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Shift Technologies, Inc. (SFT)

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Volume2,003,444
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Market cap644.392M
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Earnings date08 Mar 2021
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1y target est14.00
  • Shift Announces Record Revenue & Unit Sales in Q4’2020, with Strong Growth Momentum for 2021
    GlobeNewswire

    Shift Announces Record Revenue & Unit Sales in Q4’2020, with Strong Growth Momentum for 2021

    Achieved record revenue and units sold levels in the fourth quarter; year-over-year growth of 168% and 147%, respectivelyTransformed the reconditioning process with new leadership, staffing levels and production schedules; increased reconditioning volume to over 500 cars per week by middle of Q1Initiated strategic actions to increase national penetration with national branding campaign, new hub in Seattle, and launch of select seller markets, understood as purchasing cars from sellers, in Texas, laying the foundation for long-term growthProjecting 26% and 148% sequential Q4’2020 to Q1’2021 revenue and Adjusted GPU1,2 growth, respectively at the midpoint of management guidance ranges SAN FRANCISCO, March 08, 2021 (GLOBE NEWSWIRE) -- Shift (Nasdaq: SFT), a leading end-to-end ecommerce platform for buying and selling used cars, today reported fourth quarter and annual financial results for the period ended December 31, 2020. Management’s commentary on fourth quarter and 2020 financial results and first quarter and full year 2021 outlook can be found by accessing the Company’s shareholder letter 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. “In several respects, the fourth quarter was a record-setting period for the company. We set new records for both units sold and revenue, representing 147% and 168% year-over-year growth, respectively,” said Shift’s Co-CEO Toby Russell. “We prioritized maintaining top-line momentum through the challenging Q4 environment, which ultimately meant Q4 Gross Profit and Q4 Adjusted GPU2 were below the expected range. We made both strategic and tactical decisions to improve our reconditioning processes, initiate a branding campaign and enter new geographic markets. These actions have laid the foundation for success in FY 2021.” “A critical operational focus of Q4 was to improve reconditioning, with our in-house throughput increasing dramatically. This has created strong momentum for 2021,” said Shift’s Co-CEO George Arison. “For the first quarter 2021, we expect revenue to grow 26% sequentially from Q4 2020 and Adjusted GPU2 to increase 2-times over Q4 2020. For the full-year 2021, we expect revenue to grow 130% over 2020 and adjusted GPU2 to grow 19% year-over-year. With this strong momentum, we are trending on track for our targeted mid-term adjusted GPU2 of $2,500.” Q4 2020 and 2020 Operating Results All comparisons for the quarter are year-over-year unless otherwise specified. For the fourth quarter, total revenue grew 168% year-over-year, reaching a record $73.4 million. In 2020, total revenue grew 18% to $195.7 million. Total units sold during Q4 were 4,666, up 147%. Total ecommerce units sold were 3,308 and total wholesale units sold were 1,358, an increase of 134% and 186%, respectively. In 2020, total units sold were 13,135, up 18%. Total ecommerce units sold were 9,497 and total wholesale units sold were 3,638, increases of 15% and 29%, respectively. For the fourth quarter, gross profit grew to $1.5 million or 2% of total revenue, up from $(0.7) million. Non-GAAP adjusted gross profit2 grew to $1.7 million or 2% of total revenue. For 2020, gross profit grew to $12.2 million or 6% of total revenue as compared to $(1.8) million in the prior year period.__________________________________________1 See Q1 2021 Outlook for a discussion of guidance with respect to non-GAAP financial measures2Adjusted gross profit and Adjusted GPU are non-GAAP financial measures. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release. For the fourth quarter, gross profit per unit was $466 compared to negative gross profit per unit of $(505). For 2020, gross profit per unit was $1,283 compared to negative gross profit per unit of $(213). For the fourth quarter, adjusted gross profit per unit2 (“Adjusted GPU”) was $514, compared to $335, a 53% increase. In 2020, adjusted gross profit per unit was $1,350 compared to $811. For the fourth quarter, SG&A was $31.8 million, or 43% of revenue, as compared to $17.6 million or 64% of revenue. In 2020, SG&A was $83.9 million or 43% of total revenue as compared to $71.9 million or 43% of total revenue. For the fourth quarter, net loss was $(4.5) million as compared to net loss of $(20.5) million, and basic and diluted net loss per share was $(0.07) based on 66.1 million weighted average shares outstanding during Q4 2020. For 2020, net loss was $(59.1) million as compared to a net loss of $(80.5) million, and diluted net loss per share was $(3.12) based on 18.9 million weighted average shares outstanding during 2020. Adjusted EBITDA1 in the fourth quarter of 2020 was a loss of $(28.9) million or (39)% of total revenue, as compared to a loss of $(12.8) million or (47)% of revenue in the prior year period. For 2020, Adjusted EBITDA1 was a loss of $(68.5) million as compared to a loss of $(51.3) million. “Q4 was about maintaining top-line momentum through the end of the year, to put ourselves in a position to accelerate growth through Q1 and beyond. I am proud of the way our team responded to significant adversity in 2020 and am excited to demonstrate continued progress throughout the year,” Arison concluded. Recent Business Highlights Launched Seattle buyer market, completing full coverage of all major cities on the U.S. West CoastLaunched seller markets for certain vehicles, understood as purchasing cars from sellers, in four Texas locations: Dallas, San Antonio, Fort Worth, and AustinIntroduced a national TV campaign as part of our new brand strategy aimed at building brand awareness in existing and future marketsAchieved record in-house reconditioning volumes, with over 500 cars per week processing volume reached by middle of Q1Built a Car Finder Quiz to help customers earlier in their shopping journey to find the best vehicle that fits their specific needs Shift’s CFO Cindy Hanford commented, “While our Q4 top-line results and future outlook reflects Shift’s ability to meet customer demand for our product offering, our profitability metrics reflect the reality of managing a high growth company and the challenges of operating in the COVID-19 environment. During the fourth quarter, we made certain decisions to position ourselves to improve operations and meet the market opportunity. We expect 2021 to be a big year for strategic milestones, continued revenue growth and improving unit economics as we scale the business.” Q1 2021 Outlook We are providing guidance for the quarter ending March 31, 2021 as follows: Revenue in the range of $90 - 95 million, an increase of 200% - 217%, year over yearAdjusted GPU2,3 in the range of $1,200 - $1,350Adjusted EBITDA1,3 of $(33) - $(35) million FY 2021 Outlook We are providing guidance for the year ending December 31, 2021 as follows: Revenue greater than $450 million, an increase of 130% year over yearEcommerce unit sales greater than 20,900, an increase of 120% year over yearAdjusted GPU2,3 greater than $1,600 per ecommerce unitAdjusted EBITDA Margin1,3 better than (25)% _____________________________________________________________1 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release. 