News Press Releases

E INC announces 2022 First Quarter Financial Results

EICCF | May 10, 2022

TORONTO, May 10, 2022 /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, 2022 ("Q1 2022"). Financial references herein are in U.S. dollars unless otherwise indicated.

"We continued to attract new marketplace participants and drive higher transaction volumes on our digital wholesale marketplace, EBlock, during the quarter which led to revenue growth of 51%," said Jason McClenahan, President & CEO, E INC. "We have been able to execute on our strategy and grow despite challenging macro-economic conditions. Inventory levels within the North American vehicle market remain tight which impacts transaction volumes. This dynamic amplifies the need for auto dealers to seek an easy-to-use digital platform that enables them to profitably and effectively manage that inventory. As the market normalizes, we believe we will be well positioned to earn more units per customer as we continue to invest for growth in the U.S. market. Our digital-platform meets physical-location strategy puts us in a strong position to capitalize on the changes underway in the market as dealers search for ways to improve efficiency, transact more frequently and compete with direct to consumer models."

2022 Q1 Highlights
(Comparison periods in each case are the three months ended March 31, 2021)

Revenue was up 51% to $24.8 million from $16.4 million in the prior period, primarily driven by growth in Vehicles Transacted across its EBlock digital marketplace in Canada and its expansion of EBlock in the U.S., which resulted in increased auction fee and ancillary service revenue, as well as, the growth in its EDealer subscriber base
Gross transaction value was up 101% to $784.5 million in Q1 2022, driven by the volume and dollar value of vehicles transacted
Vehicles transacted were up 37% to 47,400 in Q1 2022
Marketplace participants grew to 11,100, up 40%, as of March 31, 2022 compared to the same point in 2021
Net loss was $14.9 million compared to a loss of $3.0 million in the corresponding period in 2021
Adjusted EBITDA1 loss was $8.9 million in Q1 2022 compared to a loss of $0.6 million in Q1 2021
The Company acquired FastLane Auto Exchange, a Midwest-focused, full service auction marketplace located in Mount Morris, Michigan, which strengthens the Company's wholesale marketplace by enabling it to offer the comprehensive cross-border dealer to dealer auction platform with an end-to-end solution for cross-border buyers.

E INC's unaudited financial statements for the three months ended March 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, May 10, 2022 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 join the call by dialing (647) 484-0478 or (888) 224-1121 with the conference identification of 8994174. Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available at e.inc/investors. Or https://produceredition.webcasts.com/starthere.jsp?ei=1545982&tp_key=504251a9fc. 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, 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, 2022 and March 31, 2021:

	The three months ended

	March 31, 2022	March 31, 2021
	$	$

Net loss for the period	(14,947,448)	(3,023,730)
Finance expense, net	286,611	430,442
Income tax expense	11,372	—
Depreciation and amortization	1,693,372	1,143,278
Share-based compensation expense	2,430,475	602,432
Acquisition costs	80,044	—
Other expense (income), net (1)	1,593,321	252,131
Total Adjusted EBITDA	(8,852,253)	(595,447)
Adjusted EBITDA Margin	(36)%	(4)%

(1) Other expense (income), net includes: foreign exchange loss (gain) and mark to market impacts of our current and non-current liabilities carried at fair value through profit and loss.

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 and that industry fundamentals remain strong. 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

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

	For the three months ended March 31,
	2022	2021
	$	$

Revenue	24,839,322	16,420,799
Cost of revenue	14,283,374	8,324,014
Gross profit	10,555,948	8,096,785


Operating expenses
Product, technology and development	2,316,746	1,301,631
Selling, general and administrative	19,601,974	7,993,033
Depreciation and amortization	1,693,372	1,143,278
Operating loss	(13,056,144)	(2,341,157)

Other expense (income), net	1,593,321	252,131
Finance expense, net	286,611	430,442

Loss before income taxes	(14,936,076)	(3,023,730)

Income tax expense	11,372	—

Net loss for the period	(14,947,448)	(3,023,730)

Other comprehensive gain (loss) that may be reclassified to profit or loss in subsequent years
Exchange differences on translation of foreign operations and reporting currency	1,643,019	363,330
Total comprehensive loss	(13,304,429)	(2,660,400)


Loss per common share - basic and diluted	$ (0.31)	$ (0.24)
Weighted average number of common shares outstanding - basic and diluted	48,047,690	12,854,345

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

As at	March 31, 2022	December 31, 2021
	$	$
ASSETS
Current assets
Cash and cash equivalents	79,814,307	111,396,148
Trade and other receivables	82,906,022	56,538,375
Prepaid expense	3,357,963	3,155,679
Net investment in lease	352,405	349,394
Total current assets	166,430,697	171,439,596
Non-current assets
Net investment in lease	831,164	895,362
Right-of-use assets	9,834,314	9,892,106
Property and equipment, net	9,525,413	3,067,617
Intangible assets, net	10,657,163	10,974,554
Goodwill	58,612,497	35,798,261
TOTAL ASSETS	255,891,248	232,067,496

LIABILITIES
Current liabilities
Trade and other payables	92,229,139	58,169,206
Deferred revenue	616,757	339,802
Lease obligations	4,178,519	4,108,203
Other current liabilities	5,790,081	3,149,054
Total current liabilities	102,814,496	65,766,265
Non-current liabilities
Lease obligations	7,616,757	7,739,107
Deferred tax liability	1,773,039	1,836,825
Other non-current liabilities	5,350,009	7,514,398
TOTAL LIABILITIES	117,554,301	82,856,595

SHAREHOLDERS' EQUITY
Share capital	219,440,336	219,440,336
Warrants	833,915	833,915
Contributed surplus	(20,373,179)	(22,803,654)
Foreign currency translation reserve	3,081,068	1,438,049
Accumulated deficit	(64,645,193)	(49,697,745)
TOTAL SHAREHOLDERS' EQUITY	138,336,947	149,210,901

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	255,891,248	232,067,496

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

For the three months ended March 31,	2022	2021
	$	$
Operating activities
Net loss for the period	(14,947,448)	(3,023,730)

Adjustment to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,693,372	1,143,278
Share-based compensation	2,430,475	602,432
Non-cash other expense (income), net	1,521,444	565,563
Non-cash finance expense	187,671	431,944
Income tax expense (recovery), net	11,372	—

Changes in working capital items:
Trade and other receivables	(26,747,118)	(36,290,613)
Prepaid expense	(202,284)	(359,824)
Trade and other payables	33,535,420	39,277,707
Deferred revenue	276,955	44,741
Cash (used in)/ generated from operations	(2,240,141)	2,391,498

Income taxes paid	(163,549)	—
Cash flows (used in)/ provided by operating activities	(2,403,690)	2,391,498

Investing activities
Receipts from net investment in lease	96,190	8,371
Purchases of property and equipment	(855,415)	(118,009)
Acquisitions of business, net of cash acquired	(29,000,000)	(6,595,406)
Cash flows used in investing activities	(29,759,225)	(6,705,044)

Financing activities
Repayment of borrowings	—	98,965
Proceeds from issuance of preferred shares	—	15,783,795
Common share repurchase	—	(20,296,555)
Repayment of lease obligation	(1,258,733)	(931,832)
Cash flows used in financing activities	(1,258,733)	(5,345,627)

Net change in cash and cash equivalents during the period	(33,421,648)	(9,659,173)
Effect of foreign exchange on cash and cash equivalents	1,839,807	(8,029)
Cash and cash equivalents, beginning of the period	111,396,148	37,038,524
Cash and cash equivalents, end of the period	79,814,307	27,371,322