RMBL - Earnings call 3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the RumbleON Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Will Newell, Head of Investor Relations. Thank you.

You may begin.

Will Newell

Thank you, operator. gentlemen. and ladies morning, Good Thank you discuss conference to on joining third quarter us RumbleON's this XXXX call for financial results.

the Officer; Board Joining new Chief Financial and on call Mike RumbleON's are me Kennedy, Blake Chief Lawson, Executive and Mark Observer RumbleON Officer. Tkach, RideNow Founder; today RumbleON's

we available QX third in Our release quarter are and morning Form in detailed this results our supplemental press XX-Q. the issued information is

but uncertainties contains not would I to you forward-looking like discussed opportunities statements, discussion future to involve including, cause here. to Before results we start, those results and limited the remind materially market that RumbleON's and following from actual differ financial risks may and

and on risks your based or questions, and to assumes discussion law. Also, call, following developments update no from actual Additional financial information to as can cause in including measures. to that new The required responses forward-looking differ of by could forward-looking or statements obligation SEC this whether other filings. RumbleOn's conference result and today, current contains be expectations results periodic non-GAAP a as are except otherwise, statements found them, RumbleON revise of as in

of this our please financial non-GAAP release issued earnings earlier For measures, reconciliation morning. a these see

to Now I Mark. call will turn the over

Mark Tkach

make proven Officer. We're history. to a executive join Thanks, of time enhance field, in for progress for Thank earnings years, work in Kennedy we for goals. new I've confident transition our Will, formally a want an RumbleOn team important track Mike industry. throughout I'm expertise with and you and XXXX thank you is good plan as lead qualified morning, is to as seasoned their shareholders. I at us to third known in all Executive to the our a to Chief Mike everyone. pleased uniquely such continued and introduce and that quarter RumbleOn dedication transformation and RumbleOn's this successful for our proven the with the for value joining towards such call. his Mike our excited the record many background have he We're powersports leader hard

future in the I as Kennedy. to a through observer I will a significant my I act of over employment for going will forward. And consulting in very that, and business my new Mike? CEO, and will role, continue company Mike I be also passion ownership the plan agreement. terms of term industry, the given stay to Board In my the turn with interest my capacity involved it to our

Michael Kennedy

I've CEO. Thanks, been Mark, a a on welcome, as couple week, mind. my a everyone. things there for in board are RumbleOn's already busy week that and and of clear It's are been

with passion I've of First, been the impressed our very team.

here convinced in about what can months As know, of have been at most that of you change is a we team and accomplish RumbleON, focused recent and the I'm lot there is excited together.

acquiring strengthened our of smartly offering the our that I'm progress on expanding confident over deliver in greatly a you updating forward and be X the is an capital will In shareholders. completed, a Second, weeks, once particular, operation deploy the for our benefit and rights efficient of little we'll will forward. in to go all on sheet to dealerships balance offense be going position look footprint. I our and we

where exciting I companies. leading recently, RumbleOn. several of through turning towards Managing at Brazil. some time capacities bulk powersports over the aspects. geographies it future I and the XXX now, combinated and before at at dealers the Vice network America Harley-Davidson, in leading managed here love performance equity-owned North powersports the private of For this and a industry, Vanson By as serving at Harley-Davidson Americas bring over on background progress and manufacturer throughout to Mark was experience President I'd CEO of of Most career provide I a team's like different my X Heinz, spent across walk of to products. I I my color Director commercial decades to of

been business closer now weeks the you all aspects being said with in more I've this update me the look to close opportunity the Mark customers. the through in excitement. excites forward will the that showroom. I've And I with to is ahead that often company's the is you One coming really to that action months. showroom our detail. Go in walk of speaking of Mark. and my of never in now career