2 Adjusted gross profit and Adjusted GPU are non-GAAP financial measures. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release. 3 Specific quantifications of the amounts that would be required to reconcile the company’s adjusted EBITDA and adjusted gross profit per unit guidance are not available. The company believes that there is uncertainty and unpredictability with respect to certain of its GAAP measures, primarily related to adjustments for the valuation of financial instruments that may be required to reconcile to GAAP net loss and GAAP gross profit per unit, 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 per unit would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above. Shift Fiscal Year and Fourth Quarter 2020 Results Summary Three Months Ended December 31, Year Ended December 31, 2020 2019 Change (%) 2020 2019 Change (%) (in thousands, except per unit amounts)Revenue$73,411 $27,350 168% $195,718 $166,235 18%Gross profit (loss)1,540 (714) 316% 12,181 (1,762) 791%Adjusted gross profit1,699 476 257% 12,818 6,705 91%Net loss(4,500) (20,521) (78)% (59,146) (80,483) (27)%Adjusted EBITDA loss(28,929) (12,801) 126% (68,464) (51,293) 33% Gross profit (loss) per unit$466 $(505) 192% $1,283 $(213) 702%Adjusted gross profit per unit$514 $335 53% $1,350 $811 66%Ecommerce average selling price per unit$18,188 $15,983 14% $16,641 $16,371 2%Ecommerce units sold3,308 1,416 134% 9,497 8,263 15% Conference Call InformationShift senior management will host a conference call today to discuss the Company’s Q4 and full year 2020 financial results and first quarter outlook. This call is scheduled to begin at 2:00 pm PT / 5:00 pm ET and can be accessed by dialing (833) 614-1395 or (914) 987-7116. To listen to a live audio webcast, please visit Shift’s Investor Relations website at investors.shift.com. A replay of the audio webcast will be available on the same website following the call through March 15, 2021. A telephonic replay will be available through March 15, 2021 by dialing (855) 859-2056 or (404) 537-3406 and entering passcode 8486229#. About Shift Shift is a leading end-to-end auto ecommerce platform transforming the used car industry with 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, having a test drive brought to you before buying the 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) the ability to recognize the anticipated benefits of the business combination, 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) costs related to the business combination; (3) changes in applicable laws or regulations; (4) the possibility that Shift may be adversely affected by other economic, business, and/or competitive factors; (5) the operational and financial outlook of Shift; (6) the ability for Shift to execute its growth strategy; and (7) 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 Ecommerce Units Sold We define ecommerce 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 ecommerce units sold is the primary driver of our revenues and, indirectly, gross profit, since ecommerce unit sales enable multiple complementary revenue streams, including all financing and protection products. We view ecommerce 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 meetings our retail standards. Ecommerce Average Sale Price We define ecommerce average sale price (“ASP”) as the average price paid by a customer for an ecommerce vehicle, calculated as ecommerce revenue divided by ecommerce units. Ecommerce 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 a 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 ecommerce units sold in a period. We view average days to sale as a useful metric in understanding the health of our inventory. Ecommerce Vehicles Available for Sale We define ecommerce vehicles available for sale as the number of ecommerce vehicles in inventory on the last day of a given reporting period. Until we reach an optimal pooled inventory level, we view ecommerce vehicles available for sale as a key measure of our growth. Growth in ecommerce 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 ecommerce vehicles available for sale is an indicator of our ability to scale our vehicle purchasing, inspection and reconditioning operations. Number of Regional Hubs We define a Hub as a physical location at which we store and recondition units bought and sold within a market. Because of our omni-channel fulfillment model with our on-demand delivery test drive offering, we are able to service super-regional areas covering approximately a 60-mile radius from a single Hub location. This is a key metric as each Hub expands our service area as our service area, reconditioning and storage capacity. Non-GAAP Financial 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 press release. 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, which resulted in reductions in gross profit in our consolidated financial statements as applicable to the periods presented. This is a non-cash adjustment, and we do not expect any material future non-cash gross profit adjustments related to the Lithia warrant agreement. Due to the non-recurring nature of the Lithia warrant agreement, our management believes it to be appropriate to adjust gross profit but these amounts to calculate adjusted gross profit. We examine adjusted gross profit in the aggregate as well as for each of our revenue streams: ecommerce, other, and wholesale. Adjusted Gross Profit per Unit: We define adjusted gross profit per unit (“Adjusted GPU”) as the adjusted gross profit for ecommerce, other and wholesale, each of which divided by the total number of ecommerce units sold in the period. Adjusted GPU is driven by ecommerce 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 ecommerce 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, including, but not limited to acquisition and related items. 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: 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. 