LAZY - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Lazydays Holdings, Inc.

Third Quarter 2020 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Debbie Harrell. go please and you, ahead. Thank

Debbie Harrell

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

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

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

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

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

will overview introduce third my Nick the Now, Tomashot, to XXXX it provide pleasure an who quarter financials. of is

Nick Tomashot

XXXX are prior million XX% up were $XX.X or lines from across for the results year. the Debbie. the note prior up sale QX million business QX was XXXX. vehicles, XX%. otherwise, or revenues of or versus of quarter, $XX.X quarter $XXX.X $XXX.X that unless to million, all Total year recreational comparisons Please for million the Thanks, stated third Revenue RVs,

RV XX%. or XX%. New or was $XX.X revenue And million $XX.X up preowned revenue up million, million, $XX.X $XXX.X sales sales million was

RV excluding units at XX%. unit sales up Looking sales, units, X,XXX, wholesale unit were total or our XXX

million unit units. business as the vehicle total, XXX our from In quarter New $X,XXX ASPs towards to XX%. or well Preowned revenue. channels of of or in XXX at were These our periods, compared $X,XXX, noncash lines increase versus or of miscellaneous and or increase million, XXX between or other excluding X%. XXXX. of XX.X% was by lower-priced consist LIFO accessories or of from revenue improving F&I increase and or and impact gross insurance X% rental $X.X $XX.X campground towables compared revenue of these revenue million The to sales unit for wholesale profit, excluding up million Total $X.X or as an The XX%. were rental to $XX.X XX.X% includes Average XXXX. related XXXX, business. new increased by mix and sales, in parts adjustments, the for $XX.X up prior out offset to LIFO X net $XX.X service, coming million, LIFO reflect gross additional XX% being $X.X XXXX. million Noncash XX% selling revenue of attributable adjustments favorable versus up was vehicle up revenue campground, by Gross mix Revenues had QX sales and excluding for and preowned miscellaneous price F&I of in a price decrease $X.X $X.X adjustments, finance and was year. million with other driven improved units and service to phased business RV other change vehicles vehicles margin, the last-in-first-out selling impact the quarter average shift X% in $X.X million, a the and or prior of a These swing, parts, preowned million lower in the million. up or $X,XXX a or were XX% down an was $XX,XXX, sales year. versus increases margin $XX,XXX, units partially was profit

release is was XXXX, overhead profit by above, million, as $X per in loss $X.X $XX.X Xx quarter gross versus well Phoenix amortization amortization XXXX. profit net the for and net $X.X $XX.X for was increase SG&A than offset dealership million QX our reductions compensation lower in from in of and from the in $X.X improved for compared down year, third the took increased and expense Earnings were and improved prior SG&A acquired by XXXX, stock-based a depreciation or the approximately profit million strong million, primarily QX performance QX more quarter, for we the quarter depreciation including we mainly record up by and million. $XX.X net driven just of versus of XXXX. quarterly income second was gross $XX.X new quarter, Amortization set Lazydays, million of favorable costs, acquired LIFO million So that XX% This increased The XXXX's company improvement $X.XX quarter overhead wages in Houston a mid-February, for million the compensation EBITDA which we This near XXX interest. driven partially by million. last discussed a percentage the down of for service the flat, record in million. quarter which Floorplan set with to ofnet up exceeding our $XX.X XXXX. XX.X% Adjusted from our Villages the $X.XX per $XX.X up the stock-based share EBITDA of and This the associated XXXX prior includes XX% million our X.X%. loss was profit expenses down started of amortization in quarter, interest year. $XX stock-based to driven year. as to of we million, in share sales table, in points income compensation additional up May Net increased adjustments, performance the August cost expense reduction EBITDA. Adjusted center for SG&A was XXXX. $XX.X million in to versus increase by $X.XX EBITDA and a as income a transaction earnings Please prior margin adjusted gross was to attributable the the new to reduced was excludes basis reconciliation refer dealership

location the to hand XX, Paycheck It for we sale-leaseback includes sheet provided Phoenix quarter the mortgage cash to million quarter near May end million increase turning XXth center Houston, of Now in million and Tennessee, the which of cash September and new consummation includes $X.X net impact up capital closed property working second balance the of cash a cash of on our XXXX. acquisition Nashville, we of had of XXXX. with for our a We had of $X.X provided This the compared in outflow $XX.X provided by first greenfield and Protection have the $X million position. of we million, the Texas in by cash we financial at self-funded taken $XX also property XXXX. dealership December in million the on by $XX.X cash out had quarter on the loans service and our Program self-funded.