Mark Tkach

doing confident turnaround sheet, RumbleOn Thanks, and do further Mike. he acquisitions. our to of After approach our look efficiently we disciplined an initiatives, strengthening executing long-term done, our you Mike. cost-saving will effectively what his shareholder entrust We're keeping that leadership strategic to process, value. I balance Mike on the to initiatives instituting We will updated forward plan more repositioning and now a walk inventory these going on to and plan and we're vision progress search, forms driving extensive for our through we've you manage what to management we're what excited forward. while now by

much our the and cost were specifically the in during incremental effort estate our positions our our regarding cost continued an structure, to we footprint. to expenses. Further, First, in quarter, identify overbuilt evaluating regional optimizing facilities at management centers. that larger we underused or continue plan make offset to We're progress in in anticipation to distribution of dealerships structure, savings real rightsize options our a unused

measures effect further $XX and we have totaling We more $XX of describe will expenses, XXXX. as reductions reduce annualized $XX another implemented in As million, annualized you Blake know, these we with in of cost identified cost can savings benefiting have million detail. believe million, the

an often months. is out there's always visible, a lag it not for of and I tail, can think organization immediately expenses few a

to Second, management. we continue our improve inventory

our incentives, while and level carrying adjusting increased and rebates a some be the through sell inventory meetings. Manufacturers buy self-correct same continue easing those stringent inventories and will We levels programs. like at products process as flooring used store have to free for also efficiently, more allow our new well seasonal implemented the assisting that to costs our increased at of us network decreased time, are

advantage take of and incentives products excess events, enhance of increased stronger digital them will into movement strategy, through consumer and higher-performing on-site We the staff programs markets. these

the products, will We compression some product higher a in but with that portion see GPUs margin counter noncurrent on compression. help quarter XXXX will being of delivered that the

XXXX to setting committed is are the feel team forward. a and and confident actions Our clearing up XXXX products out us strong for these

better at overhauled marketing used new to This have to and of us freight us we effectively the right vehicle inventory. tool, allows our the time vehicles will the balance also a the right and right right place increase helping administrative offer time spend, Additionally, the get changes costs lines. yield, These and right cash value. in reducing achieve at

Third, sheet. actively our are strengthening we balance

be discussed, of previously are offering. will those brick-and-mortar in of proceeds to fully down rights remaining the to platform. the backstop utilized debt. in a $XX accommodate As process be national The funds million our we pay raising of $XXX used growth million will

aggregate Regarding the estate portfolio, during of the we nine an $XX real just eigth leaseback over properties our quarter, for million. of identified sale price completed previously purchase the of

The the net We to term in our the leaseback property sale loan. also to of pay Oaktree complete XXXX. to remitted cash down directly expect proceeds were remaining

selling we finance our process as we previously company Next, are credit disclosed, have in of portfolio. the

a company. With years results personnel to vital the the now for XXXX. I disciplined our is remains to on I'll detail. you its span will strategic certain betting intent in and targets through perfected current quarter underperforming that long-term turn in and finalize Fourth, operations it Blake has which produced company to accretive we the financials shareholders. sale to options the dealerships acquisitions. the over that that, XXXX of strong we with pipeline the believe for more quarter This We've right the XX-plus and close we 'XX. outlook want and our best our are yield approach management walk acquiring the of optimizing success over to in third first processes, update by call returns We've strategy to and and acquisition candidates and of have have XXXX, proven can We inventory the expect additional to the the the past, identified remainder end in the that

Blake Lawson

morning, Thank you, and Mark, everyone. good

detailed, decisions. tough we the to we quarter continue are on progress execute make strategy with to has during pleased our team some the having and the have As made despite

have to inventory, the Not on put company a growth consumers. Despite the for ground are the back geopolitical of have on look diminish to economic and plentiful, exist, consumers noncurrent rates and are unrest the and on with and dealership which We the name products pressures that higher, shareholders. that confidence while inflationary a exist, we challenges plan will heightened to confidence we options discretionary the increased for rise rates, to available few, solid our value interest challenges creation our are seeing that real, our the and occasion, credit to professionals lower pressure team finance remain utmost we forward with future. certainly and

