LAZY - Earnings call transcript Q3 2018

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Operator

Good morning. My name is Tiffany and I would like to welcome everyone to today’s Lazydays Holdings Q3 2018 Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to James Meehan, Corporate Control.

You may begin your conference.

James Meehan

operator. you, Thank thank quarter and joining for us Good financial you results third XXXX conference our morning for call. I am Lazydays. at James Meehan, Corporate Controller We press issued earnings morning. the release this company’s Events earnings page with Relations our the Form to website furnished available A our the been of release has SEC. an of section to the under copy X-K the as & and current Presentations Investor on is exhibit report today are Mr. With on the call me Bill Mr. Murnane, our Executive and and Officer Chairman Chief Tomashot, our Officer. Nick Financial Chief

the of of some that that a from materially without future note taxes, please reminder, shift geographic our statements margins, consist forward-looking a hear the product will may limitation, gross and for during factors. periods compensation, expansion. forward-looking information could of today expenses, revenue, As result as many you including, stock-based Actual differ operating mix trends statements results discussion regarding statements, or

with X-K For on March refer the additional information, please XXXX. Form the risk in the SEC discussed factors filed to XX,

measures performance press to release and directly of non-GAAP refer financial most earnings adjusted our discuss EBITDA GAAP also non-GAAP financial to these of measures. EBITDA. including comparable believe will that are for to company, financial the We Please the useful measures we reconciliations

XXXX, the operating the months September information ended For of presented represents X the Lazydays financial XX, results Inc. Holdings,

X Center, Inc. months the financial results R.V. Days’ information XX, the ended For XXXX, operating September Lazy presented represents of the

to the XXXX. combined R.V. September the operating March of XX, the months September from Inc. XX, Lazy financial results ended presented XX, X, operating from X of January Days’ with the represents Holdings, the results XXXX, For to XXXX period the for Inc. March XXXX, Lazydays XXXX XX, period Center, for information

information the XX, Lazy For XXXX, results September Inc. Center, the ended of the presented X represents financial Days’ R.V. operating months

Murnane. Bill Now introduce is my pleasure to it

Bill Murnane

give most good our some and Florida to are more I’d everyone. will of Thank the did then Thank seeing in markets, this markets. an demand and you, give Recreational remained specific softness our for of we joining performance. We like strong us our Nick James vehicle you dealership. in details at overview on morning morning. what reasonably experience

motorized partners We the the experience demand dealerships that not of softer any was during quarter. changes other third the rest in outside indicate Our country did in than business significant Southeast Florida than of normal general, seasonal our our the enough impacting pre-owned finding demand product dealership changes. and Also market Florida tight, difficulty product. to product for pre-owned quality sales was motorized procuring is The had our support we goals. motorized difficulty pre-owned

product volume much gross margins softer of our were impact a other Florida than this product. it more during to able dealerships, we sales, felt motorized shortage pre-owned sells Our from dealership spite so of quarter. In an higher the of the maintain of

meet our the than and industry-leading, general, to we exited summer goals down well. Many through sense that manage Our inventories RV aware, we current probably you year, in and inventory of Xx our track inventory than our are we inventory which will our a as turn are the with comfortable for turn position, is more on XXXX year more a inventory year. and we than is Xx working in little the market the in the dealers its higher are of broader with ability to pride Lazydays to its takes normal, bring inventories year. very great end be inventory, a and we’ll of hard

our the you Nick third going over call to Now, of financial the Tomashot, CFO, some through to turning I quarter. highlights to turn am – the take of

Nick Tomashot

excluding million, Revenues million from XXXX. quarter that otherwise, from morning, Please Good down X,XXX, down period up $X.X Revenue wholesale were $X.X for third vehicles September X%. or million, everybody. comparisons $X.X recreational ended the quarter X-month note million recreational Bill. $XXX.X Thank unless down $XXX.X $XX.X to units QX was the you, XXXX. unit revenue sales are million XX the quarter, results X.X%. new stated sales same sales, units, from vehicles was or of were RV XX, the or for of X.X% million or X.X%.

