Q3 2021 Lmp Automotive Holdings Inc Earnings Call

Greetings and welcome to L. M. P. Automotive Holdings, Inc. Third quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

I know what you require operator assistance during the conference. Please press Star zero on your telephone keypad as a reminder, this conference is being recorded.

This call may contain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 21 E of the Securities Exchange Act of 1934, each as amended such.

Such statements include but are not limited to any statements relating to our expectations beliefs projections future plans and strategies anticipated events or trends and similar matters that are not historical facts.

These statements may be preceded by followed by or include the words aim anticipate believe estimate expect forecast intend likely outlook plan potential project projection seek can could nee should would well the negatives thereof in other words.

In terms of similar meaning.

Forward looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect our business operating results financial condition and stock value.

Factors that could cause actual results to differ materially from those currently anticipated include our dependence on external sources for the financing of our operations our ability to effectively execute our business plan, our ability to maintain and grow our reputation and to achieve and maintain the market acceptance of our services and platform our ability to manage the growth of.

Our operations over time, our ability to maintain adequate protection of our intellectual property and to avoid a violation of the intellectual property rights of others, our ability to maintain relationships with existing customers and automobile suppliers and develop relationships.

Our ability to compete and succeed in a highly competitive and evolving industry as well as other risks described in our SEC filings.

There is no assurance that any forward looking statements will materialize you are cautioned not to place undue reliance on forward looking statements, which reflect expectations only as of the state.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in our expectations or any changes in events conditions or circumstances on which any such statement is based except as required by law.

It is now my pleasure to introduce your host Sam topic as Chief Executive Officer. Please go ahead Sir.

Thank you operator, and good afternoon, everyone. Thanks for joining our third quarter earnings call.

With me on the call are Richard Allen, our Chief operating Officer, and Robert Mellor Flores, Our Chief Financial Officer.

I am pleased to announce our record third quarter results, which exceeded our internal outlook.

Our revenue was 141 4 million.

Generating 27 points.

$6 million of gross profits.

5%.

Gross profit margins increased 6% quarter over quarter.

Adjusted EBITDA was $11 9 million for the quarter.

Or $1 18 per share.

Seven 2% increase quarter over quarter.

We ended the quarter with $29 7 million in cash and $50 9 million and adjusted shareholder equity.

Our third quarter annualized run rates, excluding the acquisition we closed this quarter.

Which we expect to be immediately accretive to income this quarter.

Our $565 million in revenue and $47 6 million and adjusted EBITDA.

I am now going to open up the call for questions and answers.

Operator.

Thank you we will now be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Your first question comes from Mitchell far. Please go ahead.

Hello, Sam.

Hum.

You hear me.

I hear Ya Hi, Mitch.

Hey, How're you doing.

I have a question relative to <unk>.

I understand you have new sales in terms of car dealers new sales is not the greatest.

<unk> share of the revenue, but it's more than two.

Used car sales versus new cars, and then maintenance.

I understand as you acquire new dealerships over their country youre going to or certain areas acquire new clients that are going to purchase cars, new cars as well as used cars locally.

Their dealers, what they're used to for years, but.

When.

People are purchasing cars online and they're shipped to a different location.

You're losing the future.

Hum.

Business.

From that client because it can be in a different state et cetera. So.

How is that working in terms of.

The revenue.

Oh maintenance, losing people, but gaming pupil.

If you understand.

Thank you Mitch.

Same thing that what you're asking are we haven't seen an effect that we see.

All segments are groups growing.

So far.

Oh.

We haven't seen it.

Shifts in the maintenance category as far as maintenance I believe.

That's hitting the records as well.

Actually so the water kind of washes out and are you gaining new clients.

Acquisitions, where you just may not be losing us money with.

Sales out of the state, where you have to ship them out.

That would be the case, yes.

Okay.

Thank you thank you Matt.

Yeah.

Okay.

Next question comes from Stephanie more with truest.

Hi, good afternoon.

Hi, Stephanie.

Good afternoon.

Great I was hoping you could talk a little bit about your thoughts maybe some conversations you're having with the Oems there are others about when you think that you'll start to see what the when the some of the supply demand had a dynamic next maybe normalize or if they ever normalized and how you're kind of <unk>.

Aching in those assumptions in your in your M&A targets and expectations going forward.

