LAZY - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Lesa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lazydays Holdings, Inc.

Second Quarter 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]

Meehan, Thank may Corporate begin James your you Controller, you. conference.

James Meehan

call. XXXX Thank you, us results Controller quarter joining this We press issued A you thank Meehan, the conference at financial Company's Lazydays. Lisa. Good for copy morning our and I'm Corporate furnished James release earnings to of for morning. of of the section current the & our and Form with Events website Presentations X-K earnings exhibit release the the is as has on report SEC. been Relations our available page an under filed Investor second

With Officer; me call and Mr. Financial are Executive Tomashot, our Nick Bill Chief our Murnane, on the Mr. Officer. Chief Chairman and today

will forward-looking As may margins, expansion. our taxes, a mix reminder, including, note statements, operating some expense, product please regarding and you today shift consist expenses, hear discussion that revenue, of of limitation, that without geographic statements during compensation gross stock-based information the

from could Actual results or materially factors. many result trends statements periods for differ a of as the future forward-looking

information risk For the forward-looking please March the statements, that SEC XX-K XXXX. impact with could to on XX, factors the the discussed refer filed in factors regarding Form additional

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

Lazydays XX, as represents the presented the Holdings, six For financial June ended June of XXXX operating as three months XXXX, Inc. results the the XXXX XX, months ended and well information

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

Murnane. is Now introduce to my Bill pleasure it

Bill Murnane

us will then joining performance. seeing I'll a you on good and everyone. specific details give what and more Thank you, here morning quick Nick this overview give Thank for markets James, we're our our of morning. in

In demand are that R.V. demand retail last normal retail confirmed the above and Moreover, the data weaker the the the wholesale and inventories IA second continuation levels still dealer data of registration destocking September. wholesale survey gap for data stat we year-over-year a quarter, weaker both continues. data saw began RVs. OEM indicates between and

the created down still Given at market the we pricing summer try expect aged wind selling The of of retail dealers inventories or below inflated balance have are through to move year. out is season and inventories many that in inventory balance, to starting the continue as the will retail aggressive cost. destocking some

have our our opted continually levels and if the price OEM share, financial and market when not discounting, will we participate discounting. and to the market we without general, We in long-term growth In market, goals. sacrificing our our evaluate and significant change inventory to warranted approach

have customer to the demand. closely our levels for managed appropriate of current We inventories level

position. we are good about balanced feel inventories inventory current Our very and well our

new to success. placing and aggressively product inventory and of strategically approach take and adjust inventory offerings position long-term will are OEMs that we'll Some market our situations enhance advantage our

to is we locked, itself. shape opportunity in are loaded of ready sheet balance great Our any present and and advantage to take

take to the over quarter. highlights the turn to it second going to Tomashot, financial you of through I'm of some Nick Now, our CFO,

Nick Tomashot

or XX, period ended stated Please same June three the note million quarter, Bill. $XXX XXXX. for second excluding XXXX up unit for or for result Thanks that up otherwise the quarter month X.X $XXX.X revenues Total are comparisons were quarter million, wholesale the were unless units down sale the recreational the was million of or X,XXX, sales units X.X%. XX X% from XXXX. million Revenue $X.X from vehicles R.V. X.X%.

R.V. unit price Net inventory $XXX units were X.X%. unit vehicles new $XX,XXX, X,XXX, sales $X.X up new million The of selling New per XX or X.X%. million, of sales was X.X%. revenue average up or $XX.X up was

our revenue vehicles. This of there availability decline, was side units. pre-owned by pre-owned quality in the motorized in and unit a particularly driven limits of pre-owned business, decrease For the was

were down vehicles our from XX sells RVs sold increase in up partially was XXX, $X,XXX offset $XX.X $XX.XXX, for selling were by Pre-owned The or The sales retail of unit Pre-owned in wholesale compared pre-owned vehicles X.X%. was units per excluding units or X.X% X.X%. XXXX. price quarter declines wholesale $XXX,XXX or pre-owned XXXX. down million revenue average the million, vehicle X.X to

finance lines from other miscellaneous commissions consignment million, In accessories consist parts, revenue sales, cetera. F&I or of et from and of $XX.X XXXX. other as was up Revenues from restaurants $X.X revenue rentals, revenue for campgrounds, lines these quarter including services, to business insurance other and compared or of the related X.X% total, business well million

our F&I offset due and revenue declines in million $X.X parts service of miscellaneous to or increased million by to were X.X% Tennessee F&I These million. $X.X in increase or as due revenue penetration addition was XX% on of increase increases by Minnesota revenue decrease sales. The $X.X, an a million a $X.X well partially new and which and driven consignment to to locations were as commissions increase

Gross unit XX% to XXXX. to compared QX versus revenue performance XX.X% by decreased the pre-owned revenue the indexing million, between F&I We pleased driven retail X.X% of for declined million $XX.X in change two compared our margin the XXXX, periods profit with X.X% primarily performance by in gross motorized $X.X sales. are down revenue in the of F&I was QX, as to especially evidenced at with XXXX.