preferred full an dividends of was and October As September for of accrued and quarterly preferred in a This accrue payment XX, unpaid until at on are rate down X This XX% the XXXX, September at X% X% Dividends applicable of rate dividend included in Accrued $XX cash Series of the accompanying million dividend arrears X, the which company rate. paid stock balance XXXX. in October accrue payable paid has full. dividends the dividends balance payable declared sheet XX, pays on the dividend Series or cash the on A initial period are annual plus in company's ended X%. XXXX. A the payment

million. year, reflecting $X.X prior consisting As and in the vehicles is LIFO production million Total strong reserves in in preowned million the in of XXXX, less of inventory, $XX.X $XX.X time inventory parts September down million approximately compared inventory, $X in demand approximately same XX, the vehicles, to million we response COVID-XX. recent $XX.X million experienced suspension temporary approximately and new had we've of to $XX of manufacturer's

our September XX, the loans million no $XX.X in borrowings gross of Houston credit XXXX, Floorplan $X notes our As million revolving payable million outstanding, on and $X.X under facility, on term $XX.X facility. million of mortgage we M&T had

concludes Program And now Thanks notes payable on under approximately We the and summary my million million results. Bill of Protection I'll the to also outstanding to This borrowed time. your Paycheck $X.X had over Murnane. $X.X related call acquisitions loans. turn for

Bill Murnane

Thanks, describe has to fantastic the had of Nick, a today. it. thank quarter It's you, is other way Nothing great for ever just and short us a Good morning. there's joining -- everyone, quarter. no best Lazydays quarter and

supporting we've wonderful we're So I and and want is remarkable. They're to people, meet unprecedented truly to all increases our and those their experienced employees. effort fortunate support demand Lazydays dedication nothing unique volume the a and of of recently of them have to short to increases -- The the this thanking that start by very efforts. group

to great So with us Lazydays. works who everyone job at

pandemic have strong and activities RVs. by lifestyle believe the enjoy related people demand We to distancing. this to and for changes have vacation demand social strong experience We to limited and allow the options the leisure continue primarily that for very caused is

on likely very continued miss be inventory our Demand inventory addition, strong, has limited tight. to positive October. impact to and continues be continued inventory in some to us sales, be but causes margins. to Tight a In

improving, remains beginning we to where recover And rest levels to improve, OEM of year. inventory we to them our inventory are pandemic the it Our the end be. well through production the still of continue continue improve position improve to production we to Demand expect is like also year. the and the below and they strong. although are levels through expect of impact would continue the from to to OEM

we current survey that but to is volume market. in wait up X%. believe a mode and normalize sometime to still that the continue is of Through and outperform Stat begin through we market shows fluid production. nature mid-XXXX, hopeful the close in levels September, see approximately are the given are up We unit our XX%. We inventory August, will demand to

believe So we market. Lazydays outperform the continues to

area Our the been on Elkhart, before in year-end. dealership it on Indiana. most years Chicagoland few geographic since has we the close to recently a growth our we We remains And ago. active began new acquisition strategy and closed our pipeline expansion of robust, is in acquisition Camp-Land the expect

markets in We are the Indiana, up and returns open will for generate Michigan. Illinois future and And very about for excited they us acquisitions these Lazydays. growth significant believe will we

in planned the X to expect can year. Moreover, from evaluating The per addition greenfield X existing opportunities had be generate We per Arizona; XXXX. and of XXXX located we we stores. We integration acquisition stores numerous year. up Indiana; dealership resources new sites so and Tennessee. QX to dealerships by to add substantial Chicagoland; X capacity currently to to more Phoenix, many adding are or new new we dealer our new the these XXXX. add greenfield and XXXX, growth in X process our add from increase stores growth stores Elkhart, year stores X dealerships country will to are In around we have and capacity believe expect will Nashville, acquired growth Historically, in in per from add we

to excellence. to on ability continue our and focus experience service we grow, best-in-class we provide improving customer As a

