Shift Announces Third Quarter Results

• Sold 4,855 ecommerce models and achieved $161.9 million in income
• Achieved sturdy Adjusted gross revenue per unit of $1,925, regardless of macroeconomic headwinds and decrease ASP automobiles
• Successfully executed restructuring plan as outlined in final quarter’s earnings name

SAN FRANCISCO, Nov. 08, 2022 (GLOBE NEWSWIRE) — Shift Technologies, Inc. (Nasdaq: SFT), a number one end-to-end ecommerce platform for getting and promoting used automobiles, in the present day reported third quarter monetary outcomes for the interval ended September 30, 2022. Management’s commentary on third quarter monetary outcomes and outlook for the fourth quarter and full yr 2022 may be discovered by accessing the Company’s ready remarks on traders.shift.com, or by listening to in the present day’s convention name. A dwell audio webcast may also be obtainable on Shift’s Investor Relations web site.

“The third quarter represented a period of transition as we executed upon our revised business plan, which focuses on growing unit economics and driving SG&A costs lower,” stated CEO Jeff Clementz. “Despite the transition period, we introduced several exciting product updates and evolve our eCommerce capabilities. I’m extremely proud of how our team has continued to operate at the highest level through this challenging macro environment and the changes in the business.”

Third Quarter 2022 Operating Results

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

• Total income for the quarter declined 10% year-over-year to $161.9 million.
• Total ecommerce models offered had been 4,855, a lower of 25%.
• Gross revenue per unit was $84; Adjusted gross revenue per unit¹ (“Adjusted GPU”) was $1,925.
• Net loss was $75.8 million or 47% of income, in comparison with $52.2 million or 23% of income within the second quarter of 2022. Adjusted EBITDA¹ loss was $30.0 million or 18.5% of income, in comparison with $36.9 million or 16.5% of income within the second quarter of 2022.
• SG&A bills had been $49.8 million, or 30.8% of income, versus $57.9 million or 32.2% of income final yr and $58.7 million, or 26.3% of income within the second quarter of 2022.

Fourth Quarter Outlook

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

• Revenue within the vary of $60 – $70 million,
• Adjusted GPU^1,2 within the vary of $1,800 – $1,900
• Adjusted EBITDA^1,2 lack of $20 – $25 million

Fiscal Year 2022 Outlook

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

• Revenue within the vary of $665 – $675 million
• Adjusted GPU^1,2 of $1,700 – $1,800 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.
2 Specific quantifications of the quantities that might be required to reconcile these things aren’t obtainable. The Company believes that due to the ahead wanting nature of the adjusted EBITDA loss and adjusted gross revenue steerage, there may be uncertainty and unpredictability with respect to sure of its GAAP measures which preclude the Company from offering correct steerage 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 suggest a level of precision that might be complicated or misleading to traders for the explanations recognized above.}

Shift Third Quarter 2022 Results Summary                                                                         

Conference Call Information

Shift senior administration will host a convention name in the present day to debate the Company’s Q3’2022 monetary outcomes. This name is scheduled to start at 2:00 pm PT / 5:00 pm ET and may be accessed by dialing (833) 634-1255 or (412) 317-6015. To take heed to a dwell audio webcast, please go to Shift’s Investor Relations web site at traders.shift.com. A telephonic replay of the convention name will probably be obtainable till Tuesday, November 15, 2022, and may be accessed by dialing (877) 344-7529 or (412) 317-0088 and getting into the passcode 5809211.

About Shift

Shift is a number one end-to-end auto ecommerce platform remodeling the used automobile business with a technology-driven, hassle-free buyer expertise. Shift’s mission is to make automobile buy and possession easy — to make shopping for or promoting a used automobile enjoyable, truthful, and accessible to everybody. Shift gives complete, digital options all through the automobile possession lifecycle: discovering the appropriate automobile, 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 automobile possession. For extra info, go to www.shift.com. The contents of our web site aren’t integrated into this press launch.

Important Additional Information

In reference to the proposed transaction, the Company filed a registration assertion on Form S-4 with the Securities and Exchange Commission (the “SEC”), which features a joint proxy assertion of the Company and CarLotz, that additionally constitutes a prospectus of the Company (the “joint proxy statement/prospectus”). Security holders of the Company and CarLotz are urged to fastidiously learn your entire registration assertion and joint proxy assertion/prospectus as a result of they comprise vital info. Security holders of the Company and CarLotz are additionally urged to fastidiously learn different related paperwork filed with the SEC after they grow to be obtainable, together with any amendments or dietary supplements to the registration assertion and joint proxy assertion/prospectus, as a result of they’ll comprise vital info. A definitive joint proxy assertion/prospectus will probably be despatched to the Company’s stockholders and to CarLotz’s stockholders. Security holders will have the ability to acquire the registration assertion and the joint proxy assertion/prospectus from the SEC’s web site or from the Company or CarLotz as described within the paragraph under.

