Some of Carvana’s largest creditors have banded together in an effort to secure more favorable terms ahead of a potential restructuring. CEO Ernie Garcia told analysts on a conference call that plans to cut costs and eventually grow again has positioned the company to potentially avoid having to raise money or rework its debt.

“We’ve got a real shot at not requiring additional capital,” Garcia said, citing the company’s real estate portfolio as one potential source of funds. “If we’re wrong, then we have lots of ways to go out and get additional capital.”

Carvana finished the year with $434 million in cash and equivalents, up from $316 million at the end of the third quarter.

In a letter to shareholders, Garcia called 2022 a “very difficult year.” Sales fell 23 percent in the fourth quarter to about 87,000 vehicles. Gross profit per unit plunged by more than half.

The CEO said he expects gross profit per unit to rebound back to previous levels exceeding $4,000 per vehicle, and that Carvana wants to grow into new markets such as last-mile delivery and repair and reconditioning of cars.

Carvana’s current strategy to conserve cash by reducing inventory “does not give us confidence in the long-term viability of the business model,” John Colantuoni, a Jefferies analyst with a hold rating on the shares, said in a note. “We anticipate views around a potential restructuring process will be the primary determinant of the stock price, with fundamentals as a distant secondary factor.”

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