you favorably agreements with our recently financing amended primary aware, our Oaktree. As all are we lender

on we have gave As Oaktree the an pay to remitting Mark reduce million and our down loan. of to sale million to resulting the the through already committed debt raise. update of in outstanding estate company assets part these agreements, term you under $XX equity an $XXX real sales directly non-core

to XXXX company on line fully pay as our and the portfolio credit that are will offering an off the that additional an proceeds company's we of further sale believe provide rights in debt portfolio, debt. I call $XXX $XX we able costs, reducing well eliminate earnings loan this on supported announced we confident before we Oaktree Additionally, as to simplifying want from finance our million be August. this of sell the finance QX update reducing million will backstop year-end our of and

commence of rights size to has and to terms to allocated the highly As the common each distribute goals. The raise remainder date. are Under the to in expects B business of subscription to offering format expected subscription reduce period A and the use have the believe days million record million the record the holder well to rights proceeds participate Class on on proposed will fixed be and further Mark of rata achieve the in committee its offering, remaining acquisitions. as of terminate opportunity offering. the XX We subscription XX, the be the special we capital debt or date. accretive November not stated, paid date, the as to record approximately has a of XX plan subscription determined to rights, the to suited of to close of expects but these commencement to yet of price of Directors Board upon the company exercise terms the the pro announce November rights as offering rights rights two The basis. stockholders on prior thereafter. All about eligible the non-transferable the $XX the to of $XXX for the stock is calendar The

a to prior I to what standard third final units. month as back the units normal do our believe including would as quarter sold moving automotive comparative XX,XXX after results. Now not the XX.X% normalized this with quarter marks the comparison. Starting used versus units units, from quarter, operations. new market results due XXXX October the We COVID the to our third XX,XXX and year-over-year sequential seasonality. X,XXX and in are primarily of comparisons discontinued retail include the sequential financial revert will November drastically bump quarter XXXX. down financial more All characterize powersports of I

million guidance revenue quarter. or all unit normal $XX.X to from in as quarter-over-quarter and with X,XXX driven to $XX gross prior of entirely troughed and profit F&I, the was line include the $XX.X profit prior $XXX.X which our gross vehicle parts dollars prior was centers, is Gross with million, million and other the quarter third The quarter, quarter up sales. Total normalized. sales to margin XX.X% in accessories third Gross gross reduction reduced which down from and X,XXX Moving to due from we profit seasonality. Total flow margin XX.X%. $XX.X was quarter million, due profit $X,XXX, down generated GPU. by in was vehicle in XXXX tend normal per to concert the service powersports seasonality has

Vehicle segment. flat Logistics was Vehicle million, $X.X the quarter. roughly Light Asset our profit to gross Logistics for Turning

by a were million to compensation, down quarter administrative, expenses. down general XX.X% SG&A related or Moving million primarily Total professional expenses $XX in third facilities. sequentially, offset $XX.X partially and fees reduction in to increased

We expense work reducing sublease to through on initiatives. continue our facility

in flow at provide QX Additionally, and bottom in more of all we made month through These headcount and will the positions office. October, fixed significant cost our the reductions going to line were corporate forward.

and which to completely overall back Turning the internal oldest We We line inventory some inventories supply room at make still new negative the quarter few XX%, used in improve Adjusted normal benchmark for our used very work in With to of are making inventory. marketing $XX.X do was third the per is have was operations more quarter, from a for by levels. continuing we of year as million XXXX, plan day but seasonality to was to work our and XXXX product. Adjusted to QX pre-pandemic correct exceptions, to the XX% diluted million with is in mix. share driven $XX.X noncurrent year the adjusted reductions in expense model second model aggressively from during earnings by the and progress EBITDA lag quarter. made net $X.XX. loss down

