LAZY - Earnings call transcript Q3 2019

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Operator

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

Third Quarter 2019 Financial Results Conference Call. [Operator Instructions]

Mr. you begin. Controller, Corporate Meehan, may now James

James Meehan

Lazydays. Thank joining XXXX us Good morning, Controller financial you for and thank at Corporate for Meehan, conference I'm you, call. Suzanne. results James our third quarter

Form copy current We issued the to filed Events earnings furnished earnings X-K and press the the an report Investor is under to Presentations of as of our has SEC. morning. available website the release release and the this company's on A our section Relations exhibit with page been

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

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

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

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

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

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

Murnane. introduce Now my Bill to pleasure is it

Bill Murnane

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

quarter, the the of the in in aggressive and a third weaker we third continued September the quarter demand of began reasons. quarter, Destocking in XXXX. we destocking was also for believe In number that third pace the a more of continuation saw

there was a this quarter, lot the XXXX year incentive move model in to lots. change created First, a of product off and of

dealers the the represents summer as as much of quarter move before the end the for were trying the for their season off dealers selling third the country, inventory possible the Second, majority slowed primary winter. to and of in down demand lots

saw due on margins to forcing as been curtailment once significant Third, curtailment avoid that prices the larger-than-normal facing we to dealers or reduce payments. the the and Curtailments to flow, overstocking cash dealers vehicles a the last of have impact a to us on year on more. have in negative to year or curtailment. The typically new Floorplan behavior can move lot indicates so payments marketplace loans reacted dealers vehicle a for their has

improve market, significant during aggressively not Based in price to impact early our the In quarter. the quarter, in forced did above to fourth believe margins. try general, we we've price margins mentioned us the the indications we activities Unfortunately, of more in seen participate which trifecta discounting. on will

it. many margins has The in very is in is this destocking that impact on order aggressively the at dealers a below bad activity to gross it accelerated as had news likely or product priced very adverse news cost good that The industry. move

end. but impact above activities on higher to should we come as in few a mentioned more margin margins comment the will move believe Nick an start minutes, the gross to

expansion geographic continue to pleased our third quarter. in strategy benefits the of are We the to experience growth

Although was to in double-digit revenue quarter, the third able overall RV were demand generate growth. down we

about very inventory inventory position. and feel balanced, our current we well to continues be Our good

balance opportunity that in itself. Our sheet are presents ready advantage strategic is any great we to of take shape, and

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

Nick Tomashot

period unless you, Thank everyone. XX, are Please note morning, the good and Bill, third same XXXX. otherwise, comparisons to quarter that the XXXX stated results September X-month ended

revenue or XX.X% XXX the units, for recreational units was units sale year. were of million X.X%. or compared were million or Breaking wholesale million, XXXX. XX.X%. or excluding for sales, were RV total revenues sales, $XX.X up Total new unit with X,XXX, quarter, to XX.X% RV the versus $XX out XXX million sales vehicles $XXX.X sales, up $XXX.X RV Total up RV from Starting unit up X,XXX, quarter prior the

selling $XX.X Net down price up average of vehicles was RV X%. revenue per was million, The $X,XXX million or sales new $XX,XXX, new or X.X%. unit $X

the down for Shifting revenue was million, XX XXXX. units or $X.X Pre-owned to pre-owned vehicle XXX, vehicle XX.X% X.X%. up million were or excluding sold, Units $XX quarter results. from wholesale,

or vehicle per The XXXX decline average revenues selling X.X%. up sales was vehicles price of impact versus pre-owned no-margin to wholesale sales. were offset in partially on low- million unit unit a The our $XX,XXX, $X our by recreational $X,XXX increase retail pre-owned

et grounds, revenue, our and to finance and miscellaneous XX.X% of million. accessories These penetration offset or by our combined million in commissions, The increases revenue Minnesota, by $X.X including service of from services, increase Villages, to insurance miscellaneous increased parts, and million XX.X% million, sales a revenue F&I partially in lines by was an well other Tennessee parts F&I and as as and business well other as to locations were driven service $X.X of streams. increase restaurants, $X.X revenue related or acquired $X.X business F&I and declines or our revenue other million consignment increase Florida revenue In and cetera. compared were This as the across revenue million of rentals, camp from lines F&I Revenues XX.X% business or up quarter $X.X of driven XXXX. consists $XX.X total, was other for these

