NASDAQ:GORV Lazydays Q3 2023 Earnings Report $0.23 -0.03 (-9.94%) Closing price 04/28/2025 04:00 PM EasternExtended Trading$0.22 -0.01 (-5.43%) As of 04/28/2025 07:44 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Lazydays EPS ResultsActual EPS-$0.29Consensus EPS $0.07Beat/MissMissed by -$0.36One Year Ago EPSN/ALazydays Revenue ResultsActual Revenue$280.68 millionExpected Revenue$319.30 millionBeat/MissMissed by -$38.62 millionYoY Revenue GrowthN/ALazydays Announcement DetailsQuarterQ3 2023Date11/3/2023TimeN/AConference Call DateFriday, November 3, 2023Conference Call Time8:30AM ETUpcoming EarningsLazydays' Q1 2025 earnings is scheduled for Wednesday, May 21, 2025, with a conference call scheduled on Thursday, May 15, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Lazydays Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 3, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Greetings, and welcome to the Lazydays Holdings Third Quarter 2023 Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. You may begin. Speaker 100:00:16Good morning, everyone, and thank you for joining us. On the call with me today are John North, CEO and Amber Dillard, VP of Supply Chain. Before we begin, I would like to remind everyone that we will be discussing forward looking information, including potential future financial performance, which is subject to risks, Such risks, uncertainties, assumptions and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website. Accordingly, forward looking statements should not be relied upon as a prediction of actual results, and any or all of our forward looking statements may prove to be inaccurate. We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward looking statements. Speaker 100:01:11On this call, we will discuss certain non GAAP financial measures. 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 GAAP measures. With that, I'd like to turn the call over to John North, our Chief Executive Officer. Speaker 200:01:29Thanks, Kelly. Hello, everyone. I want to thank you first for taking interest in our company and reviewing our call today. I'll make some brief opening remarks, Kelly will take you through our financial results and then we'll open it up for a few questions. Obviously, the 3rd quarter was a difficult one And our financial results are disappointing to me and our team. Speaker 200:01:53Since I joined the company just over a year ago, we have been working diligently on 4 main strategic 1st, to be relentless in our execution and efficiencies second, to aspire to be the partner of choice with our OEMs 3rd, to act like an owner and allocate capital responsibly and with a long term mindset. And finally, to grow and leverage our infrastructure to deliver above average metrics and superior return on invested capital. While the ultimate barometer of our success lies in our financial performance, I am pleased that we have continued to make considerable progress against all four initiatives. First, to speak to execution and efficiencies. Our inventory remains healthy, thanks to our team's relentless focus and hard work. Speaker 200:02:38We have around 12022 model year units remaining 2 50 units at the end of last year to 171 this year and have intensified our used inventory procurement efforts more than doubling our previous record in both the months of September October. We have been removing costs from the organization. We have eliminated all unnecessary overhead, And as a result, our overall SG and A is down over 13% in the 3rd quarter despite the addition of 5 new locations since the same quarter last year. With that said, we'll still remain vigilant and laser focused on matching our overhead with what the market gives us As our second objective, we continue to strive to be the partner of choice with our OEMs. We have completed 3 acquisitions and opened 3 greenfields year to date and have more growth on the horizon. Speaker 200:03:50To that end, last month, we announced To maintain your current ownership percentage, they also allow an oversubscription right where you can contribute more capital if not every shareholder chooses to participate. The upside of the current operating environment is both the quality and quantity of acquisition opportunities available. We see both individual locations and multi store platforms Many independent dealers are reaching the end of their patients or their careers and need a monetization event. To seize the opportunity, We believe over $600,000,000 of acquisition revenue could be generated through the capital we will raise and deploy in the near term. On behalf of the entire management team, we want to thank you for your trust and we'll endeavor with maximum effort to deliver a compelling return on the money we are raising. Speaker 200:05:08And proceed to our 3rd objective, we have invested significant capital in our existing facilities to make them fit for purpose and And to ensure they provide our customers and employees a peerless experience. As I previously discussed, we endeavor to own our locations And successfully obtained long term mortgage financing on a number of them over the summer. We believe that an owner's mindset with actions taken for 10 years from now versus 10 weeks from now will create significant value for our shareholders over time. And for our 4th and final initiative, we have continued to optimize and grow the organization Due to the current operating environment and industry dynamics, we have been steadily improving our infrastructure, particularly in our technology and marketing departments. In closing, I again want to thank our team. Speaker 200:06:03They come to work each day with a singular mission to provide the best sales and service experience in the industry. Time and again, I'm impressed by their dedication and wherewithal. I sincerely thank all of you, our fantastic employees. With that, I'll turn the call over to Kelly to take you through the financials. Speaker 100:06:20Thank you, John. Please note that unless Stated otherwise, the 2023 Q3 comparisons are versus the same period in 2022. Total revenue for the quarter was $280,700,000 a