Q4 2024 Lazydays Holdings Inc Earnings Call
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Greetings and welcome to the Lazyday RV Holdings 2024 earnings release conference call. At this time, all participants are on a listen only mode.
Speaker Change: If anyone requires operator assistance during the conference, please press star-zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Needles, Chief Financial Officer. Mr. Needles, please go ahead.
Jeff Needles: Thank you operator, good morning everyone, and welcome to Lazydays 4th quarter and fiscal 2024 earnings conference call.
Speaker Change: Before we begin, I would like to remind everyone that we will be discussing for looking information.
Speaker Change: including potential future financial performance, which is subject to risks, uncertainties, and assumptions that could cause actual results to differ, materially from such forward-looking statements and information.
Speaker Change: Such risks, uncertainties, assumptions, and other factors identified in our earnings release, and other periodic filings with the SEC, as well as on the Investor Relations section of our website.
Speaker Change: Accordingly, Ford-looking statement should be relied upon as prediction of actual results and any or all of our Ford-looking statements may prove to be inaccurate.
Speaker Change: We can make no guarantees about future performance and we undertake no obligation to update or revise our forward-looking statements.
On this call, we will discuss certain non-GAAP financial measures.
Speaker Change: Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable tap measures.
Speaker Change: Today's call is being webcast live, and we'll also be archived on our website for future listening.
Speaker Change: Before we begin, please note that we will not be fielding questions following the conclusion of prepared remarks.
Speaker Change: We encourage you to refer to our earnings release and SEC violence for further information.
Ron Fleming: With that, I'll turn the call over to Ron Fleming, our internal and term CEO who is joined by Amber Dillard, our chief operating officer.
Rob.
Ron Fleming: Thank you, Jeff. Good morning, everyone, and thank you for joining us today. 2024 was a year of significant transformation for Lazydays.
Ron Fleming: This began in the third quarter with our leadership transition accelerated in the fourth quarter with a series of transactions designed to strengthen our balance sheet and streamline our operational footprint and has continued into 2025 as we execute our turnaround plan to reshape Lazydays for the future.
Ron Fleming: While the fourth quarter and full year 2024 were undoubtedly challenging, we believe the steps we have taken and continue to take will create a more durable, agile, and higher performing company and ultimately drive long-term shareholder values.
Ron Fleming: Reflecting on our progress today, in the fourth quarter we completed the comprehensive recapitalization inclusive of a $30 million common equity pipe from two of our investors.
Ron Fleming: and Exchange of Aller Outstanding Convertible Preferred Stock for Common Stock, and an amendment of our Credit Facility, led by M&T Bank.
Ron Fleming: These transactions added immediate cash to our balance sheet, enhanced our capital structure through the elimination of a preferred stock liquidation preference and annual preferred dividend requirements, and reduced our debt while providing financial covenant flexibility.
Ron Fleming: During the quarter, we also began the process of right-sizing our dealership portfolio to further deliver our balance sheet, simplify our operational footprint, and improve the underlining earnings power to the business.
Ron Fleming: We completed a sale of one dealership asset for $8 million and agreed to sell seven additional dealerships to certain subsidiaries of Camping World for $65.5 million, $10 million of which was comprised of a non-refundable deposit.
Ron Fleming: We completed the sale of five dealerships to Camping World in February and March 2025, with a buyer electing not to close on the remaining two, our locations in Portland, Oregon and Council Bluffs, Iowa.
We remain well equipped to continue operating both stores.
Ron Fleming: Importantly, due to the way in which our transaction with Camping World was structured
Ron Fleming: We retained the $10 million deposit and have exercised our remedy for their refusal to close on these two stores which relieves us of any obligation to issue any common stock to the buyer and avoids deluding our stockholders.
Ron Fleming: Taking together, these actions fortified our financial foundation and provided us with a more focused dealership footprint, allowing us to better navigate the evolving RV landscape to the benefit of our shareholders and other stakeholders.
Ron Fleming: As we look ahead, we remain laser focused on ensuring we have the right dealership footprint and maximizing the operational performance of the stores within that footprint.
Ron Fleming: To that end, this morning we announced that we have signed a letter of intent with General RV Center to divest three of our locations, our Fort Pierce, Florida, Longmont, Colorado and Mesa, Arizona stores.
Ron Fleming: If completed, this transaction will add meaningful cash to our balance sheet, reduce our indebtedness, and decrease the geographical redundancy in our footprint.
Ron Fleming: The letter of intent is generally non-binding, with the exception of a 75-day exclusivity provision for these three stores.
Ron Fleming: With respect to maximizing the operational performance of the stores within our footprint, as Amber will discuss, we have made encouraging initial progress in this respect.
Speaker Change: and we believe that continuing to improve our operations will unlock significant shareholder value in the quarters to come.
Speaker Change: In closing, I want to thank our employees as well as our shareholders, lenders, customers and OEM partners for their supportive lazy days.
Speaker Change: As we continue to execute our turnaround plan, we are committed to acting in the best interest of all of our stakeholders and upholding Lazydays' harder and reputation for delivering the best RV sales and service experience in the industry.
Speaker Change: While it remains much work to be done, we are confident Lazydays' best days are ahead, and we look forward to continuing to forge this new promising future for the business together.