We line RV open and best have please questions. deliver in and prepared place for is several us service the to purchasing sizable into new investing remarks. and people, technology are the customers. that experience initiatives and wonderful financial all Operator, resources the will country in up help processes That human of all my the for

Operator

Instructions] comes Steven Your of first the question Dyer. line [Operator from

Steven Dyer

first has as anything seeing of, you I been in think Bill, Good got you case are of guess, when you back stronger Florida, coming wise? anything into that? of seeing in there? we're all bit little morning, year. the you've a quarter, a Any Thanks. know note I sort time the maybe regionally? the work had Nice you Are year regional guys. weather just than around more public. went I commentary unique of sort footprint

Bill Murnane

we get dealerships all haven't performance customers. things In really market-driven. we've some really, closer just under Not our locations, strong not of that that in control, necessarily our But to our demand. seen to ways we're are differences Steve. to all just of across finding dealership We continued -- generating our by of be seems think any

numbers don't X that anything in performing see our different we market So significantly the indicates that other. than is

Steven Dyer

sort towards like sort then more that pushing anticipate feel this of lower something the that like that's forth. much move price Got you it's so to continuing cetera? it. you lifestyle? et that points, How driven feel sustainable? do people And of towables COVID by and Do of Is you

Bill Murnane

Yes.

next for looking it's years. believe -- they lower-priced or for think be the market entrants tend because market couple used -- is price little The new entrants sustainable, certainly, are for a definitely of to I the to the younger they lower sustainable. a We products new products looking typically and have the point. is little new

country entering generations the of the XX next right the one years. retirementage history for this is be will of that not Let's biggest forget and now in

also. there's index been to perform to -- add and industry dealerships that, good industry, XX% us roughly to continue normally is XX% a of we always to the the we because would add that's tend So motorhomes. average, But which demographic a and group as more it's we retirees towable, do dealerships for That think especially the well. massive closer going

parts focus dealerships, more specifically that, have add we on way as Having motorhome. because very in the as on bullish motorhomes does still dealerships Tampa index So little of maybe a that as to said and other our certainly we're a smaller we're big don't country dealership. Florida the going more

They them. as carry but we used. growing both so quickly, can they nice turn new as be may them tosell fast margins, not product, got towable very Somebody's very and

both focus we will market. So and continue to on the towable motorhome

Steven Dyer

And could, guess, I helpful. then on I if allocation. question Great. a maybe capital Very

You are the whether It increasing acquisitions. for over sounds be like on of chunk options, quarters guys it's to infrastructure have have whether the last addressing a sheet of the able more of few And accumulated balance you it's you obviously a cash lot do warrants, opportunities. sure. to greenfield nice sort

look that Just going at guys and on capital sort allocating big picture, how of you do basis ongoing an forward?

Bill Murnane

Yes, question. Steve. good Thanks,

is Our manage and very we cash it closely. precious,

and Conditions, focus would returns investments. The some the to present, towards the we cash. The multiples At mentioned. uses any that other our our dealerships are, that new our alternative dealerships. and have I And on cash roof. acquired acquired get return than different new can highest returns investment we and acquired you consider is say, we alternatives, dealerships higher on or opportunities into strong on considered. we'll none evaluated, shareholder dealerships. buying in of are including acquired for of near-term available always time, priority that or And of deploy Our continue course, change anywhere will this ones many time, have we the any But analyze change and we continually and investment to are warrants new including of with stock out our the to all over cash investments went most the evaluate invest don't buybacks come back highest our opportunities. foresee at new focus the return. we close Currently, investment through many we returns to the can get

the Of course, foreseeable focus in dealership invest and enhance sales to will or we small investments processes network, our but the experience, people, compared for also our our investment remain these technologies in will which that service growing are customer future.

