E INC Announces 2022 Fourth Quarter and Year End Results

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 [phone] or [phone] 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:

	The three months ended				The year ended
	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
	$		$		$		$
Net loss for the period/year	(13,891)		(10,899)		(52,272)		(24,049)
Finance expense, net	259		1,184		1,107		3,721
Income tax expense	(126)		31		(212)		53
Depreciation and amortization	2,933		1,515		9,485		5,163
Share-based compensation expense	1,921		2,258		9,970		5,479
Transaction costs	167		281		167		1,243
Acquisition costs	36		26		288		255
Restructuring costs (1)	856		—		1,775		—
Non-routine legal expense	—		—		—		53
Other expense (income), net (2)	(436)		128		(9,843)		208
Total Adjusted EBITDA	(8,281)		(5,476)		(39,535)		(7,874)

(1) Restructuring costs include provision/obligation costs recognized for the 2022 Restructurings (as defined herein) and are recorded within cost of revenue, product, technology and development and selling, general and administrative expenses in the statement of loss and comprehensive loss.

(2) 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. 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]

For the years ended	December 31, 2022		December 31, 2021
	$		$
Revenue	110,060		80,039
Cost of revenue	69,154		42,812
Gross profit	40,906		37,227
Operating expenses
Product, technology and development	11,362		5,934
Selling, general and administrative	81,279		46,196
Depreciation and amortization	9,485		5,163
Operating loss	(61,220)		(20,066)
Other expense (income), net	(9,843)		208
Finance expense, net	1,107		3,721
Loss before income taxes	(52,484)		(23,995)
Income tax expense	(212)		53
Net loss for the year	(52,272)		(24,048)
Other comprehensive gain that may be reclassified to profit or loss in subsequent years
Exchange differences on translation of foreign operations and     reporting currency	(11,095)		913
Total comprehensive loss for the year	(63,367)		(23,135)
Loss per common share - basic and diluted	$                (1.07)		$                (0.93)
Weighted average number of common shares outstanding - basic and diluted	48,703,405		25,811,749

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

As at	December 31, 2022		December 31, 2021
	$		$
ASSETS
Current assets
Cash and cash equivalents	17,092		111,396
Trade and other receivables	58,241		56,538
Prepaid expense	3,773		3,156
Net investment in lease	75		349
Total current assets	79,181		171,439
Non-current assets
Net investment in lease	115		895
Right-of-use assets	11,623		9,892
Property and equipment	13,921		3,068
Intangible assets, net	24,322		10,975
Goodwill	47,460		35,798
TOTAL ASSETS	176,622		232,067
LIABILITIES
Current liabilities
Trade and other payables	46,278		58,169
Lease obligations	3,778		4,108
Other current liabilities	4,021		3,489
Total current liabilities	54,077		65,766
Non-current liabilities
Lease obligations	9,017		7,739
Deferred tax liability	1,354		1,837
Other non-current liabilities	1,178		7,515
TOTAL LIABILITIES	65,626		82,857
SHAREHOLDERS' EQUITY
Share capital	234,812		219,440
Warrants	834		834
Contributed surplus	(13,023)		(22,804)
Foreign currency translation reserve	(9,657)		1,438
Accumulated deficit	(101,970)		(49,698)
TOTAL SHAREHOLDERS' EQUITY	110,996		149,210
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	176,622		232,067

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

For the years ended December 31,		2022		2021
		$		$
Operating activities
Net loss for the year		(52,272)		(24,048)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation and amortization		9,485		5,163
Share-based compensation		9,970		5,479
Other expense (income), net		(10,232)		4
Finance expense		922		3,530
Income tax expense		(212)		53
Changes in working capital items:
Trade and other receivables		(1,418)		(33,676)
Prepaid expense		(628)		(1,949)
Trade and other payables		(9,930)		29,979
Deferred revenue		(127)		97
Cash used in operations		(54,442)		(15,368)
Income taxes paid		(207)		—
Cash flows used in operating activities		(54,649)		(15,368)
Investing activities
Receipts from net investment in lease		210		68
Purchases of property and equipment		(1,633)		(1,851)
Purchases of intangible assets		(913)		—
Acquisitions of business, net of cash acquired		(42,458)		(29,540)
Cash flows used in investing activities		(44,794)		(31,323)
Financing activities
Proceeds from issuance of common shares		149		110
Proceeds from issuance of common shares, net of issuance cost		—		97,618
Proceeds from private placement		15,034		—
Proceeds from issuance of preferred shares		—		45,539
Proceeds from exercise of warrants		—		17,314
Common share repurchase		—		(36,093)
Repayment of lease obligation		(5,260)		(4,165)
Repayment of other current and non-current liability		(3,583)		(304)
Cash flows provided by financing activities		6,340		120,019
Net change in cash and cash equivalents during the year		(93,103)		73,328
Effect of foreign exchange on cash and cash equivalents		(1,201)		1,029
Cash and cash equivalents, beginning of the year		111,396		37,039
Cash and cash equivalents, end of the year		17,092		111,396

SOURCE E Automotive Inc.

Andy Bohlin, Chief Financial Officer, 802-734-4475