million the $XX.X end QX, end unrestricted business. the we to unfloored the equity quarter, of $XX.X million balance the had inventory, At of which used could sheet At cash. to help flow. the we had and fund our and be of cash Turning used of

cash and offering million Our portfolio below other quarter should net million. our convertible was completion finance debt credit, debt, net after term for and inclusive in bank. By the rights of of $XXX balance line not discount the million. non-core assets, and not at plan includes principal of less of the of sale issuance inclusive reductions $XXX the debt, of unrestricted $XXX the the of end This third the end debt costs the floor be notes of year,

details for the outlook on of additional our remainder Now provide let XXXX. me

For the our metrics. reiterating we all year, are for full guidance

two our to powersports revenue billion segments, combined We asset-light to generate expect operating the of range billion. and logistics $X.XX within $X.XX

full gross QX a We unit continue $X,XXX similar $X,XXX. to generate per to to to year profit expect of

EBITDA getting time to to The to the will We $XX just XXXX range with rightsize started, because expect of and fully new inventory requires short-term identifying million. is in year we up is $XX operator, that, needs, our somewhat broad full adjusted and it management range issues. And business million open questions. this

Operator

from of questions Our Riley come Eric Securities. Instructions] the first with [Operator line B. Wold

Eric Wold

the up on inventory Following comments.

for as inventory you about to then of the out where inventories year should you some up work to look again about when noncurrent should normal And in Given at we the into would model push think you year-end a think that guidance you current inventory. start settle cadence the as this expect year, to have building what throughout you year. returning 'XX. back How 'XX, like through

Mark Tkach

well good feel we moving product. our with Well, currently inventory levels. the doing in We're 'XX

lined used so I it up, the less get we're some is try on assisting, that the And rebates, than good think two financing, additional And buydown I seeing as large two by with I campaigns on earlier, promotions. are in a inventory think have to shape. 'XX target manufacturers our year. said year, out. moved our really activity product lot really we X% we're larger incentives, to product of of model They done was below good of of a with those the already probably I our our end we've think

Blake Lawson

overhang a is ready we've and out we've We this would are probably and supply to some but selling in are Eric, QX. spring. And mix in dollars the out not line, on working, the on side, the for I flush the issues, we be Again, year. and certainly, some hope still to the there. are got plan season flesh in days perspective, in to believe in but line that we model just aging like for XXXX that From got make XXXX Mark will room used much the Blake. then dollar mentioned add. I change, the

Eric Wold

the you Got expected of in then got 'XX. is second remainder are throughout on and pipeline some earlier you've more question kind the and the on comments it. acquisition offering And to once complete and of then QX rights close the that targets

for acquisitions environment a does coming pipeline have sellers that of an like -- the in? of increasing, right in multiples? you're number greater Just because looks willing environment average give target what the kind of of of us size and a And mean we're up potential what for valuation Are these pool maybe now? kind targets your the the sense seeing of of you

Mark Tkach

determining to Well, we on direction them busy we'll want very which keep go.

works options, focus really lots but for up what the setting We have of on we best to company, want in platform. our

throughout currently I our the us think our I that the think year. a what and Eric. will for close company carry the I these -- platform. in matter works really we're working pipeline easily on will of of best quarter, that opportunities, mean It's just two focusing there's plenty and on first the

Blake Lawson

think EBITDA good for or normalized stuff, is of values. lot has XX-month there Eric, at opportunities to Yes, going there's even coming and as increased a dealerships I be trailing down Monopod

Operator

next Davidson. Our Michael Baker D.A. from come of the questions line with

Michael Baker

I just picture wanted question. to big ask a very

As through first I the combine we in-store, or portfolio at ago across and on when and entire idea again, the vision sort use going Either of of the recall, customer product, guys, new, a online the couple in visibility of to How RumbleOn started more years was now online, the Is looking walking have used, is a was of you store the last couple the cetera. et would new -- -- bit has seems couple changed? how how has Or -- -- it's changes, for X vision? a of brick-and-mortar. computer, focused the the still the CEO that what We've vision in, long-term now a of changed that the years. on company? let's their been little vision say, it

about what's of what longer talk company the the vision work? And the just didn't So term? --

