Top executives at Shift Technologies Inc. said Thursday the used-vehicle retailer sought to urgently improve operations efficiencies in the second quarter and is evaluating “all avenues” to raise capital.
Shift CEO Ayman Moussa, who spoke during the company’s quarterly earnings call Thursday, said he determined it was critical to change the course of the business after he joined it in June.
Shift Technologies, of San Francisco, reduced its employee head count by one-third last month as part of a restructuring plan aimed at cutting expenses. It also eliminated investment in its dealer marketplace business. That restructuring followed Shift’s disclosure in May that its board of directors was reviewing “strategic alternatives” for the company.
“The company has gone through several changes in strategy over the last 18 months to adjust to industry and capital market factors, creating distraction and making it hard to achieve results among shifting priorities,” Moussa said during the call.
He also characterized Shift’s previous processes as “overly complicated” and said the West Coast retailer, for its size, had spread itself “too thin” by targeting a wide geographic area and neglecting local market share opportunities.
Shift has since pivoted to prioritize three things, Moussa said: boosting gross profit per vehicle through operational efficiences and improving F&I, optimizing customer experiences to increase sales conversion and driving vehicle sales through in-market penetration. The strategic alternatives review is ongoing, he said.
The company did not hold a question-and-answer session at the end of its earnings call Thursday.
Liquidity
Shift is considering “all avenues” to raise more capital, including negotiating with its debt holders, company CFO Oded Shein said during the call.
In July, the company amended its floorplan with Ally to reduce its maximum credit line to $30 million from $75 million. Shift did that to align its credit line with the company’s business trends and gain flexibility by eliminating a minimum liquidity financial covenant, Shein said.
Second-quarter results
Shift also reported Thursday a net loss of $25.8 million in the three months ended June 30, slimmer than its loss of $52.2 million for the year-earlier period. Total revenue plunged 79 percent year over year to $47.3 million.
The company’s retail sales fell 71 percent to 1,998 vehicles in the quarter. It reported $1,577 in total gross profit per vehicle, down 9.9 percent year over year.
Shares of Shift Technologies fell 6.8 percent to close at $1.51 on Friday.
Second-quarter earnings highlights:
Q2 total revenue: $47.3 million, down 79 percent from the year-earlier period.
Q2 net loss: $25.8 million, smaller than its loss of $52.2 million in the year-earlier period.
Q2 retail vehicles sold: 1,998, down 71 percent.
Q2 total gross profit per vehicle: $1,557, down 9.9 percent.
