Shift Announces Merger with CarLotz; a New Business Plan

• Shift to merge with CarLotz, a main used automobile consignment business; mixed firm estimated to have roughly $125 million of money if the merger closes on the finish of the yr  
• Shift is transitioning to a new business plan centered on transacting most gross sales via its most worthwhile on-line checkout channel, which permits shoppers to buy a automobile on-line, sight unseen, for pickup or supply.  
• Updated monetary mannequin allows optimistic unit economics in 2023 and company-wide profitability in 2024 
• Current Shift President Jeff Clementz to function CEO efficient September 1 

SAN FRANCISCO, Aug. 09, 2022 (GLOBE NEWSWIRE) — Shift Technologies, Inc. (Nasdaq: SFT), a main end-to-end ecommerce platform for purchasing and promoting used automobiles, introduced right now a number of business updates.

Merger with CarLotz

Shift introduced right now it has entered into a definitive settlement to merge with CarLotz (Nasdaq: LOTZ), a main used automobile consignment business, in a stock-for-stock merger.

The merger will convey collectively the very best, most worthwhile property from every firm, consolidating Shift’s proprietary acquisition engine, best-in-class expertise platform, and powerful presence on the West Coast with CarLotz’s distinctive consignment relationships and prime retail areas within the mid-Atlantic area.

Upon closing, the go-forward business plan is predicted to be totally funded to profitability by the money place of the mixed firm.

More info on the merger might be discovered within the joint press launch and presentation on Shift’s investor relations web site.

New Business Plan

Concurrently, Shift introduced an up to date business plan that’s anticipated to permit it to succeed in optimistic unit economics in 2023 and company-wide profitability in 2024.

Key points of the plan embrace focusing most gross sales via Shift’s most worthwhile on-line checkout channel, which permits shoppers to buy a automobile on-line, sight unseen for pickup or supply, and quickly eliminating take a look at drives. Given present market dynamics, Shift is optimizing stock combine and assortment to favor Value autos, which Shift defines as older than 8 years or having been pushed 80,000 miles. These operational modifications will even lead to a discount of workforce throughout the business and rationalization of Shift’s bodily footprint.

“At Shift, we’ve always done a great job of enabling the customer to have their desired car-buying experience. Increasingly, we’ve seen that many consumers opt for a true e-commerce offering, where they can purchase the vehicle without any in-person element,” mentioned Jeff Clementz, Shift’s President and incoming CEO. “Focusing on this sales channel not only caters to consumer demand, but is also significantly more profitable in terms of unit economics. I’m extremely confident that the team we have in place is well positioned to execute on this revised business strategy, and I look forward to bringing the Shift and CarLotz teams together once we complete the merger later this year.”

“All of us on Shift’s leadership team and our Board of Directors are very conscious of the toll that the people-related changes will have on our team members. I want to extend my deep appreciation for the incredible impact that our departing teammates have had on Shift and our customers over the years and express our commitment to supporting them as best we can during this difficult transition,” mentioned George Arison, Shift’s Co-Founder and CEO.

More info on the up to date business plan might be discovered within the presentation on Shift’s investor relations web site.

Appointment of Jeff Clementz as Company’s Chief Executive Officer (CEO)

Shift’s Board of Directors introduced right now the appointment of present Shift President Jeff Clementz as CEO efficient September 1. After almost 9 years within the function of CEO, Co-founder George Arison can be stepping down and remaining in his function of Chairman of the Board of Directors. Clementz will proceed to function CEO of Shift following its merger with CarLotz.

More info on this announcement is obtainable in a separate press launch on Shift’s investor relations web site.

Shift will talk about the transaction and up to date business plan, and report its monetary outcomes for the second quarter 2022, which ended June 30, 2022, throughout a convention name on Tuesday, August 9, 2022 at 5:00 p.m. ET (2 p.m. PT). Details of the convention name might be discovered under.

Second Quarter 2022 Operating Results

All comparisons for the quarter are year-over-year until in any other case specified.

