Q4 2020 Lazydays Holdings Inc Earnings Call
The question during the session will need to press * 1 and your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press * 0 months. I would know let's turn the call over to Debbie Hill controller. Thank you. Please go ahead operator. Good morning, and thank you for joining us for our fourth quarter and year-end type of financial results conference call. I'm Debby here'll 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 page presentation section of the investor relations page of our website and has been furnished as an exhibit to our current report on form. 8-k with the SEC with me on the call today. I'm just a consumer name our chairman and chief executive officer and Mister Nick, shot our Chief Financial Officer as a reminder. Please note that some of the information that you will hear today during our discussion Mekong.
Took the forward-looking statements including without limitation statements regarding unit sales revenue gross margin operating expenses stock-based compensation expense taxes product mix shift and Geographic expansion actual results or trends for future periods could differ materially from the forward-looking statements as a result of many factors for additional information. Please refer to the risk factors discussed in form 8-k filed with the SEC on March 18th, 2021. We also will discuss non-gaap measures of financial performance that we believe are useful for standing the company's results including ibadah and adjusted ebitda. Please refer to our earnings release for reconciliations of these non-gaap Financial measures to the most directly comparable gaap Financial measures.
For the three months and year ended December 31st, 2020 and 2019. The financial information presented represents. The operating results of Lazydays Holdings Inc name is my pleasure to introduce Nick, shot. So we'll provide an overview of the twenty twenty fourth quarter and full-year financial. Thank you Debbie. Please note that stated. Otherwise the quarter of fiscal year results comparisons are versus the same three and twelve month periods in the December 31st, 2019.
Revenue for the quarter were a hundred ninety six point six million dollars fifty one point seven million or 35.7% from 2019.
Revenue from the sale of recreational vehicles RVs was 176.6 billion dollars for the quarter of 50.1 billion or 39.6% off total RV unit sales, excluding wholesale units were 2129 to the quarter 544 units or 34.3% off.
Q4 revenue from the sale of new recreational vehicles was a hundred Seventeen point four billion dollars up 43.1 Billion or 57.9% off new RV unit sales for 1337 of 463 units or 52.9% The average selling price of new RV's for the quarter of $87,000 up $2,500 or 3%
Revenue from the sale of pre-owned RVs was 59.2 million dollars up 7.1 billion or 13.5% pre-owned RV units sold off wholesale units were 792 81 units or 11.4% the average selling price of pre-owned recreational vehicles with $71,000 a 4% off the fourth quarter of 2019.
Revenues in our other channels consists of sales of parts accessories and related service finance and insurance or F&I Revenue as well as Campground and miscellaneous Revenue agent.
In total revenue from these other lines of business was Nineteen point nine billion dollars of one point five million or 8.4% compared to 2019.
The increase was driven by an F&I Revenue increase of one point eight billion or 22.1% billion dollars offset by a small Point 8% or 1 billion months and parts and service revenue and a point two million dollar decrease in Campground and miscellaneous revenues.
Q4 gross profit excluding non-cash last in first out or light bill adjustments was forty five point six million dollars of 15.5 vs 2019.
Growth Market, excuse me, lifo judgements increase between the two periods to 23.2% compared to 20.8% in 2019 with the change. I rarely driven by growth and all lines of business.
Including non-cash lifo judgements, which had an unfavorable swing between the periods of five million compared to Prior year gross profit for the quarter was 44.2 million of 15 billion or 51.4%
Excluding transaction costs stock based compensation and depreciation and amortization sg&a for the corner of the twenty nine point seven million dollars of 3.4 km compared to the prior-year just increases attributable to overhead associated with our new service center near Houston, which open in February 2020 the Phoenix dealership acquired as a $20 bill car dealerships acquired in October 2020. The Burns Harbor dealership acquired in December twenty twenty plus increased performance wages as a result of the increased units a month and profitability for the quarter all partially offset by overhead reductions. Take it in early 2020.
Sg&a, as a percentage of gross profit excluding lifo improved from 87.4% in Q4 2019 to 65.1% in 2820 reflecting improved operating Leverage.