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. Investor Relations Contact: Drew Haroldson, The Blueshirt Group IR@shift.com Media Contact: Jeff Fox, The Blueshirt Groupjeff@blueshirtgroup.com Source: Shift Technologies, Inc. SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESConsolidated Balance Sheets(in thousands, except share and per share amounts)(unaudited) December 31, 2020 2019ASSETS Current assets: Cash and cash equivalents$233,936 $42,976 Accounts receivable, net8,426 1,839 Inventory49,086 18,198 Prepaid expenses and other current assets5,478 1,899 Total current assets296,926 64,912 Property and equipment, net2,123 2,120 Capitalized website and internal use software costs, net6,542 5,679 Restricted cash, non-current1,605 1,600 Deferred borrowing costs2,149 5,184 Other non-current assets2,748 3,274 Total assets$312,093 $82,769 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$10,675 $1,967 Accrued expenses and other current liabilities22,286 5,954 Flooring line of credit13,870 16,245 Total current liabilities46,831 24,166 Related party long term note, net, non-current— 8,505 Financial instruments liability25,230 4,810 Other non-current liabilities2,850 1,954 Total liabilities74,911 39,435 Stockholders’ equity: Preferred stock – par value $0.0001 per share; 1,000,000 shares authorized at December 31, 2020 and 2019, after recapitalization there are no preferred shares issued or outstanding at December 31, 2020 and 2019— — Common stock – par value $0.0001 per share; 500,000,000 shares authorized at December 31, 2020 and 2019, respectively; 83,904,182 and 31,394,963 shares issued and outstanding at December 31, 2020 and 2019, respectively8 3 Additional paid-in capital511,617 258,628 Accumulated deficit(274,443) (215,297)Total stockholders’ equity237,182 43,334 Total liabilities and stockholders’ equity$312,093 $82,769 SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESConsolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share amounts)(unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019Revenue Ecommerce revenue – net$60,167 $22,632 $158,037 $135,277 Other revenue2,457 523 6,390 3,150 Wholesale vehicle revenue10,787 4,195 31,291 27,808 Total revenue73,411 27,350 195,718 166,235 Cost of sales71,871 28,064 183,537 167,997 Gross profit (loss)1,540 (714) 12,181 (1,762)Operating expenses: Selling, general and administrative expenses31,787 17,623 83,896 71,860 Depreciation and amortization1,277 1,036 4,536 3,221 Total operating expenses33,064 18,659 88,432 75,081 Loss from operations(31,524) (19,373) (76,251) (76,843)Change in fair value of financial instruments30,962 — 24,751 144 Interest and other expense, net(3,938) (1,148) (7,646) (3,784)Net loss and comprehensive loss attributable to common stockholders$(4,500) $(20,521) $(59,146) $(80,483)Net loss per share attributable to common stockholders, basic and diluted$(0.07) $(6.51) $(3.12) $(25.30)Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted66,074,932 3,151,520 18,933,980 3,181,273 SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES Net loss$(4,500) $(20,521) $(59,146) $(80,483)Adjustments to reconcile net loss to net cash and restricted cash used in operating activities: Depreciation and amortization1,277 1,036 4,536 3,221 Stock-based compensation expense1,159 308 2,614 1,382 Change in fair value of financial instruments(30,962) — (24,751) (144)Non-cash bonuses in satisfaction of loans to related parties247 — 247 — Non-cash expense upon milestone achievement— 4,038 — 6,932 Contra-revenue associated with milestones159 1,190 637 8,467 Amortization of debt discount3,755 1,092 7,030 4,200 Compensation expense from exchange of common stock— — — 4,825 Changes in operating assets and liabilities: Accounts receivable(198) 1,830 (6,587) 2,238 Sales returns/cancellation allowance309 — 613 — Inventory(15,601) 4,201 (30,888) 24,874 Prepaid expenses and other current assets(3,586) (935) (3,579) (626)Other non-current assets(175) 783 (228) (98)Accounts payable579 (926) 8,094 (3,185)Accrued expenses and other current liabilities6,888 (1,382) 14,871 (162)Other non-current liabilities737 (63) 685 350 Net cash, cash equivalents, and restricted cash used in operating activities(39,912) (9,349) (85,852) (28,209)CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment(577) (603) (984) (1,688)Capitalized website and internal-use software costs(1,038) (1,151) (3,895) (4,865)Net cash, cash equivalents, and restricted cash used in investing activities(1,615) (1,754) (4,879) (6,553)CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from delayed draw term loans— 12,500 12,500 12,500 Repayment of delayed draw term loans(25,000) — (25,000) — Proceeds from SBA PPP loans— — 6,055 — Repayment of SBA PPP loans(6,055) — (6,055) — Proceeds from flooring line of credit facility28,942 19,811 96,355 112,424 Repayment of flooring line of credit facility(35,511) (23,763) (98,613) (123,564)Net contributions from merger and PIPE financing300,900 — 300,900 — Exchange of warrants for cash(7,193) — (7,193) — Proceeds from issuance of convertible preferred stock— — — 5,800 Issuance costs related to convertible preferred stock— 80 — (41)Proceeds from stock option exercises, including from early exercised options1,013 85 2,753 157 Repurchase of shares related to early exercised options1 (27) (6) (30)Net cash, cash equivalents, and restricted cash provided by financing activities257,097 8,686 281,696 7,246 Net increase (decrease) in cash, cash equivalents and restricted cash215,570 (2,417) 190,965 (27,516)Cash, cash equivalents and restricted cash, beginning of period19,971 46,993 44,576 72,092 Cash, cash equivalents and restricted cash, end of period$235,541 $44,576 $235,541 $44,576 SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESKey Operating Metrics(unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019Units: Ecommerce units3,308 1,416 9,497 8,263 Wholesale units1,358 474 3,638 2,828 Total units sold4,666 1,890 13,135 11,091 Ecommerce ASP$18,188 $15,983 $16,641 $16,371 Wholesale ASP$7,943 $8,850 $8,601 $9,833 Gross Profit per Unit Ecommerce Gross Profit per Unit$(119) $297 $434 $485 Other Gross Profit per Unit743 369 673 382 Wholesale Gross Profit per Unit(158) (1,171) 176 (1,080)Total Gross Profit per Unit$466 $(505) $1,283 $(213) Adjusted GPU1 Ecommerce Adjusted GPU$(119) $297 $434 $485 Other Adjusted GPU791 477 740 463 Wholesale Adjusted GPU(158) (439) 176 (137)Total Adjusted GPU$514 $335 $1,350 $811 Average monthly unique visitors612,456 159,459 369,292 177,407 Average days to sale43 63 55 66 Ecommerce vehicles available for sale2,378 1,152 2,378 1,152 # of regional hubs26 5 6 5 __________________________________________1 Adjusted gross profit and Adjusted GPU are non-GAAP financial measures. Please see the discussion in the section “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release.2 As of December 31, 2020, the Seattle Hub was active for vehicle storage and sales but had not yet commenced vehicle reconditioning operations. SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESReconciliation of Gross Profit to Adjusted Gross Profit(In thousands)(unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019Total gross profit: GAAP total gross profit$1,540 $(714) $12,181 $(1,762)Warrant impact adjustment (1)159 1,190 637 8,467 Adjusted total gross profit$1,699 $476 $12,818 $6,705 Ecommerce gross profit: GAAP ecommerce gross profit$(395) $421 $4,123 $4,010 Warrant impact adjustment (1)— — — — Adjusted ecommerce gross profit$(395) $421 $4,123 $4,010 Other gross profit: GAAP other gross profit$2,457 $523 $6,390 $3,150 Warrant impact adjustment (1)159 153 637 673 Adjusted other gross profit$2,616 $676 $7,027 $3,823 Wholesale gross profit: GAAP wholesale gross profit$(522) $(1,658) $1,668 $(8,922)Warrant impact adjustment (1)— 1,037 — 7,794 Adjusted wholesale gross profit$(522) $(621) $1,668 $(1,128) (1) Elimination of non-cash contra revenue impacts associated with the Lithia warrant agreement. In the referenced warrant agreement, during 2019 Lithia vested in certain warrants to purchase shares of our common stock upon the achievement of various milestones. We have determined that a portion of the value associated with warrant consideration paid to Lithia, as a customer of Shift, should be treated as contra-revenue by Shift following the revenue recognition accounting standards codification (“ASC”) topic 606. SHIFT TECHNOLOGIES, INC. AND SUBSIDIARIESReconciliation of Gross Profit Per Unit To Adjusted Gross Profit Per Unit(unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 ($ per ecommerce unit)Total gross profit per unit: GAAP total gross profit per unit$466 $(505) $1,283 $(213)Warrant impact adjustment(1) per unit$48 $840 $67 $1,024 Adjusted total gross profit per unit$514 $335 $1,350 $811 Ecommerce gross profit per unit: GAAP ecommerce gross profit per unit$(119) $297 $434 $485 Warrant impact adjustment(1) per unit$— $— $— $— Adjusted ecommerce gross profit per unit$(119) $297 $434 $485 Other gross profit per unit: GAAP other gross profit per unit$743 $369 $673 $382 Warrant impact adjustment(1) per unit$48 $108 $67 $81 Adjusted other gross profit per unit$791 $477 $740 $463 Wholesale gross profit per unit: GAAP wholesale gross profit per unit$(158) $(1,171) $176 $(1,080)Warrant impact adjustment(1) per unit$— $732 $— $943 Adjusted wholesale gross profit per unit$(158) $(439) $176 $(137) (1)Elimination of non-cash contra revenue impacts associated with the Lithia warrant agreement. In the referenced warrant agreement, during 2019 Lithia vested in certain warrants to purchase shares of our common stock upon the achievement of various milestones. We have determined that a portion of the value associated with warrant consideration paid to Lithia, as a customer of Shift, should be treated as contra-revenue by Shift following the revenue recognition accounting standards codification (“ASC”) topic 606. SHIFT TECHNOLOGIES INC. AND SUBSIDIARIESReconciliation of Net Loss to Adjusted EBITDA(In thousands)(unaudited) Three Months EndedDecember 31, Year Ended December 31, 2020 2019 2020 2019Adjusted EBITDA Reconciliation Net Loss$(4,500) $(20,521) $(59,146) $(80,483)(+) Interest and other expense, net(1)3,938 1,148 7,646 4,507 (+) Stock-based compensation(2)1,159 308 2,614 6,207 (+) Change in fair value of financial instruments(30,962) — (24,751) (144)(+) Depreciation & amortization1,277 1,036 4,536 3,221 (+) Contra-revenue associated with milestones (3)159 1,190 637 8,467 (+) Non-cash expense upon milestone achievement(4)— 4,038 — 6,932 Adjusted EBITDA$(28,929) $(12,801) $(68,464) $(51,293)Adjusted EBITDA Margin (%)(39.4)% (46.8)% (35.0)% (30.9)% (1)Includes non-cash charge of $2.9 million for the three months and year ended December 31, 2020 to write off deferred borrowing costs in connection with the repayment of the Delayed Draw Term Loan.(2)Includes compensation expense related to secondary stock sales of $4.8 million for the year ended December 31, 2019.(3)Includes non-cash charges related to the Lithia warrants and recorded as contra-revenue on the consolidated statements of operations and comprehensive loss.(4)Includes non-cash charges related to the Lithia warrants and recorded as selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

  • Shift to Present at Upcoming Investor Conference
    GlobeNewswire

    Shift to Present at Upcoming Investor Conference

    SAN FRANCISCO, March 05, 2021 (GLOBE NEWSWIRE) -- Shift (Nasdaq: SFT), a leading end-to-end ecommerce platform for buying and selling used cars, today announced that senior management will present to the investment community at the following upcoming investor conference: 2021 Truist Securities Technology, Internet & Services ConferenceDate: Tuesday, March 9, 2021 A live webcast of the presentation will be available on the investor relations section of the Shift website, investors.shift.com. About ShiftShift is a leading end-to-end auto ecommerce platform transforming the used car industry with 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, having a test drive brought to you before buying the 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. Investor Relations Contact:Drew Haroldson, The Blueshirt GroupIR@shift.com Media Contact:Jeff Fox, The Blueshirt Groupjeff@blueshirtgroup.com Source: Shift Technologies, Inc.

  • Cohen & Company Reports Fourth Quarter & Full Year 2020 Financial Results
    GlobeNewswire

    Cohen & Company Reports Fourth Quarter & Full Year 2020 Financial Results

    Fourth Quarter Net Income Attributable to Cohen & Company Inc. of $14.8 Million, or $7.64 per Diluted Share Fourth Quarter Adjusted Pre-Tax Income of $23.8 Million, or $4.64 per Diluted Share Full Year Net Income Attributable to Cohen & Company Inc. of $14.2 Million, or $7.66 per Diluted Share Full Year Adjusted Pre-Tax Income of $27.6 Million, or $5.72 per Diluted Share Insurance Acquisition Corp. Merger with Shift Technologies, Inc. Contributes $18.3 Million to Adjusted Pre-Tax Income in Fourth Quarter PHILADELPHIA and NEW YORK, March 03, 2021 (GLOBE NEWSWIRE) -- Cohen & Company Inc. (NYSE American: COHN), a financial services firm specializing in fixed income markets and, more recently, in SPAC markets, today reported financial results for its fourth quarter and full year ended December 31, 2020. Summary Operating Results Three Months Ended Year Ended($ in thousands)12/31/20 9/30/20 12/31/19 12/31/20 12/31/19 Total revenues$66,365 $21,856 $16,090 $130,110 $49,666 Compensation and benefits 23,479 10,965 6,159 59,902 25,972 Non-compensation operating expenses 5,111 4,819 5,897 27,880 19,653 Operating income 37,775 6,072 4,034 42,328 4,041 Interest expense, net (1,951) (1,952) (2,255) (9,589) (7,584)Income (loss) from equity method affiliates (244) (1,371) (188) (2,955) (553)Income (loss) before income tax expense (benefit) 35,580 2,749 1,591 29,784 (4,096)Income tax expense (benefit) (8,046) (594) 394 (8,669) (523)Net income (loss) 43,626 3,343 1,197 38,453 (3,573)Less: Net income (loss) attributable to the noncontrolling interest 28,875 1,688 423 24,248 (1,519)Net income (loss) attributable to Cohen & Company Inc.