LOTZ CarLotz Inc

CarLotz, Inc. (the “Company” or “CarLotz”; NASDAQ: LOTZ), a consignment-to-retail used vehicle marketplace, today announced financial results for the third quarter ended September 30, 2022.

Third Quarter 2022 Financial Results

• Net revenue was $50.8 million compared to $68.0 million in the same period in 2021
• Retail unit sales were 1,375 compared to 2,490 in the same period in 2021
• Finance & insurance revenue was $1.7 million compared to $2.6 million in the same period in 2021
• Gross profit was $(0.6) million, primarily due to wholesale losses to liquidate inventory at closed hubs, compared to $2.0 million in the same period in 2021
• Retail GPU increased 62% to $1,524 from $939 in the same period in 2021
• Adjusted EBITDA was $(16.3) million compared to $(22.8) million in the same period in 2021
• Cash and cash equivalents, restricted cash, and marketable securities were $117 million at quarter end

Webcast and Conference Call Information

Given the pending transaction between CarLotz and Shift Technologies, Inc. (“Shift”) (the “Shift Merger”), CarLotz will not host a webcast and conference call to discuss the third quarter 2022 financial results.

About CarLotz

CarLotz operates a consignment-to-retail used vehicle marketplace that provides our corporate vehicle sourcing partners and retail sellers of used vehicles with the ability to easily access the retail sales channel. Our mission is to create the world's greatest vehicle buying and selling experience. We operate a technology-enabled buying, sourcing, and selling model that offers an omni-channel experience and diverse selection of vehicles. Our proprietary technology provides our corporate vehicle sourcing partners with real-time performance metrics and data analytics, along with custom business intelligence reporting that enables vehicle triage optimization between the wholesale and retail channels.

Important Additional Information

In connection with the pending Shift Merger, Shift has filed a registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”), that includes a joint proxy statement of Shift and CarLotz, that also constitutes a prospectus of Shift (the “joint proxy statement/prospectus”), which has become effective. Security holders of Shift and CarLotz are urged to carefully read the entire registration statement and joint proxy statement/prospectus and other relevant documents filed or to be filed with the SEC when they become available, because they will contain important information. A definitive joint proxy statement/prospectus has been sent to Shift’s stockholders and to CarLotz’ stockholders. Security holders may obtain the registration statement and the joint proxy statement/prospectus from the SEC’s website or from Shift or CarLotz as described in the paragraph below.

The documents filed by Shift with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Shift by requesting them by mail at 290 Division Street, Suite 400, San Francisco, California 94103. The documents filed by CarLotz with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from CarLotz by requesting them by mail at 3301 W. Moore St., Richmond, Virginia 23230.

Participants in the Solicitation

Shift, CarLotz and certain of their directors, executive officers and employees may be deemed participants in the solicitation of proxies in connection with the pending Shift Merger. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of proxies in connection with the pending Shift Merger, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in the joint proxy statement/prospectus filed with the SEC. Information about the directors and executive officers of CarLotz is set forth in the definitive proxy statement for CarLotz’ 2022 annual meeting of stockholders, as previously filed with the SEC on April 29, 2022 and in CarLotz’ Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 15, 2022, as supplemented by CarLotz’ subsequent filings with the SEC. Information about the directors and executive officers of Shift and their ownership of Shift shares is set forth in the definitive proxy statement for Shift’s 2022 annual meeting of stockholders, as previously filed with the SEC on June 26, 2022, as supplemented by Shift’s subsequent filings with the SEC. Free copies of these documents may be obtained as described in the paragraph above.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include statements that are not historical facts, such as statements concerning possible or assumed future actions, business strategies, events or results of operations, including statements regarding CarLotz’ expectations or predictions of future financial or business performance or conditions, and regarding the timing and consummation of the Shift Merger. Forward-looking statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions. Such statements are based on management’s current expectations and are not guarantees of future performance. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause such differences include those disclosed in CarLotz’ filings with the SEC, including those resulting from the impact of the ongoing Covid-19 pandemic on our business and general business and economic conditions and our ability to successfully execute our business plan and the pending Shift Merger. Forward-looking statements speak only as of the date they are made, and CarLotz is under no obligation, and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Investors:

Susan Lewis, VP - Investor Relations, slewis@carlotz.com

Media:

Leslie Griles, Leslie.Griles@CarLotz.com

CarLotz, Inc. and Subsidiaries — Condensed Consolidated Balance Sheet(unaudited)(In thousands, except share data)
​		September 30,2022				December 31,2021
Assets		​				​
Current Assets:		​				​
Cash and cash equivalents		$	84,809			$	75,029
Restricted cash			4,049				4,336
Marketable securities – at fair value			28,125				116,589
Accounts receivable, net			4,786				8,206
Inventories			13,062				40,985
Other current assets			4,349				4,705
Operating and finance lease assets, property, and equipment held for sale			20,860				—
Total Current Assets			160,040				249,850
Marketable securities – at fair value			760				1,941
Property and equipment, net			7,118				22,628
Capitalized website and internal-use software costs, net			12,725				13,716
Operating lease assets			22,092				—
Finance lease assets, net			4,459				—
Lease vehicles, net			2,869				1,596
Other assets			474				558
Total Assets		$	210,537			$	290,289
Liabilities and Stockholders’ Equity (Deficit)		​				​
Current Liabilities:		​
Current portion of finance lease liabilities		$	116			$	509
Floor plan notes payable			5,433				27,815
Accounts payable			2,236				6,352
Accrued expenses			11,215				14,428
Current portion of operating lease liabilities			4,600				—
Other current liabilities			593				754
Operating and finance lease liabilities associated with assets held for sale			22,294				—
Total Current Liabilities			46,487				49,858
Finance lease liabilities, less current portion			6,083				12,206
Operating lease liabilities, less current portion			22,384				—
Earnout shares liability			722				7,679
Merger warrants liability			675				6,291
Other liabilities			417				744
Total Liabilities			76,768				76,778
Commitments and Contingencies (Note 15)			—				—
Stockholders’ Equity (Deficit):
Common stock, $0.0001 par value; 500,000,000 authorized shares, 114,879,689 and 113,996,401 shares issued and outstanding at September 30, 2022 and December 31, 2021			11				11
Additional paid-in capital			291,827				287,509
Accumulated deficit			(157,956	)			(73,916	)
Accumulated other comprehensive (loss)			(113	)			(93	)
Total Stockholders’ Equity (Deficit)			133,769				213,511
Total Liabilities and Stockholders’ Equity (Deficit)		$	210,537			$	290,289

CarLotz, Inc. and Subsidiaries — Consolidated Statements of Operations(unaudited)(In thousands, except per share and share data)
​		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
​			2022				2021				2022				2021
Revenues:		​				​				​				​
Retail vehicle sales		$	32,545			$	56,284			$	142,344			$	150,897
Wholesale vehicle sales			16,357				8,989				38,880				18,217
Finance and insurance, net			1,691				2,639				8,591				5,973
Lease income, net			245				129				528				334
Total Revenues			50,838				68,041				190,343				175,421
Cost of sales (exclusive of depreciation)			51,429				66,017				187,375				167,207
Gross Profit			(591	)			2,024				2,968				8,214
Operating Expenses:						​				​				​
Selling, general and administrative			19,334				24,780				74,017				63,039
Stock-based compensation expense			1,409				3,447				4,234				49,114
Depreciation and amortization expense			2,025				1,214				6,173				1,692
Management fee expense – related party			—				—				—				2
Impairment expense			420				—				1,143				—
Restructuring expenses			1,885				—				12,616				—
Total Operating Expenses			25,073				29,441				98,183				113,847
Loss from Operations			(25,664	)			(27,417	)			(95,215	)			(105,633	)
Interest expense			302				650				1,512				1,009
Other Income, net						​
Change in fair value of Merger warrants liability			803				12,111				5,616				24,794
Change in fair value of earnout shares			341				12,565				6,957				56,621
Other income (expense)			523				(85	)			113				(476	)
Total Other Income, net			1,667				24,591				12,686				80,939
Loss Before Income Tax Expense			(24,299	)			(3,476	)			(84,041	)			(25,703	)
Income tax expense			—				—				—				—
Net Loss		$	(24,299	)		$	(3,476	)		$	(84,041	)		$	(25,703	)
Net Loss per Share, basic and diluted		$	(0.21	)		$	(0.03	)		$	(0.74	)		$	(0.23	)
Weighted-average Shares used in Computing Net Loss per Share, basic and diluted			114,705,449				113,707,013				114,334,960				109,447,939

