Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the lazy days Holdings first quarter 2020. If its Financial results conference call at this time. It's are in a listen-only mode after the speaker's presentation. There will be a question-and-answer session. Just ask a question during the session. You will need to press star one on your phone. If you require any further assistance, please press * 0. I will now like to hand the conference over to your speaker today. Thank you, please go ahead and ma'am.
Thank you April. Good morning, and thank you for joining us for our first quarter 2020 Financial results conference call. I'm Debbie Harrell corporate controller at Lazydays.
We issue the company's earnings press release this morning a copy of the earnings release is available under the events & presentations section of the investor relations page of our website and has been Furnishing an exhibit to our current report on form. 8-k with the with me on the call today are Mister Bill murnane our chairman and chief executive officer and Mister Nick Thomas. Shut our Chief Financial Officer as a reminder, please note that some of the information that you will hear today during our discussion May consist of forward-looking statements including without limitation statements regarding unit sales tax revenue gross margins operating expenses, stock-based compensation expense taxes product mix shift and geographical expansion actual results or Transformer. Sure. Could differ materially from the looking statements as a result of many factors.
for additional information please refer
Risk factors discussed in the form 8-k filed with the SEC on May 7th 2020. We will also discuss non-gaap measures of financial performance that we believe are you so much for understanding the company's results including ibadah and adjusted ebitda. Please refer to our earnings press release her reconciliation of these non-gaap Financial measures to the most directly comparable gaap Financial measures.
For the three months ended March 31st, 2020 and 2019. The financial information presented represents. The operating results of lazy days Holdings INC. Now it is my pleasure to introduce Nick Thomas shot who will provide an overview of the 2020 first quarter Financial. Thanks Debbie. Please note that unless stated. Otherwise the q1 results comparisons are the exact same three month period ended March 2019.
Total revenues across all lines of business for the first quarter were a hundred and ninety point nine million dollars up 17.8 million or 10.3% versus 2019.
Revenue from the sale of recreational vehicles are RVs was 167.2 dollars for the quarter up 14.6 million or 9.5% New Revenue was a hundred two point four billion up four point six million or 4.7% and pre-owned RV sales revenue was 64.7 Million up 9.5 million or 18.1%
RB unit sales excluding wholesale units were 2416 up 442 units or 22.4% off Vehicles unit sales were 1367 151 units or 12.4% and pre-owned vehicle unit sales excluding wholesale units were 1049 up 291 units or 38.4%
average selling price for new vehicles with $74,400 down $5,600 or 7%
The average selling price of pre-owned RVs was $59,000 9.8% lower compared to q1 2019.
Revenues from our other channels consists of parts accessories and related service finance and insurance or F&I Revenue as well as Campground and miscellaneous Revenue in total revenue from these other lines of business was twenty three point seven million dollars up 3.3 million or 16.1% compared to 2019.
The increase was driven by an F&I Revenue increase of one point six million dollars or 16% to 11.3 million and a parts and service Revenue increase of $2 or 2.7% to 10.8 million. These increases were partially offset by a $3000000 decrease in Campground and miscellaneous Revenue.
Q1 gross profit excluding non-cash last in first out or light bill adjustments was forty one point seven million dollars up 4.5 million versus 2019 month gross margin, excluding life adjustments increase between the two periods at 21.7% compared to 21.3% in 2019 with a change attributable to walk across our core lines of business.
Non-cash lipo adjustments had a small net unfavorable swing a point five million dollars compared to Prior year. So gross profit for the quarter including life. Oh was forty one point five million dollars up four point six million or twelve and half percent.
Excluding transactions costs stock-based compensation and depreciation and amortization sg&a for the quarter was 31.1 billion up 4.6 compared to Prior year. This increase is attributable to the additional overheads associated with The Villages dealership acquired in August, 2019. The new service center near you send it started up in mid February and increased performance wage is driven by higher unit sales and revenues.
Amortization of stock-based compensation in decrease eight million dollars and depreciation and amortization decrease six million compared to Prior year.
Net income for the first quarter was $3 or $0.08 per share compared to net income of 1.8 million or 4 cents per share in 2019.
This one point two million dollar Improvement was driven by the net of increased gross profit and sg&a expense discussed above the reduced amortization of stock-based compensation wage as well as the point five million dollar reduction in interest expense driven mainly by reduced floor plan interest.
Adjusted ebitda was nine point five million dollars for the quarter up 1 million adjusted ebitda margin decreased by 40 basis points to 5.0% off. Please refer to our earnings release for a table which includes a Reconciliation of that income to adjust it even a
Now turning to the March 31st balance sheet in our financial position. We had cash-on-hand of 43.3 million dollars and net working capital of 34.5 million with cash of 11.8 million compared to December 31st, 2019. This increase in cash includes the impact of cash provided by a $5 mortgage on the recently-completed service center down in Texas, + 4.9 million provided by the consummation of a sale-leaseback of property for the Greenfield dealership being built near Nashville, Tennessee.
