Attached files
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| 8-K - CURRENT REPORT - RumbleOn, Inc. | rmbl_8k.htm |
Exhibit 99.1
RumbleOn Reports First Quarter 2020 Results
Total Revenue Growth of approximately 14% Quarter over
Quarter
Demonstrates Continued Progress towards Profitability
DALLAS
– RumbleOn (NASDAQ: RMBL), the e-commerce company using
innovative technology to simplify how dealers and consumers buy,
sell, trade or finance pre-owned vehicles, today announced
financial results for the three months ended March 31,
2020.
“Consistent
with the goals we outlined last fall, we have taken prescriptive
measures to drive gross margin expansion, gross profit per unit
improvements and reduce operating expenses. We had a strong start
to the year, with January and February tracking in line with our
expectations as our initiatives, including opportunistically
building inventory in Q4 for the anticipated acceleration in sales
in 2020, began to pay off. Beginning in March, the industry - and
our business - experienced imbalances in both supply and demand. We
were decisive and quick to take action to protect our business
through prudent management of our financial resources from the
onset of the pandemic,” commented RumbleOn CEO Marshall
Chesrown.
“We
are seeing a rebound in demand, consistent with others in our
industry. While we anticipate significant improvements from the low
volume experienced industry wide in April and May, we expect
continued fluctuations in market trends and will maintain our
conservative approach to sales volume while closely monitoring
market conditions.
“Looking
ahead, we are focused on the successful launch of the third
generation of RumbleOn.com in Q3, which will improve powersport
dealers’ ability to compete in a meaningful manner in
online-only transactions while expanding RumbleOn’s
opportunities for monetization, and furthering our advanced
discussions with potential strategic alliances. RumbleOn is still
in its early days, and we look forward to years of innovation ahead
of us.”
Chesrown
continued, “Our nimble business model enabled us to make
operational changes necessary to withstand the deepest demand
slowdown the vehicle market has probably ever seen, and we believe
that the actions we took during this time will enable us to emerge
in as strong a position as ever. We are committed to making
sustainable improvements to SG&A and GPU as we execute on our
strategy to become the first online vehicle provider to achieve
profitability.”
First Quarter 2020 Financial Highlights
●
Total vehicle unit sales of
7,420
●
Total revenue was $144.4 million, up 13.8%
from Q4 of 2019
o
Powersports revenue
was $23.1 million, up 39.2% from Q4 of 2019
o
Automotive revenue
was $114.2 million, up 8.6% from Q4 of 2019
o
Transportation
revenue was $7.1 million, up 37.4% from Q4 of 2019
●
Gross profit was
$(1.3) million or (0.9%), net of $11.7 million non-cash inventory
impairment loss, and $1.2 million for net realizable value
adjustments for inventory. Gross profit for Q4 of 2019 was $9.0
million. See the section titled “Impairment and Net
Realizable Value Adjustments” below for additional
details.
●
Adjusted gross
profit was $11.6 million, excluding the $12.9 million in impairment
and net realizable value adjustments for inventory. Adjusted gross
margin was 8.1%. See the section titled “Impairment and Net
Realizable Value Adjustments” below for additional
details.
o
Gross margin on
vehicles sold was 6.8%
o
Powersports gross
profit per vehicle sold was $1,039, a 13.8% increase from Q4 of
2019 and up 8.2% from Q1 2019
o
Automotive gross
profit per vehicle sold was $1,379, a 11.3% increase from Q4 of
2019 and up 28.7% from Q1 2019
●
Sales, general and administrative expenses were
$18.1 million, a
decrease of 18.5% from $22.2 million in Q4 of 2019
●
Operating loss was $19.9 million
●
Net Loss was $22.0 million
●
Adjusted EBITDA
loss of $6.5 million
●
Net loss per share was ($10.77) based on 2,046,423 basic and fully diluted Class B shares. On May
20, 2020, RumbleOn effected a one-for-twenty reverse stock
split of its issued and outstanding Class A Common Stock and Class
B Common Stock. Following the reverse stock split, the Company has
outstanding 50,000 shares of Class A Common Stock and approximately
2,162,696 shares of Class B Common Stock
Adjusted
gross profit, adjusted gross margin and Adjusted EBITDA are
non-GAAP financial measures. Reconciliations of non-GAAP financial
measures used in this release are provided in the attached
financial tables.
Second Quarter 2020 Commentary and Outlook
RumbleOn
experienced the bottom of the downturn in mid-April, with the
largest unit sales decline and its lowest level of inventory
acquisition during the quarter. By the end of April conditions
began improving slowly and ramping up more quickly as the month of
May progressed. Total unit sales for the month of April were down
66% from January levels. The velocity of the rebound in May and
thus far through June has been higher than expected and with the
return of demand, our acquisition of inventory has accelerated. In
May, unit sales increased more than 22% from April’s lows,
and based on initial June month-to-date results the Company is
expecting a 26% increase in month-over-month unit sales in June as
compared to April. Though current monthly unit volumes experienced
are still below January and February, preliminary results for3 the
month of June show the highest gross margin on units sold in the
Company’s history and significant operating income
improvement from prior periods.