CarLotz, Inc. and Subsidiaries — Condensed Consolidated Statements of Cash Flows(unaudited)(In thousands, except per share and share data)
​		Nine Months EndedSeptember 30,
​			2022				2021
Cash Flow from Operating Activities		​				​
Net loss		$	(84,041	)		$	(25,703	)
Adjustments to reconcile net loss to net cash used in operating activities						​
Depreciation and amortization – property, equipment, ROU assets and capitalized software			8,532				1,623
Impairment expense			1,143				—
Non-cash restructuring expenses			10,387				—
Gain on lease assignment			(236	)			—
Amortization and accretion - marketable securities			752				1,712
Depreciation – lease vehicles			360				69
Provision for doubtful accounts			656				85
Stock-based compensation expense			4,234				49,114
Change in fair value of Merger warrants liability			(5,616	)			(24,794	)
Change in fair value of earnout shares			(6,957	)			(56,621	)
Unpaid interest expense on capital lease obligations			—				199
Change in Operating Assets and Liabilities:		​				​
Accounts receivable			2,764				(4,786	)
Inventories			27,923				(46,774	)
Other current assets			356				(8,414	)
Other assets			84				(4,267	)
Accounts payable			(4,116	)			3,541
Accrued expenses			(2,237	)			5,441
Accrued expenses – related party			—				(229	)
Other current liabilities			(161	)			382
Other liabilities			(327	)			(753	)
Net Cash Used in Operating Activities			(46,500	)			(110,175	)
Cash Flows from Investing Activities		​				​
Purchase of property and equipment			(5,642	)			(6,766	)
Capitalized website and internal-use software costs			(2,958	)			(11,511	)
Purchase of marketable securities			(63,858	)			(359,381	)
Proceeds from sales of marketable securities			152,758				212,823
Purchase of lease vehicles			(1,633	)			(939	)
Net Cash (Used in) Provided by Investing Activities			78,667				(165,774	)
Cash Flows from Financing Activities		​				​
Payments made on finance leases			(376	)			(51	)
Advance from holder of marketable securities			—				4,722
Repayment of advance from marketable securities			—				(4,722	)
PIPE issuance			—				125,000
Merger financing			—				309,999
Payment made on accrued dividends			—				(4,853	)
Payments to existing shareholders of Former CarLotz			—				(62,693	)
Transaction costs and advisory fees			—				(47,579	)
Payments made on cash considerations associated with stock options			—				(2,465	)
Repayment of Paycheck Protection Program loan			—				(1,749	)
Payments made on note payable			—				(3,000	)
Payments on floor plan notes payable			(102,592	)			(109,034	)
Borrowings on floor plan notes payable			80,211				127,279
Employee stock option exercise			91				—
Payments made for tax on equity award transactions			(8	)			—
Net Cash (Used in) Provided by Financing Activities			(22,674	)			330,854
Net Change in Cash and Cash Equivalents Including Restricted Cash			9,493				54,905
Cash and cash equivalents and restricted cash, beginning			79,365				2,813
Cash and cash equivalents and restricted cash, ending		$	88,858			$	57,718
Supplemental Disclosure of Cash Flow Information
Cash paid for interest		$	1,589			$	1,000
Supplementary Schedule of Non-cash Investing and Financing Activities:						​
Transfer from lease vehicles to inventory		$	—			$	166
KAR/AFC exercise of stock warrants			—				(144	)
KAR/AFC conversion of notes payable			—				(3,625	)
Convertible redeemable preferred stock tranche obligation expiration			—				(2,832	)
Capitalized website and internal use software costs accrued			—				(1,898	)
Purchases of property under capital lease obligation			(247	)			(7,651	)