We in revenue X.X% QX pleased revenue evidenced of F&I to our be continue performance to X% retail F&I compared XXXX. at by with as indexing RV

$XX.X was gross by QX compared versus a competitive well as mix. driven versus increased to XX.X% of to million revenue reducing as margin sales sales XXXX. low- Gross XX.X% wholesale percentage year the a percentage gross XXXX, in to change -- as end-of-model-year million, $X.X margins of primarily prior end-of-year declined aggressive sales profit with up RV pricing, as our no-margin

acquisitions and depreciation Tennessee related the prior up to The Minnesota, amortization was August and in XXXX of stock-based year for compensation, to the dealership Florida. Excluding our from Villages, million, amortization transactions the costs, million expenses compared $XX.X quarter SG&A and $X.X since X

Amortization issued as of of of of to the management a decreased graded the market-based awards $X.X stock-based compared XXXX. compensation schedule March in the to million prior vesting year result

compared was was Income the million as $X.X for million reasons compared loss third million above. loss the expense tax the of to as $X.X noted $X.X net for $X.X in quarter for net the million And to XXXX. XXXX

Adjusted the for decline primarily gross EBITDA down to $X decreased in versus EBITDA XX.X% for which was driven for reasons X.X%. the This XXX quarter, margin margins basis Adjusted our million points were the down XXXX. period, was by XXX discussed million the previously. $X.X I've to basis points

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

on of reduced of cash of sheet million balance the XX, result recently million working net excluding XXXX. primarily Floorplan million, increase The compared inventory our our our our approximately of the and net flows position. as by at hand was we financial to This had $XX acquired to June up payoffs turning compared We September $XX.X inventory year-to-date Now Florida. to activities with operating from and and $X.X Villages, million, $XX.X financing December $X.X XX, XX cash XXXX, million cash capital up

At $XX.X $XX.X about the and million end reserves approximately we million million. of of in and million vehicles, parts pre-owned consisting new inventory QX, million $X $X.X total of in vehicles, inventory LIFO in $XXX.X in had

As in facility, loans facility. our in our $X million credit borrowings $XX.X Floorplan $XXX.X in revolving and had gross no million under XXXX, of September payable notes million XX, term outstanding we

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

call time for Murnane. your I'll back now to Thanks morning, turn the over this Bill and

Bill Murnane

help adult only third had X. Lazydays acquisition active at community will It This the of minutes exciting and entrance Villages' just The The August to our Coach to the branded and grow been market from located the The Thanks, and Villages Florida not also us to closed has Orlando, a on We Florida. dealership on number Alliance Ocala, access markets of XX us our Nick. Florida but announcements near great during We Orlando and quarter. share. Villages is give

our building we and this XXXX. year, Lazydays Villages eighth that that Nashville, becomes be we in in will seventh recall dealership second to this The the we Please we full-service operational -- of are quarter at dealership. also announced late full-service expect dealership Tennessee, our earlier

RV better service well and sales across RV the will we Lazydays dedicated of announced XXXX. service be is service Lazydays RV Service we industry industry, manufacturers to we an will we September, committed of are very open be from first of brand the hope the providing foot exceptional centers. the will service stands This and many The RV state-of-the-art are demanding In first facility known experience. owners and XX,XXX-square quarter name and and for Houston Lazydays what in it.

footprint more growing Our us help more our goal achieve goal. locations, will in service is to bring to our dedicated center great experience customers and this

pursue to aggressively opportunities. continue We growth

Lazydays' wishing safe expansion. dealership. all activity quarter, fit all improve are find with mean say We the attractive last should number seeing to but the of to it up prospects which strategic a that ability they in sell is increase our for This their attractive the picked to direction, sale or doesn't geographic an has in are good owners

the believe we or during well downturn the As all balance any growth little to many are sheet attractive in do us us, conditions. of prospects to flow appealing good market industry when very will but with a we resources strong and are guarantee know, have to improving And we our act themselves. aggressively to cash be present you and opportunities chances We have prepared an strong can't deliberately current expand debt finding of opportunities necessary. enable if kept

also that stock Lastly, of has a repurchase to excited morning we are program. announce authorized our Directors this Board

we management allocation with constantly investment best And that Lazydays the confidence our have an of believe price, stock of value stock Board in our growth current along is the and our on opportunity. are strategy, capital. the the evaluating We attractive based

program have strategy. on The no our will plans growth impact stock or repurchase

aggressively to continue our will geographic We footprint. grow

you. for repaired is Thank That open the line our for questions. remarks. all Please -- prepared