“Our
results reflect progress we are making on our objective of a more
disciplined approach to sales volume as we take prescriptive steps
to achieve our goal of accelerating profitability. We intend to
continue our disciplined approach to unit sales in favor of margin
enhancements. Although we are optimistic, we remain cautious. We
expect continued fluctuations in market trends that will impact our
business throughout the remainder of this year and don't anticipate
sales level getting completely back to normal until potentially
late in the year or early 2021. We are committed to our goal of
achieving profitability through margin expansion and SG&A
improvements and we continue to believe we will be the first in our
industry to reach profitability,” concluded
Chesrown.
Given
the uncertainty of the ongoing impact and unprecedented conditions
surrounding the COVID-19 pandemic, we cannot predict the overall
effect to RumbleOn, our customers, regional business partners, and
others that we work with. As a result, we believe it is prudent to
withhold guidance for the back half of the year until we can better
gauge market conditions and have a clearer understanding of the
lasting impact from the COVID-19 pandemic.
Impairment and Net Realizable Value Adjustments
The
$12.9 million impairment and net realizable value adjustments to
the March 31, 2020 inventory include:
(i) The
$11.7 million non-cash inventory impairment loss which included
$4.5 million of cost for vehicles that were a total loss and $7.3
million for loss in value of vehicles partially damaged and subject
to repair. Under ASC 330 the impairment loss is reported in cost of
revenue in the March 31, 2020 condensed consolidated statements of
operations. The Company has not recorded any recoveries that are
expected to be received from the insurance carrier since the final
amount and timing of the recovery has not been determined. Any such
recovery would be reported as a separate component of income from
continuing operations in the period in which such recovery is
recognizable. The Company maintains insurance coverage for damage
to its facilities and inventory, as well as business interruption
insurance. The Company continues in the process of reviewing
damages and coverages with its insurance carriers.
(ii)
The $1.2 million for the write down of vehicle inventory to the
lower of cost or net realizable value at March 31, 2020. The write
down included $878,542 of adjustments for automotive and $340,268
for adjustments for powersports and resulted from the negative
impact on our sales channels from COVID-19 and related effects of
sheltering-in-place and significantly reduced commercial
activity.
Conference Call Details
RumbleOn’s
management will host a conference call to discuss its financial
results on Monday, June 29, 2020 at 8:30 a.m. Eastern Time. A live
webcast of the call can be accessed from RumbleOn’s Investor
Relations website. An archived version will be available on the
website after the call. Investors and analysts can participate in
the conference call by dialing (833) 968-2268, or (778) 560-2644
for callers outside of North America (conference ID: 8073057). A
telephonic replay will be available for seven days, beginning two
hours after the call. To listen to the replay please dial (800)
585-8367, or (416) 621-4642 for callers outside North America
(conference ID: 8073057).
About RumbleOn
RumbleOn
(NASDAQ: RMBL) is an e-commerce company that uses innovative
technology to simplify how dealers and customers buy, sell, trade,
or finance pre-owned vehicles through RumbleOn’s 100% online
marketplace. Leveraging its capital-light network of 17 regional
partnerships and innovative technological solutions, RumbleOn is
disrupting the old-school pre-owned vehicle supply chain by
providing users with the most efficient, timely and transparent
transaction experience. For more information, please visit
http://www.rumbleon.com.
Non-GAAP Financial Measures
As
required by the rules of the Securities and Exchange Commission
("SEC"), we provide reconciliations of the non-GAAP financial
measures contained in this press release to the most directly
comparable measure under GAAP, which are set forth in the financial
tables attached to this release. Non-GAAP financial measures for
the three months ended March 31, 2020 used in this release include:
adjusted gross profit, adjusted gross margin and adjusted
EBITDA.
Adjusted
gross profit, adjusted gross margin, and adjusted EBITDA is a
non-GAAP financial measure and should not be considered as an
alternative to operating income or net income as a measure of
operating performance or cash flows or as a measure of liquidity.
Non-GAAP financial measures are not necessarily calculated the same
way by different companies and should not be considered a
substitute for or superior to U.S. GAAP.
Adjusted
gross profit is defined as gross profit adjusted to add back
non-cash impairment loss on damage sustained on automotive
inventory and the write down of inventory at March 31, 2020 to net
realizable value due to the adverse impacts of the COVID-19
pandemic resulting from practices implemented to combat COVID-19,
such as social distancing and shelter-in-place policies, as these
charges are not considered a part of our core business operations
and are not an indicator of ongoing, future company performance.