CarLotz, Inc. and Subsidiaries — Results of Operations and Retail Gross Profit per Unit(unaudited)(In thousands, except share data)
​		Three Months EndedSeptember 30,											Nine Months EndedSeptember 30,
​			2022				2021			Change				2022				2021			Change
​		($ in thousands, exceptper unit metrics)											($ in thousands, exceptper unit metrics)
Revenue:
Retail vehicle sales		$	32,545			$	56,284			(42.2	)%		$	142,344			$	150,897			(5.7	)%
Wholesale vehicle sales			16,357				8,989			82.0	%			38,880				18,217			113.4	%
Finance and insurance, net			1,691				2,639			(35.9	)%			8,591				5,973			43.8	%
Lease income, net			245				129			89.9	%			528				334			58.1	%
Total revenues			50,838				68,041			(25.3	)%			190,343				175,421			8.5	%
Cost of sales:		​				​							​				​
Retail vehicle cost of sales			32,141				56,584			(43.2	)%			144,058				147,142			(2.1	)%
Wholesale vehicle cost of sales			19,288				9,433			104.5	%			43,317				20,065			115.9	%
Total cost of sales		$	51,429			$	66,017			(22.1	)%		$	187,375			$	167,207			12.1	%
Gross profit:		​				​							​				​
Retail vehicle gross profit (loss)		$	404			$	(300	)		234.7	%		$	(1,714	)		$	3,755			(145.6	)%
Wholesale vehicle gross profit (loss)			(2,931	)			(444	)		(560.1	)%			(4,437	)			(1,848	)		(140.1	)%
Finance and insurance gross profit			1,691				2,639			(35.9	)%			8,591				5,973			43.8	%
Lease income, net			245				129			89.9	%			528				334			58.1	%
Total gross profit		$	(591	)		$	2,024			(129.2	)%		$	2,968			$	8,214			(63.9	)%
Retail gross profit per unit(1):		​				​				​			​				​				​
Retail vehicle gross profit (loss)			404				(300	)		234.7	%			(1,714	)			3,755			(145.6	)%
Finance and insurance gross profit			1,691				2,639			(35.9	)%			8,591				5,973			43.8	%
Total retail vehicle and finance and insurance gross profit			2,095				2,339			(10.4	)%			6,877				9,728			(29.3	)%
Retail vehicle unit sales			1,375				2,490			(44.8	)%			6,066				7,053			(14.0	)%
Retail vehicle gross profit per unit		$	1,524			$	939			62.3	%		$	1,134			$	1,379			(17.8	)%
Wholesale gross profit per unit(2):
Wholesale vehicle gross profit (loss)			(2,931	)			(444	)		(560.1	)%			(4,437	)			(1,848	)		(140.1	)%
Wholesale vehicle unit sales			1,042				614			69.7	%			2,312				1,451			59.3	%
Wholesale vehicle gross profit per unit		$	(2,813	)		$	(723	)		(289.1	)%		$	(1,919	)		$	(1,274	)		(50.6	)%
(1) Gross profit (loss) per unit is calculated as gross profit for retail vehicles and finance and insurance, each of which is divided by the total number of retail vehicles sold in the period.(2) Wholesale gross (loss) profit per unit is calculated as gross profit for wholesale vehicles, each of which is divided by the total number of wholesale vehicles sold in the period.

Reconciliation of Non-GAAP Financial Measures

To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we also present the following non-GAAP measures: EBITDA and Adjusted EBITDA. We believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team, and it also improves investors’ understanding of our underlying operating performance and their ability to analyze our ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures.

EBITDA is defined as net loss attributable to common stockholders adjusted to exclude interest expense, income tax expense and depreciation and amortization expense.

Adjusted EBITDA is EBITDA adjusted to exclude certain expenses related to the Company’s capital structure and management fee expense prior to the merger pursuant to that certain Agreement and Plan of Merger, dated as of October 21, 2020 (as amended by Amendment No. 1, dated December 16, 2020), by and among CarLotz, Inc. (f/k/a Acamar Partners Acquisition Corp.), Acamar Partners Sub, Inc., a wholly owned subsidiary of CarLotz, Inc., and CarLotz Group, Inc. (f/k/a CarLotz, Inc.) (“Former CarLotz”), pursuant to which Acamar Partners Sub, Inc. merged with and into Former CarLotz, with Former CarLotz surviving as the surviving company and as a wholly owned subsidiary of CarLotz, Inc. (the “Merger”), stock compensation expense and other non-operating income and expenses, including interest, investment gain/loss and nonrecurring income/expense.

Management believes the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is useful to investors in comparing the Company’s performance prior to the Merger and the Company’s performance following the Merger.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of the results as reported under GAAP. These measures may not be comparable to similarly titled measures reported by other companies.

The following tables reconcile EBITDA and Adjusted EBITDA to net loss attributable to common stockholders for the periods presented:

CarLotz, Inc. and Subsidiaries — EBITDA and Adjusted EBITDA(unaudited)(In thousands, except share data)
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
			2022				2021				2022				2021
		($ in thousands)
Net Loss		$	(24,299	)		$	(3,476	)		$	(84,041	)		$	(25,703	)
Adjusted to exclude the following:
Interest expense			302				650				1,512				1,009
Income tax expense			—				—				—				—
Depreciation and amortization expense			2,025				1,214				6,173				1,692
EBITDA		$	(21,972	)		$	(1,612	)		$	(76,356	)		$	(23,002	)
Other expense			(523	)			85				(113	)			476
Stock compensation expense			1,409				3,447				4,234				49,114
Management fee expense - related party			—				—				—				2
Change in fair value of warrants liability			(803	)			(12,111	)			(5,616	)			(24,794	)
Change in fair value of earnout provision			(341	)			(12,565	)			(6,957	)			(56,621	)
Restructuring expense1			1,885				—				13,626				—
Shift Merger2			4,044				—				4,044				—
Adjusted EBITDA		$	(16,301	)		$	(22,756	)		$	(67,138	)		$	(54,825	)
1 Reflects certain expenses associated with the closure of 11 of our retail hubs.2 Reflects financial advisory, legal, accounting costs and associated fees and expenses that will be paid at the close of the Shift Merger.