decrease of 15.9%. From this point on, all metrics will be on a same store basis, unless stated otherwise. New unit sales declined 20.7% in the quarter and gross profit per unit, Excluding LIFO declined 36.7%. Speaker 100:06:52Compared to the Q2 of 2023, new unit sales declined 8.3% Gross profit per unit decreased 26.8 percent to $9,323 per unit as the model year 2024 inventory began to roll out. Used unit sales, excluding wholesale units, declined 17.6% and gross profit per unit declined 15.6%. Compared to the Q2 of 2023, used unit sales decreased 22.5% and gross profit per unit decreased 3.2% to $13,135 per unit. Finance and insurance revenue declined 19.7% during the quarter, primarily due to lower unit volume as F and I per unit was flat year over year at $4,988 Our service body and parts revenues decreased 8.8% and our gross profit decreased by 6.9%. Our gross margin on service body and parts increased 100 basis points. Speaker 100:07:54We continue to evaluate and modify our cost structure to drive performance Excluding the impact of LIFO and adjusted SG and A for the quarter was 82.1%. Adjusted net loss was $2,900,000 for the quarter compared to net income of $14,400,000 last year. Adjusted fully diluted earnings per share was a loss of $0.29 for the quarter compared to net income per diluted share of $0.54 in the prior year. Moving on to liquidity and capital allocation. As of September 30, we had as well as $4,600,000 available on our revolving line of credit. Speaker 100:08:50We also have approximately $95,000,000 of unfinanced Real estate that we estimate could provide $80,000,000 of additional liquidity. At quarter end, we were in compliance with all debt covenants. As John mentioned, this quarter's results were challenging, and as a result, we recorded a net loss for the Q3 and by extension for the year to date. In times like these, the most important metric to pay attention to is operational cash flow to ensure we remain positive. For the Q3, our operational cash flow was nearly $5,000,000 and year to date, it is nearly $7,000,000 This includes the impact of growing our used inventory more than $35,000,000 this year, but funding only $15,000,000 through floorplan financing. Speaker 100:09:35Taking this into account, we have generated more than $20,000,000 of operational cash flow year to date. The reduction in our liquidity and cash This is a function of capital deployed for both acquisitions and for capital expenditures to improve our existing store base and improve the health and size of our core. This is a lever that we can adjust to respond to market conditions, both accelerating our capital allocations as things normalize And we'll see continued improvement in our cost structure as we made significant changes intra quarter that will result in additional savings in the 4th quarter. Finally, an additional reminder that the subscription period for our previously announced rights offering is currently open and scheduled to expire November 14. Assuming the offering is fully subscribed, we will raise an additional $100,000,000 in equity capital that will fortify our balance Operator00:11:16Our first questions come from the line of Daniel Moore with CJS Securities. Please proceed with your questions. Speaker 300:11:23Thanks. Thanks, John Kelly for taking the questions. I've got a couple. I guess first, maybe just talk high level about trends in retail Traffic and demand through the quarter and into fiscal Q4. Obviously, we're getting into the seasonal softer period. Speaker 300:11:39So Maybe if you can delineate between seasonality and just kind of general second derivative rate of change. Speaker 200:11:51Sure. Good morning, Dan. Nice to hear from you. The quarter was pretty consistent. We saw Pretty similar unit deliveries each month. Speaker 200:12:02I think the interesting or maybe differentiated thing about our business is just Our concentration in southern locales, in particular Florida, Arizona, where we've got a larger And so as we move into the winter, we typically see a bit of a shoulder In October and then things tend to start to pick up in November December and then particularly into Q1. So it's a little bit different maybe than the broader U. S. Because we tend to skew a bit more in the Sunbelt. October traffic Was down relative to what we saw in the Q3, whether that's our execution or a broader trend Remains to be seen. Speaker 200:12:53But obviously, as we move into November December, we expect to see that pick back up. Speaker 300:13:00Very helpful. And appreciate the color on inventory destocking. If you can maybe delineate between kind of higher end motorized and 5th Speaker 400:13:26From an inventory this is Amber. From an inventory perspective, we've continued to work on our destocking To get down the regulated inventory levels, obviously, a lot of that does come on the higher ASPs and the higher end motorized units. Still certainly a demand for those, but we do believe we're in a healthier inventory position and we'll continue to head into The next model you're poised to take advantage of them. Speaker 200:13:54In terms of the relative mix, I think we've been focusing obviously on The lower end as well. So we've got some good relationships and we're putting Some entry level travel trailers into a lot of our stores. We've got a couple of 100 units coming at the low end that we're We're going to be pushing into the marketplace. I think affordability is a theme that's generally talked about across The segment and particularly with some of our competitors and I think we agree with that as well. Ultimately, A lot of our buyers are payment buyers. Speaker 200:14:34And so if we can find ways to try to support that and to bring some entry level product Into the portfolio, I think that's been helpful. We've seen that also with a lot of our OEM partners. So they've been introducing Models that are at a lower level and more affordable, introducing some product that might be single axle, $15,000 to $20,000 ASPs and that's been something we've been trying to lean into. I think The very high end motorized and towables, the demand has been pretty