sales sales XXX, sold, units of a average in revenue from majority mentioned price was excluding within driven consist X was pre-owned service, significant and or in and vehicles as sales. selling motorized Pre-owned In of decrease X.X%, The up call, decrease But revenue from X.X% pre-owned related down availability, wholesale $XX.X limits vehicles only quality units as unit of insurance pre-owned X,XXX, small or of driven $XX,XXX, in or XX units, XXXX. used campground million was earlier The this up million, the This $X.X compared these included down units by XXXX. revenue were $XX,XXX, or or as on selling our recreational finance $XX decline. vehicle was in was $X,XXX motorized decline channels vehicles of QX down motorized or X.X%. lines $X.X New down the parts, of million, units. resulting decline X%. other revenue. pre-owned accessories were Revenues business total, Bill F&I new from to other by and X.X%. other vehicle was $X,XXX million price on X.X% revenue, sales the average or a in well

flat XX.X%. million million sales. LIFO driven XX.X% motorized in with the relatively margin, down excluding swing XXXX, million was million, Gross versus unit, $XX.X or including by last-in change to X.X%, excluding the were sales $XXX,XXX parts $X.X $XXX,XXX business or down revenue e-commerce and in compared XX.X% XXXX. quarter, of $X.X $X.X business the increasing and at a adjustments, other adjustments, to an in adjustments, was $X.X service decrease for $X.X primarily XX.X% Gross of $XXX,XXX approximately by from $X.X pre-owned increase last to net driven LIFO profit Gross revenue year’s non-cash was the up $XX.X X.X% first-out F&I million, LIFO vehicle lines million these in or non-cash Excluding million, profit, discontinued or revenue from or million.

XXXX impact acquisition. Net the net expenses primarily income and quarter, merger as between third depreciation was $X Center, in increase impact $X.X stock-based million, discussion. result periods management Excluding million the adjusted we balance for II by of refer to the related EBITDA valuations that year. to the costs, between million loss discussion Please mentioned EBITDA. of $X.X margin X.X%. in $X.X rate for million Days’ expense Adjusted to Lazy and quarter SG&A $X.X $X.X $XX.X and in the asset anticipated compared for XXXX. the tangible compared transaction of prior $X.X table, down stemming net in intangible from and to have income prior expenses million Despite as for amortization years, to These release in of the adjustments XX loss earnings R.V. was stock-based still on for I This non-cash prior in my million Inc., compared $X.X decreased the for tax and Andina a $X.X our our was Acquisition mentioned respectively included our the of effective compensation amortization, non-cash quarter tax $X.X March and net EBITDA the increased reconciliation compensation compared million. compensation and Corp. issued Stock-based nondeductible quarter, gross sheet. year, LIFO my increased of to primarily our was million to loss $X as million, Minnesota up recorded to on to income the well year. or net options decrease million and pre-tax primarily profit SG&A which million depreciation points Adjusted the third the for shown million due expenses basis which of to the increases includes

from up balance June $XX.X operations had vehicles the $XX.X $X.X and consisting driven million parts in XXXX, pre-owned $X.X flow cash XX We September $XXX.X financial $XX.X LIFO million hand sheet $X.X turning million new capital reserves on our of in in approximately cash $XX.X inventory with we million. and working $XXX,XXX. million vehicles, million to compared of million inventory to million, by of and had approximately and XX, Now of of net in position, cash

million no over back to on of floor $XXX.X our you. million payable XXXX, our And XX, As call $X $XX.X facility, of notes credit we I loans Bill in Thank million facility. and September the had plan outstanding revolving term turn borrowings would Murnane. under to like

Bill Murnane

Minnesota strong will and of the the during and you, stock. focus able the comments of Nick. on We cash continue confident flow that accounting like last in quarter for dividend acquisition of $X.X softness generate of remain Thank after to I’d a growth on our for the our and Nick’s support spite strategy. cost generation. cash little preferred our business minute model the We to payment a regarding of to million generate cash one were our

a remain Our We focused providing are our on changed priorities, service excellence; experience; strategy not and focused three geographic not country internal customer on believe expansion. service We great will one, strategic our across and three-pronged above-market generate priorities. two, customer all which best-in-class growth performance and great will all experience that has the three, are efforts and anytime of these change soon.

closed as have excited Minnesota We This is of branded dealership acquisition in RV Minneapolis. August. very our are Shorewood of to in Lazydays now

Our into we welcome to family. are Minnesota excited is them and talented, Lazydays team the

in Minneapolis of Lazydays results expect We to generate strong XXXX.

the to assets recently signed Tennessee we have excited We purchase of are RV Supercenter. announced to an agreement equally

We them are Knoxville the the and before also end we will the close. the of expect to branded the into very Knoxville to Lazydays dealership be Lazydays of the welcome team is near family after This in year. acquisition close excited very calendar future. very talented, The

results our Lazydays in opportunities generate geographic all growth and strong those expansion expect The continued expect we Knoxville are to Operator, robust, of of our are also remarks. prepared continue XXXX. to We XXXX. for geographic in

open line up can please. questions, You the for

Operator

Your line comes Steve Instructions] of with Dyer question the from [Operator first Craig-Hallum.

open. is line Your

Steve Dyer

You mentioned any shift motorized, did again quarter, you to mix greater from that color see kind towables away a there? the in of

Bill Murnane

Yes.