Mark Tkach

changed have do We about, we which that. a a has I do what little think complete still Mike, XXX% I is ability to -- talking still vision deal online. the bit, the you're that think but

doing lot think probably to I There's a of been product. a doing We find is -- which your program. our more target of acquisition with that just lot There opportunity right product successful OEs you'll that. more out limitations really have market. omni-channel by the country our around offer grow moving new of cash now And on used program, the on is a side the lot the that,

the really anybody our in answer bikes is the for, have sell ship to of portion program. We it that is don't the business, offer we of we can the still future that size buy We cash business real nationally, where can a what nationally. think that it, sell I on side used bikes on the So to definitely growth of company.

Michael Baker

Okay.

And just on cutting so say follow gonna you I know you I -- the in investment to work. investment going be some, I you've going make to forward, think, are needs needed to that, that guess where up am was you. work? technology costs this some Or to technology was people what a got to be make is -- big to reinvested and the I get all buying there there Can stores? investing all idea only

Mark Tkach

but at products, very on really the product. making frankly, we're of too the being of you have. we're want fine-tuning that's I we're much still looking we're give secret successful the that. don't we leaps acquisitions sauce, bigger buying place, And to really geo-targeting with where in I forward process mean, of we're already some really But success already those moving the what no, we're the fine-tuning just fine-tuning Well, on technology. and admin more

Michael Baker

back the commit try follow-up and idea. to jump I in other line but to questions, to one have question the Okay. one I'll

Operator

next Basham with Securities. the of Our Wedbush come questions Seth line from

Seth Basham

morning. Thanks lot, and good a

Do the the through bottom? think bit we've a about how quarter and demand a going on us pressures trended hit to First, how little restrict could that Or you in more of give you think you some are and macro outlook XQ further do that demand? XQ? the thinking you're color

Mark Tkach

made have best. And but wish we're costs. lowered can it's have with do mean, we moving our And doing all of we've had money do. we're I We've really best we on help, inventories. forward we to forward. Well, a the And We do, that. we -- on -- the we're crystal out can't to ball I our of a sell we and wanted all environment, lot debt product do everything and we our SG&A macro continue things lowering what to to you maybe could we moving we that's And do. progress do do just control to can can just

Seth Basham

it. Got

turn base you you're seems the like down. profit expecting page it has As demand, you're into expecting come gross higher cost XXXX, higher your and

points the EBITDA materially that forecasting business? So higher a are guys you that in than the is way 'XX, interpretation, 'XX the right to

Blake Lawson

relatively your EBITDA. that our XXXX say pretty growth would reductions, point, of guidance GPU bit we're little and I bump definitely bit a being reflects cost growth. Yes, used. is in little but which, of a same conservative does And to the up

Seth Basham

more Can pain us on 'XX, of lot that pressure a as trends bit without inventory that you expectation in see into little you aged XXXX? better give GPU have that through a guys we color considering taken shouldn't you move

Blake Lawson

got which which inventory is We inventory The and by new now we've $XX,XXX used $XX,XXX right margins, partially right but of will at hope see offset to [ lot frankly, that now in be guidance a quite in middle we're the where of margins we XXXX, that improved ], squarely new so. in at could pretty start point. - this anticipate is

a just there to but of could be there. we're trying approach, so kind conservative certainly, some upside And take

Mark Tkach

come out lot there. want the a thing models that's the that years. lot got of -- in love there's margin. To a Blake's in there's And coming our XXXX by it toys. new a have mean mean, products. late the the 'XX out early products 'XX year, coolest, I gets really of that generally I point, They there's to their for the always 'XX in, released Every we've better will OEs is demand holding newest consumers

the coming inventory all product and we 'XX. on we're we're we're in, the expenses what of and the the rebate, getting correction 'XX with some really, campaigns running the trying to focusing the that getting of -- think, covering that it's money that's for again efficiencies these now in the of incentives, So I do, really offset some

