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Carlotz Inc (LOTZ)

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Last Post: 2/24/2021 6:03:05 PM - Followers: 12 - Board type: Free - Posts Today: 0

CarLotz

 

CarLotz was founded because we were frustrated with the process of selling a used car.

Our innovative approach helps sellers get what their car is worth without the hassle of selling it themselves, and our buyers pay below traditional dealership prices.

 
Michael BorCo-Founder & CEO

About

Michael has primary oversight over the general strategy and vision of CarLotz, in addition to managing growth and new hub openings. Michael works with the Company’s Executive Committee, comprised of the leaders of Operations, Talent Management, Technology, Finance & Accounting, Marketing, Legal, and the Retail RemarketingTM Team. Starting effectively as a Coach with the other Co-Founders in 2011 with the opening of CarLotz’ first hub in Midlothian, VA, Michael has always enjoyed close interactions with CarLotz’ many and diverse guests and teammates and continues to enjoy viewing pictures of happy car buyers driving off in their new rides! Michael has an extensive background in the automotive sector through CarLotz and his previous work as a Mergers & Acquisition investment banker at Harris Williams & Co. Prior to Harris Williams & Co., Michael held positions at Lehman Brothers and PricewaterhouseCoopers. Michael received a BS in Finance from Lehigh University and an MBA from the Harvard Business School. Michael was appointed by the Governor of Virginia to serve on the Virginia Motor Vehicle Dealer Board and also sits on the Board of the Sheltering Arms Institute and on the Finance Committee of the World Pediatric Project. Michael has lived on three continents, but currently resides in Richmond, Virginia with his wife and three sons. He enjoys playing ping-pong with his boys, tennis with his wife, and squash with his friends. His first car was a tan 1986 Nissan Stanza Wagon.

First Car

1986 Nissan Stanza Wagon
 
Michael ChapmanCMO

About

Michael Chapman is a brand builder, with unrelenting ambition and a track record of marketing success. He brings more than two decades of experience as a dynamic marketer and strategic planner. Most recently, Chapman served as the Chief Growth Officer of The Martin Agency (“Martin”), based in Richmond, Virginia, which was recently named Adweek’s U.S. Agency of the Year. Over the years Chapman has worked across a number of categories and brands including UPS, Walmart, DoorDash, Intel, Heinz and Oreo. As part of Martin’s executive leadership team, Chapman oversaw brand strategy across all of Martin’s clients, while also being the lead architect of The Martin Agency’s own brand identity. Prior to Martin, Mr. Chapman served as Senior Planner for McCann, where he led global strategy for UPS, helping establish its positioning as one of the top three shipping and logistics companies in China. Chapman received his undergraduate degree from the University of Virginia, where he also received his MBA from the Darden School of Business.

First Car

1979 International Harvester Scout
 
Tom StoltzCFO

About

A veteran senior finance professional with close to three decades of public and private company experience, that brings extensive retail industry expertise to the role and most recently served as the Chief Financial Officer of Chicago-based Portillos Hot Dogs. Previously, Stoltz held roles with Fortune 500 companies Dollar General and Food Lion, as well as senior roles at a number of retail industry public and private companies. During career Tom has been responsible for a wide range of functional areas beyond the traditional finance role including: legal, risk management, investor relations, IT, HR, real estate, distribution and loss prevention.

First Car

1976 Mercury Cougar

About:
  • Sponsor/Founder Share Dilution: It is projected to have 114.8M shares outstanding excluding earn-outs (see below). These include 3.8M in sponsor shares. So, the net dilution due to sponsor shares is 3.3%. This is in the low end of the range for SPAC deals. Note: Sponsor shares are dilutive because the sponsors acquire these shares for a nominal price instead of the ~$10 per share paid by retail investors. In general, the higher the percentage ownership of the sponsors in the target business, the higher the dilution, as 20% of sponsors' equity is sponsor shares. The only exception to this "rule" was Bill Ackman's Pershing Square Tontine (NYSE:PSTH) which had no such dilution.
    Cash-Outs: Original CarLotz shareholders are rolling ~95% of their investment. In other words, CarLotz shareholders are cashing out ~5% of their investment for $33M. There is also a $33M outlay to redeem preferred stock held by TRP Capital partners which led its most recent funding round in September 2017. Note: The best outcome for new investors is if the original investors of the target were to roll their entire holdings. In general, a high cash-out ratio is a bad sign as that implies they don't have the confidence in the business to hold their position past deal close. Low ratios such as this can be due to the original investors seeking to exit for portfolio management related reasons. As such, it is less of a negative.
    Earn-outs: CarLotz shareholders are receiving 7.5M shares in earn-outs while Acamar Partners agreed to defer 3.8M shares (50% of the original founder shares) as earn-outs: half each earned if PPS hits $12.50 and $15 within five years of close. Note: Earn-outs are incentives to the shareholders of the sponsor and/or target. They are usually structured to vest at higher price points. Although the implied dilution is a negative, substantial earn-outs at higher price-points show some level of confidence in the business as well as alignment of interests.
    Valuation: Pro Forma Enterprise Value of ~$827M implies a 0.88x revenue-multiple on $945M projected 2022 estimated revenue and $122M gross profit. Assuming no redemption, the business will have $321M in cash on the balance sheet.
 

