Q1 2022 Lazydays Holdings Inc Earnings Call
And our preliminary first quarter results, which were released on April 20th of 2022, we indicated an expectation of reporting revenue of.
$376 million.
Adjusted EBITDA of $44 $8 million.
And net income of $27 5 million.
Today, we are announcing revenue of $376 $2 million adjusted.
EBITDA of $44 $8 million and net income of $28 $3 million each in line with our earlier expressed expectations.
Nick Thomas shot will provide more detail on our first quarter results a bit later in the call.
During the first quarter period, we were pleased with the performance of the business with most of our dealerships delivering retail unit service and.
In parts revenue and gross profit levels exceeding the same period a year ago.
Demand continued to be robust and our retail units sold were up over the same period a year ago.
We were pleased with the mix of new and pre owned unit sales, we generated supported by our strategy to assure that we can offer both new products and.
And pre owned products purchased on the open market or accepted in trade associated with a new unit sale.
Average unit sales price or ESP.
Of approximately $89000 continued to be strong in the period as customers confirmed the willingness to pay for the value associated with the RV lifestyle.
Our prospect engagement continued to be excellent in Q1.
We are pleased with our ability to meet our future customers online through our innovative use of data and analytics via the phone or in person with a greeting and a handshake in one of our dealerships.
During the Q1 period, we saw improvement in our inventory position as we along with our OEM partners work to get our lots stocked for the spring selling season.
Although the industry continues to work to restore motorized inventory levels. Our total product inventory has made great progress towards full recovery.
As we all read in the various industry outlets. The industry is working through a process of normalization.
Normalization of inventory and scarcity and normalization of demand as other forms of recreational travel recover.
The industry is also talked quite a bit about pricing and margins as the market normalizes.
With regard to inventory and scarcity.
We are focused on prudently managing our new and pre owned inventory levels.
As for pricing and margins, we are fortunate to offer through our OEM relationships, both high value and premium brands models and floor plans, which we believe result in superior consumer preference and willingness to pay.
We're also responding to the normalization of the industry by making adjustments in our marketing efforts in terms of when and how we engage with prospective RV owners and help them along with our RV community to see the opportunities associated with the lifestyle.
We are very focused on opportunistically, improving lazy day share of voice and fully utilizing our data and analytics to drive our digital engagement strategy to more effectively target markets and market segments.
Shifting to our strategic investments and efforts during Q1, we did repurchased $19 $2 million of lazy days' common stock.
Consistent with our previously announced share repurchase program.
Our share repurchases over the last 12 months totaled $31 $2 million.
We also continue to focus on growth with the aforementioned Greenfield dealership developments in surprise, Arizona, Wilmington, Ohio Council Bluffs, Iowa in Fort Pierce, Florida, and subsequent to the close of Q1, the acquisition of Daves clear more RV.
We continue to evaluate new greenfield dealership locations and acquisition opportunities.
We see promising an actionable opportunities to enter new markets and we will continue to share our plans as they mature.
As previously disclosed on March 9th of 2022, the company received a non binding unsolicited proposal from B Riley to acquire the company for $25 per share.
The company evaluated the offer and ultimately rejected it on March 14th of 2022.
I can assure all shareholders that the company was professionally advised as to its governance obligations its disclosure obligations and in the process of its evaluation of the offer.
The ultimate response to the offer was unanimous with all directors voting to reject the overture.
I would like to offer an update on the CEO search that is ongoing under the direction of the board.
The search continues with the assistance of <unk> search firm.
The board has evaluated numerous well qualified executives and has had advanced interactions with a promising subset of candidates.
These interactions continue although at the present time, we have no announcements to make.
The board and myself personally are appreciative of the commitment and performance of the executive team.
Please see today's partners as we work together every day to move the business forward and make new customers for life.
I will now turn the call over to Nick Thomas Schott, who will provide a more complete overview of the first quarter of 2022 financial results.
Thank you Bob Please note that unless stated otherwise with 2021st quarter results comparisons are versus the same three month period ended March 31 2021.
Revenues for the first quarter was $376 $2 million.
$105 2 million or <unk> 38, 8% from 2021.
Revenue for the quarter from the sale of recreational vehicles, our RV was $345 million.