Amortization of stock-based compensation decreased point six million dollars and depreciation and amortization increase point four million compared to Prior year that income afford quarter was six point five million dollars as compared to a net loss of point five million in 2019.
this
Million-dollar improvement with the net result of the jistis discussed increase in sales and gross profits relative to our overhead expenses.
Adjusted even done for the quarter was fifteen point five million dollars up 12.2 million or 370% adjusted ebitda margin increased by 560 basis points to 7.9% from 2.3% in 2019. Please please refer to our earnings release for a table which includes a Reconciliation of net income to adjust the data off.
I'm now going to provide a summary of our 2020 full year year-end Financial results.
Revenue for the year or eight hundred Seventeen Point 1 billion dollars 172 point two million or 26.7% versus 2019.
Revenue from the sale of recreational vehicles was 729.9 million dollars for the year 162.8 billion or 28.7%
Total RV unit sales excluding wholesale units were $10,020 of 2429 units or 32%
Profit excluding lifo adjustments was $178 billion dollars up 44.3 million versus 2019.
Gross margin excluding Michael Jackson increased between the two periods from 20.9% in 2019 to 21.9% primarily driven by growth across all lines of business.
Including Dante's life adjustments which had a net favorable swing got two point five million dollars compared to Prior year gross profit for the quarter was 179 million of 46 million or 35.4% versus 2019.
Excluding transaction costs stock-based compensation and depreciation and amortization sg&a for the air was a hundred Seventeen point seven million dollars up 14.2 age compared to Prior year.
Just increase is attributable to the overhead associated with The Villages dealership acquired August 2019 the new service center near used in which open in February 2020 took three dealerships acquired in May October and December twenty twenty plus increase performance wages as a result of the increase unit sales and profitability for the year all partially offset overhead reductions taken in 2020.
Sg&a is a percentage of gross profit improved from 76.9% in 2019 to 65.8% in 2020 reflecting improved operating number.
Amortization of stock-based compensation decreased 3.3 million dollars in depreciation and amortization increase point four million compared to Prior year.
Adjusted ebit the non-gaap financial measure was $59 for the year up $31 million or 111% compared to 2019. This was primarily driven by improved RV sales and gross profit relatives overhead expenses previously discussed adjusted even a margin as percentage of revenue for the year increased to 7.2% compared to 4.3% in 2019.
Now turning to the December 31st, you're in balance sheet in our financial position. We had cash-on-hand of sixty three point five million dollars and networking Capital 29.7 billion.
With cash 18.2 million lower than September 30th 2020 this decrease in cash includes the impact of cash used to invest in growth initiatives, including our two fourth-quarter at home as well as the fourth quarter payment of approximately $11 per accrued dividends on series a preferred stock.
At the end of 2020 we had a hundred sixteen point three million dollars in inventory consisting of ninety two point four million in new vehicles twenty-three million in pre-owned vehicles, and approximately 8.5 million and parts inventory plus lifo reserves of 3.6 million.
As of December 31st 2020 we had no borrowings under our $5 revolving credit facility 12.8 million of term loans outstanding and 105.5 million notes payable on our floor plans facility. We also had approximately 5.2 million outstanding on notes payable related to Acquisitions, 8.7 million a PPP loans outstanding and approximately six million dollar mortgage.
Thank you very much. And now I'd like to turn the call over to Bill Byrne a Bill. Thank you, Nick. Good morning. Everyone. We having continued to experience very strong demand for RVs in our inventory continues to be tight the combination of robust demand and tight inventory has had and continues to have a very positive impact on our margins.
Our inventory position improved modestly in Q4, but inventory has been relatively flat to slightly down so far this quarter our dealership inventory levels are well-behaved historical and desired levels OEM production levels continue to recover from the impact of the pandemic and we expect OEM production to continue to improve throughout calendar year 2021.
Recent commentary by one large OEM indicated that they do not believe their output will begin to outpace demand until late in calendar year 2021. They also, that it could be late in calendar year 2022 before dealer inventory levels normalize. We agree with this commentary given this we believe the significance supply-demand imbalance will continue for the next year and will allow us to maintain elevated margins throughout calendar year 2021 and likely into calendar year 20 20 20 20 28
as a result
Of the unprecedented demand for RVs combined with the tight inventory conditions are pending sale backlog is at a historical High pending sales are contracts for units that are often sold, but if not been delivered to the dealerships by the OEM our large pending sale backlog is a positive indicator for future unit sales and revenue.