Steven Dyer

adding there? even yesterday the said lastly, or XX you've resources color. of what increased the best sort larger That's seeing consistent days. a seen. environment great. of competitors I you're earlier in Great M&A made one and he's public Is just your tag about last significantly guess, as with the comments week, on this It's that has

Bill Murnane

Yes. good, robust. We with feel that very and is We argue our very pipeline position. won't

Operator

Fred Your comes the next from line question of Wightman.

Fred Wightman

In shipping the retail slightly mentioned release, of units are you ahead that OEMs the demand.

bit a you I mid-October. was the think back that change what pre-release in said a versus of in

of slower So What's retail? a little can better shipments, driving bit in dig just change you into the that language? it sort more? Is that

Bill Murnane

Better our we're shipments numbers up getting seen on go continue from what We've OEMs. to in. the

get we're we southern going I coming first the keep across Now presence into season and because U.S. south, to in mind, have think served in the big a we're

it's So priority. a I think

But we in not We there because because so larger increase as also the a change It's any may shipments, well. are player, it's priority some of coming. in get of demand.

Fred Wightman

have. you that on of And I size guys sort that then more think few geographical the heel normalized mix hearing on and follow-up shipments? Really issues and the next of do a impact for as here just the or fair on industry been far resolved mean, to supply an you months points shipments? that that. be helpful. chain you are But your seeing could anything the in supply as Achilles chain those drive have Totally bit

Bill Murnane

Yes, disrupting continue fires is they it's problems for really and hard What their predict that. can chain. say to I put to solve out us are that supply

that and don't every confidence resolve ball. those have the we have We crystal but continue production increase a months, OEMs in coming to our problems will

Fred Wightman

one just one. final then And

think mentioned, could of normalize you time the including that frame? inventory I sort in and mid sometime about just that talk Bill, retail Can assumptions wholesale you that you levels think 'XX. in you're

Bill Murnane

Yes.

to to we to somewhere today, but always environment. subject this according to be back year normal have information of should going we're expecting demand have continuing year. strong a continuing or OEMs. from -- to don't So ball. the we're to crystal we're October, start increases the is which see in Again, to middle September, think or we And around June, in going to know, we expect shipments change our the next don't continued we be is it Is also get May the it we

Operator

[ph]. comes next question Charles from of Your the McDoulan line

Unidentified Analyst

Congrats on quarter. the

and have while up capital about pursuing million bit per could couple Xx. EBITDA we're generating a we even more you cash how million $X.X potentially to debt, quarters M&A about the just more guys Just in trying to a structure to plan think because capital a $XX allocation potentially million little understand add refinance $XX non-floor in in month, cleaning cash, debt in of coming maybe bring

reduce We're plenty trying X.X, So quarters Xx Xx EV-to-EBITDA. for the of kind basically, dilution in excited couple ammo we're X.X have not at But at to to the years? lot why just opportunity. cash next M&A X a very we're over and trading we of just a understand of EV-to-EBITDA? about trying should So to of M&A

Bill Murnane

Yes.

So before, we very we're when on do that, at look we And we as the evaluating -- capital capital. get we allocation that carefully. said I return can

in So we lot last. we're any generated anybody certainly times but don't good of that's amount this long of how XX very industry will cyclical. And that a been we've around And unprecedented times time, now. years that I've yes, know it's for the it know been cash, around

strong So I background we approach be a have well debt. -- distressed to debt limit that I understand and its debt, in our the to risks. very very to benefits its is conservative I so understand and