consistent, and I think those consumers are less affected. I think where we've really seen a bit of an air pocket, if you will, is just around some of the product that's in the middle. Speaker 200:15:26Those are the consumers that are still payment buyers and are certainly feeling a bit more pressure. But overall, we're pretty Pleased with what we've done with our inventory and you can see that in our days supply, which is obviously significantly improved from where we were at year end. Speaker 300:15:43Very helpful, John. And I appreciate the color on the TAM and the opportunity from the capital you The $600,000,000 revenue you quoted, I assume that is sort of a steady state figure and just kind of remind us what's your definition of steady state in terms of Vince, are there any other metric you want to give? Speaker 200:16:05Yes. I think in general, the way we model our acquisitions for the 5 year kind of Timeline, we certainly are looking to buy dealerships that we can improve and The 3 dealerships we bought year to date are all profitable. So I'm very pleased with what we've added to our portfolio. In terms of their initial contribution to our organization, but none of them are really performing to where we think they can be. And that is really giving us time to ramp up and build obviously the consumer base. Speaker 200:16:42And then importantly, A lot of our OEM partners are interested in coming along with us as we go into a market. So as an example, we bought Las Vegas in February And we're able to add Tiffin, which was not part of that dealership's mix prior to us Acquiring it. And so that goes back to our second strategic initiative, which is really to be the OEMs' partner of choice. And I think what we believe and part of what Lazydays has stood for even prior to me joining was really to have An amazing relationship with our OEM partners. And so, in many cases, we believe that there are acquisitions that will come that we can add brands to Or we can add lines to from our OEMs because they want to partner with us. Speaker 200:17:28And so in many cases, that allows us to ramp revenue. In terms of the $600,000,000 I mean that's probably like a year or 3 view and obviously I'm not smart enough to tell you what 2024 is going to look like. Are we going to see an up year, flat year, down year, I mean, who knows. We only think about 90 days to 120 days out because that's Really the inventory that we're managing to, but our assumptions are in a normalized market, If we buy these locations, we think it could be plus $600,000 or more $1,000,000 It's not an insignificant revenue number and At a normalized contribution margin, that's a pretty attractive EBITDA or pretax Income number relative to $100,000,000 we're raising. Speaker 300:18:16Very helpful. Last question for me. I apologize It's long winded, but just focusing on gross margins a little bit. Obviously, saw some pressure in the quarter, particularly on new unit sales. How much of that was mix and desire to clear out older inventory versus maybe a more strategic decision to focus less Gross margin for new units and more on longer term opportunities than used in maintenance and repair. Speaker 300:18:41Just trying to get a sense for if this was temporary decline or closer to sort of the new norm for at least the near term in terms of margins on new unit sales? Thanks again for the color. Speaker 200:18:56It's an astute question. I appreciate it. I think it's both. We certainly are being very attentive to the 2023 model year. And like last year, As you see the model year changeover, which typically happens sort of April to July, you start to see some compression on those margins. Speaker 200:19:20And It's a very competitive industry dynamic right now because I think other private dealers have Probably been less attentive in terms of 20222023, and so they're feeling more acute pressure. And someone's advertising a similar unit with Same floor plan at 40% off. It's hard for us to not match that. And so that's a dynamic I think that's happening. In terms Of real time color, in October, our margins actually improved. Speaker 200:19:53The health of our inventory is really good. And as you get more of the deliveries in the 2024 model, you're seeing still similar attractive gross margins. And so I think some of what we saw in the Q3 was transitory. That pressure probably continues and even accelerates, which is what we saw last But it's on a smaller percentage of the overall mix and so it's less relevant. And I think that's probably the larger piece of the trend. Speaker 200:20:21But importantly, and I think you're exactly right, what I observed in the last 25 years in automotive Is a secular decline in front end gross. And what that meant was you needed to prioritize F and I service and taken in trades and trying to accelerate that and really thinking about the velocity of capital. And that's been a big message we've talked to our general managers about. I would rather sell something in 60 days for a smaller front end than to try to hold out for the really big gross margin And then it up with a couple more units that are aged that you have to discount aggressively to get rid of. And so we're very focused on the velocity of capital And the gross margin return on investment that comes from accelerating turns, The flip side of that is we need to then drive F and I performance up, which should be plus or minus 10% of your average selling price. Speaker 200:21:18And I think in the quarter, we were at 5. So the biggest opportunity for us is to really focus on F and I and the used opportunity that comes from the trades As we accelerate the velocity of new and that's been a pretty consistent message internally. I wouldn't say we hit our stride in the Q3, but it's a focus area for us. Speaker 300:21:39Okay. Appreciate the color again. Thank you. Operator00:21:44Thank you. Our next questions come from the line of Mike Swartz with Truist Securities. Please proceed with your questions. Speaker 500:21:59Hey, John and Kelly. Good morning. I just hopped on the call a little late, so I apologize if I'm asking a question the