Shift Technologies, Inc. (Nasdaq: SFT), a leading end-to-end
ecommerce platform for buying and selling used cars, today reported
fourth quarter financial results for the period ended
December 31, 2022. Management’s commentary on fourth quarter
financial results and outlook for the first quarter 2023 can be
found by accessing the Company’s prepared remarks on
investors.shift.com, or by listening to today’s conference call. A
live audio webcast will also be available on Shift’s Investor
Relations website.
“2022 was a year of significant change for
Shift,” said CEO Jeff Clementz. “Given market dynamics of the auto
industry and capital markets, we adjusted our strategy to
prioritize balance sheet health, reduce cash burn, and accelerate
our path to profitability. During the fourth quarter, we closed our
merger with CarLotz and began our transition to an omnichannel
selling model which is now complete. We also continue to invest in
our technology and marketplace to improve the customer experience
and expand our business. Given the structural changes to our
strategy, we expect sequential improvement in financial performance
each quarter in 2023.”
In addition to announcing fourth quarter results, the Company
announces the following:
- On March 22, 2023, the Company was informed by the Nasdaq
Stock Market that the Company has regained compliance with Nasdaq
Listing Rule 5550(a)(2), otherwise known as the minimum bid price
requirement, and the matter is now closed.
- The Company has closed its location in Downers Grove, IL, to
focus on its West Coast markets.
Fourth Quarter
2022 Operating Results
All comparisons for the quarter are year-over-year unless
otherwise specified.
- Total revenue for the quarter was $65.6
million.
- Total retail units sold were
2,520.
- Gross profit per unit was $895;
Adjusted gross profit per unit1 (“Adjusted GPU”) was $1,041.
- Net income was $13.0 million or 20% of
revenue, compared to a net loss of $75.8 million or 47% of revenue
in the third quarter of 2022. Net income for the fourth quarter
includes a gain on bargain purchase of $76.7 million related to the
acquisition of CarLotz, Inc. Adjusted EBITDA1 loss was $25.5
million or 38.9% of revenue, compared to $30.0 million or 18.5% of
revenue in the third quarter of 2022.
- SG&A expenses were $41.9 million,
or 64.0% of revenue, versus $63.8 million or 32.5% of revenue last
year and $49.8 million, or 30.8% of revenue in the third quarter of
2022.
First Quarter
2023 and Full Year 2023
Outlook
We are providing guidance for the first quarter of fiscal year
2023 as follows:
- Revenue in the range of $56 - $58
million,
- Adjusted GPU1,2 in the range of $1,600
- $1,800
- Adjusted EBITDA1,2 loss of $24 - $26
million
- Q1'23 ending cash balance of
approximately $70.0 million.
Guidance for the 2023 full year is as follows:
- Adjusted SG&A expenses to end the
year between $85 - $95 million annualized
____________________________________________________________1Adjusted
Gross Profit, Adjusted Gross Profit per Unit (GPU), Adjusted
EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures.
Please see the discussion in the section “Explanation of Non-GAAP
Measures” and the reconciliations included at the end of this press
release.2Specific quantifications of the amounts that would be
required to reconcile these items are not available. The Company
believes that because of the forward looking nature of the adjusted
EBITDA loss and adjusted gross profit guidance, there is
uncertainty and unpredictability with respect to certain of its
GAAP measures which preclude the Company from providing accurate
guidance on certain forward-looking GAAP to non-GAAP
reconciliations. The Company believes that providing estimates of
the amounts that would be required to reconcile the range of the
Company’s adjusted EBITDA and adjusted gross profit would imply a
degree of precision that would be confusing or misleading to
investors for the reasons identified above.
Shift Fourth
Quarter 2022 Results
Summary
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
Change (%) |
|
|
2022 |
|
|
|
2021 |
|
|
Change (%) |
|
(in thousands, except per unit and per share
amounts) |
Revenue |
$ |
65,569 |
|
|
$ |
196,216 |
|
|
(67 |
)% |
|
$ |
670,753 |
|
|
$ |
636,869 |
|
|
5 |
% |
Gross profit |
|
2,256 |
|
|
|
12,141 |
|
|
(81 |
)% |
|
|
25,333 |
|
|
|
48,788 |
|
|
(48 |
)% |
Adjusted gross profit |
|
2,622 |
|
|
|
12,567 |
|
|
(79 |
)% |
|
|
35,774 |
|
|
|
50,092 |
|
|
(29 |
)% |
Net loss |
|
13,014 |
|
|
|
(54,463 |
) |
|
(124 |
)% |
|
|
(172,042 |
) |
|
|
(166,268 |
) |
|
3 |
% |
Net income (loss) per share,
basic |
|
1.26 |
|
|
|
(6.96 |
) |
|
(118 |
)% |
|
|
(19.91 |
) |
|
|
(21.29 |
) |
|
(6 |
)% |
Net income (loss) per share,
diluted |
|
1.25 |
|
|
|
(6.96 |
) |
|
(118 |
)% |
|
|
(19.91 |
) |
|
|
(21.29 |
) |
|
(6 |
)% |
Adjusted EBITDA loss |
|
(25,538 |
) |
|
|
(43,691 |
) |
|
(42 |
)% |
|
|
(138,956 |
) |
|
|
(137,575 |
) |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per unit |
$ |
895 |
|
|
$ |
1,885 |
|
|
(53 |
)% |
|
$ |
1,208 |
|
|
$ |
2,098 |
|
|
(42 |
)% |
Adjusted gross profit per
unit |
$ |
1,041 |
|
|
$ |
1,951 |
|
|
(47 |
)% |
|
$ |
1,707 |
|
|
$ |
2,154 |
|
|
(21 |
)% |
Average selling price per
retail unit |
$ |
22,849 |
|
|
$ |
25,384 |
|
|
(10 |
)% |
|
$ |
26,503 |
|
|
$ |
23,155 |
|
|
14 |
% |
Retail units sold |
|
2,520 |
|
|
|
6,441 |
|
|
(61 |
)% |
|
|
20,961 |
|
|
|
23,251 |
|
|
(10 |
)% |
Share and per-share amounts have been adjusted to
give effect to the Company’s 10 for 1 reverse stock split effective
March 8, 2023
Conference Call Information
Shift senior management will host a conference call today to
discuss the Company’s Q4'22 financial results. This call is
scheduled to begin at 2:00 pm PT / 5:00 pm ET and can be accessed
by dialing (833) 634-1255 or (412) 317-6015. To listen to a live
audio webcast, please visit Shift’s Investor Relations website at
investors.shift.com. A telephonic replay of the conference call
will be available until Tuesday, April 4, 2023, and can be accessed
by dialing (877) 344-7529 or (412) 317-0088 and entering the
passcode 2098340.