Speaker Change: With that, I'll turn the call over to Amber to discuss our operational performance in more detail.
Amber: Thanks, Ron, and good morning, everyone. On a same-store basis, we saw a decline in both new and used unit volume relative to the third quarter of 2024, partially offset by significantly improved growth profit per unit fold, reflecting the benefits of the inventory actions we took throughout 2024.
Amber: Offsetting these improvements in the fourth quarter were inventory adjustments of pre-owned vehicles of 3 million and LIFO adjustments of 3.8 million.
Amber: Our total gross margin was 19% in the fourth quarter compared to 21% in the third quarter of 2024. Excluding the impacts of the inventory adjustments and LIFO adjustments, our total gross margin was 23% in the fourth quarter compared to 21% in the third quarter.
Amber: We continue to see improvement in FNI, where our FNI revenue was over $6,000 per unit at 3% relative to the third quarter of 2024. Notably, our finance penetration in the fourth quarter remained strong at approximately 73%.
Amber: Our focus on maintaining a healthy inventory position while increasing our ability to procure more use units directly from consumers, continue during the quarter.
Amber: with trade-ins on vehicle sales in 2024 and thus far in 2025 coming in significantly lower than our historical averages as consumer confidence and macroeconomic trends remain uncertain.
Amber: As of today, our new inventory is comprised of 75% Model Year 2025 units and 25% prior Model Year units.
Amber: Over 77% of our new inventory is towable product, up from 73% at the same time last year, demonstrating current consumer demand towards more affordable inventory options, targeting first-time buyers and payment-conscious customers.
Amber: Our motorized inventory decreased 44% from the prior year's period, given aggressive inventory management and store divestitures, leaving the company poised to capitalize on a healthier inventory position as we head into model your change and spring selling season.
Amber: We continue to evaluate our product mix on a store by store basis. We're finding product classes, brands, and stocking levels based on market demand and competitive landscapes based at the local level.
Amber: In 2024, we launched our consignment program, which continues to generate healthy growth profit while giving consumers an option to recover some negative equity. Indeed, 76% of the units acquired from customers during the fourth quarter were consignment versus an outright purchase.
Amber: From a macro perspective, our fourth quarter and full year, 2024 results were certainly negatively impacted by economic and other demand headwinds, as well as hurricane season in our Southeast location.
Amber: That said, we are optimistic that we are near the bottom of this prolonged market down the cycle and we firmly believe future retail demand for RVs over the longer term will return to at or near historical levels as consumers continue to value the benefits offered by the RV lifestyle.
Amber: Moreover, as Ron mentioned, we see a tremendous opportunity to continue to improve the operational performance of the stores within our footprint without relying solely on market stabilization.
Amber: We see substantial opportunities for improvement across all functional areas of our dealership.
Amber: including inventory, sales, service, FNI, and marketing, so that we are operating as efficiently and effectively as possible, and serving as a true partner to our customers and OEMs across the full RV ownership value chain.
Amber: We are working closely with our general managers to identify additional waves to increase volume, improve that's an eye, and drive incremental service revenue. And we look forward to providing additional updates on these initiatives in future quarters. With that, I'll turn the call back over to Jeff.
Jeff Needles: Thanks, Amber. Turning to the fourth quarter results, unless otherwise stated, please note that all my comparisons are versed.
Speaker Change: Starting with volumes, new unit sales decline, 7% are approximately 92 units in the quarter.
Speaker Change: Despite this, average selling price for the new units grew 3 percent due to improved channel health and less competitive used inventory overhang.
Speaker Change: Pre-owned retail unit sales, including consigned the vehicles were down 23% or 268 units during the border.
Speaker Change: To the positive, as Amber mentioned, we saw strength intervals, which on a year over year basis are 3% and 5% higher for new and pre-owned units respectively.
Speaker Change: Focusing on the top line, net sales for the quarter were $160 million. A decrease of 38 million are 19%, which is in line with planned lower volumes for the company.
Speaker Change: Gross margins for the quarter, excluding life of adjustments remained unchanged at 21 percent.
Speaker Change: S-TNA expenses were 53 million for the quarter compared to 46 million in the prior year period primarily as a result of higher transaction and legal and professional expenses related to the restructuring.
Speaker Change: We anticipate overhead and SGNA expenses to decline as we continue to make adjustments to our cost structure and with the completion of our previously announced by best teachers to camping world.
Speaker Change: Excluding the previously mentioned costs related to transactions, as well as restructuring and other non-operating expenses.
Speaker Change: We had an adjusted EBITDA loss of $24 million compared to a loss of $11 million in the prior year period.
Speaker Change: During the quarter reduced floor plan debt by 11 million and reduced 6 million in term loan debt and exchange preferred stock with common stock.
Speaker Change: And in some, and to echo Ron's earlier comments, while there remains significant work to be done, we remain energized by the prospects of the business.
Speaker Change: and our ability to drive improved results for the benefit of all stakeholders.
I'll turn the call back to Ron for closing remarks.
Speaker Change: Thank you everyone for joining today's call. We look forward to updating you on our continued progress in the months ahead.
Speaker Change: Ladies and gentlemen, this concludes today's event. You may now disconnect your lines or log off the webcast and enjoy the rest of your day.