second time. But Just in terms of the new vehicle margins, can you give us any color about maybe how that played out through the quarter, maybe what the exit rate was coming out of the quarter? Speaker 200:22:20Sure. Nice to hear from you, Mike. I think as it was intra quarter, what we saw is The 2023 is really toggled over. So most of our total product tends to flip in like July And you start to really see the 24s come online from an industry dynamic. As I mentioned a moment ago, a lot of our Competitors have been aggressively discounting 2023s. Speaker 200:22:53And if you go online and look, you can see many of them are 35% to 40% off, Which is pretty close to cost in many cases. And so what you're really focusing on as you turn those units are what's the trade opportunity, what's the F and I opportunity, what's your documentation fee, what can you do to try to What's your documentation fee? What can you do to try to make a little bit of money and get those turned? And so as we progress through the Q3, I would say, We were very aggressive in terms of discounting those and trying to turn them. As we mentioned in Kelly's prepared remarks, 47% of our inventory is 2024s. Speaker 200:23:28So we're in really good shape. The 2023s that we have are a mix between both towable and motorized. And the motorized in Particular, the Cs and some of those are very scarce and so you're still seeing pretty good margin on those. But I think overall, we've been very focused on maintaining the health of inventory versus maintaining the health Gross and I'm pleased with where we stood and our day supply has come down a bunch. Relative to October, our margins have actually gotten better. Speaker 200:24:02They're up And that's because more of the mix is 2024 is now. And if half your inventory is that model year, you're going to see that improve. And We were early to the party last year, for lack of a better term, in terms of discounting 2022s. That was a big focus What we were working on in Q3, Q4 last year and what you saw I think in Q1 and Q2 was really healthy margins Because we were through the 22s and working on the 23s, and I feel like we're set up in a similar fashion So my expectation is you'll see a slightly higher margin in Q4. I don't think it's going to be dramatically stronger than Where we ended Q3, but I think it will be up. Speaker 200:24:44And I think as we fall into next year, you're going to see that continue And see some nice margin for the next couple of quarters because we're in better shape than probably the industry is generally speaking. Speaker 500:24:58Okay. Thanks so much for the color, John. Just a second question on I'm just trying to kind of net out the impact from several things, several of the acquisitions you've announced With Speaker 200:25:08some of the store closures, I Speaker 500:25:10know you've got another Greenfield location opening this year. But as I take that all Gather, what is the what do you think the annualized impact is on revenue? Speaker 300:25:30Well, I think in terms Speaker 200:25:31of the acquisitions we've done, they probably worth $125,000,000 So that's 3 stores. You've got Four greenfields opening this year and that's probably worth another $125,000,000 I would say. And then we closed 2 locations. 1 was taken through eminent domain By the Tennessee Department of Transportation and one was consolidation into our sister store that's about an hour away in Elkhart. We closed the store in Indiana and consolidated those brands. Speaker 200:26:12Those were smaller locations. They were probably $50,000,000 to $60,000,000 annualized and I think our belief is that some percentage of that revenue should shift to other stores in the market. I'm not sure it's dollar for dollar. I might give it $0.50 on the dollar, something like that. So I think, let's call it $250,000,000 of growth and then let's call it $100,000,000 of Sorry, dollars 50,000,000 of closure and maybe $25,000,000 of that should still remain in kind of the Lazydays portfolio. Speaker 200:26:47So rough justice, dollars 275, and then you got to layer into that plus or minus 15%, 20% decline in just the overall market. And obviously, we've lost some share relative to the competition, but we don't dabble in the But the super low end isn't where we are and I would say that's where most of the market growth has been happening. Speaker 500:27:12Okay. Awesome. And just to clarify, those numbers you were giving us were steady state, Normalized industry demand type numbers, not necessarily what we will see in 2024? Speaker 300:27:26Yes. Speaker 200:27:26I mean, I'm not that smart. I wish I could tell you what next year is going to look like. You tell me. I think what we're trying to do is say in a normalized 400 and The 1,000 unit year, what should our stores do? What should our expectation be? Speaker 200:27:41And that's kind of how we size it. Where we go in March of 2024 is your guess is probably better than mine. Speaker 500:27:51Okay. That's great. Thanks, John. Operator00:27:56Thank you. We have reached the end of question and answer session. I would now like to turn the floor back over to John North for any closing comments. Speaker 200:28:04Thanks for joining us today. We'll talk to you guys next year. Operator00:28:10Thank you. This does conclude today's teleconference. We appreciate your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallLazydays Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Lazydays Earnings HeadlinesLazydays Holdings Reports Challenging 2024 Financial ResultsMarch 31, 2025 | tipranks.comLAZYDAYS REPORTS FOURTH QUARTER AND FISCAL YEAR 2024 FINANCIAL RESULTSMarch 31, 2025 | prnewswire.comTrump’s Secret WeaponHave you looked at the stock market recently? Millions of investors are scrambling trying to figure out what's coming next. But here's the truth… This is just the beginning. Trump has made it clear his tariffs are coming, and that the market will get worse before it gets better. Luckily, our FREE Presidential Transition Guide details exactly what will happen in the next 100 days, and how to protect your hard-earned savings during these times. Don't wait for the next crash to wipe you out. Act now.April 29, 2025 | American Alternative (Ad)LAZYDAYS TO SELL THREE STORE LOCATIONS TO GENERAL RV CENTERMarch 31, 2025 | prnewswire.comLazydays Holdings Modifies Credit Agreement with LendersMarch 28, 2025 | tipranks.comLAZYDAYS SCHEDULES RELEASE OF FOURTH QUARTER AND FISCAL YEAR 2024 FINANCIAL RESULTSMarch 27, 2025 | prnewswire.comSee More Lazydays Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Lazydays? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Lazydays and other key companies, straight to your email. Email Address About LazydaysLazydays (NASDAQ:GORV) operates recreational vehicle (RV) dealerships under the Lazydays name in the United States. The company offers RV sales, RV-repair and services, financing and insurance products, third-party protection plans, and after-market parts and accessories. It also operates the Lazydays RV resort at Tampa, Florida. The company was founded in 1976 and is based in Tampa, Florida.View Lazydays ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Alphabet Rebounds After Strong Earnings and Buyback AnnouncementMarkets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial Earnings Upcoming Earnings QUALCOMM (4/30/2025)Automatic Data Processing (4/30/2025)Microsoft (4/30/2025)Meta Platforms (4/30/2025)KLA (4/30/2025)Equinix (4/30/2025)Lloyds Banking Group (4/30/2025)Itaú Unibanco (4/30/2025)Banco Santander (4/30/2025)Equinor ASA (4/30/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 6 speakers on the call. Operator00:00:00Greetings, and welcome to the Lazydays Holdings Third Quarter 2023 Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kelly Porter, Chief Financial Officer. Thank you. You may begin. Speaker 100:00:16Good morning, everyone, and thank you for joining us. On the call with me today are John North, CEO and Amber Dillard, VP of Supply Chain. Before we begin, I would like to remind everyone that we will be discussing forward looking information, including potential future financial performance, which is subject to risks, Such risks, uncertainties, assumptions and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website. Accordingly, forward looking statements should not be relied upon as a prediction of actual results, and any or all of our forward looking statements may prove to be inaccurate. We can make no guarantees about our future performance, and we undertake no obligation to update or revise our forward looking statements. Speaker 100:01:11On this call, we will discuss certain non GAAP financial measures. 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 GAAP measures. With that, I'd like to turn the call over to John North, our Chief Executive Officer. Speaker 200:01:29Thanks, Kelly. Hello, everyone. I want to thank you first for taking interest in our company and reviewing our call today. I'll make some brief opening remarks, Kelly will take you through our financial results and then we'll open it up for a few questions. Obviously, the 3rd quarter was a difficult one And our financial results are disappointing to me and our team. Speaker 200:01:53Since I joined the company just over a year ago, we have been working diligently on 4 main strategic 1st, to be relentless in our execution and efficiencies second, to aspire to be the partner of choice with our OEMs 3rd, to act like an owner and allocate capital responsibly and with a long term mindset. And finally, to grow and leverage our infrastructure to deliver above average metrics and superior return on invested capital. While the ultimate barometer of our success lies in our financial performance, I am pleased that we have continued to make considerable progress against all four initiatives. First, to speak to execution and efficiencies. Our inventory remains healthy, thanks to our team's relentless focus and hard work. Speaker 200:02:38We have around 12022 model year units remaining 2 50 units at the end of last year to 171 this year and have intensified our used inventory procurement efforts more than doubling our previous record in both the months of September October. We have been removing costs from the organization. We have eliminated all unnecessary overhead, And as a result, our overall SG and A is down over 13% in the 3rd quarter despite the addition of 5 new locations since the same quarter last year. With that said, we'll still remain vigilant and laser focused on matching our overhead with what the market gives us As our second objective, we continue to strive to be the partner of choice with our OEMs. We have completed 3 acquisitions and opened 3 greenfields year to date and have more growth on the horizon. Speaker 200:03:50To that end, last month, we announced To maintain your current ownership percentage, they also allow an oversubscription right where you can contribute more capital if not every shareholder chooses to participate. The upside of the current operating environment is both the quality and quantity of acquisition opportunities available. We see both individual locations and multi store platforms Many independent dealers are reaching the end of their patients or their careers and need a monetization event. To seize the opportunity, We believe over $600,000,000 of acquisition revenue could be generated through the capital we will raise and deploy in the near term. On behalf of the entire management team, we want to thank you for your trust and we'll endeavor with maximum effort to deliver a compelling return on the money we are raising. Speaker 200:05:08And proceed to our 3rd objective, we have invested significant capital in our existing facilities to make them fit for purpose and And to ensure they provide our customers and employees a peerless experience. As I previously discussed, we endeavor to own our locations And successfully obtained long term mortgage financing on a number of them over the summer. We believe that an owner's mindset with actions taken for 10 years from now versus 10 weeks from now will create significant value for our shareholders over time. And for our 4th and final initiative, we have continued to optimize and