About Shift
Shift is a consumer-centric omnichannel retailer transforming
the used car industry by leveraging its end-to-end ecommerce
platform and retail locations to provide a technology-driven,
hassle-free customer experience. Shift’s mission is to make car
purchase and ownership simple — to make buying or selling a used
car fun, fair, and accessible to everyone. Shift provides
comprehensive, digital solutions throughout the car ownership
lifecycle: finding the right car, a seamless digitally-driven
purchase transaction including financing and vehicle protection
products, an efficient, digital trade-in/sale transaction, and a
vision to provide high-value support services during car ownership.
For more information, visit www.shift.com. The contents of our
website are not incorporated into this press release.
Forward-Looking Statements
This document includes “forward looking statements” within the
meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
“forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,”
“expect,” “estimate,” “plan,” “outlook,” and “project” and other
similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. Such
forward looking statements include estimated financial information.
Such forward looking statements with respect to revenues, earnings,
performance, strategies, prospects and other aspects of Shift’s
business are based on current expectations that are subject to
risks and uncertainties. A number of factors could cause actual
results or outcomes to differ materially from those indicated by
such forward looking statements. These factors include, but are not
limited to: (1) Shift’s ability to sustain its current growth,
which may be affected by, among other things, competition, Shift’s
ability to grow and manage growth profitably, maintain
relationships with customers and suppliers and retain its
management and key employees; (2) changes in applicable laws or
regulations; (3) the possibility that Shift may be adversely
affected by other economic, business, and/or competitive factors;
(4) the operational and financial outlook of Shift; (5) the ability
for Shift to execute its growth strategy; (6) Shift’s ability to
purchase sufficient quantities of vehicles at attractive prices;
(7) legislative, regulatory and economic developments and (8) other
risks and uncertainties indicated from time to time in other
documents filed or to be filed with the SEC by Shift. You are
cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Shift undertakes
no commitment to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by law.
Key Operating Metrics
Retail Units Sold
We define retail units sold as the number of vehicles sold to
customers in a given period, net of returns. We currently have a
seven-day, 200 mile return policy. The number of retail units sold
is the primary driver of our revenues and, indirectly, gross
profit, since retail unit sales enable multiple complementary
revenue streams, including all financing and protection products.
We view retail units sold as a key measure of our growth, as growth
in this metric is an indicator of our ability to successfully scale
our operations while maintaining product integrity and customer
satisfaction.
Wholesale Units Sold
We define wholesale units sold as the number of vehicles sold
through wholesale channels in a given period. While wholesale units
are not the primary driver of revenue or gross profit, wholesale is
a valuable channel as it allows us to be able to purchase vehicles
regardless of condition, which is important for the purpose of
accepting a trade-in from a customer making a vehicle purchase from
us, and as an online destination for consumers to sell their cars
even if not selling us a car that meets our retail standards.
Retail Average Sale Price
We define retail average sale price (“ASP”) as the average price
paid by a customer for an retail vehicle, calculated as retail
revenue divided by retail units. Retail average sale price helps us
gauge market demand in real-time and allows us to maintain a range
of inventory that most accurately reflects the overall price
spectrum of used vehicle sales in the market.
Wholesale Average Sale Price
We define wholesale average sale price as the average price paid
by a customer for a wholesale vehicle, calculated as wholesale
revenue divided by wholesale units. We believe this metric provides
transparency and is comparable to our peers.
Average Monthly Unique Visitors
We define a monthly unique visitor as an individual who has
visited our website within a calendar month, based on data
collected on our website. We calculate average monthly unique
visitors as the sum of monthly unique visitors in a given period,
divided by the number of months in that period. To classify whether
a visitor is “unique”, we dedupe (a technique for eliminating
duplicate copies of repeating data) each visitor based on email
address and phone number, if available, and if not, we use the
anonymous ID which lives in each user’s internet cookies. This
practice ensures that we do not double-count individuals who visit
our website multiple times within any given month. We view average
monthly unique visitors as a key indicator of the strength of our
brand, the effectiveness of our advertising and merchandising
campaigns and consumer awareness.
Average Days to Sale
We define average days to sale as the number of days between
Shift’s acquisition of a vehicle and sale of that vehicle to a
customer, averaged across all retail units sold in a period. We
view average days to sale as a useful metric in understanding the
health of our inventory.
