Ernie Garcia, the CEO of online used car retailer Carvana, discussed his company's unexpected comeback with CNBC's Jim Cramer on Wednesday.
Carvana moved its second-quarter earnings report up to Wednesday and reported revenue at $2.97 billion, comfortably topping the $2.59 consensus estimate. Although Carvana's revenue still decreased 24% year-over-year, the company performed better than expected and secured a debt restructuring agreement that's expected to reduce the company's outstanding debt by more than $1.2 billion.
The company had been working on such a deal for more than a year.
"I think in Q1 last year we had negative $360 million of EBITDA, which is not a good number," Garcia said. "But in the last 15 months we've been able to turn that around. We had $155 million positive this quarter, and that only happened because our customers love our model and, very importantly, a ton of people inside Carvana did a ton of amazing work over the last year and a half, and we've made a lot of progress."
Garcia said his company's recent success is sustainable, attributing this quarter's performance to Carvana's solid fundamentals, such as being able to swiftly provide consumers with affordable used cars. He also said lower car prices are actually better for business and for customers, and that the company usually provides next-day delivery but is currently testing same-day delivery.
"We had some of our most successful years when car prices were much lower, so we would love for car prices to go lower," Garcia said. "We're seeing some depreciation in the market today. The last couple years have been characterized much more by car prices going up than going down. But I think we're well-positioned to ride through any market and to just keep delivering great experiences for our customers."
After the earnings report, Carvana's stock opened up 35% Wednesday to reach $53.99, its highest open price in over a year, and it closed at $55.80, close to its 52-week high in August of 2022.
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