grow the organization Due to the current operating environment and industry dynamics, we have been steadily improving our infrastructure, particularly in our technology and marketing departments. In closing, I again want to thank our team. Speaker 200:06:03They come to work each day with a singular mission to provide the best sales and service experience in the industry. Time and again, I'm impressed by their dedication and wherewithal. I sincerely thank all of you, our fantastic employees. With that, I'll turn the call over to Kelly to take you through the financials. Speaker 100:06:20Thank you, John. Please note that unless Stated otherwise, the 2023 Q3 comparisons are versus the same period in 2022. Total revenue for the quarter was $280,700,000 a decrease of 15.9%. From this point on, all metrics will be on a same store basis, unless stated otherwise. New unit sales declined 20.7% in the quarter and gross profit per unit, Excluding LIFO declined 36.7%. Speaker 100:06:52Compared to the Q2 of 2023, new unit sales declined 8.3% Gross profit per unit decreased 26.8 percent to $9,323 per unit as the model year 2024 inventory began to roll out. Used unit sales, excluding wholesale units, declined 17.6% and gross profit per unit declined 15.6%. Compared to the Q2 of 2023, used unit sales decreased 22.5% and gross profit per unit decreased 3.2% to $13,135 per unit. Finance and insurance revenue declined 19.7% during the quarter, primarily due to lower unit volume as F and I per unit was flat year over year at $4,988 Our service body and parts revenues decreased 8.8% and our gross profit decreased by 6.9%. Our gross margin on service body and parts increased 100 basis points. Speaker 100:07:54We continue to evaluate and modify our cost structure to drive performance Excluding the impact of LIFO and adjusted SG and A for the quarter was 82.1%. Adjusted net loss was $2,900,000 for the quarter compared to net income of $14,400,000 last year. Adjusted fully diluted earnings per share was a loss of $0.29 for the quarter compared to net income per diluted share of $0.54 in the prior year. Moving on to liquidity and capital allocation. As of September 30, we had as well as $4,600,000 available on our revolving line of credit. Speaker 100:08:50We also have approximately $95,000,000 of unfinanced Real estate that we estimate could provide $80,000,000 of additional liquidity. At quarter end, we were in compliance with all debt covenants. As John mentioned, this quarter's results were challenging, and as a result, we recorded a net loss for the Q3 and by extension for the year to date. In times like these, the most important metric to pay attention to is operational cash flow to ensure we remain positive. For the Q3, our operational cash flow was nearly $5,000,000 and year to date, it is nearly $7,000,000 This includes the impact of growing our used inventory more than $35,000,000 this year, but funding only $15,000,000 through floorplan financing. Speaker 100:09:35Taking this into account, we have generated more than $20,000,000 of operational cash flow year to date. The reduction in our liquidity and cash This is a function of capital deployed for both acquisitions and for capital expenditures to improve our existing store base and improve the health and size of our core. This is a lever that we can adjust to respond to market conditions, both accelerating our capital allocations as things normalize And we'll see continued improvement in our cost structure as we made significant changes intra quarter that will result in additional savings in the 4th quarter. Finally, an additional reminder that the subscription period for our previously announced rights offering is currently open and scheduled to expire November 14. Assuming the offering is fully subscribed, we will raise an additional $100,000,000 in equity capital that will fortify our balance Operator00:11:16Our first questions come from the line of Daniel Moore with CJS Securities. Please proceed with your questions. Speaker 300:11:23Thanks. Thanks, John Kelly for taking the questions. I've got a couple. I guess first, maybe just talk high level about trends in retail Traffic and demand through the quarter and into fiscal Q4. Obviously, we're getting into the seasonal softer period. Speaker 300:11:39So Maybe if you can delineate between seasonality and just kind of general second derivative rate of change. Speaker 200:11:51Sure. Good morning, Dan. Nice to hear from you. The quarter was pretty consistent. We saw Pretty similar unit deliveries each month. Speaker 200:12:02I think the interesting or maybe differentiated thing about our business is just Our concentration in southern locales, in particular Florida, Arizona, where we've got a larger And so as we move into the winter, we typically see a bit of a shoulder In October and then things tend to start to pick up in November December and then particularly into Q1. So it's a little bit different maybe than the broader U. S. Because we tend to skew a bit more in the Sunbelt. October traffic Was down relative to what we saw in the Q3, whether that's our execution or a broader trend Remains to be seen. Speaker 200:12:53But obviously, as we move into November December, we expect to see that pick back up. Speaker 300:13:00Very helpful. And appreciate the color on inventory destocking. If you can maybe delineate between kind of higher end motorized and 5th Speaker 400:13:26From an inventory this is Amber. From an inventory perspective, we've continued to work on our destocking To get down the regulated inventory levels, obviously, a lot of that does come on the higher ASPs and the higher end motorized units. Still certainly a demand for those, but we do believe we're in a healthier inventory position and we'll continue to head into The next model you're poised to take advantage of them. Speaker 200:13:54In terms of the relative mix, I think we've been focusing obviously on The lower end as well. So we've got some good relationships and we're putting Some entry level travel trailers into a lot of our stores. We've got a couple of 100 units coming at the low end that we're