Adjusted gross margin represents adjusted gross profit as a
percentage of revenue.
Adjusted
EBITDA is defined as net loss adjusted to add back interest expense
including debt extinguishment and depreciation and amortization,
and certain charges and expenses, such as non-cash compensation
costs, acquisition related costs, derivative income, financing
activities, litigation expenses, severance, new business
development costs, technology implementation costs and expenses,
and facility closure and lease termination costs, as these charges
and expenses are not considered a part of our core business
operations and are not an indicator of ongoing, future company
performance.
Adjusted
gross profit, adjusted gross margin and adjusted EBITDA is one of
the primary metrics used by management to evaluate the financial
performance of our business. We present adjusted gross profit,
adjusted margin, and adjusted EBITDA because we believe it is
frequently used by analysts, investors and other interested parties
to evaluate companies in our industry. Further, we believe it is
helpful in highlighting trends in our operating results, because it
excludes, among other things, certain results of decisions that are
outside the control of management, while other measures can differ
significantly depending on long-term strategic decisions regarding
capital structure and capital investments.
Cautionary note regarding forward looking statements
This
press release may contain “forward-looking statements”
as that term is defined under the Private Securities Litigation
Reform Act of 1995 (PSLRA), which statements may be identified by
words such as “expects,” “projects,”
“will,” “may,” “anticipates,”
“believes,” “should,”
“intends,” “estimates,” and other words of
similar meaning. Readers are cautioned not to place undue reliance
on these forward-looking statements, which are based on the
Company’s expectations as of the date of this report and
speak only as of the date of this report and are advised to
consider the factors listed under the heading
“Forward-Looking Statements” and “Risk
Factors” in the Company’s SEC filings, as may be
updated and amended from time to time. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
RumbleOn, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
As
of
March
31,
2020
|
As
of
December
31,
2019
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$2,484,169
|
$49,660
|
|
Restricted
cash
|
5,502,322
|
6,676,622
|
|
Accounts
receivable, net
|
8,242,025
|
8,482,707
|
|
Inventory
|
55,408,531
|
57,381,281
|
|
Prepaid expense and
other current assets
|
1,369,648
|
1,210,474
|
|
Total current
assets
|
73,006,695
|
73,800,744
|
|
|
|
|
|
Property
and equipment, net
|
6,172,886
|
6,427,674
|
|
Right-of-use
asset
|
5,815,328
|
6,040,287
|
|
Goodwill
|
26,886,563
|
26,886,563
|
|
Other
assets
|
82,648
|
237,823
|
|
Total
assets
|
$111,964,120
|
$113,393,091
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable
and other accrued liabilities
|
$10,235,472
|
$12,421,094
|
|
Accrued interest
payable
|
1,183,623
|
749,305
|
|
Current portion of
convertible debt
|
1,156,911
|
1,363,590
|
|
Current portion of
long-term debt
|
62,799,557
|
59,160,970
|
|
Total current
liabilities
|
75,375,563
|
73,694,959
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
Note
payable
|
-
|
1,924,733
|
|
Convertible
Debt
|
26,082,706
|
20,136,229
|
|
Derivative
liabilities
|
137,488
|
27,500
|
|
Other long-term
liabilities
|
4,968,931
|
4,722,101
|
|
Total long-term
liabilities
|
31,189,125
|
26,810,563
|
|
|
|
|
|
Total
liabilities
|
106,564,688
|
100,505,522
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Class B Preferred
stock, $0.001 par value, 10,000,000 shares authorized, 0 and 0
shares issued and outstanding as of March 31, 2020 and December 31,
2019
|
-
|
-
|
|
Common A stock,
$0.001 par value, 50,000 shares authorized, 50,000 shares issued
and outstanding as of March 31, 2020 and December 31,
2019
|
50
|
50
|
|
Common B stock,
$0.001 par value, 4,950,000 shares authorized, 2,151,166 and
1,111,681 shares issued and outstanding as of March 31, 2020 and
December 31, 2019
|
2,151
|
1,112
|
|
Additional paid in
capital
|
106,817,379
|
92,268,213
|
|
Accumulated
deficit