Retail Vehicles Available for Sale
We define retail vehicles available for sale as the number of
retail vehicles in inventory on the last day of a given reporting
period. Until we reach an optimal pooled inventory level, we view
retail vehicles available for sale as a key measure of our growth.
Growth in retail vehicles available for sale increases the
selection of vehicles available to consumers, which we believe will
allow us to increase the number of vehicles we sell. Moreover,
growth in retail vehicles available for sale is an indicator of our
ability to scale our vehicle purchasing, inspection and
reconditioning operations.
Explanation Of Non-GAAP Measures
In addition to our GAAP results, we review certain non-GAAP
financial measures to help us evaluate our business, measure our
performance, identify trends affecting our business, establish
budgets, measure the effectiveness of investments in our technology
and sales and marketing, and assess our operational efficiencies.
These non-GAAP measures include Adjusted Gross Profit, Adjusted
gross profit per unit (“Adjusted GPU”), and Adjusted EBITDA, each
of which is discussed below.
These non-GAAP financial measures are not intended to be
considered in isolation from, as substitutes for, or as superior
to, the corresponding financial measures prepared in accordance
with GAAP. You are encouraged to evaluate these adjustments, and
review the reconciliation of these non-GAAP financial measures to
their most comparable GAAP measures, and the reasons we consider
them appropriate. It is important to note that the particular items
we exclude from, or include in, our non-GAAP financial measures may
differ from the items excluded from, or included in, similar
non-GAAP financial measures used by other companies. 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 part of this shareholder letter.
Adjusted Gross Profit
Management evaluates our business based on an adjusted gross
profit calculation that removes the financial impact associated
with milestones achieved under our Lithia warrant arrangement and
depreciation related to reconditioning facilities that is included
in cost of sales. These items resulted in reductions in gross
profit in our consolidated financial statements as applicable to
the periods presented. These are non-cash adjustments, and we do
not expect any material future non-cash gross profit adjustments
related to the Lithia warrant agreement. We also excluded
non-recurring losses incurred to liquidate inventories as part of
the Project Focus Restructuring Plan. We examine adjusted gross
profit in aggregate as well as for each of our revenue streams:
retail, other, and wholesale.
Adjusted Gross Profit per Unit
We define adjusted gross profit per unit (“Adjusted GPU”) as the
adjusted gross profit for retail, other and wholesale, each of
which divided by the total number of retail units sold in the
period. Adjusted GPU is driven by retail vehicle revenue, which
generates additional revenue through attachment of our financing
and protection products, and gross profit generated from wholesale
vehicle sales. We present Adjusted GPU from our three revenues
streams, as Retail Adjusted GPU, Wholesale Adjusted GPU and Other
Adjusted GPU. We believe Adjusted GPU is a key measure of our
growth and long-term profitability.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net loss adjusted to exclude
stock-based compensation expense, depreciation and amortization,
net interest income or expense, impact of warrant remeasurement,
warrant milestone impact, and other cash and non-cash based income
or expenses that we do not consider indicative of our core
operating performance. Adjusted EBITDA Margin is defined as
Adjusted EBITDA divided by revenue. We believe Adjusted EBITDA is
useful to investors in evaluating our performance for the following
reasons:
- Adjusted EBITDA is widely used by
investors and securities analysts to measure a company’s
performance without regard to items such as those we exclude in
calculating this measure, which can vary substantially from company
to company depending upon their financing, capital structures, and
the method by which assets were acquired.
- Our management uses Adjusted EBITDA in
conjunction with GAAP financial measures for planning purposes,
including the preparation of our annual operating budget, as a
measure of performance and the effectiveness of our business
strategies, and in communications with our board of directors
concerning our performance.
- Adjusted EBITDA provides a measure of
consistency and comparability with our past performance that many
investors find useful, facilitates period-to-period comparisons of
operations, and also facilitates comparisons with other peer
companies, many of which use similar non-GAAP financial measures to
supplement their GAAP results.
Although Adjusted EBITDA is frequently used by investors and
securities analysts in their evaluations of companies, Adjusted
EBITDA has limitations as an analytical tool, and should not be
considered in isolation or as a substitute for analysis of our
results of operations as reported under GAAP. These limitations
include but are not limited to:
- Stock-based compensation is a non-cash
charge and will remain an element of our long-term incentive
compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular
period.
- Depreciation and amortization are
non-cash charges, and the assets being depreciated or amortized
will often have to be replaced in the future, but Adjusted EBITDA
does not reflect any cash requirements for these replacements.
- Change in fair value of financial
instruments is a non-cash gain or loss. Liability-classified
financial instruments represent potential future obligations to
settle liabilities by issuing the Company’s common stock. Adjusted
EBITDA does not reflect changes in the fair value of these
obligations.
- Adjusted EBITDA does not reflect
changes in our working capital needs, capital expenditures, or
contractual commitments.
- Adjusted EBITDA does not reflect cash
requirements for income taxes and the cash impact of other income
or expense.
- Other companies may calculate Adjusted
EBITDA differently than we do, limiting its usefulness as a
comparative measure.
Our Adjusted EBITDA is influenced by fluctuations in our revenue
and the timing and amounts of our investments in our operations.
Adjusted EBITDA should not be considered as an alternative to net
income (loss), income (loss) from operations, or any other measure
of financial performance calculated and presented in accordance
with GAAP.