We're going to be pushing into the marketplace. I think affordability is a theme that's generally talked about across The segment and particularly with some of our competitors and I think we agree with that as well. Ultimately, A lot of our buyers are payment buyers. Speaker 200:14:34And so if we can find ways to try to support that and to bring some entry level product Into the portfolio, I think that's been helpful. We've seen that also with a lot of our OEM partners. So they've been introducing Models that are at a lower level and more affordable, introducing some product that might be single axle, $15,000 to $20,000 ASPs and that's been something we've been trying to lean into. I think The very high end motorized and towables, the demand has been pretty consistent, and I think those consumers are less affected. I think where we've really seen a bit of an air pocket, if you will, is just around some of the product that's in the middle. Speaker 200:15:26Those are the consumers that are still payment buyers and are certainly feeling a bit more pressure. But overall, we're pretty Pleased with what we've done with our inventory and you can see that in our days supply, which is obviously significantly improved from where we were at year end. Speaker 300:15:43Very helpful, John. And I appreciate the color on the TAM and the opportunity from the capital you The $600,000,000 revenue you quoted, I assume that is sort of a steady state figure and just kind of remind us what's your definition of steady state in terms of Vince, are there any other metric you want to give? Speaker 200:16:05Yes. I think in general, the way we model our acquisitions for the 5 year kind of Timeline, we certainly are looking to buy dealerships that we can improve and The 3 dealerships we bought year to date are all profitable. So I'm very pleased with what we've added to our portfolio. In terms of their initial contribution to our organization, but none of them are really performing to where we think they can be. And that is really giving us time to ramp up and build obviously the consumer base. Speaker 200:16:42And then importantly, A lot of our OEM partners are interested in coming along with us as we go into a market. So as an example, we bought Las Vegas in February And we're able to add Tiffin, which was not part of that dealership's mix prior to us Acquiring it. And so that goes back to our second strategic initiative, which is really to be the OEMs' partner of choice. And I think what we believe and part of what Lazydays has stood for even prior to me joining was really to have An amazing relationship with our OEM partners. And so, in many cases, we believe that there are acquisitions that will come that we can add brands to Or we can add lines to from our OEMs because they want to partner with us. Speaker 200:17:28And so in many cases, that allows us to ramp revenue. In terms of the $600,000,000 I mean that's probably like a year or 3 view and obviously I'm not smart enough to tell you what 2024 is going to look like. Are we going to see an up year, flat year, down year, I mean, who knows. We only think about 90 days to 120 days out because that's Really the inventory that we're managing to, but our assumptions are in a normalized market, If we buy these locations, we think it could be plus $600,000 or more $1,000,000 It's not an insignificant revenue number and At a normalized contribution margin, that's a pretty attractive EBITDA or pretax Income number relative to $100,000,000 we're raising. Speaker 300:18:16Very helpful. Last question for me. I apologize It's long winded, but just focusing on gross margins a little bit. Obviously, saw some pressure in the quarter, particularly on new unit sales. How much of that was mix and desire to clear out older inventory versus maybe a more strategic decision to focus less Gross margin for new units and more on longer term opportunities than used in maintenance and repair. Speaker 300:18:41Just trying to get a sense for if this was temporary decline or closer to sort of the new norm for at least the near term in terms of margins on new unit sales? Thanks again for the color. Speaker 200:18:56It's an astute question. I appreciate it. I think it's both. We certainly are being very attentive to the 2023 model year. And like last year, As you see the model year changeover, which typically happens sort of April to July, you start to see some compression on those margins. Speaker 200:19:20And It's a very competitive industry dynamic right now because I think other private dealers have Probably been less attentive in terms of 20222023, and so they're feeling more acute pressure. And someone's advertising a similar unit with Same floor plan at 40% off. It's hard for us to not match that. And so that's a dynamic I think that's happening. In terms Of real time color, in October, our margins actually improved. Speaker 200:19:53The health of our inventory is really good. And as you get more of the deliveries in the 2024 model, you're seeing still similar attractive gross margins. And so I think some of what we saw in the Q3 was transitory. That pressure probably continues and even accelerates, which is what we saw last But it's on a smaller percentage of the overall mix and so it's less relevant. And I think that's probably the larger piece of the trend. Speaker 200:20:21But importantly, and I think you're exactly right, what I observed in the last 25 years in automotive Is a secular decline in front end gross. And what that meant was you needed to prioritize F and I service and taken in trades and trying to accelerate that and really thinking about the velocity of capital. And that's been a big message we've talked to our general managers about. I would rather sell something in 60 days for a smaller front end than to try to hold out for the really big gross margin And then it up with a couple more units that are aged that you have to discount aggressively to get rid of. And so we're very focused on the velocity of capital And the gross margin return on investment that comes from accelerating turns, The flip side of that is we need to then drive F and