$95 6 million or 39%.
Total RV unit sales, excluding wholesale units were 3748 up.
551 units or 17, 2%.
Q1 revenue from the sale of new recreational vehicles was $217 $4 million.
Up $50 million or 29, 9%.
New RV unit sales for 2275, 145 units or six 8%.
The average selling price of new Rpms for the quarter was $95600 up 17200 or 21, 9%.
Q1 revenue from the sale of pre owned RV was $123 million.
Up $45 5 million or 58, 8%.
Pre owned RV units sold excluding wholesale units were 1478 up 460 units or 37, 9%.
The average selling price of pre owned recreational vehicles was $78800.
$11000 or 16, 2% versus the first quarter of 2021.
Revenues in our other channels consisted of sales of parts accessories and related service.
And insurance or F&I revenue as well as campground and miscellaneous revenue.
In total revenue from these other lines of business was $35 $7 million.
Up $9 6 million or <unk> 36, 7% compared to 2021.
The increase was driven by an F&I revenue increase of $7 million or <unk> 48, 1% to $21 6 million and our parts and service revenue increase of $2 4 billion or 23, 4% $12 7 million Q.
Q1 gross profit excluding noncash last in first out or LIFO adjustments was $101 6 million up $35 6 million versus 2021.
Gross margin, excluding LIFO adjustments increased between the two periods to 27% compared to 24, 4% in 2021 with.
With the change driven by increases in units sold and average selling price, including noncash LIFO adjustments, which had a net unfavorable swing between periods of $6 million compared to prior year gross profit for the quarter was $99 2 million up $35 1 million or 54, 7%.
Okay.
Excluding transaction costs stock based compensation and depreciation and amortization.
G&A for the quarter was $55 9 million up.
$18 2 million compared to prior year.
This increase is attributable to overhead associated with the Maryville, Tennessee dealership acquired in March 2021 overhead associated with the Portland, Oregon, and tumor, Washington, and Milwaukee, Wisconsin dealerships acquired in August 2021, and.
And overhead associated with our Monticello, Minnesota dealership, which we opened in March 2022.
Yes.
SG&A as a percentage of gross profit ex LIFO decreased from 58, 8% in Q1 2021 to 56, 4% in 2022.
Improved gross profit and margins, partially offset by increased overhead from the acquisitions I mentioned above amortization of stock based compensation increased $2 million and depreciation and amortization increased <unk> 9 million compared to prior year.
Net income for the first quarter was $28 3 million as compared to $8 8 million in 2021.
This was driven by improved RV sales and gross profit relative to overhead expenses previously discussed.
Adjusted EBITDA for the quarter was $44 8 million up $16 9 million or 69%. This was record quarterly EBITDA performance by lazy days.
Adjusted EBITDA margin increased by 160 basis points to 11, 9% from 10, 3% in 2021.
Please refer to our earnings release for a table, which includes a reconciliation of net income to adjusted EBITDA.
Now turning to the March 31 balance sheet, and our financial position, we had cash on hand of $89 6 million and net working capital of $112 4 million with.
With cash $8 6 million lower than December 31, 2021.
This decrease includes the impact of cash used in operating activities of $17 4 million in cash pay for purchases of property and equipment and acquisitions was $7 9 million offset by cash provided by financing activities of $16 8 million.
Operating cash flow includes the negative impact of a $41 4 million increase in inventory as RV inventory continues to recover from depleted levels.
The cash impact of this inventory increase is offset by a $38 1 million more planned cash inflow reflected in cash provided by financing activities.
Cash provided by financing activities also include cash outflows of $19 $2 million for the repurchase of $1 million 86797 shares of common stock at an average price of approximately $17 64.
As of March 31, 2022, we had $284 million in inventory consisting of $217 3 million in new vehicles.
$9 2 million in pre owned vehicles, approximately $8 4 million in parts inventory and LIFO reserves of $10 9 million.
As of March 31, 2022, we had no borrowings under our $25 million revolving credit facility $9 4 million of term loans outstanding.
$230 9 million in gross notes payable on our floor plan facility.
Also had approximately 8 million outstanding on notes payable related to acquisitions.
$2 million of PPP loans outstanding.