Business Background

CarLotz was founded in 2011 as a consignment business for used cars with a single location in Richmond, VA (Midlothian Turnpike). The initial capital came from the founders Michael Bor, Aaron Montgomery, and Will Boland along with their friends and family. Over the next two years, they expanded to two more locations. During 2011, they also raised $2M through a couple of capital raises. That money was primarily used to build up the technology platform. They then did a more substantial $5M capital raise in August 2014. This time, the money came from PE firms specialized in retail expansion and so more stores (hubs) were definitely in the cards. The business model at the time was very simple:

  1. To sell, an owner would bring their vehicle to the closest CarLotz location and pay a $199 fee. The fee is to prep the car for sale. The asking price is up to the owner, although CarLotz suggests one.
    CarLotz then takes over and handles the rest of the process including test drives.
    When the car is sold, CarLotz takes a flat $699 fee and issues a check for the rest to the owner.

While the model was very simple and catered well to sellers wanting a better deal than the trade-in offers, there was one major flaw that would preclude them from really disrupting the used-car retail industry: the consignment model only works for a minority of the people who are looking to sell their cars. Sellers usually need a replacement vehicle immediately which is partly funded using the money from selling their existing vehicle. The consignment model therefore causes a mismatch: sellers have to either raise cash to replace the money that is tied up or have to go without a car for ~30 days. One way to solve the problem would have been to offer cash advances to sellers, but the company probably did the right thing and opted not to pursue that, as that would have involved taking on credit risk - a risky proposition, given its status as a small business.

During the period through 2017, it added two more stores. In the interim, it became increasingly clear that it needed a business transformation to grow profitably. Such an opportunity came to light with the hiring of Brent Garrett, who had a background in remarketing and fleet management. He saw an opportunity to address the flaw in the consignment model: rather than trying to disrupt the sell-side which is what most of the competition is doing any way, why not disrupt the buy-side by sourcing cars from fleets. This insight proved to be a stroke of genius/luck: in the crowded user-car retail arena, it stumbled onto an unexploited niche ripe for disruption.

LOTZ
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LOTZ News: Current Report Filing (8-k) 02/26/2021 04:16:24 PM
LOTZ News: CarLotz, Inc. Announces Fourth Quarter and Fiscal 2020 Earnings Release Date, Conference Call and Webcast 02/23/2021 04:05:00 PM
LOTZ News: Amended Statement of Ownership (sc 13g/a) 02/16/2021 02:15:24 PM
LOTZ News: Amended Statement of Ownership (sc 13g/a) 02/16/2021 09:46:52 AM
LOTZ News: CarLotz rallies after attracting first Wall Street bull 02/16/2021 08:46:04 AM
News News Alert: Current Report Filing (8-k) 02/26/2021 04:16:24 PM
PostSubject
#15   https://finviz.com/quote.ashx?t=LOTZ [SMART MONEY] 02/24/21 06:03:05 PM
#14   LOTZ...$10.66...Psar flipped to a Bullish Buy Position...on the georgie18 02/18/21 04:49:40 AM
#13   $LOTZ On the ground floor of a huge The Cardiac Kid 02/16/21 08:46:04 PM
#12   $LOTZ Opened a starter here. =) HelloKitty8 02/16/21 06:59:24 PM
#11   LOTZ...$9.50...in the P/M...(Updated - February 16, 2021 8:16 georgie18 02/16/21 09:20:53 AM
#10   LOTZ...$9.06...adding here on the Reversal Hammer off the bottom... georgie18 02/12/21 12:13:15 PM
#9   Can someone give me mod power on this DailyTrades 02/11/21 11:03:30 AM
#8   My thoughts exactly. I entered this morning. Good luck! DailyTrades 02/11/21 11:02:45 AM
#7   LOTZ looks to be promising but I think Chronic The Hemp Hog 02/10/21 10:19:07 AM
#6   CarLotz Enters West Coast Market and Opens Second Pro-Life 02/02/21 09:54:16 AM
#5   Fireworks!$$$$ Jess070283 02/01/21 05:14:00 PM
#4   Took a starter!$$$$ Jess070283 01/29/21 10:49:49 AM
#3   LOTZ...$10.84...The dip tested all Support of the Moving georgie18 01/28/21 04:47:35 AM
#2   LOTZ...$12...in the A/H...Took a 2000 share starter...on this georgie18 01/23/21 06:19:19 AM
#1   Yay, Carlotz is finally a stock OracleofOC 01/22/21 05:53:00 AM
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