I performance up, which should be plus or minus 10% of your average selling price. Speaker 200:21:18And I think in the quarter, we were at 5. So the biggest opportunity for us is to really focus on F and I and the used opportunity that comes from the trades As we accelerate the velocity of new and that's been a pretty consistent message internally. I wouldn't say we hit our stride in the Q3, but it's a focus area for us. Speaker 300:21:39Okay. Appreciate the color again. Thank you. Operator00:21:44Thank you. Our next questions come from the line of Mike Swartz with Truist Securities. Please proceed with your questions. Speaker 500:21:59Hey, John and Kelly. Good morning. I just hopped on the call a little late, so I apologize if I'm asking a question the second time. But Just in terms of the new vehicle margins, can you give us any color about maybe how that played out through the quarter, maybe what the exit rate was coming out of the quarter? Speaker 200:22:20Sure. Nice to hear from you, Mike. I think as it was intra quarter, what we saw is The 2023 is really toggled over. So most of our total product tends to flip in like July And you start to really see the 24s come online from an industry dynamic. As I mentioned a moment ago, a lot of our Competitors have been aggressively discounting 2023s. Speaker 200:22:53And if you go online and look, you can see many of them are 35% to 40% off, Which is pretty close to cost in many cases. And so what you're really focusing on as you turn those units are what's the trade opportunity, what's the F and I opportunity, what's your documentation fee, what can you do to try to What's your documentation fee? What can you do to try to make a little bit of money and get those turned? And so as we progress through the Q3, I would say, We were very aggressive in terms of discounting those and trying to turn them. As we mentioned in Kelly's prepared remarks, 47% of our inventory is 2024s. Speaker 200:23:28So we're in really good shape. The 2023s that we have are a mix between both towable and motorized. And the motorized in Particular, the Cs and some of those are very scarce and so you're still seeing pretty good margin on those. But I think overall, we've been very focused on maintaining the health of inventory versus maintaining the health Gross and I'm pleased with where we stood and our day supply has come down a bunch. Relative to October, our margins have actually gotten better. Speaker 200:24:02They're up And that's because more of the mix is 2024 is now. And if half your inventory is that model year, you're going to see that improve. And We were early to the party last year, for lack of a better term, in terms of discounting 2022s. That was a big focus What we were working on in Q3, Q4 last year and what you saw I think in Q1 and Q2 was really healthy margins Because we were through the 22s and working on the 23s, and I feel like we're set up in a similar fashion So my expectation is you'll see a slightly higher margin in Q4. I don't think it's going to be dramatically stronger than Where we ended Q3, but I think it will be up. Speaker 200:24:44And I think as we fall into next year, you're going to see that continue And see some nice margin for the next couple of quarters because we're in better shape than probably the industry is generally speaking. Speaker 500:24:58Okay. Thanks so much for the color, John. Just a second question on I'm just trying to kind of net out the impact from several things, several of the acquisitions you've announced With Speaker 200:25:08some of the store closures, I Speaker 500:25:10know you've got another Greenfield location opening this year. But as I take that all Gather, what is the what do you think the annualized impact is on revenue? Speaker 300:25:30Well, I think in terms Speaker 200:25:31of the acquisitions we've done, they probably worth $125,000,000 So that's 3 stores. You've got Four greenfields opening this year and that's probably worth another $125,000,000 I would say. And then we closed 2 locations. 1 was taken through eminent domain By the Tennessee Department of Transportation and one was consolidation into our sister store that's about an hour away in Elkhart. We closed the store in Indiana and consolidated those brands. Speaker 200:26:12Those were smaller locations. They were probably $50,000,000 to $60,000,000 annualized and I think our belief is that some percentage of that revenue should shift to other stores in the market. I'm not sure it's dollar for dollar. I might give it $0.50 on the dollar, something like that. So I think, let's call it $250,000,000 of growth and then let's call it $100,000,000 of Sorry, dollars 50,000,000 of closure and maybe $25,000,000 of that should still remain in kind of the Lazydays portfolio. Speaker 200:26:47So rough justice, dollars 275, and then you got to layer into that plus or minus 15%, 20% decline in just the overall market. And obviously, we've lost some share relative to the competition, but we don't dabble in the But the super low end isn't where we are and I would say that's where most of the market growth has been happening. Speaker 500:27:12Okay. Awesome. And just to clarify, those numbers you were giving us were steady state, Normalized industry demand type numbers, not necessarily what we will see in 2024? Speaker 300:27:26Yes. Speaker 200:27:26I mean, I'm not that smart. I wish I could tell you what next year is going to look like. You tell me. I think what we're trying to do is say in a normalized 400 and The 1,000 unit year, what should our stores do? What should our expectation be? Speaker 200:27:41And that's kind of how we size it. Where we go in March of 2024 is your guess is probably better than mine. Speaker 500:27:51Okay. That's great. Thanks, John. Operator00:27:56Thank you. We have reached the end of question and answer session. I would now like to turn the floor back over to John North for any closing comments. Speaker 200:28:04Thanks for joining us today. We'll talk to you guys next year. Operator00:28:10Thank you. This does conclude today's teleconference. We appreciate your participation.Read morePowered by