Our growth pipeline remains very healthy and active and 20/20 we closed on the Acquisitions of Lazy Days RV of Phoenix Lazy Days RV of Elkhart and the Lazydays of Chicago and in addition, we commenced operations at Lazydays RV of Nashville and early January of this year. We are very excited about the markets. These Acquisitions will open 4 a.m. In Arizona, Indiana, Illinois, Michigan and Tennessee, and we believe they will generate significant future growth for Lazydays.
We normally don't come in on individual dealership profitability, but I would like to note that our national dealership was able to generate a very respectable profit in both January and February. This is noteworthy. This is a noteworthy with achievement because we first opened the doors and turned on the light on January 4th of this year. It is not typical for a Greenfield to be profitable in the first month or two of operation. It's high level of performance is a tribute to the strong team we have in our Nashville store and demonstrates the strength of the Lazydays brand when we enter a new market.
We recently announced the Acquisitions of Joe Harvey and not in the Knoxville Tennessee market and sprads RV in the rapidly-growing Reno Nevada Market. We expect to close on the Chilhowee RV transaction this month and the sprads RV transaction next quarter both Chilhowee and spreads will be outstanding additions to the Lazydays family of dealerships. We've also announced new dedicated Airstream dealerships in Minneapolis, Minnesota, Knoxville, Tennessee and Nashville, Tennessee. We are very excited to partner with a stream on these dedicated dealerships and believe they will help Lazydays and Airstream grow market share in these respective markets Lazydays an Airstream are both recognized as premium brands in the art industry. And we believe Airstream is a great fit with not only our growth strategy, but also our focus on providing a best-in-class customer experience and service Excellence. We look forward to working wage.
Mostly what they are streaming continuing to grow with them.
In addition to all the expansion. I just mentioned we're currently evaluating numerous new acquisition opportunities and new Greenfield dealership sites around the country and they expect to add more new stores in 2021 and 2022. It is a very busy and exciting time to be part of Lazydays.
As we grow we never lose our focus on improving our ability to provide a best-in-class customer experience and service Excellence. We have several new initiatives in place in our investing sizeable home and Financial Resources into people processes and technology that will help us deliver the best RV purchasing and service experience in the country to all of our wonderful customers.
In closing I would like to take a moment to thank the outstanding team at Lazydays 2020 was a very difficult and challenging year the year started with the worldwide pandemic that frightened all of us and had searching every corner of the organization for cost reductions that would allow us to survive in addition. We needed to quickly Implement new safety processes and systems that would keep our customer and employees safe at the time. It was all very scary and stressful then suddenly without warning demand took off and the year ended with our team pulling his hair out trying to figure out how to procure deliver and service more products than ever before all while maintaining a safe work environment throughout this rollercoaster of stress and emotion. The Lazydays may never lost focus never complained and always rose up to meet every challenge. I am proud honored and humbled to be part of such an amazing and special group wage.
Operator that's all for our prepared remarks. Please open the line for questions. Thank you. Ladies and gentlemen to ask a question, please press star. The number one Choice telephone keypad to withdraw your question, press the pound key. Please limit yourself to one question and one follow-up then rejoin the queue for any additional questions. Your first question comes from Steven Dyer with Craig Bellamy line is open thanks gud morning guys and congratulations on a good results. Um a couple of questions just around demand. It's obviously very strong. Are you seeing any differences regionally in demand and then you know, I guess as you as you look at the year q1 typically our seasonally strongest uh off or would you anticipate that will be the same this year or might they all look, you know, fairly similar given that it inventory should improve throughout the year.
Yeah, I think the couple things we your first question Steve demand has been strong everywhere and I wouldn't say anywhere how pays off at any location outpaced others in a significant way. There's always modest differences. One of the things I do think we're noticing in in currently is some of the northern dealership experience a little stronger demand than they normally would so so they're seasonality is is actually benefiting from from the strong demand wage. Um, and uh, and and I think given the additions we've made to our Network I think over time in this year included you're going to see how long our future quarters be more similar or stronger than they have been in the past relative to the first quarter. I can't say that they're going to be a strong as our q1, but but they're going to continue to get sick.