Mortgage on property of approximately $5 6 million.
Thank you now I would like to turn the call over to Bob B Vincenzi.
Thanks, Nick.
As we look ahead into our second quarter and beyond.
We believe that we are well positioned to address the opportunities and challenges that the external environment may present.
We enjoy excellent dealership locations are strong brand identity.
Superior service capabilities and relationships with Premier Oems to provide outstanding products to increasingly well educated consumers.
We also have built the business with an agile operating model in mind.
And an innovative approach to using data and analytics to maximize our connection with prospective customers.
In closing.
As I said when we ended the Q4 2021 and year end conference call.
We will continue to allocate capital to various investments that support the long term growth of lazy days' shareholder value.
During the Q1 period and subsequently.
We have delivered on that objective with greenfield announcements and an additional acquisition.
While at the same time executing on our share buyback program.
We will continue to balance investments in our core business to generate future cash flow growth with opportunities to invest through share buybacks.
This balance will continue to be the focus of leadership team and the board.
We will now open up the call for questions.
At this time I would like to remind everyone.
Ask a question please press <unk>.
And the number one our near term focus on pack.
Your first question comes from Steve Dyer with Craig Hallum.
Your line.
Thank you. Good morning, just I know you don't give a lot in the way of guidance, but looking forward I guess directionally could you kind of help us.
Going through how youre thinking about sort of both same store sales year over year as well as maybe the pace of acquisitions, we've seen vis vis recent years guess, just really trying to get some sense as to what you see the core business of stores doing.
On a go forward basis.
Sure Steve Thanks, very much for the question, Nick do you want to handle the.
A question and then I'll make a couple of comments on Steve's question about acquisitions going forward.
Yes.
Yes.
As Bob mentioned, we are still seeing.
Strong inbound interest.
In Rvs I would say sequentially it's.
Leveling off the tapering.
In particular on the <unk> side, where we're getting closer to normal levels of inventory.
<unk> side, though there are still some scarcity there so year on year, whereas we're still seeing nice margins.
Improved margins sequentially.
Starting to taper a little bit, but it's hard to tell because the first quarter margins are typically a little bit lower than they are in the fourth quarter.
With regards to acquisitions by Bob had mentioned earlier in his comments that.
We're evaluating what that right paces for us and I'll, let him add some color around what we're working on.
Thanks, Nick.
Steve.
I think it's I think it's important to.
To note the focus that we have on growth and of course, we have two primary mechanisms.
To grow the business. In addition to our organic store growth one of those is greenfields and of course the second is.
Acquisitions.
Greenfields as you know, we exclusively control subject to the availability of Av.
Real estate.
Appropriate markets for us to enter and the availability of brands.
So we have pretty good visibility on our greenfield growth plan, although I'm not I'm not prepared to share more detail beyond what we have commented on in this call at this time at least with respect to our acquisition plans those are less controllable less controllable than Greenfield of course, because they are counterparties to deal with.
And we are we're actively.
Engaged in evaluating a set of alternatives, but I really don't have the ability to confidently express to you.
A number and a pacing.
<unk> debt.
That would be comfortable and confident in delivering against so I hope you can appreciate the precision of of that element of our growth plan.
Yes.
That makes sense helpful. You've talked a little bit about inventory I mean should we sort of read into it.
<unk>.
It's pretty much back to where you want it sounds like certainly on the total side, but.
Just understanding kind of trying to manage the supply and demand aspect I mean would you say youre relatively fully inventoried for what you see from a demand perspective.
Yeah. Thanks, Nick do you want to pick that up.
So we don't target and absolute inventory level, we target turns on our sell through and.
On the towable side, particularly on the lower price points or where we want to be in terms of inventory. There are some some of the higher and higher price point tell bowls that.
Would like to have a bit more of and then on the motorized depth.
Definitely could.
Take additional stock.
Historically.
We've said that we're $60 40 roughly.
<unk> total in motorized.
As we've been adding locations, that's getting closer to around two thirds one third.
And then as you know the industries around 90, 10, so we do skew towards motorized.
And.
The pros and cons of it are we would prefer more product, but while there is scarcity.
We believe we will continue to see the same kinds of margins we've been seeing.
Got it okay. That's it for me thank you.
