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Management Commentary

Speaking about the results for the nine months ended September 30, 2024, Scott Wallace, CEO & Co-Founder of ECD stated, “ECD continues to see strong growth as we push through with our ambitious plans to be the premier builder in the classic luxury automotive market. Progress along our growth plan was evidenced by our 35% increase in year-to-date 2024 revenues to a record $19.9 million and strong gross margins of 31.2% in the third quarter. As we move ahead, we intend to continue scaling our existing footprint and fill the factory, while also looking at growth opportunities in the larger classic car ecosystem.

“On November 19, 2024, the Company disclosed that its 2022, 2023 and first half of 2024 financial statements should no longer be relied upon. We are happy to put the financial restatement behind us and file our third quarter 2024 results. We believe that commencing in the second quarter of 2025, there will be lower G&A expenses as the Company incurred significant non-recurring professional fees in connection with the restatements of the 2022, 2023 and first half 2024 financial statements, the suspension of BF Borgers CPA PC and related matters. We believe our cash flow break even is approximately 120 vehicle builds per year.”

Mr. Wallace concluded: “The business operations and our long-term outlook remain unchanged and unaffected by the financial restatement. Our retail strategy is a key component of continued growth and is already showing positive proof points. Our ‘store within a store’ at One Driver’s Club in West Palm Beach launched in late 2024 and is already contributing to our backlog and ‘ready-now’ sales. Our partnership with 10 Easy Street of Nantucket launches in April and we have inventory ready. ECD is actively evolving the retail growth strategy to support backlog and vehicles that are ready now. Going forward, we believe we will continue to drive higher revenue through increased sales, higher average selling prices, product innovation driving upgrades and pursuing additional avenues of revenue to take advantage of the multi-billion dollar classic car ecosystem.”

Third Quarter 2024 Financial Results

Revenue increased 30% to $6.4 million in the third quarter of 2024, compared to $5.0 million in the third quarter of 2023. The increase was primarily due increased volume, higher average selling price, increased upgrades and increased used vehicle sales versus a year ago.

Third quarter 2024 gross profit was $2.0 million, or 31.1% of revenue, compared to $1.0 million, or 19.4% of revenue in the third quarter of 2023.

Operating expenses were $2.6 million in the third quarter of 2024, compared to $1.3 million in the third quarter of 2023. The increase in operating expenses was primarily due to higher general and administrative expenses related to the ongoing costs of being a public company and the restatement of financials with our new auditing firm.

Operating loss was ($0.6) million, compared to operating loss of ($0.3) million in the third quarter of 2023. The decline was primarily related to higher expenses in 2024, including the restatement costs, compared to 2023.

Net loss for the third quarter 2024 was ($2.6 million), or $(0.08) per diluted share, compared to a net loss of ($0.2) million, or $0.01 per diluted share in the third quarter of 2023.

Adjusted EBITDA was a loss of ($0.5) million in the third quarter 2024, compared to an Adjusted EBITDA loss of ($0.3) million in the third quarter of 2023.

Cash and equivalents on September 30, 2024 were $3.6 million, as compared to $8.1 million on December 31, 2023.

Nine Months Ended September 30, 2024 Financial Results

Revenue increased 35% to a record $19.9 million for the nine months ended September 30, 2024, compared to $14.7 million for the nine months ended September 30, 2023. The increase was primarily due to increased volume, higher average selling price and increased used vehicle sales versus the same period in 2023.

For the nine months ended September 30, 2024 gross profit increased to $5.6 million, or 28.1% of revenue, compared to $3.3 million, or 22.5% of revenue for the nine months ended September 30, 2023.

Operating expenses were $7.8 million for the nine months ended September 30, 2024, compared to $3.9 million for the nine months ended September 30, 2023. The increase in operating expenses was primarily due to higher general and administrative expenses related to the ongoing costs of being a public company and the costs associated incurred in connection with the restatements of the 2022, 2023 and first half 2024 financial statements, the suspension of BF Borgers CPA PC and related matters.

Operating loss was ($2.2) million, compared to operating loss of ($0.6) million for the nine months ended September 30, 2023. The decline was primarily due to increased costs in the first year as a public company.

Net loss for the nine months ended September 30, 2024 was ($7.5 million), or $(0.23) per diluted share, compared to a net loss of ($0.5) million, or $(0.02) per diluted share for the nine months ended September 30, 2023.

Adjusted EBITDA was a loss of ($1.2) million for the nine months ended September 30, 2024, compared to an Adjusted EBITDA loss of ($0.5) million in the same year ago period.

About ECD Auto Design

ECD, a public company trading under ECDA on the Nasdaq, is a creator of restored luxury vehicles that combines classic English beauty with modern performance. Currently, ECD restores Land Rover Defenders, Land Rover Series IIA, the Range Rover Classic, the Jaguar E-Type and we have recently added Ford Mustang and Toyota FJ. Historically, each vehicle produced by ECD was fully bespoke, a one-off that is designed by the client through an immersive luxury design experience and hand-built from the ground up in 2,200 hours by master-certified Automotive Service Excellence ("ASE") craftsmen. The Company was founded in 2013 by three British "gear heads" whose passion for classic vehicles is the driving force behind exceptionally high standards for quality, custom luxury vehicles. ECD's global headquarters, known as the "Rover Dome," is a 100,000-square-foot facility located in Kissimmee, Florida that is home to 72 talented craftsmen and technicians, who hold a combined 69 ASE and four master level certifications. ECD has an affiliated logistics center in the U.K. where its seven employees work to source and transport 25-year-old work vehicles back to the U.S. for restoration. For more information, visit www.ecdautodesign.com.

About Non-GAAP Financial Measures

The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used to evaluate companies on the basis of operating performance and leverage.

EBITDA is not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading “Reconciliation of Net Income (loss) from Operations to EBITDA” in the financial tables included in this press release.

Cautionary Note Regarding Forward-Looking Statements

This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “attempting,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You should carefully consider the risks and uncertainties that affect our business, including those described in our filings with the Securities and Exchange Commission (“SEC”), including under the caption “Risk Factors” in our Annual Report on Form 10-K filed for the year ended December 31, 2023 with the SEC, which can be obtained on the SEC website at www.sec.gov. These forward-looking statements speak only as of the date of this communication. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and filings with the SEC.

Investor Relations
Brian M. Prenoveau, CFA
MZ Group – MZ North America
ECDA@mzgroup.us
561 489 5315