R.V. issued and of and and Incorporated, XXXX. stock-based to compared stemming management. prior was $XX.X Corporation to $X.X Center Day’s amortization merger Expense included half Acquisition amortization of prior the Lazy year, XXXX acquisition options up depreciation related second from million decreased million $X.X Andina to transaction our compensation the which compared Excluding compensation, the quarter million, between and II due the to stock-based Tennessee SG&A the amortization to in cost, year locations for Minnesota

The based $X.X Income with as upon that these income second above. for option treatment compared to non-cash, million income expense the million conditions. $X.X net $X.X reasons the million XXXX as quarter for was expense noted non-tax deductable awards to million compared due was $X.X was frontloaded market to Net of accounting for associated awards XXXX. for the in tax

the Adjusted EBITDA XXX down margin basis driven is X.X%. for on almost quarter versus impacts sales. to by year’s points flat unit EBITDA million. primarily was by our in points pre-owned vehicle XX% to Adjusted EBITDA vehicle of $X.X This which a XX million $XX basis the were adjusted decreased mix margins, gross decline last driven

our table of includes and the net to for to release EBITDA a EBITDA to refer Please adjusted earnings adjusted margin reconciliation which GAAP margin. net income

balance $X.X December and our cash hand in floor This driven million, offset XXth we of June to paying our to million million, on was turning inventory with financial by million compared by and $XX.X cash $XX.X down had associated the R.V. of sheet position, XX, capital up decrease net Now plan primarily working $XX XXXX. a balances.

consisting $XXX.X reserves pre-owned million We a in had $XX.X of parts $X.X inventory, and approximately of approximately in $X.X vehicles, LIFO $XX.X million new vehicles, million. of inventory million million total

versus XXXX vehicle of or RV our pre-owned down or inventory March down Further comments million XX.X% million XX, is and $XXX.X opening December and a combined regarding position, $XX.X XX% $XX June inventory million Bill's XXXX. XX, new XXth our versus

we in our facility. borrowings $XX.X had million in outstanding XX, million our and June no of As under plan revolving XXXX, notes payable $X term million on facility, loans credit $XX gross floor

acquisitions. on $X.X We payable outstanding million to notes have related approximately

million with how pleased same seeing for the we have above be taken $XX Overall, minimal we're balance over in maintain manage dealerships, We've to that sheet. and all acquired maintenance level liabilities business and relatively appropriate flat and two inventories our of at the timeframe. cash our we're levels

you to I'll this for time Thank over back call morning Bill the all Murnane. your turn and

Bill Murnane

you, Thank Nick.

press were our our the in As our we industry we customers, to pleased spite relatively able keep slowdown competition quarter, generally margins in more with flat the are for period XXXX. performance stated fewer an same we release, of in and with in

job price dealerships that and The in a not did of to to and great articulating competition customers the general the market. teams our our simply succumbing value Lazydays the managers sales proposition existed at

our thank with a Judy Alan dealership on her Lazydays for she late on and Coach of close entrusting Alliance wonderful husband, want Shapiro, We Florida. to We August Xst. Bill Ocala, acquisition near

of just to give our us market is just and been help Ocala, Ocala location, south which located from dealership markets Florida, and share. adult these to Florida The This grow branded community Orlando, the near the villages, access Lazydays entrance will XX minutes great Florida. us of has is important active in

Lazydays Lazydays is Lazydays past the have of we Ocala the in third XX with along months, and acquisition closed Knoxville. of Minneapolis of

Lazydays the did team than intent. a of from bringing XX letter the integration family in completing into job, into an less closing days outstanding by Ocala entering Lazydays of Our

this that we this announced becomes Lazydays XXXX. of Tennessee; our earlier are dealership building dealership year, recall and Ocala dealership. we seventh also be that Nashville, to full-service eighth in expect QX, in full-service our operational we Please

progressing continue footprint. strategy expansion our geographic our well feel we to is expand and Our in to confident ability national

Minnesota completed state-of-the-art is service important quarter, the to to across and we’ll and a dealership. our we offering During component our construction very Company. square-foot, a Service the continue of service strategy of go-forward invest facility adjacent XX,XXX our expand new

components are customer of experience service We good which continue initiatives. other make best-in-class and two to key excellence progress on our our strategy,

and focus improving these to enhance are our resources experience and processes customers. efforts added and for the changing processors We and Lazydays have greatly to actively

a from succeeding stronger it the By goal successful. when best customers' Our more expect they our expectations, service Lazydays is receive Lazydays, their or will and to become expectations. exceed and customer product buy

all for prepared our is remarks. That

line open please Lisa, the Now, questions. for

Operator

Instructions] Craig-Hallum from of Our first comes Capitals. line Steve Dyer Thank you. the from question [Operator

line Your open. is

Ryan Sigdahl

Congrats results environment. Steve. for the solid the Sigdahl challenging Ryan guys, Hi, on given

Bill Murnane

Thanks, Ryan.