• Total income for the quarter grew 44% year-over-year to a document $223.7 million, versus steering within the vary of $225-235 million.
• Total ecommerce items offered have been 6,872, a rise of 17.0%.
• Gross revenue per unit was $1,729, rising 8% sequentially from $1,607 within the first quarter of 2022. Adjusted gross revenue per unit¹ (“Adjusted GPU”) was $1,821, versus steering within the vary of $1,800 – $2,000.
• Net loss was $52.2 million or 23% of income, in comparison with $57.0 million or 26% of income within the first quarter of 2022. Adjusted EBITDA¹ loss was $36.9 million or 16.5% of income, versus steering within the vary of $37.0 to $39.0 million and versus $46.6 million or $21.2% of income within the first quarter of 2022.
• SG&A bills have been $58.7 million, or 26.3% of income, versus $48.1 million or 31.1% of income final yr and $63.5 million, or 28.9% of income within the first quarter of 2022

Second Half Outlook

We are offering steering for the rest of fiscal yr 2022 as follows:

• Revenue within the vary of $270 – $290 million,
• Adjusted GPU^1,2 within the vary of $1,500 – $1,700
• Adjusted EBITDA^1,2 lack of $50 – $55 million

Fiscal Year 2022 Outlook

We are offering steering for the yr ending December 31, 2022 as follows:

• Revenue within the vary of $690 – $710 million
• Ecommerce items of 21,000 – 24,000
• Adjusted GPU^1,2 of $1,600 – $1,700 per ecommerce unit
• Adjusted EBITDA^1,2 lack of $133.0 – $138.0 million

^{___________________________
1}Adjusted Gross Profit, Adjusted Gross Profit per Unit (GPU), Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP monetary measures. Please see the dialogue within the part “Explanation of Non-GAAP Measures” and the reconciliations included
on the finish of this press launch.
²Specific quantifications of the quantities that might be required to reconcile this stuff are usually not obtainable. The Company believes that due to the ahead trying nature of the adjusted EBITDA loss and adjusted gross revenue steering, there may be uncertainty and unpredictability with respect to sure of its GAAP measures which preclude the Company from offering correct steering on sure forward-looking GAAP to non-GAAP reconciliations. The Company believes that offering estimates of the quantities that might be required to reconcile the vary of the Company’s adjusted EBITDA and adjusted gross revenue would indicate a diploma of precision that might be complicated or deceptive to buyers for the explanations recognized above.

Shift Second Quarter 2022 Results Summary
                                                                                

Conference Call Information

Shift senior administration will host a convention name right now to debate the Company’s Q2’2022 monetary outcomes. This name is scheduled to start at 2:00 pm PT / 5:00 pm ET and might be accessed by dialing (833) 634-1255 or (412) 317-6015. To hearken to a dwell audio webcast, please go to Shift’s Investor Relations web site at buyers.shift.com. A telephonic replay of the convention name can be obtainable till Tuesday, August 16, 2022, and might be accessed by dialing (877) 344-7529 or (412) 317-0088 and coming into the passcode 9112119.

About Shift

Shift is a main end-to-end auto ecommerce platform remodeling the used automotive business with a technology-driven, hassle-free buyer expertise. Shift’s mission is to make automotive buy and possession easy — to make shopping for or promoting a used automotive enjoyable, truthful, and accessible to everybody. Shift supplies complete, digital options all through the automotive possession lifecycle: discovering the precise automotive, a seamless digitally-driven buy transaction together with financing and automobile safety merchandise, an environment friendly, digital trade-in/sale transaction, and a imaginative and prescient to supply high-value help companies throughout automotive possession. For extra info, go to www.shift.com. The contents of our web site are usually not integrated into this press launch.

Important Additional Information
In connection with the proposed transaction, Shift Technologies, Inc. (“Shift”) intends to file a registration assertion on Form S-4 with the Securities and Exchange Commission (the “SEC”), that may embrace a joint proxy assertion of Shift and CarLotz, that additionally constitutes a prospectus of Shift (the “joint proxy statement/prospectus”). Security holders of Shift and CarLotz are urged to fastidiously learn all the registration assertion and joint proxy assertion/prospectus and different related paperwork filed with the SEC once they grow to be obtainable, as a result of they may comprise essential info. A definitive joint proxy assertion/prospectus can be despatched to Shift’s shareholders and to CarLotz’s shareholders. Security holders will be capable of acquire the registration assertion and the joint proxy assertion/prospectus from the SEC’s web site or from Shift or CarLotz as described within the paragraph under.