Adjusted Selling, General and Administrative
Expenses
We define Adjusted selling, general and administrative expenses
(“Adjusted SG&A”) as Selling, General and Administrative
Expenses (“SG&A”) adjusted to exclude those SG&A items that
are excluded from Adjusted EBITDA. These items included but are not
limited to stock-based compensation expense, transaction costs, and
other cash and non-cash based expenses that we do not consider
indicative of our core operating performance. We believe Adjusted
SG&A is useful to investors in evaluating our performance for
the following reasons:
- Adjusted SG&A is widely used by
investors and securities analysts to measure a company’s
performance without regard to items such as those we exclude in
calculating this measure, which can vary substantially from company
to company depending upon their financing, capital structures, and
the method by which assets were acquired.
- Our management uses Adjusted SG&A
in conjunction with GAAP financial measures for planning purposes,
including the preparation of our annual operating budget, as a
measure of performance and the effectiveness of our business
strategies, and in communications with our board of directors
concerning our performance.
- Adjusted SG&A provides a measure
of consistency and comparability with our past performance that
many investors find useful, facilitates period-to-period
comparisons of operations, and also facilitates comparisons with
other peer companies, many of which use similar non-GAAP financial
measures to supplement their GAAP results.
Although Adjusted SG&A is frequently used by investors and
securities analysts in their evaluations of companies, Adjusted
SG&A has limitations as an analytical tool, and should not be
considered in isolation or as a substitute for analysis of our
results of operations as reported under GAAP. These limitations
include but are not limited to:
- Stock-based compensation is a non-cash
charge and will remain an element of our long-term incentive
compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular
period.
- Adjusted SG&A does not reflect
changes in our working capital needs, capital expenditures, or
contractual commitments.
- Other companies may calculate Adjusted
SG&A differently than we do, limiting its usefulness as a
comparative measure.
Our Adjusted SG&A is influenced by fluctuations in the
timing and amounts of our investments in our operations. Adjusted
SG&A should not be considered as an alternative to SG&A or
any other measure of financial performance calculated and presented
in accordance with GAAP.
Investor Relations Contact:IR@shift.com
Media Contact:press@shift.com
Source: Shift Technologies, Inc.
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESConsolidated Balance
Sheets(in thousands, except share and per share
amounts)(unaudited)
|
As of December 31, 2022 |
|
As of December 31, 2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
96,159 |
|
|
$ |
182,616 |
|
Restricted cash, current |
|
10,632 |
|
|
|
— |
|
Marketable securities at fair value |
|
1,264 |
|
|
|
— |
|
Accounts receivable, net of allowance for doubtful accounts of $93
and $304 |
|
4,558 |
|
|
|
20,084 |
|
Inventory |
|
40,925 |
|
|
|
122,743 |
|
Prepaid expenses and other current assets |
|
7,657 |
|
|
|
7,392 |
|
Operating and finance lease assets, property and equipment,
accounts receivable, and other assets held for sale |
|
17,226 |
|
|
|
— |
|
Total current assets |
|
178,421 |
|
|
|
332,835 |
|
Restricted cash,
non-current |
|
1,055 |
|
|
|
11,725 |
|
Marketable securities at fair
value, non-current |
|
707 |
|
|
|
— |
|
Property and equipment,
net |
|
6,797 |
|
|
|
7,940 |
|
Operating lease assets |
|
44,568 |
|
|
|
— |
|
Finance lease assets, net |
|
152 |
|
|
|
— |
|
Capitalized website and
internal use software costs, net |
|
10,657 |
|
|
|
9,262 |
|
Goodwill |
|
2,070 |
|
|
|
— |
|
Deferred borrowing costs |
|
268 |
|
|
|
564 |
|
Other non-current assets |
|
3,323 |
|
|
|
3,414 |
|
Total assets |
$ |
248,018 |
|
|
$ |
365,740 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
12,085 |
|
|
$ |
15,175 |
|
Accrued expenses and other current liabilities |
|
33,872 |
|
|
|
43,944 |
|
Operating lease liabilities, current |
|
8,865 |
|
|
|
— |
|
Finance lease liabilities, current |
|
271 |
|
|
|
— |
|
Operating and finance lease liabilities and other liabilities
associated with assets held for sale |
|
15,432 |
|
|
|
— |
|
Flooring line of credit |
|
24,831 |
|
|
|
83,252 |
|
Total current liabilities |
|
95,356 |
