Carvana Co.

Hello and welcome to the Carvana first quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw from the question queue, please press star and two. Please note this event is being recorded. I would now like to turn the conference over to Meg Keehan, Investor Relations. Please go ahead.

Thank you, MJ. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana's first quarter 2023 earnings conference call. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at investors.carvana.com. The first quarter shareholder letter is also posted to the IR website. Additionally, we posted a set of supplemental financial tables for Q1, which can be found on the events and presentations page of our IR website. Joining me on the call today are Ernie Garcia, Chief Executive Officer, and Mark Jenkins, Chief Financial Officer. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities laws, including but not limited to Carvana's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those disclosed here. A detailed discussion of the material factors that cause actual results to differ from forward-looking statements can be found in the Risk Factors section of Carvana's most recent Form 10-K. The forward-looking statements and risks in this conference call are based on current expectations as of today, and Carvana assumes no obligation to update or revise them, whether as a result of new developments or otherwise. Our commentary today will include non-GAAP financial metrics. Unless otherwise specified, all references to GPU and SG&A will be to the non-GAAP metrics and all references to EBITDA will be to adjusted EBITDA. Reconciliations between GAAP and non-GAAP metrics for all reported results can be found in our shareholder letter issued today, a copy of which can be found on our IR website. And now with that said, I'd like to turn the call over to Ernie Garcia. Ernie?

Thanks, Meg, and thanks, everyone, for joining the call. The first quarter was a quarter of significant progress for Carvana. A year ago, the automotive industry as well as the macroeconomic and market environment changed pretty dramatically, resulting in us significantly shifting our near-term priorities away from growth and toward profitability. This shift has impacted everything we do. It's impacted what we are focused on, it has impacted how much we are focused on, and it has impacted the way we are managing the business day to day. And all these adjustments take time. First, we made a narrow set of operating goals inside the company that we knew would be necessary to hit our financial targets. Second, we tighten the connections between our technology and operating teams through shared goals, shared meetings, and even shared office spaces. These changes first have to show up in the projects the teams are undertaking. They move to operating metrics, and finally, they show up in financial results. And that is exactly how progress has been unfolding. In the second quarter of 2022, we outlined our plan and discussed how we were organizing internally to tackle our goals. In the third quarter, we shared a number of operating metrics that were beginning to rapidly move in the right direction. In the fourth quarter, we began to see some of the earliest signs of meaningful financial progress. And now in the first quarter of 2023, the direction and speed of the financial progress is undeniable. We reduced FCNA by over $100 million quarter over quarter and completed our year-long effort to cut a billion dollars of annualized costs out of the business. In addition, in the first quarter, we returned to our historical GPU and adjusted EBITDA margin trend lines and reported company best results for our first quarter in both metrics. We still have a long way to go to achieve our broader goals, but we are on the right path and we are moving quickly. As we've discussed before, there are three steps in our plan to achieve positive cash flow and get Carvana back on track to becoming the largest and most profitable automotive retailer. Number one, drive the business to positive adjusted EBITDA. Number two, drive the business to significantly positive unit economics. Number three, after achieving objective number one and two, return to growth. As outlined in the letter, we expect to complete the first step in this plan in the second quarter. The completion of this step is a milestone, not a change of direction. We will be using the same processes and focus we have benefited from over the last year to continue to see the plan through. We remain firmly on the path to fulfilling our mission of changing the way people buy cars and to becoming the largest and most profitable automotive retailer. The march continues. Mark.