The paperwork filed by Shift with the SEC could also be obtained freed from cost on the SEC’s web site at www.sec.gov. These paperwork may additionally be obtained freed from cost from Shift by requesting them by mail at 290 Division Street, Suite 400, San Francisco, California. The paperwork filed by CarLotz with the SEC could also be obtained freed from cost on the SEC’s web site at www.sec.gov. These paperwork may additionally be obtained freed from cost from CarLotz by requesting them by mail at 3301 W. Moore St., Richmond, Virginia 23230.

Participants within the Solicitation
Shift, CarLotz and sure of their administrators, govt officers and staff could also be deemed members within the solicitation of proxies in connection with the proposed transaction. Information relating to the individuals who might, beneath the foundations of the SEC, be deemed members within the solicitation of proxies in connection with the proposed transaction, together with a description of their direct or oblique pursuits, by safety holdings or in any other case, can be set forth within the joint proxy assertion/prospectus when it’s filed with the SEC. Information in regards to the administrators and govt officers of CarLotz is about forth within the definitive proxy assertion for CarLotz’s 2022 annual assembly of stockholders, as beforehand filed with the SEC on April 29, 2022 and in CarLotz’s Annual Report on Form 10-Okay for the yr ended December 31, 2021, filed with the SEC on March 15, 2022, as supplemented by CarLotz subsequent filings with the SEC. Information in regards to the administrators and govt officers of Shift and their possession of Shift shares is about forth within the definitive proxy assertion for Shift’s 2022 annual assembly of stockholders, as beforehand filed with the SEC on June 26, 2022. Free copies of those paperwork could also be obtained as described within the paragraph above.

No Offer or Solicitation
This communication shall not represent a proposal to promote or the solicitation of a proposal to promote or the solicitation of a proposal to purchase any securities, nor shall there be any sale of securities in any jurisdiction during which such supply, solicitation or sale can be illegal previous to registration or qualification beneath the securities legal guidelines of any such jurisdiction. No supply of securities shall be made besides by the use of a prospectus assembly the necessities of Section 10 of the Securities Act of 1933, as amended, and in any other case in accordance with relevant legislation.

Forward-Looking Statements

This doc contains “forward looking statements” throughout the that means of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements could also be recognized by way of phrases resembling “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and different comparable expressions that predict or point out future occasions or tendencies or that aren’t statements of historic issues. Such ahead trying statements embrace estimated monetary info. Such ahead trying statements with respect to revenues, earnings, efficiency, methods, prospects and different points of Shift’s business are based mostly on present expectations which might be topic to dangers and uncertainties. Plenty of elements might trigger precise outcomes or outcomes to vary materially from these indicated by such ahead trying statements. These elements embrace, however are usually not restricted to: (1) Shift’s means to maintain its present progress, which can be affected by, amongst different issues, competitors, Shift’s means to develop and handle progress profitably, keep relationships with prospects and suppliers and retain its administration and key staff; (2) modifications in relevant legal guidelines or laws; (3) the likelihood that Shift could also be adversely affected by different financial, business, and/or aggressive elements; (4) the operational and monetary outlook of Shift; (5) the power for Shift to execute its progress technique; (6) Shift’s means to buy ample portions of autos at enticing costs; (7) the danger that the situations to the closing of the transaction are usually not happy, together with the danger that required approvals from the stockholders of Shift or CarLotz for the transaction are usually not obtained; (8) litigation referring to the transaction; (9) uncertainties as to the timing of the consummation of the transaction and the power of every get together to consummate the transaction; (10) dangers that the proposed transaction disrupts the present plans and operations of Shift or CarLotz; (11) the power of Shift and CarLotz to retain and rent key personnel; (12) aggressive responses to the proposed transaction; (13) surprising prices, costs or bills ensuing from the transaction; (14) potential antagonistic reactions or modifications to business relationships ensuing from the announcement or completion of the transaction; (15) the mixed firms’ means to attain the synergies anticipated from the transaction, in addition to delays, challenges and bills related with integrating the mixed firms’ current companies; and (16) legislative, regulatory and financial developments and (17) different dangers and uncertainties indicated occasionally in different paperwork filed or to be filed with the SEC by Shift. You are cautioned to not place undue reliance upon any forward-looking statements, which converse solely as of the date made. Shift undertakes no dedication to replace or revise the forward-looking statements, whether or not as a results of new info, future occasions or in any other case, besides as could also be required by legislation.