Because a lot of the dealerships we've added have been in.
In more summer related markets and and so I think you're going to see a much more balanced and that's part of our strategy. They have a much more balanced, you know, Revenue stream throughout the year and not as heavily focused on q1.
Yep, got it. And then a couple of questions around m&a you've done a decent amount. I think this last year. Would you anticipate the pace to be similar faster or slower Astra in 2021 and are the the multiples that you're seeing on these are they are they fairly similar to what you're used to or you know the boom kind of odd, I guess training multiples up as well. Yeah, I I think yeah, I think the page should be similar to what what we've been experiencing more recently that certainly our plan and in the pipeline wage is like that should be the case uhmm multiples aren't really or in line with what we've been paying historically but uh earnings have improved so so we're and and you know, so anyway, I think we're paying a little higher only because the bottom line is improved sort of paying the same similar multiple wage.
A higher earnings stream that makes it at it and then the last one for me and I'll turn it over your dedicated parts and service locations. I guess what you see in there. I know it's still early. Are you seeing you know business or sort of commensurate with with the the boom and interest and so forth. And is that a a concept you'd think about, you know doing again in different locations. We're will definitely consider doing that in other locations the challenge who we've had at our current location in Texas. We've got two challenges one very recent is is the revenue generation and and adding capacity in line with the revenue generation. It's taken us a little a little more work to generate Revenue to bring customers in customers. Typically we'll go back to the dealership where they bought the product so we've got to break that cycle and and we're we're since this is our first we're figuring out how to break that cycle and and it's working. It's just taking us probably little wage.
And then we thought to do that certainly the the storms that hit Texas because we are in Houston the storms that hit Texas this this winter did not help that effort at all to shut down not only just stayed but us for a while, but we're we're very pleased with their progress. This should be a great year for them in terms of making progress in and yes service centers are not important part of our future strategy. Okay. I'll turn it over Thanksgiving. Thanks Steve your next question confirm Fred whitening with wolf. Your line is open Monday. Hey guys, good morning. I was hoping we could dig into the inventory commentary in the release if we just look at what you guys had posted and that mid-January pre-announcement. You talked about ships were exceeding customer demand and inventory levels were growing but the language and the release today looked a little bit different. So can you talk about is that change in language do more to a pickup?
Retail are you seeing some of the deliveries slow what are sort of the puts and takes their I would?
They the they continue to fight different issues on the on the delivery side Fred and and we thought most of those were behind him. They aren't all beneath them. They're still I mean every day in the paper you read about different in different Industries supply chain difficulties. And and we thought we'd be past that by now. We aren't but on the on the other side of the equation demand is quite strong. You know, our our our sales are are quite strong. And as I noted in my remarks, we aren't able to recognize a lot of those sales jobs because the product is an unlocked but are pending sales continues to grow so that's part of the equation as well. And and we're just, you know, we're it's two months later and we're a little smaller than we were back then on on the last couple of quarters. It's a combination of both sides of that equation.
Super helpful and just the final one. I mean bill at a high level. Could you talk about how you think the Cadence for this year will look for you guys. I mean if we look at, you know the releases from last year retail really picked up in mid-april you guys are laughing. I think it's 55% unit growth and may I mean big big numbers and and what is sort of the natural house view from what would constitute and it was successful anniversary for some of those big numbers.
Yeah, we we our goal internally is to add the resources to to continue to grow off of those numbers. That's and and and I mean we don't disclose the same store sales, but we would like to grow same stores off of last year. Obviously, we're going to get growth out of the new dealerships we're adding but we're adding resources both on the sale side and on the service side to be able to to grow throughout throughout our our network over the next page here. And we're I think we've proven we can generate the leads. We can find the customers. We've got to be able to process them from the sales and service perspective is going to be the bigger challenge in 2021.
Perfect. Thanks guys.