The paperwork filed by the Company with the SEC could also be obtained freed from cost on the SEC’s web site at www.sec.gov. These paperwork might also be obtained freed from cost from the Company by requesting them by mail at 290 Division Street, Suite 400, San Francisco, California 94103. 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 might also be obtained freed from cost from CarLotz by requesting them by mail at 3301 W. Moore St., Richmond, Virginia 23230.

Participants within the Solicitation

The Company, CarLotz and sure of their administrators, govt officers and staff could also be deemed members within the solicitation of proxies in reference to the proposed transaction. Information concerning the individuals who might, beneath the principles of the SEC, be deemed members within the solicitation of proxies in reference to the proposed transaction, together with an outline of their direct or oblique pursuits, by safety holdings or in any other case, is about forth within the Registration Statement. Information concerning the administrators and govt officers of CarLotz is about forth within the definitive proxy assertion for CarLotz’s 2022 annual assembly of stockholders, 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’s subsequent filings with the SEC. Information concerning the administrators and govt officers of the Company and their possession of the Company’s shares is about forth within the definitive proxy assertion for the Company’s 2022 annual assembly of stockholders, 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 by 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 via 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 regulation.

Forward-Looking Statements

This doc consists of “forward looking statements” inside 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 related expressions that predict or point out future occasions or developments or that aren’t statements of historic issues. Such ahead wanting statements embody estimated monetary info. Such ahead wanting statements with respect to revenues, earnings, efficiency, methods, prospects and different features of Shift’s business are based mostly on present expectations which are topic to dangers and uncertainties. A variety of elements might trigger precise outcomes or outcomes to vary materially from these indicated by such ahead wanting statements. These elements embody, however aren’t restricted to: (1) Shift’s means to maintain its present development, which can be affected by, amongst different issues, competitors, Shift’s means to develop and handle development profitably, preserve relationships with prospects and suppliers and retain its administration and key staff; (2) modifications in relevant legal guidelines or rules; (3) the chance 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 flexibility for Shift to execute its development technique; (6) Shift’s means to buy enough portions of automobiles at engaging costs; (7) the danger that the circumstances to the closing of the transaction aren’t happy, together with the danger that required approvals from the stockholders of Shift or CarLotz for the transaction aren’t obtained; (8) litigation referring to the transaction; (9) uncertainties as to the timing of the consummation of the transaction and the flexibility 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 flexibility of Shift and CarLotz to retain and rent key personnel; (12) aggressive responses to the proposed transaction; (13) sudden prices, costs or bills ensuing from the transaction; (14) potential opposed reactions or modifications to business relationships ensuing from the announcement or completion of the transaction; (15) the mixed firms’ means to realize the synergies anticipated from the transaction, in addition to delays, challenges and bills related to integrating the mixed firms’ present companies; and (16) legislative, regulatory and financial developments and (17) different dangers and uncertainties indicated once in a while 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 communicate solely as of the date made. Shift undertakes no dedication to replace or revise the forward-looking statements, whether or not because of new info, future occasions or in any other case, besides as could also be required by regulation.

Key Operating Metrics

Ecommerce Units Sold

We outline ecommerce models offered because the variety of automobiles offered to prospects in a given interval, web of returns. We at the moment have a seven-day, 200 mile return coverage. The variety of ecommerce models 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 models offered as a key measure of our development, as development 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 models offered because the variety of automobiles offered by wholesale channels in a given interval. While wholesale models aren’t the first driver of income or gross revenue, wholesale is a useful channel because it permits us to have the ability to buy automobiles no matter situation, which is vital 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 automobile that meets our retail requirements.