Key Operating Metrics

Ecommerce Units Sold

We outline ecommerce items offered because the variety of autos offered to prospects in a given interval, web of returns. We at present have a seven-day, 200 mile return coverage. The variety of ecommerce items offered is the first driver of our revenues and, not directly, gross revenue, since ecommerce unit gross sales allow a number of complementary income streams, together with all financing and safety merchandise. We view ecommerce items offered as a key measure of our progress, as progress on this metric is an indicator of our means to efficiently scale our operations whereas sustaining product integrity and buyer satisfaction.

Wholesale Units Sold

We outline wholesale items offered because the variety of autos offered via wholesale channels in a given interval. While wholesale items are usually not the first driver of income or gross revenue, wholesale is a useful channel because it permits us to have the ability to buy autos no matter situation, which is essential for the aim of accepting a trade-in from a buyer making a automobile buy from us, and as a web-based vacation spot for shoppers to promote their automobiles even when not promoting us a automotive that meets our retail requirements.

Ecommerce Average Sale Price

We outline ecommerce common sale worth (“ASP”) as the common worth paid by a buyer for an ecommerce automobile, calculated as ecommerce income divided by ecommerce items. Ecommerce common sale worth helps us gauge market demand in real-time and permits us to keep up a vary of stock that the majority precisely displays the general worth spectrum of used automobile gross sales out there.

Wholesale Average Sale Price

We outline wholesale common sale worth as the common worth paid by a buyer for a wholesale automobile, calculated as wholesale income divided by wholesale items. We imagine this metric supplies transparency and is similar to our friends.

Average Monthly Unique Visitors

We outline a month-to-month distinctive customer as a person who has visited our web site inside a calendar month, based mostly on information collected on our web site. We calculate common month-to-month distinctive guests because the sum of month-to-month distinctive guests in a given interval, divided by the variety of months in that interval. To classify whether or not a customer is “unique”, we dedupe (a approach for eliminating duplicate copies of repeating information) every customer based mostly on e mail deal with and cellphone quantity, if obtainable, and if not, we use the nameless ID which lives in every person’s web cookies. This apply ensures that we don’t double-count people who go to our web site a number of occasions inside a month. We view common month-to-month distinctive guests as a key indicator of the energy of our model, the effectiveness of our promoting and merchandising campaigns and client consciousness.

Average Days to Sale

We outline common days to sale because the variety of days between Shift’s acquisition of a automobile and sale of that automobile to a buyer, averaged throughout all ecommerce items offered in a interval. We view common days to sale as a helpful metric in understanding the well being of our stock.

Ecommerce Vehicles Available for Sale

We outline ecommerce autos obtainable on the market because the variety of ecommerce autos in stock on the final day of a given reporting interval. Until we attain an optimum pooled stock degree, we view ecommerce autos obtainable on the market as a key measure of our progress. Growth in ecommerce autos obtainable on the market will increase the choice of autos obtainable to shoppers, which we imagine will permit us to extend the variety of autos we promote. Moreover, progress in ecommerce autos obtainable on the market is an indicator of our means to scale our automobile buying, inspection and reconditioning operations.

Explanation Of Non-GAAP Measures

In addition to our GAAP outcomes, we evaluate sure non-GAAP monetary measures to assist us consider our business, measure our efficiency, determine tendencies affecting our business, set up budgets, measure the effectiveness of investments in our expertise and gross sales and advertising and marketing, and assess our operational efficiencies. These non-GAAP measures embrace Adjusted Gross Profit, Adjusted gross revenue per unit (“Adjusted GPU”), and Adjusted EBITDA, every of which is mentioned under.

These non-GAAP monetary measures are usually not meant to be thought of in isolation from, as substitutes for, or as superior to, the corresponding monetary measures ready in accordance with GAAP. You are inspired to judge these changes, and evaluate the reconciliation of those non-GAAP monetary measures to their most comparable GAAP measures, and the explanations we take into account them acceptable. It is essential to notice that the actual objects we exclude from, or embrace in, our non-GAAP monetary measures might differ from the objects excluded from, or included in, comparable non-GAAP monetary measures utilized by different firms. See “Reconciliation of gross profit to Adjusted Gross Profit,” “Reconciliation of gross profit per unit to Adjusted gross profit per unit” and “Reconciliation of net loss to Adjusted EBITDA” included as a part of this shareholder letter.