|
|
|
142,371 |
|
Long-term debt, net |
|
163,363 |
|
|
|
144,335 |
|
Operating lease liabilities,
non-current |
|
44,985 |
|
|
|
— |
|
Finance lease liabilities,
non-current |
|
3,989 |
|
|
|
— |
|
Other non-current
liabilities |
|
111 |
|
|
|
3,762 |
|
Total liabilities |
|
307,804 |
|
|
|
290,468 |
|
|
|
|
|
Stockholders’ equity
(deficit): |
|
|
|
Preferred stock – par value
$0.0001 per share; 1,000,000 shares authorized at December 31,
2022 and December 31, 2021, respectively |
|
— |
|
|
|
— |
|
Common stock – par value $0.0001
per share; 500,000,000 shares authorized at December 31, 2022
and December 31, 2021, respectively; 17,212,130 and 8,136,931
shares issued and outstanding at December 31, 2022 and
December 31, 2021, respectively |
|
2 |
|
|
|
1 |
|
Additional paid-in capital |
|
552,968 |
|
|
|
515,982 |
|
Accumulated other comprehensive loss |
|
(3 |
) |
|
|
— |
|
Accumulated deficit |
|
(612,753 |
) |
|
|
(440,711 |
) |
Total stockholders’ equity (deficit) |
|
(59,786 |
) |
|
|
75,272 |
|
Total liabilities and stockholders’ equity (deficit) |
$ |
248,018 |
|
|
$ |
365,740 |
|
Share and per-share amounts have been adjusted to
give effect to the Company’s 10 for 1 reverse stock split effective
March 8, 2023 SHIFT TECHNOLOGIES INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(in thousands, except share and per
share amounts)(unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Retail revenue, net |
$ |
57,579 |
|
|
$ |
163,498 |
|
|
$ |
555,523 |
|
|
$ |
538,387 |
|
Other revenue, net |
|
3,201 |
|
|
|
7,324 |
|
|
|
27,007 |
|
|
|
22,633 |
|
Wholesale vehicle revenue |
|
4,789 |
|
|
|
25,394 |
|
|
|
88,223 |
|
|
|
75,849 |
|
Total revenue |
|
65,569 |
|
|
|
196,216 |
|
|
|
670,753 |
|
|
|
636,869 |
|
Cost of sales |
|
63,313 |
|
|
|
184,075 |
|
|
|
645,420 |
|
|
|
588,081 |
|
Gross profit |
|
2,256 |
|
|
|
12,141 |
|
|
|
25,333 |
|
|
|
48,788 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
41,940 |
|
|
|
63,791 |
|
|
|
214,008 |
|
|
|
220,055 |
|
Depreciation and amortization |
|
3,359 |
|
|
|
1,549 |
|
|
|
10,456 |
|
|
|
5,586 |
|
Restructuring expenses |
|
334 |
|
|
|
— |
|
|
|
21,001 |
|
|
|
— |
|
Loss on impairment |
|
17,319 |
|
|
|
— |
|
|
|
17,319 |
|
|
|
— |
|
Total operating expenses |
|
62,952 |
|
|
|
65,340 |
|
|
|
262,784 |
|
|
|
225,641 |
|
Loss from operations |
|
(60,696 |
) |
|
|
(53,199 |
) |
|
|
(237,451 |
) |
|
|
(176,853 |
) |
Change in fair value of
financial instruments |
|
— |
|
|
|
1,302 |
|
|
|
— |
|
|
|
18,893 |
|
Gain on bargain purchase |
|
76,685 |
|
|
|
— |
|
|
|
76,685 |
|
|
|
— |
|
Interest and other expense,
net |
|
(2,734 |
) |
|
|
(2,340 |
) |
|
|
(10,950 |
) |
|
|
(8,082 |
) |
Net income (loss) before income taxes |
|
13,255 |
|
|
|
(54,237 |
) |
|
|
(171,716 |
) |
|
|
(166,042 |
) |
Provision for income
taxes |
|
241 |
|
|
|
226 |
|
|
|
326 |
|
|
|
226 |
|
Net income (loss) attributable
to common stockholders |
$ |
13,014 |
|
|
$ |
(54,463 |
) |
|
$ |
(172,042 |
) |
|
$ |
(166,268 |
) |
Net income (loss) per share
attributable to common stockholders, basic |
$ |
1.26 |
|
|
$ |
(6.96 |
) |
|
$ |
(19.91 |
) |
|
$ |
(21.29 |
) |
Net income (loss) per share
attributable to common stockholders, diluted |
$ |
1.25 |
|
|
$ |
(6.96 |
) |
|
$ |
(19.91 |
) |
|
$ |
(21.29 |
) |
Weighted-average number of
shares outstanding used to compute net income (loss) per share
attributable to common stockholders, basic |
|
10,317,221 |
|
|
|
7,825,876 |
|
|
|
8,641,922 |
|
|
|
7,811,414 |
|
Weighted-average number of
shares outstanding used to compute net income (loss) per share
attributable to common stockholders, diluted |
|
12,124,578 |
|
|
|
7,825,876 |
|
|
|
8,641,922 |
|
|
|
7,811,414 |
|
Share and per-share amounts have been adjusted to
give effect to the Company’s 10 for 1 reverse stock split effective
March 8, 2023 SHIFT TECHNOLOGIES INC. AND
SUBSIDIARIESConsolidated Statements of Cash
Flows(in
thousands)(unaudited)
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net loss |
$ |
(172,042 |
) |
|
$ |
(166,268 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
|
11,787 |
|
|
|
6,253 |
|
Stock-based compensation expense |
|
13,029 |
|
|
|
25,130 |
|
Unrealized losses on equity securities |
|
24 |
|
|
|
— |
|
Gain on bargain purchase |
|
(76,685 |
) |
|
|
— |
|
Change in fair value of financial instruments |
|
— |
|
|
|
(18,893 |
) |
Amortization of operating lease right-of-use assets |
|
10,496 |
|
|
|
— |
|
Contra-revenue associated with milestones |
|
637 |
|
|
|
637 |
|
Amortization of debt discounts |