$14,751 $1,655 $774 $14,205 $(2,054)Fully diluted net income (loss) per share$7.64 $1.19 $0.56 $7.66 $(1.81) Adjusted pre-tax income (loss)$23,779 $3,603 $1,691 $27,619 $(3,808)Fully diluted adjusted pre-tax income (loss) per share$4.64 $0.78 $0.75 $5.72 $(2.26) Net income attributable to Cohen & Company Inc. was $14.8 million, or $7.64 per diluted share, for the three months ended December 31, 2020, compared to $1.7 million, or $1.19 per diluted share, for the three months ended September 30, 2020, and $0.8 million, or $0.56 per diluted share, for the three months ended December 31, 2019. Adjusted pre-tax income was $23.8 million, or $4.64 per diluted share, for the three months ended December 31, 2020, compared to $3.6 million, or $0.78 per diluted share, for the three months ended September 30, 2020, and $1.7 million, or $0.75 per diluted share, for the three months ended December 31, 2019. Adjusted pre-tax income (loss) is not a measure recognized under U.S. generally accepted accounting principles (“GAAP”). See Note 1 below.Revenues during the three months ended December 31, 2020 increased $44.5 million from the prior quarter and $50.3 million from the prior year quarter. The increase from the prior quarter was comprised primarily of (i) an increase of $1.1 million in net trading revenue primarily from increased revenue in the Company’s Gestation repo and Corporate trading groups, (ii) an increase of $2.2 million in asset management revenue primarily related to an incentive allocation earned by the manager of the Company’s SPAC funds, (iii) an increase of $1.2 million in new issue and advisory revenue related to European insurance asset origination, and (iv) an increase of $39.8 million in principal transactions revenue primarily related to the closing of the Company’s sponsored insurance SPAC in October 2020. On October 13, 2020, Insurance Acquisition Corp. completed its merger with Shift Technologies, Inc. (NASDAQ: SFT).The increase from the prior year quarter was comprised primarily of (i) an increase of $5.8 million in net trading revenue primarily from increased revenue in the Company’s Gestation repo and Corporate trading groups, (ii) an increase of $2.0 million in asset management revenue primarily related to an incentive allocation earned by the manager of the Company’s SPAC funds, and (iii) an increase of $42.1 million in principal transactions revenue primarily related to the closing of the Company’s sponsored insurance SPAC in October 2020. Compensation and benefits expense as a percentage of revenue was 35% for the three months ended December 31, 2020, compared to 50% for the three months ended September 30, 2020 and 38% for the three months ended December 31, 2019. The number of Company employees was 87 as of December 31, 2020, compared to 87 as of September 30, 2020, and 94 as of December 31, 2019.Non-compensation operating expenses during the three months ended December 31, 2020 increased $0.3 million from the prior quarter and decreased $0.8 million from the prior year quarter. The increase from the prior quarter was due primarily to revenue-driven third-party marketing costs related to European origination revenue. The decrease from the prior year quarter was primarily due to lower travel and entertainment, subscriptions, professional fees, and revenue-driven third-party marketing costs related to European origination revenue. Interest expense during the three months ended December 31, 2020 was comparable to the prior quarter and decreased $0.3 million from the prior year quarter. The changes in quarterly interest expense are primarily driven by fluctuations in interest on redeemable financial instruments, which are driven by certain Company groups’ revenues and profits.Loss from equity method affiliates during the three months ended December 31, 2020 decreased $1.1 million from the prior quarter and increased $0.1 million from the prior year quarter. The decrease in loss from equity method affiliates was primarily related to expenses incurred in the prior quarter by the Company’s sponsored insurance SPAC. During the three months ended December 31, 2020, the Company recognized an $8.0 million U.S. net income tax benefit, which was primarily the result of the reduction in the valuation allowance applied against the Company's net operating loss and net capital loss tax assets. The Company will continue to evaluate its operations on a quarterly basis and may make further adjustments to its valuation allowances going forward. Future adjustments could be material and could result in additional tax benefit or tax expense. As of December 31, 2020, total equity was $101.4 million, compared to $48.8 million as of December 31, 2019; $27.8 million of December 31, 2020 total equity was non-convertible non-controlling interest. Lester Brafman, Chief Executive Officer of Cohen & Company, said, “We are pleased with our fourth quarter and annual results, and are excited for the year ahead as we continue to execute on our strategic goals, including growing our Mortgage and Repo businesses, expanding our asset management revenue streams, and positioning the Company to attract new business opportunities and capital partners. Net trading revenue was $73.6 million in 2020, up $35.4 million or 93% from 2019, primarily from our Mortgage, Repo, and Corporate trading groups. At the end of the year, our Gestation Repo book had grown to $3.3 billion, up from $1.3 billion at the end of 2019, and our non-CDO assets under management increased 27% to $712 million, including growth in our European PriDe Funds and SPAC Funds.” Brafman continued, “We also continue to make strides in the development of our SPAC franchise and remain active in the SPAC market as a sponsor, asset manager, and investor. In the fourth quarter, our first company-sponsored SPAC, Insurance Acquisition Corp., closed its merger with Shift Technologies, contributing $18.3 million to the quarter’s adjusted pre-tax income. More recently, our second company-sponsored SPAC, INSU Acquisition Corp. II, closed its merger agreement with Metromile, a digital insurance platform and pay-by-mile auto insurer, and our third company-sponsored SPAC, INSU Acquisition Corp. III, completed its $250 million IPO and is currently seeking a business combination. Our team has substantial experience in the SPAC space, and we are excited to build on our momentum and continue growing our SPAC franchise. Looking ahead, we remain committed to executing on our strategic priorities, with a continued focus on proactively managing our risk and our capital structure, and on enhancing stockholder value.” Recent Developments in Our SPAC Business Subsequent to Quarter End INSU Acquisition Corp. II Closes Merger with Metromile, Inc. Our second company-sponsored SPAC, INSU Acquisition Corp. II (“Insurance SPAC II”), previously entered into an Agreement and Plan of Merger and Reorganization with INSU II Merger Sub Corp., its wholly owned subsidiary (“Insurance SPAC II Merger Sub”), and Metromile, Inc., a digital insurance platform and pay-by-mile auto insurer (“Metromile”). On February 9, 2021, Insurance SPAC II Merger Sub was merged with and into Metromile (the “Closing”). In connection with the Closing, Insurance SPAC II changed its name from “INSU Acquisition Corp. II” to “Metromile, Inc.” and, on February 11, 2021, Insurance SPAC II’s NASDAQ trading symbol was changed from "INAQ" to “MILE.” The merger was approved by the Insurance SPAC II’s stockholders at a special meeting of stockholders held on February 9, 2021. Upon the Closing, Insurance Acquisition Sponsor II, LLC and Dioptra Advisors II, LLC, of which the Company is the manager (together, the “Insurance SPAC II Sponsor Entities”), held 452,500 shares of Metromile’s Class A Common Stock (“MILE Class A Common Stock”), and 150,833 warrants (“MILE Warrants”) to purchase an equal number of shares of MILE Class A Common Stock (such MILE Class A Common Stock and MILE