So we conservative we're take -- a approach. very

far number a warrant stock today, buybacks. we've as people investments us our of had ask Now about and buybacks as

shareholders. numerous We questions about that have from

that could evaluated these help program built buyback to value And programs, the that understand we've analysis. not exchange We extensively. evaluated the have it's shareholder purchase And program. that us such complicated or a them fully run to program a create. We've warrant or model

to magnitude of Comparatively, program a on warrant new relatively than according the low or program analysis. or in Our return or higher exchange order detailed return exchange single-digit our return on the a that is acquired shareholders. has analysis buyback dealerships shows to payback a

shareholders growing interest in we very network. it available in invest believe dealer is our cash this, best Given our to of our the

believe just opportunities comes But We shareholders. based make that decisions available investment the returns an will close on right dealer and compare whatwe continue to highest there our are anywhere isn't opportunity investment now, to expanding network. investment to analyze and

is a to X, -- year shares, we we on cash ourselves I now buying can't execute return strategy. hope but find in and because -- or plan If cash we more a lot very have we're powerful made position can't buying a you X we from back or that, don't a in year investment expansion and want low very, investment or now tight a geographic on warrants single-digit where this on in we

Operator

Cohen line Your Instructions] question from the next comes Greg of [ph]. [Operator

Unidentified Analyst

to and the Yes, what second is said, like I'd for the third the performance have quarter. incredible earnings people

the So the that business congratulations and the and clear quite is me, long, cylinders to is expansion seems the think on going and firing everyone RV is to in to pan. that. I It all runway nice it's be to flash

So more of I that think the right, our of guys not is relations the is that traded to X.Xx investor guess favorably do we have, bridge to going and question publicly stock what these the you company -- sort perspective is XXXX to results I why reacting that's amazing valuation larger between I guess gap kind sort the where from EBITDA an sort do trade, of peer? of versus

Bill Murnane

Yes.

our So we with as communicate best we shareholders. can

stays the What focus what given control control -- open. can't we can we We can't within to on extent, control do. -- things And dealerships We Our how dealerships -- we market. investors us, we some really can our perform. performs control how that the business we is can control we new we open we can control. market perform the gives can what

proven, at strategy. the will us, we X it And months that for us the But believe if that X the X-month long perform well And we that how performance. reward we our month looking reward us. continue continue that have a to would to to We a this going and provided we patient. every confidence that. fundamentally reward that We're not will focus and will haul. will we've it execute. us. for we're least to in And capital. for market to X-month dealerships not we And deploy may New reward It from results or fast I we're past or us as in like. the as on continue think market we require think continue our reward understand We're execute a will

smart that's our we what the that's to and do. deployment So with are try continue -- to capital, and of where

Unidentified Analyst

well these points think Bill. I Yes, are taken,

of you of only could fairly think is you investor comprehensive, seen but thing, that investors. deck the The I a thing group online. a sort deck do be that weeks few one pretty roadshow the post though, put could by was simple a ago out to for that was select

you for post disseminating that helpful on could presentation So see, the broader incredibly the website just that be story. I the to if in think public would

So would if can great. that you just that, consider be

second business. The question is the to ancillary the opportunities of some grow had I around

As the know, you peer-to-peer segment is growing incredibly fast.

companies very, You is out which high-growth, as such valuations. businesses, These high-multiple have Camping stand-alone obviously, Outdoorsy, high-margin, have low-CapEx, a very are rolling program. high and World similar

high Secondarily, it seems that not rentals looks we're like business And have very doing RV also to a really anymore. ROI.

kind high-growth, because I the being high-margin, segments punished of many we it think seems stock, we're on right, as don't our the as So business. high-multiple multiple about like these of have of

a So and typical thinking be I guess, closer particular. things like of how in about World that we to dealership can valued Camping are you so type those

Bill Murnane

Yes.