Operator

[Operator Fred Wightman comes from question first Instructions] line Citibank. of Our the of

open. line Your is

Fred Wightman

down off I promo that think confidence Could maybe last help giving about activities? quarter? And a cadence quarter. activity It's Could the the into us the there? really down performance was a morning. bit the we specifically to guys, basis more sort Hey bit sort you in are what's talking uptick normalizing good that a in it quarter, just How you about comment promo margins due points. the Is on or start you? than gross was improving all then margin bit the of it understand throughout fourth quarter? of the XXX of

Bill Murnane

Yes.

you're So I'm the question? we you not asking. could repeat Fred, what sure fully understand

FredWightman

margins, did the mean margins And trend that pretty and down on due throughout to how right? Just that quarter were significantly gross Was I basis. of promo a in gross activity entirely sort year-over-year quarter? the discounting?

Bill Murnane

Yes.

last quarter quarter. was a right last of from the start. I knew I of the it was -- continuation think rough end the

promo impacted change was -- The it I impact. an of we an know year there that to season right? summer the had certainly It discussed, were selling end So impact. model -- if had that the -- X XXXX don't it certainly activity, things

actions based the are of on frankly their seeing the dealers facing lot cash which believe, which acquisition putting a them forcing sell. is of candidates, seeing of to we're we're and is we information And that on flow, some number curtailments, a from strain quite

to how in is take it's believe, we for movement the the most ahead, and were impacted we there things, to in our for of were Nick. each a people those product. So margins, much those Go in X And market think what conditions, of us the but hard willing the margins impact. had distinct conditions weigh those

Nick Tomashot

to relative our offered And invoice when promote introduced, leeway the XXXXs had pricing competitors see online, aggressive discounted able and we being were were then pricing costs. to by more to dealers

FredWightman

Okay.

I think that's helpful. really

talk confidence? sort you that rather mean And in discounting really getting is So rather of industry. did promo, that I That's think improvement and aggressive going it's that -- just I sort mention it's you giving was the pricing normalize. than you margin about what's what than to XQ, the of Can you at.

Bill Murnane

Yes. November month said -- belt, early things feeling that basing isn't it's QX it's under in -- we now. back we're a and that's in But change We're on. What that December. QX. in is we of or indications direction to going what our like improve And say it's that the are couldn't we're to moving just other have

and comes comment, pricing, touched product. know, off you Fred, Nick old more that on I One a it, when they Internet that think year, pricing, model the new introduce of advertised

on is So having really go longer ends up and minimum and they that promote when a a no price margins happens. any want, dealers can negative that out price there impact there really and

Fred Wightman

That retail last destocking. the think about sense. makes destocking, Sure. quarter, I And talked you

inventory, now? like an that to come sort are clean that little there more need end to you accelerated that this a Do that think level, I the continue at you are out? of some mean quarter. about thinking How expected You through the units is this bit It today? still industry year. of that sounds

Bill Murnane

else's inventories good Yes. there in move for to don't get -- is our our expansion. into grow. to see think quarter a hard little we it's there's we was a still some sense. think as We geographic to but room that. so the obviously We it's we're shape, insight right, we But pursue inventory still in better us gauge everybody inventory, much get And others' do

FredWightman

'XX but sort the lot from mean about Okay. in expectations overarching thinking And retail level? I then industry. at how of a units 'XX industry the are and retail finally, just performance left just here you overall 'XX, of not for

Bill Murnane

again, I'm Fred? question sorry. the you Sorry. Could repeat

Fred Wightman

Yes.

industry-level retail the year this next Just and of for expectations rest year.