I a was towable. anything think read the on really used that, we really the else. on we to than the more a supply continues issue given market get was a to shift and bit towards of had softness little hard some that motorized Steve, It think

Steve Dyer

that to preference or was Yes, something customer sounds opposed shift constraints my just It like in question. as inventory primarily else? next

Bill Murnane

to have what find to Yes, just use. not it’s we hard quality and We we we couldn’t did inventory plan inventory. do have tell, the know but is

there are find which we some quantity the to We – to to weren’t lower wanted we quality support the to sales buy, going goals. not of we but inventory, quality is able going aren’t our

Steve Dyer

I it. as how what of terms ever targets change then slightly etcetera? or Got in industry in sell for, the seen the you willing environment X months, are last so in targets And X any guess have softened, M&A just here there the many are, to

Bill Murnane

active more of the now are we is you tell right in can are seeing. I What opportunities we terms

that opportunities going I of maybe so the function know, don’t think have And is market, our that, but increased. a I something incoming on yes, in

selective. very are We

disciplined. are We very

So are we for are – going to we not to anything. – going and overpay

We pay for quality we are buy selective be very in to the dealership. very disciplined and dealership and terms we of much the how going

Steve Dyer

Got can something? sort And expect then sort transient point it. you you of U.S., point And then Thanks. for in last was the from persist that softening can of would some Florida. you Anything or that to mentioned of to, Southeast is bit it you me, thing a to? particularly a have because

Bill Murnane

just business the that probably during would in was We could industry. be the It be We I why? could partners in weather-related. just slowdown quarter. It did in from with some Southeast the they speculate. gave us, the our a and the have be that shouldn’t operators hurricanes and speculating who data industry I deal multiple got

but Lazydays. we speculate, it to talking is from than So I to a would what our wasn’t that just not know broader partners prefer little

Steve Dyer

Thanks, Alright. guys.

Bill Murnane

Thanks, Steve.

Operator

Your [Operator Gibas comes with line Securities. of the Instructions] from question Greg Northland next

line Your open. is

Greg Gibas

Thanks on questions. today. am taking for the for Hi, guys. I Paul Penney

First, the pricing? some OEMs, better are you excess negotiate inventory ability of just given seeing wholesale to greater at

Bill Murnane

Yes, there to makes pricing, but get I opportunities I models, Greg. is think and select better there not are think on board, across the

Greg Gibas

add S&R and two could recent then on any update little do and F&I the not ancillary progress And acquisitions you are provide a Okay. to Maybe like it’s but the bit talk efforts? have about segments it, today looking an these? you with

Bill Murnane

F&I think have And includes performance some two a those same of similar necessarily The opportunity their which all locations, I aggressively at will business an and not the them to is we of today, do certainly what very – try acquisitions we F&I. to have there that. model and improve

Greg Gibas

kind EBITDA Okay, contributions about expect with looks you of then great. Tennessee of we XXXX And positive the talk good the wondering Lazydays? pretty like synergy from rest Supercenter acquisition, as RV and a look maybe see that would to just the opportunities we could

Bill Murnane

I we won’t excited an a about, great not our we excitement last acquisition told but we so so lot. will Minnesota, are do them to how Yes, are share you are really some with It’s great we don’t excited. a were a about excited ownership, about all, We really excited about have think we dealership with do great we team. of Tennessee. a We quarter

can I very entrance will ton of their increase things location that think their of opportunity Mountains is but and which in the turns, in to close some their Smoky do in turn the great it’s just like location. line, we there impact a grow a bottom right revenue,

we will So do think a And EBITDA they XXXX. contribution positive we are that. in really have excited yes, about

Greg Gibas

quarters we seen being now to to is a assume is follow-up assume two of two per would safe public, kind approximately be quarter it one one safe in just then cadence since going forward? And that acquisitions Great. have of

Bill Murnane

Yes.

one not We going And we I going grow. are a a to try said – we think Greg, acquisitions well. chance are X-year we our year. we acquisitions, at will is want multiple are anything. try to stuff sometimes to and in row, want assume as time. some have XX% over going a do grow to We bigger period, this to good a goal to will Greenfield a sometimes have we There smaller is we acquisition

we disciplined is will advantage. I lot best out but process. doing we are remain opportunity quarter, to so we commit the going one And to the a there, in So there but will do we certainly of can’t can, take a

Greg Gibas

Understood. Thanks.

Operator

queue back further turn questions at in the over I no are There time. this our conference to presenters.

Bill Murnane

for a this to quarter. joining you we day. everyone. look thanks Have and great forward us with again Thanks quarter Yes, speaking next

Operator

today’s This conference concludes call.

disconnect. You may now

Lazydays (GORV) 11 Nov 182018 Q3 Earnings call transcript