investment I So go the think We made investments. consider we consider lot Steve's to question. all comments different I'll of investments, back Not a I opportunities. to all

on considered we're acquired great get have not years. close returns rental rental kind we the capital, rental business double-digit case, best business at hard. X It a a in on is opportunities getting We business. in of It's were those And the greenfield returns fact, the return dealerships. number the or for certainly length, a to low of anywhere does

in not we other other at those our especially we targets in those time, that we in rental are it's to best them they investment one There they neither do the in, have of opportunity will to our have determine shorter-term the given at a if In meet invest changes and the don't potentially certainly But is our return business, don't we selling to and trend in and servicing, opportunities we the did And point we We're not road this the because infrastructure hurdle, term. react to -- fundamental opportunities does. a a those. financing deployment capital. selling going to want support chase our We're market focused fundamental that we our build we businesswill that core not that. long right may have that aren't things belief on core of business, That's will business to business. are be then our RVs. servicing ourselves the meet not not our if ultimately core drive management we just on the we team stays now ourselves best have. the rate. If focused business. their core want look invest opportunities best rentals distract And from highest the have and of don't So chasing And that evaluated sometime that down distract that we business, the and hurdle return results. capturing

management. b, not don't I close think, the this they're careful hurdle And and distracting we're elsewhere; so and return get about to meet rate, a, rentals even very the we can deploying capital that

Unidentified Analyst

point I just out levered having tons and of mean, path you clearly, you're continue one here, this go this this as private building sort your helpful. equity and That could background last up on on of buying almost focused a dealerships, buyers of was to question. the where private kind interest like of and staying equity greenfields cash market today Board generating guess trading lever stock of to give to about continues multiple. of its franchise laying that and going we're background, value at us incredibly not nothing because, national And is I boom. real want scope know cash every basis. Okay. month, debt broader scale to multiples alternatives start with that thinking thing this worth recognize with and for free flow reason, and you management, strategic if were the opening and pay is whatever what who Bill, guess of generate I amounts massive distressed for a But Kind is the to does the to business and

markets, obviously, guess, at And or time, for, stock X want this stock, stock a the would it's like may you've you years being $XX, of as needs it of now, point. to great. some been you some And I a don't dramatically warrants, same buy decision, But $XX the public in like to don't the still has that's be but undervalued where to company today. too. quite been trade it for strategy, share buy So stock works, at the to $XX, the has the work hasn't okay, right, but CEO that's and the I the if the your But at want been it kind point, X think, private And time. to if CEO. the -- work, performance long has which

we're think in kind this think I'm of wondering work you up working, doesn't But of all it review, if end want over on X I long months, sort of how thoughts guess say? stock we I next out alternatives the how as for all the strategic sort are So your to what about the you just term.

Bill Murnane

experience. is company this the on the value. tell have business capture opinion and been that. not months longer-term very I shareholders than years. equity time I is said and I private a X view to much and try you industry going of And to all a like wrong. have direct frame. valuation was our that Chairman our And short of much this think can than rush majority before, be horizon that. And I -- this very Well, your market Board, of we're XX longer and the to of is our for we impatient I've

seem so down years was is fair to the get years While ago we will long and wasn't view The we and paid X take shareholders in CEO given value private we think of of and went think joined the market what get And we now the of the think one creating that And have December. do, equity them we original in we and think than of road a long -- will we'll longer-term I ago. I course, a alternatives. $X.XX can't it itself. for you If for other value ago, But be owned, it opportunity the that's consider X for ago. I'm we're XXXX, valuation it us still years company, we we in and that front as isn't of which really -- shares years Lazydays. much the public care apparently X --

or gotten doubled money they years it. close in I they've to their X -- think

I money. on they've return X gotten in So think years that an okay

to it’s better, strategic say, I that. say in mistake. can say think certainly it's That I would frame. don't so X to do be that wouldn't considering be got good a we time all And think I months. continue But alternatives to going anyway, do in will it. on we it's And So, pretty we hard I to okay. we're work and

Operator

There this no questions are at time. further

Bill Murnane

you going quarter. Thank Great. you you, excited you. week. to great on We're everyone. Well, a your your next now. really right what's to we'll talking And thank about for Have support. forward rest look We thank of

Operator

does conclude gentlemen, and call. today's this Ladies conference

disconnect You lines. your may now

Lazydays (GORV) 4 Nov 202020 Q3 Earnings call transcript