Your next question comes from David cannon with management. Your line is open. Good morning. Gentlemen. Congratulations. Nice, Florida Welcome first question in regards to mapping difficult from last year previous month. So all you know, help me to get a little bit of perspective on it. So you're you're you're basically saying that you think that you can execution year with favorable margin backdrop. I recall once things kind of opened up in May and you said you were doing about seven days million a month, but do you think that you would be able to grow the bottom line? You're over a year if the sales are up dead?
or has something changed within your
Cost structure. Would you get leverage on that incremental growth? Yeah, I think then nothing changed in our cost structure Dave. In fact, we're getting more leverage out of our cost structure as we had dealerships and I think Nick gave some commentary on that in terms of you know, we we can't give specifics but you heard me say that we think the strong margin environment will remain through the through the end of this year and if we can add and this is the challenge if we can add sales and service resources to the organization, which we're trying to aggressively to add now do we think we have plenty of leads to be able to grow same stores off of last year's numbers and obviously the stores provide additional money. That's that's our goal. But there are some challenges that come with that goal. Okay understood and then on the subject of m&a, could you quantify dead?
For us in terms of on m&a already done in 2020 and 2021. What is the Admiral run-rate long terms of Revenue almost new locations and then it was a very large transaction that that was consummated by your competitor or Thursday. I believe it was it was twelve dealerships based out of North Carolina. Could you give a little color on that? And did you participate you know, or do not kind of how you looked at that cuz it was a fairly large one that would move the needle like to just get your view on it. Yeah, so we don't disclose, you know any run-rate summer break out, you know individual dealerships days, so I can't really comment on that and and we don't comment on on Acquisitions or negotiations, you know, all I can say Thursday.
Is we're very disciplined in our approach to Acquisitions in terms of the types of dealership locations of dealerships and the price that we're willing to pay off not going to overpay just to to get dealerships we can we can we can enter there's a lot of different ways to enter markets and it doesn't make sense for us to overpack for it to be ocean. Okay, so I take that as an implication that they were asking too much in your opinion. We're not making any comment on any particular negotiation. We're just commenting on our approach to do every day. Okay. Good luck. Appreciate the call. Thank you. Thank you.
Again to ask a question, please. Press star at the number one on your telephone keypad. Your next question comes from Joseph Raymond. James line is open Monday. Great. Thanks. He got good morning. This is a couple of quick ones. I guess first. Could you talk about inventory between new and used and I'm curious if you're using a story is even tighter than what you're seeing on and off.
Yeah, I think it's not a comment on that. We would always like to have more used inventory and you can see that our our growth rate and use relative to talk to do have been a little bit less. But you know, we're we're actively working to Source product. And and in fact, we've we've seen our our used inventory levels relative to a year ago comparisons are actually more favorable than what we're seeing on the news side in terms of the decline. We both are down. The new inventories are down more than used you off a couple additional comments on the used Side. We've seen our trade ratio come up a little bit which is always beneficial towards towards used inventory and we are buyers are doing a great job of fine.
Used inventory out there. So we're it's a little bit better situation on the used side. We still don't have enough. We'd love to have a lot more used but this whole situation and on the new side at least over the last couple of months. Is it older product on the used side or or is it later model? It's it's it's probably more weight loss model. We we only will buy stuff that you know, ten years old or younger. I would say the mix is similar to what we've what we've historically seen and we're still counting our standards as to what we do keep on our lot and we we wholesale units that are trade-in and just aren't suitable for being sold through laziness.
Got it. Okay, and secondly in terms of the potential changes that are being discussed on tax policy put that sperm or dealer to look the cell. Is that coming up at all in your conversation when you talk about the acquisition it's hard to tell what's going on in the back of their minds Joe. But but you know, they're yeah, I do. I honestly don't know it is in front and center in terms of driving decision-making, but it's perhaps it's in the back of mine, but we really don't know. Okay, great. Thank you.
Dan there are no further questions. Can I put this Hamilton the call back over to the morning for closing remarks? Great. Well, thanks everyone for joining us this quarter. We appreciate all your support and and we look forward to speaking with you again next quarter. Have a great have a great week. Thanks. Everyone does conclude today's conference call you may now disconnect.
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