EINC E Automotive Inc

TORONTO, May 9, 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 ended March 31, 2023 ("Q1 2023"). References to "$" or "dollars" in this press release are in US dollars unless otherwise indicated.

"We continue to grow our marketplace participants and vehicles transacted which are two key metrics to the underlying performance of our business in the long term," said Jason McClenahan, President & CEO, E INC. "The proactive measures we initiated in 2022 to reduce our costs and better align our investments with a focus on the U.S. regions where we have physical auction locations has started to show up in our bottom line performance. We believe we can continue to grow the top line and deliver profitability on a run rate basis within the near term. While used vehicle pricing remains high, we continue to see strong demand in our digital platform and physical auctions and have the ability to scale as the market normalizes driving more transactions, adding more participants, and thereby creating operating leverage for our business."

2023 Q1 Highlights
(Comparison periods in each case are the three months ended March 31, 2022)

• Revenue was up 24% to $30.8 million in Q1 2023. The improvement was primarily due to increased auction fee and ancillary revenue as a result of pricing actions, increased adoption of ancillary services and an increase in vehicles transacted.
• Vehicles transacted were up 5% to 49,650 in Q1 2023. The increase was primarily due to a full quarter of activity from Louisiana's 1st Choice Auto Auction and FastLane Auto Exchange and a partial quarter contribution from Houston Auto Auction.
• Gross transaction value was down 8% to $721.9 million in Q1 2023. The change was primarily due to decreases in market prices of used vehicles in the first quarter of 2023 compared to the prior year period.
• Marketplace participants grew to 13,321 across our marketplaces as of March 31, 2023, compared to 11,102 at the same point in 2022.
• Net loss was $10.2 million in Q1 2023, compared to $14.9 million in the prior period.
• Adjusted EBITDA loss was $4.9 million in Q1 2023 compared to $8.9 million in the corresponding period in 2022. The improvement was primarily due to the cost restructuring the Company implemented in 2022 to better align its operations with its strategic focus, building digitally around its physical auction locations in fewer regions in the U.S. The restructuring resulted in lower operating expenses in the period despite incremental expenses from recent acquisitions.
• On January 31, 2023, the Company acquired Houston Auto Auction, an independent auction marketplace that specializes in commercial sales. Houston Auto Auction transacted approximately 6,500 vehicles in 2022. Houston Auto Auction represents the Company's first purchase in Texas which is the second largest resale market for used vehicles.
• Subsequent to the end of the period, the Company announced that its board of directors ("Board"), shareholders and the Toronto Stock Exchange ("TSX") had all approved a voluntary de-listing of the Company's common shares ("Shares") from the TSX after concluding that maintaining the listing did not offer substantial benefits to the Company and its shareholders. The Company expects to delist its Shares from the TSX on or about May 24, 2023, at which point there will be no public market to trade the Company's Shares. The Company will, however, remain a "reporting issuer" under applicable Canadian securities laws.
• To provide liquidity to current shareholders prior to the de-listing, subsequent to the end of the period the Board approved the commencement of a substantial issuer bid (the "Offer") pursuant to which the Company will offer to acquire up to C$7.5 million of Shares at a price of C$3.50 per Share ("Offer Price"), as described in the Company's issuer bid circular dated April 18, 2023, which is available on the Company's profile at www.sedar.com. To help finance the Offer and provide the Company with additional working capital, the Company intends to complete a private placement of up to C$20 million of Shares at the Offer Price ("2023 Private Placement"). The Company's controlling shareholder, Intercap Equity Inc. ("Intercap") has committed to finance up to the full amount of the 2023 Private Placement. Depending on demand for the 2023 Private Placement, Intercap's commitment may decrease, or the size of the 2023 Private Placement may increase.

E INC's unaudited financial statements for the three months ended March 31, 2023 and Management's Discussion & Analysis for the same period have been filed on SEDAR at www.sedar.com.

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, including "Adjusted EBITDA". 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. In addition to "Adjusted EBITDA", this press release also makes reference to "vehicles transacted", "marketplace participants", "subscribers", and "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 and other expense (income), net.

The following table reconciles net loss to Adjusted EBITDA loss for the three months ended March 31, 2023 and March 31, 2022:

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. Forward-looking statements can generally be identified by words such as "will", "expects", "anticipates", "intends", "plans", "believes", "estimates", "prospects" or similar expressions suggesting future outcomes or events. More particularly and without limitation, this press release contains forward-looking statements and information concerning the Company's proposed voluntary delisting from the TSX, the potential for listing again, potential future upside in the delisted company, purchases of Shares made under the Offer, the 2023 Private Placement and the future success of the Company's business growth and replicating success in the U.S. market. These statements are based on the Company's expectations, estimates, forecasts, and projections and are based on information currently available to management, and there is no assurance that the voluntary delisting or relisting will occur, any Shares will be purchased under the Offer, the 2023 Private Placement will be completed or that the value of the Shares will increase in the future.

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 its recent results. 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 7, 2023. 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

Unaudited Interim Condensed Consolidated Statements of Loss and Other Comprehensive Loss
[Expressed in thousands of US dollars, except per share data and number of shares]

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

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

SOURCE E Automotive Inc.