Carvana posted its first-ever annual profit on Feb. 22 in the aftermath of a deal with bondholders last year to cut its outstanding debt by $1 billion.

The company forecast an adjusted core profit for the first quarter “significantly above” $100 million, according to CNBC report.

Ernie Garcia, Carvana Founder and CEO, said that 2023 was an “exceptional year” for the company, crediting their “deliberate focus on efficiency and profitability” that resulted in the best-ever financial results as well as increased customer satisfaction.

Changes at Carvana

“Carvana is stronger than ever,” declared Garcia. “We are beginning to demonstrate the differentiated profitability, efficiency and customer experience benefits of our vertically integrated approach, and have a clear path toward our goals of becoming the largest and most profitable automotive retailer and buying and selling millions of cars.”

Carvana rose in prominence during the pandemic when demand for used cars shot up because a global chip crunch squeezed production of new cars. But the company struggled as dealers reopened and its inventory of used cars acquired at elevated prices were met with as car buyers who cut spending due to inflation and new car production normalized.

Wall Street Applause

The company struck a deal in July 2023 with bondholders to cut its outstanding debt. Since then, it has also been trimming inventory, slashing advertising and other expenses as it seeks to strengthen its balance sheet.

The moves and profit announcement were welcomed by Wall Street analysis.

“We believe Carvana has optimized operations enough to execute its way through a sideways macro and limit downside to estimates,” said J.P Morgan analyst Rajat Gupta.

Carvana officials expect retail units sold in the first quarter 2024 to be “slightly up” from last year, and retail gross profit per unit to be similar to the fourth quarter, with a potential for upside.