2,941) | $2,431 | $6,944 | $13,675 | | Diluted (Loss) EPS | ($0.04) | $0.03 | $0.10 | $0.19 | Consolidated Statements of Cash Flows For the nine months ended September 30, 2022, operating cash flow decreased to $91.3 million, while investing activities significantly increased due to an acquisition Cash Flow Summary for Nine Months Ended Sept 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $91,291 | $116,226 | | Net cash used in investing activities | ($79,169) | ($17,879) | | Net cash used in financing activities | ($19,271) | ($114,559) | | Net decrease in cash | ($7,149) | ($16,212) | Notes to the Consolidated Financial Statements (Unaudited) These notes detail revenue breakdown, significant acquisitions, debt structure, and the company's share repurchase program Revenue by Major Products and Services (in thousands) | Product/Service | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Subscription advertising and digital solutions | $135,433 | $131,293 | $403,112 | $385,472 | | Display advertising | $22,699 | $20,766 | $64,607 | $64,045 | | Total Revenue | $164,595 | $156,553 | $485,675 | $465,378 | - The company acquired Accu-Trade on March 1, 2022, for a total purchase consideration of $94.0 million, which included $77.0 million in goodwill[40][42][46] - In February 2022, the Board of Directors authorized a three-year, $200 million share repurchase program, with the company repurchasing 3.5 million shares for $40.0 million during the first nine months of 2022[68][70] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, key operating metrics, the impact of acquisitions, and reviews liquidity and capital resources Key Operating Metrics In Q3 2022, Average Monthly Unique Visitors grew 12% year-over-year, while Dealer Customers increased 3% and Monthly ARPD remained flat Key Operating Metrics Comparison | Metric | Q3 2022 | Q3 2021 | % Change YoY | Q2 2022 | % Change QoQ | | :--- | :--- | :--- | :--- | :--- | :--- | | Traffic (Visits, thousands) | 150,449 | 142,418 | 6% | N/A | N/A | | Average Monthly UVs (thousands) | 27,309 | 24,341 | 12% | N/A | N/A | | Dealer Customers | 19,585 | 19,029 | 3% | 19,517 | 0% | | Monthly ARPD | $2,334 | $2,332 | 0% | $2,326 | 0% | Results of Operations Q3 2022 total revenue increased 5% year-over-year, but a net loss was recorded primarily due to contingent consideration remeasurement - Q3 2022 Dealer revenue increased by $6.1 million (4%) year-over-year, primarily due to a 3% increase in Dealer Customers[113] - Q3 2022 OEM and National revenue decreased 2% due to spending pullbacks by certain OEMs related to production delays and supply-chain disruptions[114] - The significant change in 'Other (expense) income, net' for both the three and nine-month periods was primarily due to the remeasurement of the fair value of contingent consideration from the CreditIQ and Accu-Trade acquisitions[122][135] Liquidity and Capital Resources As of September 30, 2022, total liquidity was $226.9 million, with outstanding debt of $505.0 million, and operating cash flow decreased year-over-year - Total liquidity as of September 30, 2022, was $226.9 million, including $31.9 million in cash and cash equivalents and $195.0 million available under the Revolving Loan[140] - Total outstanding debt principal was $505.0 million as of September 30, 2022, composed of a Term Loan, Revolving Loan borrowings, and Senior Unsecured Notes[141] - The decrease in operating cash flow for the nine months ended September 30, 2022, was primarily due to changes in working capital and the non-recurrence of a $9.1 million tax refund received in the prior-year period[145] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk exposures since December 31, 2021 - There have been no material changes in the company's market risk exposures since December 31, 2021[154] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[155] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[157] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, and equity security sales Legal Proceedings Information regarding legal proceedings is contained in Note 7 of the Consolidated Financial Statements, with no new material developments - Information regarding legal proceedings is contained in Note 7 (Commitments and Contingencies) of the Consolidated Financial Statements[160] Risk Factors There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021[161] Unregistered Sales of Equity Securities and Use of Proceeds During Q3 2022, the company repurchased 1.43 million shares as part of its $200 million share repurchase program Issuer Purchases of Equity Securities (Q3 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Remaining Authorization (in thousands) | | :--- | :--- | :--- | :--- | | July 2022 | 479,836 | $10.41 | $171,697 | | August 2022 | 432,819 | $13.09 | $166,033 | | September 2022 | 519,995 | $11.58 | $160,012 | | Total | 1,432,650 | N/A | $160,012 | - In February 2022, the Board of Directors authorized a three-year share repurchase program for up to $200 million of the company's common stock[164]