Warrants, collectively, the “Placement Securities”) as a result of the 452,200 placement units, which the Insurance SPAC II Sponsor Entities had purchased in a private placement that occurred simultaneously with Insurance SPAC II’s initial public offering on September 8, 2020. Further, upon the Closing, the Insurance SPAC II Sponsor Entities collectively held an additional 6,669,667 shares of MILE Class A Common Stock as a result of their previous purchase of founder shares of Insurance SPAC II (collectively, the “Founder Shares,” and, together with the Placement Securities, the “Insurance SPAC II Sponsor Shares”). The Company currently consolidates the Insurance SPAC II Sponsor Entities and previously treated its investment in Insurance SPAC II as an equity method investment. Effective upon the Closing, the Company has reclassified its equity method investment in Insurance SPAC II to other investments, at fair value and has adopted fair value accounting for the investment in MILE, resulting in an amount of principal transaction revenue to be recorded in the first quarter of 2021, derived from the (i) the final amount of Insurance SPAC II Sponsor Shares retained by the Insurance SPAC II Sponsor Entities; (ii) the trading share price of the MILE Class A Common Stock and the MILE Warrants; and (iii) fair value discounts related to the share sale restrictions on the Insurance SPAC II Sponsor Shares outlined below. Upon recognition of the principal transaction revenue described above in the first quarter of 2021, the Company will record a non-controlling interest expense or compensation expense related to the amount of Insurance SPAC II Sponsor Shares distributable to the non-controlling interest holders in the Insurance SPAC II Sponsor Entities. If the non-controlling interest holder is an employee of the Company, the expense will be recorded as compensation. Otherwise, the expense will be non-controlling interest expense. The Company currently expects that, upon the registration with the SEC of the Insurance SPAC II Sponsor Shares in accordance with the registration rights agreement executed in connection with the merger with Metromile, (a) all of the Placement Securities will be distributed to the non-controlling interest holders of the Insurance SPAC II Sponsor Entities and, (b) of the Founder Shares, 3,414,875 shares of MILE Class A Common Stock will be distributed to the non-controlling interest holders of the Insurance SPAC II Sponsor Entities. Immediately following these distributions, the Company will retain (i) none of the Placement Securities, and (ii) of the Founder Shares, 3,254,792 shares of MILE Class A Common Stock. Subject to certain limited exceptions, Placement Securities held by the Insurance SPAC II Sponsor Entities will not be transferable or salable until 30 days following the Closing. Of the Founder Shares held by the Insurance SPAC II Sponsor Entities, (a) 24% are freely transferable and salable, and (b) subject to certain limited exception, the remaining shares will not be transferable or salable until the closing price of the MILE Class A Common Stock, for a period of 20 out of any 30 consecutive trading days following the Closing, (a) exceeds $15.00 with respect to 38% of such shares, and (b) exceeds $17.00 with respect to an additional 38% of such shares. INSU Acquisition Corp. III Initial Public Offering The Company is the manager of Insurance Acquisition Sponsor III, LLC (“IAS III”) and Dioptra Advisors III, LLC (“Dioptra III” and, together with IAS III, the “Insurance SPAC III Sponsor Entities”). The Insurance SPAC III Sponsor Entities are sponsors of INSU Acquisition Corp. III (NASDAQ: IIII) (“Insurance SPAC III”), a blank check company that will seek to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Insurance SPAC III Business Combination”). On December 22, 2020, the Insurance SPAC III completed the sale of 25,000,000 units ("Insurance SPAC III Units") in its IPO. Each Insurance SPAC III Unit consists of one share of the Insurance SPAC III's Class A Common Stock (“Insurance SPAC III Common Stock”), and one-third of one warrant (each, an “Insurance SPAC III Warrant”), where each whole Insurance SPAC III Warrant entitles the holder to purchase one share of Insurance SPAC III Common Stock for $11.50 per share. The Insurance SPAC III Units were sold in the IPO at an offering price of $10.00 per unit, for gross proceeds of $250,000,000 (before underwriting discounts and commissions and offering expenses). Immediately following the completion of the IPO, there were an aggregate of 34,100,000 shares of Insurance SPAC III Common Stock issued and outstanding. If Insurance SPAC III fails to consummate an Insurance SPAC III Business Combination within the first 24 months following its IPO and is unable to obtain an extension of such time period, its corporate existence will cease except for the purposes of winding up its affairs and liquidating its assets. The Company currently consolidates the Insurance SPAC III Sponsor Entities and treats the Insurance SPAC III Sponsor Entities' investment in the Insurance SPAC III as an equity method investment. The Insurance SPAC III Sponsor Entities purchased 575,000 of the Insurance SPAC III placement units in a private placement that occurred simultaneously with Insurance SPAC III’s IPO for an aggregate of $5,750,000, or $10.00 per placement unit. Each placement unit consists of one share of Insurance SPAC III Common Stock and one-third of one warrant (the “Insurance SPAC III Placement Warrants”). The placement units are identical to the Insurance SPAC III Units sold in the Insurance SPAC III IPO except (i) the shares of Insurance SPAC III Common Stock issued as part of the placement units and the Insurance SPAC III Placement Warrants will not be redeemable by Insurance SPAC III, (ii) the Insurance SPAC III Placement Warrants may be exercised by the holders on a cashless basis, and (iii) the shares of Insurance SPAC III Common Stock issued as part of the placement units, together with the Insurance SPAC III Placement Warrants, are entitled to certain registration rights. Subject to certain limited exceptions, the placement units (including the underlying Insurance SPAC III Placement Warrants and Insurance SPAC III Common Stock and the shares of Insurance SPAC III Common Stock issuable upon exercise of the Insurance SPAC III Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of an Insurance SPAC III Business Combination. In addition, the Insurance SPAC III Sponsor Entities collectively hold 8,525,000 founder shares of Insurance SPAC III. Subject to certain limited exceptions, the founder shares will not be transferable or salable except (a) with respect to 25% of such shares, until consummation of an Insurance SPAC III Business Combination, and (b) with respect to additional 25% tranches of such shares, when the closing price of the Insurance SPAC III Common Stock exceeds $12.00, $13.50, and $17.00, respectively, for 20 out of any 30 consecutive trading days following the consummation of an Insurance SPAC III Business Combination. Certain executive and key employees of the Company purchased