Carvana Co., under pressure from investors in advance of its earnings report on Thursday, indicated that its first-quarter loss on an adjusted basis will be less than it was a year earlier as used-vehicle sales are also expected to decline.
The online used-vehicle retailer has been working to scale back growth endeavors, trim costs and reduce inventory as it — like its peers in the used-vehicle-only retail space — seeks stability to buoy profits in a more volatile sales environment amid higher interest rates and consumer concerns about vehicle affordability.
Carvana is also facing pressure to restructure its debt load, an action analysts have said is necessary to improve its long-term financial outlook and ease concerns about bankruptcy. Bloomberg reported last week that creditors holding about 90 percent of Carvana's bonds have been pitching the company on ways to pare down debt and improve liquidity, including a proposal for a debt-for-equity swap.
Carvana said it expects to report a smaller adjusted loss of earnings before interest, taxes, depreciation and amortization, between $50 million and $100 million, slimmer than its adjusted EBITDA loss of $348 million a year ago. It recorded a net loss of $506 million in the first quarter of 2022, a year in which it posted a net loss of $2.89 billion.
Carvana expects first-quarter sales to land between 76,000 and 79,000 vehicles, according to an estimate it provided in a March 22 regulatory filing. Comparatively, Carvana sold 105,185 retail vehicles in the year-ago period and 86,977 vehicles in the fourth quarter.