Ecommerce Average Sale Price

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

Wholesale Average Sale Price

We outline wholesale common sale value as the common value paid by a buyer for a wholesale automobile, calculated as wholesale income divided by wholesale models. We consider this metric gives transparency and is akin 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 method for eliminating duplicate copies of repeating information) every customer based mostly on electronic mail handle and cellphone quantity, if obtainable, and if not, we use the nameless ID which lives in every consumer’s web cookies. This apply ensures that we don’t double-count people who go to our web site a number of occasions inside any given 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 models 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 automobiles obtainable on the market because the variety of ecommerce automobiles in stock on the final day of a given reporting interval. Until we attain an optimum pooled stock stage, we view ecommerce automobiles obtainable on the market as a key measure of our development. Growth in ecommerce automobiles obtainable on the market will increase the collection of automobiles obtainable to shoppers, which we consider will enable us to extend the variety of automobiles we promote. Moreover, development in ecommerce automobiles 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 assessment sure non-GAAP monetary measures to assist us consider our business, measure our efficiency, establish developments affecting our business, set up budgets, measure the effectiveness of investments in our know-how and gross sales and advertising, and assess our operational efficiencies. These non-GAAP measures embody Adjusted Gross Profit, Adjusted gross revenue per unit (“Adjusted GPU”), and Adjusted EBITDA, every of which is mentioned under.

These non-GAAP monetary measures aren’t supposed 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 guage these changes, and assessment the reconciliation of those non-GAAP monetary measures to their most comparable GAAP measures, and the explanations we think about them acceptable. It is vital to notice that the actual gadgets we exclude from, or embody in, our non-GAAP monetary measures might differ from the gadgets excluded from, or included in, related 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 impression related to milestones achieved beneath our Lithia warrant association and depreciation associated to reconditioning services that’s included in price of gross sales. These gadgets resulted in reductions in gross revenue in our consolidated monetary statements as relevant to the durations offered. These are non-cash changes, and we don’t anticipate any materials future non-cash gross revenue changes associated to the Lithia warrant settlement. We additionally excluded non-recurring losses incurred to liquidate inventories as a part of the Project Focus Restructuring Plan. We study adjusted gross revenue in combination 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 full variety of ecommerce models offered within the interval. Adjusted GPU is pushed by ecommerce automobile income, which generates further income by 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 consider Adjusted GPU is a key measure of our development 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, impression of warrant remeasurement, warrant milestone impression, and different money and non-cash based mostly earnings or bills that we don’t think about indicative of our core working efficiency. Adjusted EBITDA Margin is outlined as Adjusted EBITDA divided by income. We consider Adjusted EBITDA is helpful to traders in evaluating our efficiency for the next causes:

• Adjusted EBITDA is extensively utilized by traders and securities analysts to measure an organization’s efficiency with out regard to gadgets resembling these we exclude in calculating this measure, which may differ considerably from firm to firm relying upon their financing, capital buildings, and the strategy by which property had been acquired.
• Our administration makes use of Adjusted EBITDA together with GAAP monetary measures for planning functions, together with the preparation of our annual working funds, 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 gives a measure of consistency and comparability with our previous efficiency that many traders discover helpful, facilitates period-to-period comparisons of operations, and in addition facilitates comparisons with different peer firms, a lot of which use related non-GAAP monetary measures to complement their GAAP outcomes.

Although Adjusted EBITDA is ceaselessly utilized by traders and securities analysts of their evaluations of firms, Adjusted EBITDA has limitations as an analytical device, and shouldn’t be thought of in isolation or as an alternative choice to evaluation of our outcomes of operations as reported beneath GAAP. These limitations embody however aren’t restricted to:

• Stock-based compensation is a non-cash cost and can stay a component of our long-term incentive compensation package deal, 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 mirror any money necessities for these replacements.
• Change in truthful worth of monetary devices is a non-cash acquire or loss. Liability-classified monetary devices signify potential future obligations to settle liabilities by issuing the Company’s widespread inventory. Adjusted EBITDA doesn’t mirror modifications within the truthful worth of those obligations.
• Adjusted EBITDA doesn’t mirror modifications in our working capital wants, capital expenditures, or contractual commitments.
• Adjusted EBITDA doesn’t mirror money necessities for earnings taxes and the money impression of different earnings or expense.
• Other firms might calculate Adjusted EBITDA otherwise 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 an alternative choice to web earnings (loss), earnings (loss) from operations, or another measure of monetary efficiency calculated and offered in accordance with GAAP.