We had approximately 153.3 million dollars in inventory consisting of 121.4 million and new vehicles 31.8 million in Pre-owned Vehicles off and parts inventory and lifo reserves a 3.9 million total inventory is up approximately $10 compared to the same time prior year off include the addition of approximately 19 million + RV and parts inventory from our location near the villages that we acquired in the second half of 2019.
As of March 31st 2020 we had fourteen point two million of term loans outstanding a hundred thirty three point six million in Gross notes payable on our floor plans about 5 million on the Houston M&T mortgage and no borrowings under our $5 revolving credit facility. We also had approximately 5.9 million outstanding on a table related Acquisitions. Thank you for your time. And I'd like to turn the call over to Bill morning Bill. Thank you. Nick started strong and remain strong until mid March when the covid-19 shelter at home orders began to take effect through the first ten to eleven weeks of the quarter our revenue and earnings were up significantly and both were on pay stub in all time and lazy days record. The demand was strong at all of our dealerships across the country.
During the last two.
Two three weeks of q1. We experienced a substantial drop in demand as a result of Most states issuing strong shelter at home orders. Although we managed to finish the quarter showing growth in revenues and earnings. We are confident. We would have had much higher growth. If not for covid-19. In addition to the demand drop. We also experienced the shift to more used and life which is reflected in our lower year-over-year average selling price.
We are encouraged by the growth in our fni in service businesses during the quarter as you know, we are very focused on improving and growing our service businesses at Lazydays. We continue to grow this business as a country recover. We will continue to grow this business as the country recovers from covid-19.
We did not lose sight of our goal to provide a best-in-class customer experience during the quarter. We made very nice improvements in customer survey scores for both our sales office operations The Lazy Days team has worked hard to improve these scores and it is exciting to see their hard work generate meaningful results.
We have managed our inventory closely and I'm happy to report that our inventory is in great shape. We believe the size of our inventory is well-matched to expected future demand where I am. So very pleased with the age of our inventory as you may know Lazydays turns it to inventory as fast or faster than anyone in the industry. Our team has worked hard to keep our inventory am moving and fresh We Believe are focused inventory management positions us. Well as we enter the model change season in Q2 and Q3 because we will have less aged inventory. Give off our Lots at discounted prices.
We continue to believe it is prudent to plan for covid-19 to have a negative impact on the economy and our industry for the foreseeable future. We made a number of hard decisions and took difficult actions Thursday April to get our costs in line with expected demand these decisions and actions have been previously disclosed in the company's filings.
Given the special circumstances presented by covid-19. We would like to give a little color on the month of April given the drop in sales during the back half of March we came into April with a much smaller delivery backlog than normal.
Moreover April started off the same way March ended with significantly lower Demand versus prior year which continued to diminish our delivery backpack as a result of our April deliveries were below prior year.
Keep in mind that we recognize Revenue when we deliver a unit there is often a delay of a week or more between when we sell an RV and when we deliver an RV
around mid-april are demand improved dramatically and his continued to be has continued to be strong into met your every year unit sales during the past three weeks of increasing jobs at most of our dealerships. Overall. April monthly unit sales were higher than last year. Remember that there can be a delay of a week or more between the sale and delivery of a young age.
Result of this strong sales activity. We entered made with a much-improved delivery backlog.
We continue to see our customers migrate towards lower priced units in April which drove a s p flower. Although we are encouraged by the strong demand. We are experiencing. We're not losing sight of the the comic impact of covid-19 and we are managing our business accordingly.
We will continue to intelligently grow our business in q1. We opened Lazydays RV service of Houston are first dedicated service center. Lazydays RV service of Houston continues Rampage nicely and we expect it to achieve break-even in Q3.
You support our service? Excellent strategy, we expect to open more dedicated service centers in the future.
We have broken ground on our new dealership in Nashville, Tennessee. We expect to open Lazydays RV of Nashville for sales and service in Q4 of this year. We are very excited to enter the rapidly growing Natural Market.
Our growth pipeline remains robust, and we believe we will be able to continue to grow our dealership and service network as shelter and place orders come to a close that is off remarks. Please open the line for questions.
Ten ladies and gentlemen as a reminder. Ask a question, please, press star one on your telephone keypad again, press * 1 to ask a question.
And your first question comes from the line of Steve Dire from Greg Holland capital.