Bill Murnane

Yes. expect year? not What year do for of next I'm sure. still we the balance the

FredWightman

stay And an will retail, level, still you about year think Is -- industry level? how up I do XXXX, you to think then an it digit? mid-single retail at be industry at end thinking same? for are you Well, improve? down the where that'll XXXX for it's mean of Like going do Sort that? full

Bill Murnane

to give Yes. continued bit the industry It's flat down that's a for insight a really us hard We're where going. of kind for you planning XXXX, into our in any planning little XXXX. But process. softening just is in to

FredWightman

little that flat 'XX saying talking on Sure. And level, not just versus You're saw in confirm to to absolute you down that's down, to an flat right? a about bit. what

down it at to absolute could an flat saying You're level, be slightly.

Bill Murnane

probably We're down others is flat thinking bit. saying, anything what overall, a everybody RV so retail little demand saying is than not to we're That's different what are saying.

FredWightman

lot That's guys. fair. Thanks a

Operator

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

line Your open. is

Ryan Sigdahl

for Hey Ryan Sigdahl Steve.

know So I would don't be versus it on comment guys contribution, acquisition but you helpful. historically sales organic

So in up willing if the on I was guess, you quarter? revenue are basis year-over-year minimum, a comment to an organic at

Bill Murnane

share -- we not when prepared to much too Ryan, We're that. give want -- like we're to bigger, that, not get it's data we may but just And we do that. don't competitively,

Ryan Sigdahl

right. All

Okay.

Bill Murnane

at this out not So same-store sales is point break going we're in answer to no, the time.

Ryan Sigdahl

of can was questions vehicle XXX-basis But from margin So to shift much the used gross how were you new from up gross few and first, like quite point follow-up decline, -- Okay. down. of nicely vehicle so mix the margins. units used? that A quantify on were new

Nick Tomashot

-- units. that don't have mix was sales same at we the that also the higher-margin I were an to And a on move was time, to XXXX discounting of overall. was units, the had an the impact shift newer the out, I year, believe but the on we the seeing used what model there new that the used breaking impact from definitely that shift then

was attractively sell to Just with through new our it used. on putting pressure the ability being priced, units

Ryan Sigdahl

you. Got

along new to it of cetera? then like as goes any guess But I -- the kind was pressure next used my motorized, pricing there towables, both any felt the that in outsized used, versus et and there new and was question. as from either sounds But pressure, So new. well

Bill Murnane

Yes. Yes.

Ryan Sigdahl

that improving Is Or of at up better are market nicely F&I, there? rates? helping also to along that some moving then are dynamics is tax there a And structural improvement XX%. getting primarily Lazy that

Bill Murnane

our either that's But F&I a operations great that or a improving improvement, ones doing we job. just that's of some the team existing great us new have acquire. think all that's that I internal we

Nick Tomashot

we're right can there's And practices we And other. each roles, getting benchmark those against right if people make we best in to and able the seat apply even locations that our or the F&I those in adjustments.

Ryan Sigdahl

Got for you. one Last me.

to a that it You've impacted your of about guess inventory. competitor impacted any standpoint competitive just talked from inventory I entirely curtailments competitors a curtailments was against the quite did up pricing actions? and guys having how decisions? you that Or bit bump move against issue a

Bill Murnane

It action. was competitive against all

minimal. number managed are similar issues certainly, do our inventory, a any curtailments But do to we've competitors we And not think levels, did. to our curtailment. we of face Our historical relative so

Operator

Citibank. [Operator question Instructions] have another We Wightman, from Fred

FredWightman

the inventory Just in one -- coming say? seeing quick those the seeing Or isn't of follow-up on this some or more with the terms curtailments. hitting that some are XXth the fair we're payments? that of get actually side. of stricter lenders This a bit up month curtailment on fact really with you little you're some the to just finance changes partners not It's aggressive Floorplan anniversary channel. Is get

Bill Murnane

No.

you just it It's right, have normal. think Fred. I

You curtailment start, pass an it's practice. anniversary normal

Nick Tomashot

during of end to And have if say, to the to areas, season season, high. slow the likelihood one in going you're you're payments northern of if the approaching the is continue you're, that the make

Operator

to turn Murnane closing in further no the over questions I for are his remarks. the queue. there And call Bill back

Bill Murnane

day. everyone, and to quarter. a joining this next you talk we'll you. you, morning, Thank great Great. Have us Thank for

Operator

call. conference today's concludes this And

disconnect. now may You

Lazydays (GORV) 9 Nov 192019 Q3 Earnings call transcript