|
2,011 |
|
|
|
2,741 |
|
Non-cash impairment and restructuring expenses |
|
30,692 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
18,158 |
|
|
|
(11,658 |
) |
Inventory |
|
88,409 |
|
|
|
(73,657 |
) |
Prepaid expenses and other current assets |
|
(203 |
) |
|
|
(1,914 |
) |
Other non-current assets |
|
767 |
|
|
|
(1,186 |
) |
Accounts payable |
|
(4,352 |
) |
|
|
4,359 |
|
Accrued expenses and other current liabilities |
|
(19,020 |
) |
|
|
22,375 |
|
Operating lease liabilities |
|
(10,770 |
) |
|
|
— |
|
Other non-current liabilities |
|
(3,354 |
) |
|
|
1,035 |
|
Net cash, cash equivalents, and restricted cash used in operating
activities |
|
(110,416 |
) |
|
|
(211,046 |
) |
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Purchases of property and
equipment |
|
(4,665 |
) |
|
|
(7,524 |
) |
Proceeds from sale of property
and equipment |
|
317 |
|
|
|
— |
|
Purchases of marketable
securities |
|
(67 |
) |
|
|
— |
|
Proceeds from sales of
marketable securities |
|
115 |
|
|
|
— |
|
Capitalized website
internal-use software costs |
|
(10,368 |
) |
|
|
(6,619 |
) |
Cash received from acquisition
of CarLotz, Inc. |
|
95,663 |
|
|
|
— |
|
Cash paid for acquisition of
Fair Dealer Services, LLC |
|
(15,000 |
) |
|
|
— |
|
Net cash, cash equivalents, and restricted cash provided by (used
in) investing activities |
|
65,995 |
|
|
|
(14,143 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Proceeds from flooring line of
credit facility |
|
382,090 |
|
|
|
329,981 |
|
Repayment of flooring line of
credit facility |
|
(440,511 |
) |
|
|
(261,217 |
) |
Exchange of warrants for
cash |
|
— |
|
|
|
(497 |
) |
Proceeds from Senior Unsecured
Notes, net of discounts |
|
19,591 |
|
|
|
— |
|
Payment of debt issuance
costs |
|
(175 |
) |
|
|
(88 |
) |
Proceeds from issuance of
convertible notes |
|
— |
|
|
|
143,768 |
|
Premiums paid for Capped Call
Transactions |
|
— |
|
|
|
(28,391 |
) |
Principal payments on finance
leases |
|
(127 |
) |
|
|
— |
|
Proceeds from stock option
exercises, including from early exercised options |
|
— |
|
|
|
506 |
|
Payment of tax withheld for
common stock issued under stock-based compensation plans |
|
(2,861 |
) |
|
|
— |
|
Repurchase of shares related
to early exercised options |
|
(81 |
) |
|
|
(73 |
) |
Net cash, cash equivalents, and restricted cash provided by (used
in) financing activities |
|
(42,074 |
) |
|
|
183,989 |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(86,495 |
) |
|
|
(41,200 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
|
194,341 |
|
|
|
235,541 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
107,846 |
|
|
$ |
194,341 |
|
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESKey Operating
Metrics(unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Units: |
|
|
|
|
|
|
|
Retail units |
|
2,520 |
|
|
|
6,441 |
|
|
20,961 |
|
|
|
23,251 |
Wholesale units |
|
354 |
|
|
|
1,972 |
|
|
5,344 |
|
|
|
7,067 |
Total units sold |
|
2,874 |
|
|
|
8,413 |
|
|
26,305 |
|
|
|
30,318 |
|
|
|
|
|
|
|
|
Retail ASP |
$ |
22,849 |
|
|
$ |
25,384 |
|
$ |
26,503 |
|
|
$ |
23,155 |
Wholesale ASP |
$ |
13,528 |
|
|
$ |
12,877 |
|
$ |
16,509 |
|
|
$ |
10,733 |
|
|
|
|
|
|
|
|
Gross Profit per
Unit |
|
|
|
|
|
|
|
Retail gross profit per unit |
$ |
203 |
|
|
$ |
572 |
|
$ |
409 |
|
|
$ |
1,087 |
Other gross profit per unit |
|
1,270 |
|
|
|
1,137 |
|
|
1,288 |
|
|
|
973 |
Wholesale gross profit per unit |
|
(578 |
) |
|
|
176 |
|
|
(489 |
) |
|
|
38 |
Total gross profit per
unit |
$ |
895 |
|
|
$ |
1,885 |
|
$ |
1,208 |
|
|
$ |
2,098 |
|
|
|
|
|
|
|
|
Average monthly unique
visitors |
|
531,592 |
|
|
|
829,845 |
|
|
735,824 |
|
|
|
659,358 |
Average days to sale |
|
80 |
|
|
|
57 |
|
|
69 |
|
|
|
54 |
Retail vehicles available for
sale |
|
1,476 |
|
|
|
4,337 |
|
|
1,476 |
|
|
|
4,337 |
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESReconciliation of Gross Profit to
Adjusted Gross Profit(In
thousands)(unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Total gross
profit: |
|
|
|
|
|
|
|
GAAP total gross profit |
$ |
2,256 |
|
|
$ |
12,141 |
|
$ |
25,333 |
|
|
$ |
48,788 |
Warrant impact adjustment
(1) |
|
159 |
|
|
|
159 |
|
|
637 |
|
|
|
637 |
Restructuring - Inventory
liquidation (2) |
|
53 |
|
|
|
— |
|
|
8,598 |
|
|
|
— |
Depreciation in cost of sales
(3) |
|
154 |
|
|
|
267 |
|
|
1,206 |
|
|
|
667 |
Adjusted total gross
profit |
$ |
2,622 |
|
|
$ |
12,567 |
|
$ |
35,774 |
|
|
$ |
50,092 |
|
|
|
|
|
|
|
|
Retail gross
profit: |
|
|
|
|
|
|
|
GAAP retail gross profit |