Hey guys, Ryan signaling for Steve Ryan. Just want to clarify thought I'd caught it in the prepared remarks, but did you say April was up year-over-year? And was that on a unit or Revenue? Basis? Thursday? April April was up on a unit basis year-over-year given the ASP change that we talked about customers or dead only moving towards lower-priced and and more used products that's going to drive our ASP down. So Revenue, we we're not given we Revenue likely will be dead. Although we're not being specific on that but keep in mind also that you know, the April revenue is impacted by the backlog we come into a place there's a delay. So when I say unit sales those are our units that we contracted to sell they may not get delivered until May
Got it. And then from a mix standpoint is you know used to a stronger in the quarter in q1. Is that Trend continued into April and can a quarter a day later? Yes, definitely need the trend towards used more used and and overall just lower priced units even on the new side is definitely a shift towards lower price.
got it then you guys have you know a decent cash balance and liquidity you announced earlier a couple weeks ago that basically refer Goldberg your interest and principal payments I guess what's the thought process they're given the cash and liquidity you have and then how are those conversations with your lenders going
yeah conversation our lenders are great all that Nick add he he talks them more than I do but we both talked to him a lot you know yes we have a cash balance but we're pretty conservative company name is the person that's been in this industry for over 10 years things can change quickly and we also have a lot of debt and you know a lot of things can change quickly especially when the economy had the wrong direction though so that's we're just we're being we think prudent in managing our business very conservatively
Yeah, I'll just add that. You know, we as Bill had mentioned we saw a pretty straight steep drop-off and demand at the end of March and beginning of April. And so we were taking every action we could try to make sure we're positioning ourselves to lower costs and preserve cash.
In in the one more comment, like I said, we're encouraged by the growth and and growth has been strong the last three weeks or so. We're definitely encouraged by that but we're not losing sight of what's Happening. A lot of people are unemployed the the broader economy. I think the the the longer-term impacts of this are not clear to anybody this point or will but where we are very encouraged the growth we're seeing
And then last one for me and then I'll turn it over just on that growth in kind of the stabilization Improvement. The last few weeks is that primarily you know, what demographic is that primarily driven by is it off people looking to go outdoors and naturally social distance is that the retired Community, you know, just any comments on kind of who that that Meyer is. Yeah. Well, it's across the board Ryan. We think there's there's likely and it's hard for us to gauge at this point what the primary drivers are but we think there's probably three primary driver of of of the growth one is you know, there's some pent-up demand people are home. They haven't been getting out. So there's some pent-up demand and there while they're home, they're looking for things to do. So they're hunting dog or you know for for RVs online. We think there's definitely more people maybe
Thinking about a vacation and getting in an RV sounds better and getting on a plane or going to a hotel somewhere. We also think we're taking markets here. We we are doing a great job internationally marketing and selling and and we think we're gaining market share.
Great. Thanks guys. Good luck.
And your next question comes from one a very hunting from a sage Asset Management. Thanks so much for taking my question. I had one is given what's going on in the industry. Do you anticipate that there could be some industry consolidation in terms of you know wage dealers dropping out or is this downturn at the moment feel so short that we we may not see much of a change there, so that that's my first question. Thanks.
Yeah, I think the answer is we don't know. I think it's it's been it hasn't been long enough. We need more time to understand the longer-term impact of this quite frankly. We don't think we fully understand the long-term impact of this and and that's why we're being conservative. So it's it's definitely too early to see if there's any impact on the industry and consolidation Although our goal in our place and strategically is still too, you know consolidate be a consolidator.
Okay, great. Thanks. And then second question I had was I wonder if you could talk about marketing a little bit. You know, what have you done in total in response to everything off but then within that and especially as your sales come back, you know as you as you mentioned there's there's logic to do in the RV vacation versus getting on an airplane. We're giving covid-19. So are you doing anything different from a marketing point of view to try to get that message across, you know, maybe reach some new people who you know, haven't thought about every type of Faith before, you know, we're used to fly in places. So but anything I'm the marketing site, but with love any color things, yeah, and and unfortunately Barry we're not going to be able to give any color, you know other than we're keeping the pedal-to-the-metal we're not marketing is not an area we're going to let up on but we believe marketing is a competitive Advantage for us and and our competitors. We do not want to share with them.
What we're doing but we we we feel like we're we're our marketing team is doing a good job and getting our sales guys what they need and and and women get them what they need to do close deals and they're doing the sales people are doing a good job of of converting what's marketing hands with into sales, but we we don't we will not get into specifics on how we Market.
Yeah, no, that's fine. But I mean let me rephrase without asking about specifics at all. Are you again without getting specific are you doing anything different in the marketing spin off to try to get you know reach those people who may not have thought about our views before you know who are used to the fly and stay at a hotel type vacation. I mean is that
something you're trying to
Yes, I think everybody's probably changed some messaging but that's that's a small piece. We're just our primary goal is to reach people who are showing interest in our RV lifestyle. It's not really our job to convert people from camping to are being our job is to convert people who are interested in are being divorced these days. It's more of an industry, you know those we don't spend a lot of dollars trying to convince people to take up the lifestyle. That's that's somebody else's job wage job is to confer people are interested in a lifestyle and the lazy days customers.
Perfect. Thanks so much for the color. Appreciate it.
You're welcome.
Is that we have right? Well, thank you everyone for joining us today. We'll talk to you next quarter. Have a great birthday week. Thanks. Today's conference call. Thank you for your participation. You may now disconnect.