Adjusted Gross Profit

Management evaluates our business based mostly on an adjusted gross revenue calculation that removes the monetary affect related with milestones achieved beneath our Lithia warrant association and depreciation associated to reconditioning services that’s included in price of gross sales. These objects resulted in reductions in gross revenue in our consolidated monetary statements as relevant to the durations introduced. These are non-cash changes, and we don’t count on any materials future non-cash gross revenue changes associated to the Lithia warrant settlement. We look at adjusted gross revenue in mixture in addition to for every of our income streams: ecommerce, different, and wholesale.

Adjusted Gross Profit per Unit

We outline adjusted gross revenue per unit (“Adjusted GPU”) because the adjusted gross revenue for ecommerce, different and wholesale, every of which divided by the entire variety of ecommerce items offered within the interval. Adjusted GPU is pushed by ecommerce automobile income, which generates extra income via attachment of our financing and safety merchandise, and gross revenue generated from wholesale automobile gross sales. We current Adjusted GPU from our three revenues streams, as ecommerce Adjusted GPU, Wholesale Adjusted GPU and Other Adjusted GPU. We imagine Adjusted GPU is a key measure of our progress and long-term profitability.

Adjusted EBITDA and Adjusted EBITDA Margin:

We outline Adjusted EBITDA as web loss adjusted to exclude stock-based compensation expense, depreciation and amortization, web curiosity earnings or expense, affect of warrant remeasurement, warrant milestone affect, and different money and non-cash based mostly earnings or bills that we don’t take into account indicative of our core working efficiency. Adjusted EBITDA Margin is outlined as Adjusted EBITDA divided by income. We imagine Adjusted EBITDA is helpful to buyers in evaluating our efficiency for the next causes:

• Adjusted EBITDA is extensively utilized by buyers and securities analysts to measure a firm’s efficiency with out regard to objects resembling these we exclude in calculating this measure, which may fluctuate considerably from firm to firm relying upon their financing, capital constructions, and the strategy by which property have been acquired.
• Our administration makes use of Adjusted EBITDA in conjunction with GAAP monetary measures for planning functions, together with the preparation of our annual working finances, as a measure of efficiency and the effectiveness of our business methods, and in communications with our board of administrators regarding our efficiency.
• Adjusted EBITDA supplies a measure of consistency and comparability with our previous efficiency that many buyers discover helpful, facilitates period-to-period comparisons of operations, and in addition facilitates comparisons with different peer firms, lots of which use comparable non-GAAP monetary measures to complement their GAAP outcomes.

Although Adjusted EBITDA is steadily utilized by buyers and securities analysts of their evaluations of firms, Adjusted EBITDA has limitations as an analytical instrument, and shouldn’t be thought of in isolation or as a substitute for evaluation of our outcomes of operations as reported beneath GAAP. These limitations embrace:

• Stock-based compensation is a non-cash cost and can stay a component of our long-term incentive compensation bundle, though we exclude it as an expense when evaluating our ongoing working efficiency for a specific interval.
• Depreciation and amortization are non-cash costs, and the property being depreciated or amortized will typically have to get replaced sooner or later, however Adjusted EBITDA doesn’t replicate any money necessities for these replacements.
• Change in truthful worth of economic devices is a non-cash achieve or loss. Liability-classified monetary devices symbolize potential future obligations to settle liabilities by issuing the Company’s frequent inventory. Adjusted EBITDA doesn’t replicate modifications within the truthful worth of those obligations.
• Adjusted EBITDA doesn’t replicate modifications in our working capital wants, capital expenditures, or contractual commitments.
• Adjusted EBITDA doesn’t replicate money necessities for earnings taxes and the money affect of different earnings or expense.
• Other firms might calculate Adjusted EBITDA in a different way than we do, limiting its usefulness as a comparative measure.

Our Adjusted EBITDA is influenced by fluctuations in our income and the timing and quantities of our investments in our operations. Adjusted EBITDA shouldn’t be thought of as a substitute for web earnings (loss), earnings (loss) from operations, or every other measure of economic efficiency calculated and introduced in accordance with GAAP.

Investor Relations Contact:
Drew Haroldson
[email protected]

Media Contact:
[email protected]

Source: Shift Technologies, Inc.

SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIES
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