$ |
512 |
|
|
$ |
3,683 |
|
$ |
8,583 |
|
|
$ |
25,263 |
Warrant impact adjustment
(1) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Restructuring - Inventory
liquidation (2) |
|
53 |
|
|
|
— |
|
|
8,598 |
|
|
|
— |
Depreciation in cost of sales
(3) |
|
154 |
|
|
|
267 |
|
|
1,206 |
|
|
|
667 |
Adjusted retail gross
profit |
$ |
719 |
|
|
$ |
3,950 |
|
$ |
18,387 |
|
|
$ |
25,930 |
|
|
|
|
|
|
|
|
Other gross
profit: |
|
|
|
|
|
|
|
GAAP other gross profit |
$ |
3,201 |
|
|
$ |
7,324 |
|
$ |
27,007 |
|
|
$ |
22,633 |
Warrant impact adjustment
(1) |
|
159 |
|
|
|
159 |
|
|
637 |
|
|
|
637 |
Restructuring - Inventory
liquidation (2) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Depreciation in cost of sales
(3) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Adjusted other gross
profit |
$ |
3,360 |
|
|
$ |
7,483 |
|
$ |
27,644 |
|
|
$ |
23,270 |
|
|
|
|
|
|
|
|
Wholesale gross
profit: |
|
|
|
|
|
|
|
GAAP wholesale gross
profit |
$ |
(1,457 |
) |
|
$ |
1,134 |
|
$ |
(10,257 |
) |
|
$ |
892 |
Warrant impact adjustment
(1) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Restructuring - Inventory
liquidation (2) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Depreciation in cost of sales
(3) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Adjusted wholesale gross
profit (loss) |
$ |
(1,457 |
) |
|
$ |
1,134 |
|
$ |
(10,257 |
) |
|
$ |
892 |
(1) Includes non-cash charges related to the
Lithia warrants and recorded as contra-revenue on the consolidated
statements of operations and comprehensive loss.
(2) Includes non-recurring losses on inventory
liquidation incurred as part of the previously announced
Restructuring Plan.
(3) Includes depreciation expense attributed to
reconditioning facilities included in cost of sales on the
condensed consolidated statements of operations and comprehensive
loss.
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESReconciliation of Gross Profit Per
Unit To Adjusted Gross Profit Per
Unit(unaudited)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Total gross profit per
unit: |
|
|
|
|
|
|
|
GAAP total gross profit per
unit |
$ |
895 |
|
|
$ |
1,885 |
|
$ |
1,208 |
|
|
$ |
2,098 |
Warrant impact adjustment per
unit (1) |
|
64 |
|
|
|
25 |
|
|
31 |
|
|
|
28 |
Restructuring - Inventory
liquidation (2) |
|
21 |
|
|
|
— |
|
|
410 |
|
|
|
— |
Depreciation adjustment per
unit (3) |
|
61 |
|
|
|
41 |
|
|
58 |
|
|
|
28 |
Adjusted total gross profit
per unit |
$ |
1,041 |
|
|
$ |
1,951 |
|
$ |
1,707 |
|
|
$ |
2,154 |
|
|
|
|
|
|
|
|
Retail gross profit
per unit: |
|
|
|
|
|
|
|
GAAP retail gross profit per
unit |
$ |
203 |
|
|
$ |
572 |
|
$ |
409 |
|
|
$ |
1,087 |
Warrant impact adjustment per
unit (1) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Restructuring - Inventory
liquidation (2) |
|
21 |
|
|
|
— |
|
|
410 |
|
|
|
— |
Depreciation adjustment per
unit (3) |
|
61 |
|
|
|
41 |
|
|
58 |
|
|
|
28 |
Adjusted retail gross profit
per unit |
$ |
285 |
|
|
$ |
613 |
|
$ |
877 |
|
|
$ |
1,115 |
|
|
|
|
|
|
|
|
Other gross profit per
unit: |
|
|
|
|
|
|
|
GAAP other gross profit per
unit |
$ |
1,270 |
|
|
$ |
1,137 |
|
$ |
1,288 |
|
|
$ |
973 |
Warrant impact adjustment per
unit (1) |
|
64 |
|
|
|
25 |
|
|
31 |
|
|
|
28 |
Restructuring - Inventory
liquidation (2) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Depreciation adjustment per
unit (3) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Adjusted other gross profit
per unit |
$ |
1,334 |
|
|
$ |
1,162 |
|
$ |
1,319 |
|
|
$ |
1,001 |
|
|
|
|
|
|
|
|
Wholesale gross profit
per unit: |
|
|
|
|
|
|
|
GAAP wholesale gross profit
per unit |
$ |
(578 |
) |
|
$ |
176 |
|
$ |
(489 |
) |
|
$ |
38 |
Warrant impact adjustment per
unit (1) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Restructuring - Inventory
liquidation (2) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Depreciation adjustment per
unit (3) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Adjusted wholesale gross
profit (loss) per unit |
$ |
(578 |
) |
|
$ |
176 |
|
$ |
(489 |
) |
|
$ |
38 |
(1) Includes non-cash charges related to the
Lithia warrants and recorded as contra-revenue on the consolidated
statements of operations and comprehensive loss.
(2) Includes non-recurring losses on inventory
liquidation incurred as part of the previously announced
Restructuring Plan.
(3) Includes depreciation expense attributed to
reconditioning facilities included in cost of sales on the
condensed consolidated statements of operations and comprehensive
loss.