Ryan Sigdahl

I but quarter? that then organic that the also the in break know miss all segment I you by And prepared be don’t helpful? off, if revenue remarks, it what could would in growth if First was

Bill Murnane

are Yes. but doing We this breaking Ryan, not not have we the -- out store in sales versus same point new future, this time. we we’re may at that. at store

comment So, that. on we can’t

or have the segments other If done. a you want to we of have what breakout

Nick Tomashot

few mentioned high we different towards the streams, We at revenue but the and say new more we level tilting breakout use, points than a the would we’re mix, still new get I basis hundred And to between XX-XX when that results. we use. but are the roughly

Bill Murnane

the inventory, seeing And demand in a know it also new but shift lack from any was guess new? use, of quality new I use are the so to a versus I on just follow-up mix maybe you shift use or

Bill Murnane

product Not, a It’s get through turned always trades. strong always quickly. units. big part used really -- our business It’s we -- of is driven strong get availability and We by been and margins. lot it’s good no, the used carry we of of always a our most

buying demand We’re active market perspective, say seeing new wouldn’t demand side is any we’re lighter the I significant change. out the that’s from in The a But it. think and probably on the probably there. I change

Nick Tomashot

And seeing strong where in used what we’re inventory the have. turns you that

Bill Murnane

business, right now. Use a has It’s always just -- good always tight there is will it's out been, supply be.

Ryan Sigdahl

mentioned to if then, in and impact meaningful margin reported, you And you and increased your bigger well. the really one were Can And on, discount but second your that, compression hold of guys half? you've briefly promotional margin guess, recently the in that is elaborate sales of able how pretty expect prevalent to secondly, because then I markets? be competitors environment the

Bill Murnane

June. changed to What since the second has nothing predict tell we you of half. hard It’s the end can is,

think I QX market out is went. has how similar in the QX started to

We promotional dollars. haven't increased

them priced they media, some far. chase just to to any different focus haven't margin. but our to we've significantly increased, chase that actually too is customers chosen all, increased want. approach to we are are certain -- We've not We chosen customers at not shifting What not

like they We we have a my sales job bit, a won't therefore When they I in you customers, has team them feel feel done more. And think that, them done lot way. a chase get chase too great more. And you like get them then our buy job, a proposition. comments, we from know of little that our great Lazydays, little what cost a will said far. value dealerships but our And our I articulating of

down and little if going price get Lazydays. have to they experience what with road, than a So they're the they're just chasing lowest different the

question? that answers your So,

Ryan Sigdahl

the or it helpful. as you're add deal can That's as Yes. share revenue of relates and Ocala going to willing as that EBITDA? then you contribution to anything forward to dealership, far I guess terms and Then

Bill Murnane

They of No. performance The on the kind There in ordinary. a were I with don't can of on our things bit have Florida. out of of strategy is what on a deal dealership. our have is thing think. The that enhance focus which well commented product, for fits to pretty some do F&I We think solid they in the It's the terms and both years had we've the side. the is the nothing part really strategy. we standard we've over side more important is past. motorized a which little disclosed the service, sales there very done

-- it F&I more side, performance we enough we're the and going former sales was of we So the there, their get a just there. and lot we both strong to there. getting and probably on a we were up Alliance And off, really getting think we that's but we gotten that market could think have not Coach than enhance think

Ryan Sigdahl

you seen I'll and over. the current cash challenges? industry environment the sheet? change more turn me strategy And any M&A to Thanks then given have guys change short-term environment, more aggressive M&A strategy, for become or more does luck. and or less One on Great. your little good the hold it the in then balance

Bill Murnane

Ryan. a sheet you as been -- thanks kept our can always balance Yes, tell. pretty about disciplined We've have

tighter, there. are dealers I to activity will months, we plan this like necessarily plenty out going continues think aged to have problem, don't have out more the their curtailments We and XX We start there's may that opportunities. to another it paying think all, an on for dealers are create is more there going if current financial get there. X floor environment, that but situations slowdown do of to more think which the opportunities

And said if to and we're comments, as ready my I in happens. go when that

We a ready away what a best, by we unlimited resources, are have for that's year. will want of we've what in pick number to to how that from the dealership We strategy, they weren't limited ones do. except so and continue we our many fit acquire walked dealerships can the acquisitions, don't Lazydays. think because and potential I we done We've just only

there's add next put the -- So way. you to XX in little, Nick, X continues if we possibility see more see want a will slowdown we'll that? opportunities that it to do to but, a that this months,

Nick Tomashot

No.

Operator

in [Operator Instructions] Bill the And turn we I’ll questions have no to call remarks. further for Murnane queue. closing back

Bill Murnane

Lisa. you, for everyone Thank Thanks joining today. us

week. Thank in again three talk a We months. will Have to you great you.

Operator

conference today’s call. concludes This

now may You disconnect.

Lazydays (GORV) 13 Aug 192019 Q2 Earnings call transcript