membership interests in Dioptra III and have an interest in the Insurance SPAC III’s founder shares through such membership interests. The number of founders shares eventually retained by the Insurance SPAC III Sponsor Entities and amounts in which the Company executives and key employees, and other non-controlling interests have an interest in through the Insurance SPAC III Sponsor Entities will not be finally determined until the Insurance SPAC III Business Combination, if any, is complete. Conference Call The Company will host a conference call at 11:00 a.m. Eastern Time (ET) to discuss these results. The conference call will be available via webcast. Interested parties can access the webcast by clicking the webcast link on the Company’s homepage at www.cohenandcompany.com. Those wishing to listen to the conference call with operator assistance can dial (877) 686-9573 (domestic) or (706) 643-6983 (international), with participant pass code 2381120, or request the Cohen & Company earnings call. A replay of the call will be available for one week following the call by dialing (800) 585-8367 or (404) 537-3406, participant pass code 2381120. About Cohen & Company Cohen & Company is a financial services company specializing in fixed income markets and, more recently, in SPAC markets. It was founded in 1999 as an investment firm focused on small-cap banking institutions but has grown to provide an expanding range of capital markets and asset management services. Cohen & Company’s operating segments are Capital Markets, Asset Management, and Principal Investing. The Capital Markets segment consists of fixed income sales, trading, and matched book repo financing as well as new issue placements in corporate and securitized products, and advisory services, operating primarily through Cohen & Company’s subsidiaries, J.V.B. Financial Group, LLC in the United States and Cohen & Company Financial (Europe) Limited in Europe. The Asset Management segment manages assets through collateralized debt obligations, managed accounts, and investment funds. As of December 31, 2020, the Company managed approximately $2.8 billion in primarily fixed income assets in a variety of asset classes including US and European trust preferred securities, subordinated debt, and corporate loans. As of December 31, 2020, 74.3% of the Company’s assets under management were in collateralized debt obligations that Cohen & Company manages, which were all securitized prior to 2008. The Principal Investing segment is comprised primarily of investments the Company holds related to its SPAC franchise and other investments the Company has made for the purpose of earning an investment return rather than investments made to support its trading, matched book repo, or other capital markets business activity. For more information, please visit www.cohenandcompany.com. Note 1: Adjusted pre-tax income (loss) and adjusted pre-tax income (loss) per share are non-GAAP measures of performance. Please see the discussion under “Non-GAAP Measures” below. Also see the tables below for the reconciliations of non-GAAP measures of performance to their corresponding GAAP measures of performance. Forward-looking Statements This communication contains certain statements, estimates, and forecasts with respect to future performance and events. These statements, estimates, and forecasts are “forward-looking statements.” In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “seek,” or “continue” or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this communication are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties, and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied in the forward-looking statements including, but not limited to, those discussed under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition” in our filings with the Securities and Exchange Commission (“SEC”), which are available at the SEC’s website at www.sec.gov and our website at www.cohenandcompany.com/investor-relations/sec-filings. Such risk factors include the following: (a) a decline in general economic conditions or the global financial markets, (b) losses caused by financial or other problems experienced by third parties, (c) losses due to unidentified or unanticipated risks, (d) a lack of liquidity, i.e., ready access to funds for use in our businesses, (e) the ability to attract and retain personnel, (f) litigation and regulatory issues, (g) competitive pressure, (h) an inability to generate incremental income from new or expanded businesses, (i) unanticipated market closures or effects due to inclement weather or other disasters, (j) losses (whether realized or unrealized) on our principal investments, including on our CLO investments, (k) the possibility that payments to the Company of subordinated management fees from its CDOs will continue to be deferred or will be discontinued, (l) the possibility that the stockholder rights plan may fail to preserve the value of the Company’s deferred tax assets, whether as a result of the acquisition by a person of 5% of the Company’s common stock or otherwise, (m) the possibility that Insurance SPAC III does not successfully consummate an Insurance SPAC III Business Combination, (n) a reduction in the volume of investments into SPACs; (o) the value of our holdings of founders shares in Shift and Metromile may decline and the possibility that significant portions of the founder shares may remain restricted for a long period of time; and (p) the impacts of the COVID-19 pandemic. As a result, there can be no assurance that the forward-looking statements included in this communication will prove to be accurate or correct. In light of these risks, uncertainties, and assumptions, the future performance or events described in the forward-looking statements in this communication might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Cautionary Note Regarding Quarterly Financial Results Due to the nature of our business, our revenue and operating results may fluctuate materially from quarter to quarter. Accordingly, revenue and net income in any particular quarter may not be indicative of future results. Further, our employee compensation arrangements are in large part incentive-based and, therefore, will fluctuate with revenue. The amount of compensation expense recognized in any one quarter may not be indicative of such expense in future periods. As a result, we suggest that annual results may be the most meaningful gauge for investors in evaluating our business performance. COHEN & COMPANY INC.CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)(in thousands, except per share data) Three Months Ended Year Ended 12/31/209/30/20 12/31/1912/31/2012/31/19 Revenues Net trading$18,087 $16,957 $12,299 $73,611 $38,172 Asset management 3,821 1,631 1,795 8,759 7,560 New issue and advisory 1,734 500 1,580 2,234 1,831 Principal transactions 42,389 2,606 276 44,702 1,521 Other revenue 334 162 140 804 582 Total revenues 66,365 21,856 16,090 130,110 49,666 Operating expenses Compensation and benefits 23,479 10,965 6,159 59,902 25,972 Business development, occupancy, equipment 671 641 926 2,708 3,402 Subscriptions, clearing, and execution 2,517 2,242 2,950 9,887 9,682 Professional services and other operating 1,838 1,851 1,942 7,068 6,251 Depreciation and amortization 85 85 79 334 318 Impairment of goodwill - - - 7,883 - Total operating expenses 28,590 15,784 12,056 87,782 45,625 Operating income (loss) 37,775 6,072 4,034 42,328 4,041 Non-operating income (expense) Interest expense, net (1,951) (1,952) (2,255) (9,589) (7,584) Income (loss) from equity method affiliates (244) (1,371) (188) (2,955) (553) Income (loss) before income tax expense (benefit) 35,580 2,749 1,591 29,784 (4,096) Income tax expense (benefit) (8,046) (594) 394 (8,669) (523) Net income (loss) 43,626 3,343 1,197 38,453 (3,573) Less: Net income (loss) attributable to the noncontrolling interest 28,875 1,688 423 24,248 (1,519) Net income (loss) attributable to Cohen & Company Inc.