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESReconciliation of Net Loss to Adjusted
EBITDA(In
thousands)(unaudited)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
Adjusted EBITDA Reconciliation |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net Loss |
$ |
13,014 |
|
|
$ |
(54,463 |
) |
|
$ |
(172,042 |
) |
|
$ |
(166,268 |
) |
(+) Interest and other expense, net |
|
2,734 |
|
|
|
2,340 |
|
|
|
10,950 |
|
|
|
8,082 |
|
(+) Stock-based compensation |
|
(270 |
) |
|
|
6,182 |
|
|
|
13,029 |
|
|
|
25,130 |
|
(+) Change in fair value of financial instruments |
|
— |
|
|
|
(1,302 |
) |
|
|
— |
|
|
|
(18,893 |
) |
(+) Depreciation & amortization |
|
3,513 |
|
|
|
1,816 |
|
|
|
11,662 |
|
|
|
6,253 |
|
(+) Warrant impact adjustment - contra-revenue (1) |
|
159 |
|
|
|
159 |
|
|
|
637 |
|
|
|
637 |
|
(+) Merger and acquisition transaction costs (2) |
|
12,557 |
|
|
|
141 |
|
|
|
19,972 |
|
|
|
141 |
|
(+) Costs related to closed locations excluding severance (3) |
|
1,956 |
|
|
|
— |
|
|
|
11,857 |
|
|
|
— |
|
(+) Sales tax penalty accrual (recovery) |
|
(1,218 |
) |
|
|
521 |
|
|
|
(2,149 |
) |
|
|
5,951 |
|
(+) At-the-market sales agreement costs |
|
— |
|
|
|
— |
|
|
|
266 |
|
|
|
— |
|
(+) Provision for income taxes |
|
241 |
|
|
|
226 |
|
|
|
326 |
|
|
|
226 |
|
(+) Severance, retention, and CEO costs (4) |
|
1,104 |
|
|
|
689 |
|
|
|
8,455 |
|
|
|
1,166 |
|
(+) Restructuring costs from inventory, property and equipment, and
capitalized internal-use software (5) |
|
38 |
|
|
|
— |
|
|
|
17,447 |
|
|
|
— |
|
(+) Impairment expense |
|
17,319 |
|
|
|
— |
|
|
|
17,319 |
|
|
|
— |
|
(+) Bargain purchase gain |
|
(76,685 |
) |
|
|
— |
|
|
|
(76,685 |
) |
|
|
— |
|
Adjusted EBITDA |
$ |
(25,538 |
) |
|
$ |
(43,691 |
) |
|
$ |
(138,956 |
) |
|
$ |
(137,575 |
) |
EBITDA Margin (%) |
(38.9)% |
|
(22.3)% |
|
(20.7)% |
|
(21.6)% |
(1) Includes non-cash charges related to the Lithia warrants and
recorded as contra-revenue on the consolidated statements of
operations and comprehensive loss.(2) Includes transaction costs
for the Fair acquisition in the second quarter and the CarLotz
merger in the third and fourth quarters.(3) Includes non-cash lease
charges related to the closure of the Company’s facilities in Miami
and Las Vegas. Includes termination fees and non-cash lease expense
related to leases of closing hubs due to the Restructuring Plan.
Includes fulfillment, lease, payroll, facilities, and other
operating expenses related to the process of closing various hubs
due to the Restructuring Plan. (4) Includes severance amounts
related to the Restructuring Plan and the CEO transition.(5)
Includes net losses on inventory liquidated as part of the
previously announced Restructuring Plan. Includes losses on
property sold or disposed from closing hubs due to the
Restructuring Plan. Includes non-cash charges related to the early
decommissioning of capitalized internal use software costs due to
changes in business strategy arising from the Restructuring
Plan.
SHIFT TECHNOLOGIES, INC. AND
SUBSIDIARIESReconciliation of Selling, General and
Administrative Expenses to Adjusted Selling, General and
Administrative Expenses(In
thousands)(unaudited)
|
Three Months EndedDecember 31, |
|
Year EndedDecember 31, |
Adjusted Selling, General and Administrative Expenses
Reconciliation |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Selling, general and
administrative expenses |
$ |
41,940 |
|
|
$ |
63,791 |
|
|
$ |
214,008 |
|
|
$ |
220,055 |
|
(-) Stock-based compensation |
|
270 |
|
|
|
(6,182 |
) |
|
|
(13,029 |
) |
|
|
(25,130 |
) |
(-) Merger and acquisition transaction costs |
|
(12,557 |
) |
|
|
(141 |
) |
|
|
(19,972 |
) |
|
|
(141 |
) |
(-) Facility closure costs (1) |
|
(1,653 |
) |
|
|
— |
|
|
|
(3,419 |
) |
|
|
— |
|
(-) Sales tax penalty accrual (recovery) |
|
1,218 |
|
|
|
(521 |
) |
|
|
2,149 |
|
|
|
(5,951 |
) |
(-) At-the-market sales agreement costs |
|
— |
|
|
|
— |
|
|
|
(266 |
) |
|
|
— |
|
(-) Severance and transaction bonuses (2) |
|
(1,101 |
) |
|
|
(689 |
) |
|
|
(4,784 |
) |
|
|
(1,166 |
) |
Adjusted selling, general and
administrative expenses |
$ |
28,117 |
|
|
$ |
56,258 |
|
|
$ |
174,687 |
|
|
$ |
187,667 |
|
(1) Included in Costs related to closed locations excluding
severance in the Adjusted EBITDA Reconciliation table above. (2)
Included in Severance, retention, and CEO costs in the Adjusted
EBITDA Reconciliation table above.
Shift Technologies (NASDAQ:SFT)
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Shift Technologies (NASDAQ:SFT)
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