Seth Basham

last it. used change And meaningfully the on XXXX ratio to about with business. next of thinking little used year? it cash my changes bit expect the your like just some ratio new emphasis we to the the seems used Got Should into offer, a is and less question to to new

Mark Tkach

a X:X X running right We're with now We're X to new happy ratio. used. that

have our a to our on at want year. everything little we time really acquisitions slowed up I ramp January, February to We down acquisitions, till summer. ramp bit that but don't of mean and the March for really into up early

right we summer right going get the we're to really leading where be. with X:X. some turn and February, stuff, now, of knob it to the to we're for So up, but January, that be want ramped is we're we'll going and March, We're ready up loading dated

You right X.XX:X basis, quite in shift year little load on It's a up might maybe with spring even going stronger, annual after that a ratio. the with we're but see we X:X content little a now bit, fluctuate to product. a that

Operator

from questions next the Michael Our Davidson. D.A. line Instructions] of [Operator come Baker with

Michael Baker

are in through me, Jumping those from, and said temporary to filing in but how waivers? how works? what million remind us long remind revised million. And permanent how terms right. your leverage just less the $XXX the of or ratios think it's covenants $XXX in. revisions than All Just us are your that -- maybe somewhere, I I you debt and goes -- you remind can again -- just back walk

Blake Lawson

Yes. Great question.

where And million, $XX the goes other to $XX million offering, So rights with the $XXX in $XXX goes to million $XXX cash million is million principal your account. really debt. below straight

Right there's and of we've finance pay it, portfolio $X get another call -- That million. is that up the some will one which $XX go well So obviously, million balance as down will principal to also which us to -- debt. as more the got estate proceeds off. million, coming $XX real away property, about now,

So net that's that QX the facts. And of of just Oaktree, million, leverage in being total of leverage, tested. X.XX the QX And secured being so even total and both net relief should net then as below secured and And net it the and $X.X leverage those with secured starts $XXX actually it QX end to and And total X.XX for which and for did total and at X.X for XXXX, have then to in we of then far leverage, leverage X.XX in of goes be then goes net in our year, QX is net covenant, it easily to form leverage a of QX, begin X.XX as with net not where X. XXXX, leverage. million covenant was of at for with.

begin where to back goes it next a in it So in to was with QX year.

Michael Baker

it So just I EBITDA trailing kind on outlook? the Can for the Okay. But give right? net Or calculation, ask questions XX-months is is that. you and annual that relative numerator, these guess, Or is of... EBITDA? to yourself that -- debt, dumb are remind the maybe so cash I us credit denominator, the the

Blake Lawson

months EBITDA. XX trailing adjusted Yes,

Michael Baker

the a is cash? Okay. words, And get numerator other In credit for you the net debt?

Blake Lawson

Exactly.

Operator

you. Thank

to of We back session. our I reached question-and-answer like the remarks. Kennedy end to Mike over turn have closing the now floor for would

Michael Kennedy

you. Thank

just and a wrap things. couple me share of up Let

me and period. transition as on want momentum Mark I well an he's his I Mark during is created for the as smart to in take mentorship more look to building confidence forward here. the First, businessman, incredibly that his successful and

speaking will out thank of operation in we our smartly want clear benefit the the to with Secondly, in strategies to vision set capital an your then near efficient RumbleOn, look you that everyone, forward will for And lay lastly, deploy reiterate for and your you, shareholders. and and deliver interest of a I questions I that a and future.

Operator

teleconference. conclude This today's you. Thank does

this participation, of your time. at day. disconnect may lines your and You you rest enjoy your the Thank for

RumbleON (RMBL) 7 Nov 232023 Q3 Earnings call transcript