Adjusted Selling, General and Administrative Expenses

We outline Adjusted promoting, common and administrative bills (“Adjusted SG&A”) as Selling, General and Administrative Expenses (“SG&A”) adjusted to exclude these SG&A gadgets which are excluded from Adjusted EBITDA. These gadgets included however aren’t restricted to stock-based compensation expense, transaction prices, and different money and non-cash based mostly bills that we don’t think about indicative of our core working efficiency. We consider Adjusted SG&A is helpful to traders in evaluating our efficiency for the next causes:

• Adjusted SG&A is extensively utilized by traders and securities analysts to measure an organization’s efficiency with out regard to gadgets resembling these we exclude in calculating this measure, which may differ considerably from firm to firm relying upon their financing, capital buildings, and the strategy by which property had been acquired.
• Our administration makes use of Adjusted SG&A together with GAAP monetary measures for planning functions, together with the preparation of our annual working funds, as a measure of efficiency and the effectiveness of our business methods, and in communications with our board of administrators regarding our efficiency.
• Adjusted SG&A gives a measure of consistency and comparability with our previous efficiency that many traders discover helpful, facilitates period-to-period comparisons of operations, and in addition facilitates comparisons with different peer firms, a lot of which use related non-GAAP monetary measures to complement their GAAP outcomes.

Although Adjusted SG&A is ceaselessly utilized by traders and securities analysts of their evaluations of firms, Adjusted SG&A has limitations as an analytical device, and shouldn’t be thought of in isolation or as an alternative choice to evaluation of our outcomes of operations as reported beneath GAAP. These limitations embody however aren’t restricted to:

• Stock-based compensation is a non-cash cost and can stay a component of our long-term incentive compensation package deal, though we exclude it as an expense when evaluating our ongoing working efficiency for a specific interval.
• Adjusted SG&A doesn’t mirror modifications in our working capital wants, capital expenditures, or contractual commitments.
• Other firms might calculate Adjusted SG&A otherwise than we do, limiting its usefulness as a comparative measure.

Our Adjusted SG&A is influenced by fluctuations within the timing and quantities of our investments in our operations. Adjusted SG&A shouldn’t be thought of as an alternative choice to SG&A or another measure of monetary efficiency calculated and offered in accordance with GAAP.

Investor Relations Contact:
[email protected] 

Media Contact:
[email protected] 

Source: Shift Technologies, Inc.

^{(1) Includes non-cash costs associated to the Lithia warrants and recorded as contra-revenue on the condensed consolidated statements of operations and complete loss.
(2) Includes non-recurring losses on stock liquidation incurred as a part of the beforehand introduced Restructuring Plan.
(3) Includes depreciation expense attributed to reconditioning services included in price of gross sales on the condensed consolidated statements of operations and complete loss.}

^{(1) Includes non-cash costs associated to the Lithia warrants and recorded as contra-revenue on the condensed consolidated statements of operations and complete loss.
(2) Includes non-recurring losses on stock liquidation incurred as a part of the beforehand introduced Restructuring Plan.
(3) Includes depreciation expense attributed to reconditioning services included in price of gross sales on the condensed consolidated statements of operations and complete loss.}

^{(1) Includes non-cash costs associated to the Lithia warrants and recorded as contra-revenue on the condensed consolidated statements of operations and complete loss.
(2) Includes depreciation expense attributed to reconditioning services included in price of gross sales on the condensed consolidated statements of operations and complete loss.}

SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of Gross Profit Per Unit To Adjusted Gross Profit Per Unit (Historical)
(unaudited)

^{(1) Includes non-cash costs associated to the Lithia warrants and recorded as contra-revenue on the condensed consolidated statements of operations and complete loss.
(2) Includes depreciation expense attributed to reconditioning services included in price of gross sales on the condensed consolidated statements of operations and complete loss.}

^{(1) Includes non-cash costs associated to the Lithia warrants and recorded as contra-revenue on the condensed consolidated statements of operations and complete loss.
(2) Includes non-cash lease costs associated to the closure of the Company’s services in Miami and Las Vegas.
(3) Includes web losses on stock liquidated as a part of the beforehand introduced Restructuring Plan.
(4) Includes termination charges and non-cash lease expense associated to leases of closing hubs as a result of Restructuring Plan.
(5) Includes losses on property offered or disposed from closing hubs as a result of Restructuring Plan.
(6) Includes non-cash costs associated to the early decommissioning of capitalized inner use software program prices as a consequence of modifications in business technique arising from the Restructuring Plan
(7) Includes severance quantities associated to the Restructuring Plan and the CEO transition.
(8) Includes achievement, lease, payroll, services, and different working bills associated to the method of closing varied hubs as a result of Restructuring Plan.}