Thank you Stephanie as far as the Oems.

So you haven't been given any indications on steady supply, it's sporadic Ah well you read it in the news it's public information.

Nonetheless.

Hard to predict.

As far as our expectations for.

The supply fulfilling the current demand.

We see for the foreseeable future is that.

Uh huh.

Not being suppressed for the foreseeable future. So we see.

The steady but may be choppy on a monthly basis, but on a quarterly.

Slash a semiannual basis.

Oh, just the demand outstripping the supply for the foreseeable future, which would entail.

Same if not better financial results for the foreseeable future.

That makes sense doesn't it.

Absolutely I appreciate it I.

I guess and then touching a little bit on the on the M&A opportunity going forward are you finding it.

It's been a I feel like thing certainly an increase in deal this year versus prior years, which makes sense given the environment and obviously the large opportunity do you find that it's being it's more competitive to go after.

You know select select opportunities there select groups or do you feel that the pie still remains pretty large that it's really just as attractive as it was before.

Before thank you.

Thank you that's a great question.

We see it.

As the probably being very large lease we continue to get inquiries and our pipeline is growing.

Growing.

The beauty of what we're doing although the larger deals that are easier to do than the smaller ones, but the smaller ones are you.

Capture for better prices I E lower multiples. So it's just more work, but very accretive and that's what we've been doing so far.

So.

Basically tucking in the small and medium size acquisitions and aggregating them.

<unk>.

It gives us a great cost basis.

From a multiple point of view.

Nonetheless, the larger deals that easier, but we see both existing it's very busy out there.

Yeah.

And it has not slowed down.

Great. Thank you so much I appreciate it.

Once again.

Once again, if you would like to ask a question. Please press star one on your telephone keypad your.

Your next question comes from Chris <unk>. Please go ahead.

Hey, good afternoon, Sam I just have a question regarding how would the company attract new investors.

So that you know we could be moving.

The stock price up.

That's a difficult one to answer Chris Oh, let's see.

As we execute our business plan and grew.

Grow to scale.

We're expecting.

Other analysts they'll pick up coverage given the size.

And the sector there are not too many analysts in this sector.

Unfortunately, that's all.

Lucrative sectors. So hopefully just continue to execute as you see.

And things will gravitate to.

In the right direction.

So I don't know how the.

The analysts come about but.

Alright.

But do you guys have like a plan in place to contact these analysts or how how would they come about.

Yes, we do contact analysts and.

There are not many in this sector when a very large sector, where our peers are all in the fortune 500.

So oh I believes.

When we reach certain thresholds, which were approaching if we close all these deals.

Then Uh huh.

It's likely to pick up coverage.

Awesome. Thank you so much for your pump that's.

That's awesome.

Thank you Chris.

Next question Josh Cohen.

Okay.

Hey, congratulations on a great quarter really excited to see profitability.

And wanted to get a sense of.

How things are shaping up with the refinancing and weather.

Dividend and buyback are still on the table.

And what kind of timing expectation if any can be communicated at this point.

Hi, Josh and thank you let me give you some color on that we're currently in a recapitalization phase where for refinancing our current term loan.

Which is X coding flooring is approximately nine only $96 million by the way.

Of which.

We have $30 million in cash as we stand practically.

That said, we're looking for a flexible structure to accommodate.

Not only the deals under contract, but our future pipeline deals as we just mentioned the pipeline is increasing its very exciting.

Uh huh.

And Oh.

That structure, we're aiming to accommodate not only the future pipeline deals existing deals but also.

Less prohibitive, where we can where the company can buy back stock and issued dividends.

And as our peer groups too because that attracts institutional investors and create shareholder values.

Liquidity.

As far as timing is concerned we're aiming to close some of the acquisitions this quarter.

It may be tough.

And some if not all may be delayed into January or February or in the second quarter, given the frequency of acquisitions in our sector.

Burdening workflow that certain manufacturers and vendors.

Along with the upcoming holiday so.

Aiming to close this quarter if that doesn't happen.

It looks as though maybe in the second quarter.

But things are progressing well.

Confidence in our strategy.

Thank you and congrats again really great numbers right.

There are no further questions I would like to turn the floor over to Sam for closing remarks.

Thank you operator, and thank you everybody for joining us.

Have a great afternoon.

This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

Yeah.

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