Thank you Steve.
Your next question comes from Mike Swartz with <unk> Securities.
Your line is open.
Great Hello, Mike.
Hey, how are you good morning.
Just maybe a question maybe more clarification for Nick just in terms of the vehicle margins.
During the quarter I understand there is seasonality that can be impacted by mix, but can you just talk about maybe the exit rate on those margins relative to what you reported in the quarter at around I think 20%.
Yeah.
Okay.
I think we are pretty consistent across the quarter I've been kind of watching them associated with the asps going up so much and the.
With the cost increases has been looking at per vehicle grosses and.
Werent there relatively flat over the course of the quarter.
Okay.
That's helpful and then just I guess from the.
From the standpoint of acquisitions and new store additions I understand you can't really give us the timing or kind of scope scale of that but can you just talk about what we should think about or how should we think about I guess your ability to acquire from a bandwidth standpoint, whether that's financial whether that's just.
Management integration of these is it four to six a year or is it two to three I'm just trying to get a sense of the general scale scope, where you are today.
Yes, Mike I wouldn't I wouldn't want to offer any more guidance on that than we have offered previously although although I will I will say.
That.
Yeah.
The company the company has.
The cash capacity.
To execute the growth plan that we are that we are internally planning and implementing of course as you know we're we're securing.
Greenfield.
Locations, we tend to secure that real estate and.
Build the improvement.
And then ultimately.
Implement at least buyback structure with a financial partner.
Which puts us in a position of needing to finance.
That process during the construction period, ultimately, bringing the cash back into the business.
We feel like we have a.
An appropriate level of internal resource allocated to doing both greenfield evaluate your greenfield implementation and acquisition evaluation and acquisition implementation.
So beyond that I really wouldn't have any other comment to offer beyond what we guided previously.
Fair enough. Thanks, a lot.
Yes, thanks for the question I appreciate it.
This question comes from Craig Kennison Baird.
Your line is open.
Hey, good morning, Thank you for taking.
Hey, good morning, Thanks for taking my question.
So I'm curious where in a rising rate environment clearly fed policy.
Is now aimed at kind of moderating demand so that we can meet supply at a lower price again.
I'm curious your businesses sort of on the front lines of that have you seen any change in your consumer behavior as rates rise.
Great question, Greg Nick would you like to address that one.
Yes in fact.
One of the analysts on this call I think I can't recall, who it was had done a survey and us as well as other dealers that were surveyed still haven't seen interest rates or.
Gas prices, having an impact on demand, yet I'm, not saying that won't continue but.
But so far haven't really seen it.
Have an impact.
There's some data out there that the amount of miles that an RV is actually driven.
Arent really substantial amount relative to their total.
Cost of ownership that gas prices can be a pitch and a lot of consumers, it's really how big the payment is.
It's really a factor rather than the sticker price for the units or the interest rates on their loan, but so far we haven't seen any impact.
Impact.
So very helpful comment I've been curious about that point, you make about the monthly payment because.
I would think alike for like unit is significantly more expensive today. So the monthly payment has gone up because your asps.
Has gone up on a on a unit at a typical unit so to the extent you could see inflation, maybe drop and you don't see so much pressure on asps.
You think if you're a consumer can absorb some of these higher rates, because it's better than actually higher prices.
Yes, well I.
I think we mentioned in our comments that we're seeing our average selling prices going up.
The other thing I'd point out is.
We have a whole array of products at various price points and so it.
You would almost have to.
Evaluate each person that walks into the door in terms of what they would have bought in the previous pricing environment versus today, but.
We can put anybody in a unit from anything from $10 $20 up to one hundreds of thousands of dollars. So it.
It's hard to tell whether people are being selective.
Whether they're going up or down because of <unk>.
Differences in the relative prices of products.
Yeah.
Got it hey, thank you so much.
Thank you Craig.
There are no further questions at this time, Mr. Kevin Kimzey, I turn the call over to you.
Great. Thank you Stephanie.
I'd like to thank everybody for participating in our conference call.
We certainly look forward to updating you further on our next call. When we report our second quarter results. Thank you all for joining us.
Thank you. This concludes today's conference call you may now disconnect.
[music].
Yeah.