$14,751 $1,655 $774 $14,205 $(2,054) Earnings per share Basic Net income (loss) attributable to Cohen & Company Inc.$14,751 $1,655 $774 $14,205 $(2,054) Basic shares outstanding 1,070 1,147 1,125 1,131 1,137 Net income (loss) attributable to Cohen & Company Inc. per share$13.79 $1.44 $0.69 $12.56 $(1.81) Fully Diluted Net income (loss) attributable to Cohen & Company Inc.$14,751 $1,655 $774 $14,205 $(2,054) Net income (loss) attributable to the convertible non-controlling interest 17,074 2,542 523 14,200 (1,231) Net interest attributable to convertible debt, net of taxes 39 379 374 1,162 - Income tax and conversion adjustment 7,924 1,503 (123) 9,452 246 Enterprise net income (loss)$39,788 $6,079 $1,548 $39,019 $(3,039) Basic shares outstanding 1,070 1,147 1,125 1,131 1,137 Unrestricted Operating LLC membership units exchangeable into COHN shares 2,803 2,803 581 2,801 545 Additional dilutive shares 1,334 1,166 1,051 1,159 - Fully diluted shares outstanding 5,207 5,116 2,757 5,091 1,682 Fully diluted net income (loss) per share$7.64 $1.19 $0.56 $7.66 $(1.81) Reconciliation of adjusted pre-tax income (loss) to net income (loss) attributable to Cohen & Company Inc. and calculations of per share amounts Net income (loss) attributable to Cohen & Company Inc.$14,751 $1,655 $774 $14,205 $(2,054) Addback: Impairment of goodwill - - - 7,883 - Addback (deduct): Income tax expense (benefit) (8,046) (594) 394 (8,669) (523) Addback (deduct): Net income (loss) attributable to the convertible non-controlling interest 17,074 2,542 523 14,200 (1,231) Adjusted pre-tax income (loss) 23,779 3,603 1,691 27,619 (3,808) Net interest attributable to convertible debt 381 379 374 1,504 - Enterprise pre-tax income (loss) for fully diluted adjusted pre-tax income (loss) per share calculation$24,160 $3,982 $2,065 $29,123 $(3,808) Fully diluted shares outstanding 5,207 5,116 2,757 5,091 1,682 Fully diluted adjusted pre-tax income (loss) per share$4.64 $0.78 $0.75 $5.72 $(2.26) COHEN & COMPANY INC.CONSOLIDATED BALANCE SHEETS(in thousands) December 31, 2020 (unaudited) December 31, 2019 Assets Cash and cash equivalents$41,996 $8,304 Receivables from brokers, dealers, and clearing agencies 52,917 96,132 Due from related parties 2,812 466 Other receivables 3,929 46,625 Investments - trading 242,961 307,852 Other investments, at fair value 58,540 14,864 Receivables under resale agreements 5,716,343 7,500,002 Investment in equity method affiliates 13,482 3,799 Deferred income taxes 7,397 - Goodwill 109 7,992 Right-of-use asset - operating leases 6,063 7,155 Other assets 2,830 8,433 Total assets$6,149,379 $8,001,624 Liabilities Payables to brokers, dealers, and clearing agencies$156,678 $241,261 Accounts payable and other liabilities 46,251 20,295 Accrued compensation 14,359 4,046 Trading securities sold, not yet purchased 44,439 77,947 Other investments sold, not yet purchased 7,415 - Securities sold under agreements to repurchase 5,713,212 7,534,443 Deferred income taxes - 1,339 Operating lease liability 6,531 7,693 Redeemable Financial Instruments 11,957 16,983 Debt 47,100 48,861 Total liabilities 6,047,942 7,952,868 Equity Voting nonconvertible preferred stock 27 27 Common stock 13 12 Additional paid-in capital 65,031 68,714 Accumulated other comprehensive loss (821) (915) Accumulated deficit (20,341) (34,519) Total stockholders' equity 43,909 33,319 Noncontrolling interest 57,528 15,437 Total equity 101,437 48,756 Total liabilities and equity$6,149,379 $8,001,624 Non-GAAP Measures Adjusted pre-tax income (loss) and adjusted pre-tax income (loss) per diluted share Adjusted pre-tax income (loss) is not a financial measure recognized by GAAP. Adjusted pre-tax income (loss) represents net income (loss) attributable to Cohen & Company Inc., computed in accordance with GAAP, excluding impairment of goodwill and income tax expense (benefit), plus the net income (loss) attributable to the convertible non-controlling interest. Impairment of goodwill has been excluded from adjusted pre-tax income (loss) because it is a non-recurring, non-cash item. Income tax expense (benefit) has been excluded because a pre-tax measurement of enterprise earnings that includes net income (loss) attributable to the convertible non-controlling interest is a useful and appropriate measure of performance. Furthermore, our income tax expense (benefit) has been, and we expect it will continue to be, a substantially non-cash item for the foreseeable future, generated from adjustments in our valuation allowance applied to the Company’s gross deferred tax assets. Convertible non-controlling interest is added back to adjusted pre-tax income because the underlying Cohen & Company, LLC equity units are convertible into Cohen & Company Inc. shares. Adjusted pre-tax income (loss) per diluted share is calculated, by dividing adjusted pre-tax income (loss) by diluted shares outstanding, both of which include adjustments used in the corresponding calculation in accordance with GAAP. We present adjusted pre-tax income (loss) and related per diluted share amounts in this release because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted pre-tax income (loss) and related per diluted share amounts help us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash or recurring impact on our current operating performance. In addition, our management uses adjusted pre-tax income (loss) and related per diluted share amounts to evaluate the performance of our enterprise operations. Adjusted pre-tax income (loss) and related per diluted share amounts, as we define them, are not necessarily comparable to similarly named measures of other companies and may not be appropriate measures for performance relative to other companies. Adjusted pre-tax income (loss) should not be assessed in isolation from or construed as a substitute for net income (loss) prepared in accordance with GAAP. Adjusted pre-tax income (loss) is not intended to represent and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP. Contact: Investors -Media -Cohen & Company Inc.Joele Frank, Wilkinson Brimmer KatcherJoseph W. Pooler, Jr.James Golden or Andrew SquireExecutive Vice President and212-355-4449Chief Financial Officerjgolden@joelefrank.com or asquire@joelefrank.com215-701-8952 investorrelations@cohenandcompany.com