EINC E Automotive Inc

TORONTO, March 7, 2023 /CNW/ - E Automotive Inc. d/b/a E Inc. (TSX: EINC) (the "Company" or "E INC") a company that connects the automotive wholesale and retail experiences with a proprietary technology platform operating under the brands EBlock and EDealer, today announced its financial and operational results for the three months and year ended December 31, 2022 ("Q4 2022" and "FY 2022", respectively). Financial references herein are in US dollars unless otherwise indicated.

"We continued to grow our marketplace participants and vehicle listings through this period of persistently challenging dynamics. Additionally, we took proactive actions during the quarter to improve our operating expense as we focused on more profitable unit economics. Although we expect market headwinds to remain in 2023, we are well positioned to drive significantly more volume through the EBlock platform as supply and demand dynamics normalize," said Jason McClenahan, President & CEO, E INC. "Despite depressed conversion rates in Q4 and it being the seasonally lowest quarter of the year, we successfully continued to reduce our adjusted EBITDA loss moving us forward on the path to profitability. In the first two months of 2023, we have seen positive movement with demand improving our conversion rates. Achieving profitability continues to be a priority for us. Our path to that goal is supported by the delivery of new product offerings to our dealership network, continued execution on cost management and delivering on expansion opportunities that our digital platform creates."

2022 Q4 and Year End Highlights
(Comparison periods in each case are the three months and year ended December 31, 2021)

• Revenue was up 14% to $26.3 million and up 38% to $110.1 million in Q4 and FY 2022, respectively, compared to $23.1 million and $80.0 million in the corresponding periods in 2021. The improvement in the quarterly period was primarily due to the two acquisitions completed since Q4 2021 as well as an increase in auction fee and ancillary revenues due to pricing actions and further adoption of ancillary services.
• Vehicles transacted were down 4% to 43,544 in Q4 2022, and up 18% to 192,615 in FY 2022. The change in the quarterly period is primarily due to current demand/supply dynamics in the macro market with used vehicle pricing remaining high due to low inventory which adversely impacted the volume of transactions in the wholesale sector.
• Gross transaction value was down 18% to $577.4 million in Q4 2022, and up 32% to $2.9 billion in FY 2022, which is a function of the volume and dollar value of vehicles transacted.
• Marketplace participants grew to 12,531, up 25%, as of December 31, 2022 compared to the same point in 2021.
• Net loss was $13.9 million and $52.3 million in Q4 2022 and FY 2022, respectively, compared to $10.9 million and $24.0 million in the corresponding periods in 2021.
• Adjusted EBITDA¹ loss was $(8.3) million and $(39.5) million in Q4 2022 and FY 2022, respectively compared to $(5.5) million and $(7.9) million in the corresponding periods in 2021.
• The Company completed a restructuring during the quarter to better align its operations with its strategic focus, building digitally around its physical auction locations in fewer regions in the U.S. This restructuring resulted in lower operating expenses in the period despite incremental expenses from the recent acquisition of Louisiana 1st Choice Auto Auction.
• The Company completed a non-brokered private placement offering of 4.8 million common shares at a price of C$4.23 per share for aggregate gross proceeds of $15 million.
• Subsequent to the end of the period, the Company acquired Houston Auto Auction Inc. ("Houston Auto Auction"), an independent auction marketplace that specializes in commercial sales. Houston Auto Auction transacted approximately 6,500 vehicles in 2022 and has historically generated positive EBITDA on a non-IFRS basis. The Company acquired the asset for $5.5 million, with $2.5 million paid upfront and the remaining payments split equally on the first and second anniversaries of closing.

E INC's unaudited financial statements for the three and twelve months ended December 31, 2022 and Management's Discussion & Analysis for the same period have been filed on SEDAR at www.sedar.com.

Notice of Conference Call
E INC will host a conference call Tuesday, March 7, 2023 at 5:00 PM ET to discuss its financial results. Jason McClenahan, President & CEO, and Andy Bohlin, CFO, will co-chair the call. All interested parties can instantly join the call by phone by following the URL https://bit.ly/3HyZmFE to easily register and be connected into the conference call automatically or the conventional method by dialing (416) 764-8659 or (888) 664-6392 with the conference identification of 86691417. A live audio webcast of the conference call will also be available at e.inc/investors. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About E INC
E INC's mission is to optimize the online vehicle buying, selling, and management experience for automotive dealers and consumers. E INC has a digital platform (the "Platform") that provides automotive dealerships with access to an online wholesale auction marketplace where they can purchase or sell vehicles to other dealers, as well as access innovative software solutions to support dealers' digital retailing and inventory management. Access to E INC's Platform is complemented by ancillary service offerings to assist dealers with supplementary auction-related needs, along with driving consumer traffic to their digital properties and optimizing other business processes. E INC's digital wholesale marketplace goes to market under the brand EBlock, and E INC's digital suite of retail products goes to market under the brand EDealer.

Non-IFRS Financial Measures
This press release makes reference to certain non-IFRS financial measures and industry metrics. These measures are not recognized measures under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS financial measures, including "Adjusted EBITDA". This press release also makes reference to "vehicles transacted", "marketplace participants", "subscribers", "gross transaction value", each of which are operating metrics used in our industry. Non-IFRS financial measures and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS financial measures and industry metrics in the evaluation of issuers. Management also uses non-IFRS financial measures and industry metrics in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and forecasts and determine components of management compensation.

Non-IFRS Measures
"Adjusted EBITDA" means net loss for the period, adjusted to exclude: finance expense, net, income tax expense, depreciation and amortization, share-based compensation expense, transaction costs, acquisition related expenses, restructuring costs, expenses related to non-routine legal matters and other expense (income), net.

The following table reconciles net loss to Adjusted EBITDA loss for the three and twelve months ended December 31, 2022 and December 31, 2021:

Forward Looking Statements
This press release may contain forward-looking information and statements within the meaning of applicable securities legislation, which reflect management's current expectations regarding future events. These statements are based on the Company's expectations, estimates, forecasts, and projections and include, without limitation, statements regarding the future success of the Company's business growth and replicating success in the U.S. market.

The forward-looking statements in this press release are based on certain assumptions, including that the Company's business will continue to perform in accordance with recent history. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including the risks discussed under the heading "Risk Factors" in the Company's Annual Information Form dated March 22, 2022. Actual results could differ materially from those projected herein. Readers, therefore, should not place undue reliance on any such forward-looking statements. The forward-looking statements included herein are made as of the date of this press release and the Company does not undertake any obligation to update such forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws. All of the forward-looking

information in this press release is expressly qualified by the foregoing cautionary statements. Additional information relating to E INC, including our Annual Information Form, can be found on SEDAR at www.sedar.com

Consolidated Statements of Loss and Other Comprehensive Loss
[Expressed in thousands of US dollars, except number of shares]

Consolidated Statements of Financial Position
[Expressed in thousands of US dollars]

Consolidated Statements of Cash Flows 
[Expressed in thousands of US dollars]

SOURCE E Automotive Inc.