|
(101,420,148)
|
(79,381,806)
|
|
Total stockholders'
equity
|
5,399,432
|
12,887,569
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
$111,964,120
|
$113,393,091
|
RumbleOn, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
2019
|
|
Revenue:
|
|
|
|
Pre-owned vehicle
sales:
|
|
|
|
Powersports
|
$23,139,080
|
$26,929,159
|
|
Automotive
|
114,198,079
|
190,907,188
|
|
Transportation and
vehicle logistics
|
7,087,591
|
5,341,412
|
|
Total
revenue
|
144,424,750
|
223,117,759
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
Powersports
|
20,558,286
|
23,949,556
|
|
Automotive
|
108,353,505
|
181,495,112
|
|
Transportation
|
5,088,059
|
3,742,022
|
|
Cost of revenue
before impairment loss
|
133,999,850
|
209,186,690
|
|
Impairment loss on
automotive inventory
|
11,738,413
|
-
|
|
Total cost of
revenue
|
145,738,263
|
209,186,690
|
|
|
|
|
|
Gross profit
(loss)
|
(1,313,513)
|
13,991,069
|
|
|
|
|
|
Selling, general
and administrative
|
18,056,426
|
20,440,016
|
|
|
|
|
|
Depreciation and
amortization
|
522,995
|
382,225
|
|
|
|
|
|
Operating
loss
|
(19,892,934)
|
(6,831,172)
|
|
|
|
|
|
Interest
expense
|
(2,216,757)
|
(1,445,133)
|
|
|
|
|
|
Loss in derivative
liability
|
(116,815)
|
-
|
|
|
|
|
|
Gain on early
extinguishment of debt
|
188,164
|
-
|
|
|
|
|
|
Net loss before
provision for income taxes
|
(22,038,342)
|
(8,276,305)
|
|
|
|
|
|
Benefit for income
taxes
|
-
|
-
|
|
|
|
|
|
Net
loss
|
$(22,038,342)
|
$(8,276,305)
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic and fully
diluted
|
2,046,423
|
1,024,221
|
|
|
|
|
|
Net loss per share
- basic and fully diluted
|
$(10.77)
|
$(8.08)
|
RumbleOn, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Three
Months Ended March 31,
|
|
|
|
2020
|
2019
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Net
loss
|
$(22,038,342)
|
$(8,276,305)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
522,995
|
382,225
|
|
Amortization of
debt discounts
|
627,755
|
211,725
|
|
Share based
compensation
|
846,370
|
689,121
|
|
Impairment loss on
inventory
|
11,738,413
|
-
|
|
Impairment loss on
fixed assets
|
177,626
|
-
|
|
Loss from change in
value of derivatives
|
116,815
|
-
|
|
Gain on early
extinguishment of debt
|
(188,164)
|
-
|
|
Changes in
operating assets and liabilities:
|
|
|
|
(Increase) decrease
in prepaid expenses and other current assets
|
(159,175)
|
324,689
|
|
(Increase) decrease
in inventory
|
(9,765,663)
|
2,106,138
|
|
Decrease (Increase)
in accounts receivable
|
240,682
|
(1,200,058)
|
|
(Increase) decrease
in other assets
|
155,175
|
-
|
|
Decrease in
accounts payable and accrued liabilities
|
(2,176,064)
|
(806,848)
|
|
Increase in accrued
interest payable
|
434,318
|
92,573
|
|
Net cash used in
operating activities
|
(19,467,259)
|
(6,476,740)
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
Cash used for
acquisitions; net of cash received
|
-
|
(835,000)
|
|
Purchase of
property and equipment
|
(132,366)
|
-
|
|
Proceeds from sales
of property and equipment
|
-
|
40,620
|
|
Technology
development
|
(290,376)
|
(879,829)
|
|
Net cash used in
investing activities
|
(422,742)
|
(1,674,209)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
Proceeds from notes
payable
|
8,272,375
|
-
|
|
Net proceeds
(repayments) on line of credit
|
2,097,755
|
(3,241,603)
|
|
Net Proceeds from
sale of common stock
|
10,780,080
|
6,525,775
|
|
Net cash provided
by financing activities
|
21,150,210
|
3,284,172
|
|
|
|
|
|
NET CHANGE IN
CASH
|
1,260,209
|
(4,866,777)
|
|
|
|
|
|
CASH AND RESTRICTED
CASH AT BEGINNING OF PERIOD
|
6,726,282
|
15,784,902
|
|
|
|
|
|
CASH AND RESTRICTED
CASH AT END OF PERIOD
|
$7,986,491
|
$10,918,125
|
RumbleOn, Inc.
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Net Loss
(Unaudited)
|
|
Three Months
Ended
March
31,
|
|
|
|
2020
|
2019
|
|
Net loss
|
$(22,038,342)
|
$(8,276,305)
|
|
Add back:
|
|
|
|
Interest
expense (including debt extinguishment)
|
2,028,593
|
1,445,133
|
|
Depreciation
and amortization
|
522,995
|
382,225
|
|
Increase in
derivative liability
|
116,815
|
-
|
|
EBITDA
|
(19,369,939)
|
(6,448,947)
|
|
Adjustments
|
|
|
|
Impairment
loss on automotive inventory
|
11,738,413
|
-
|
|
Non-cash-stock-based
compensation
|
846,370
|
689,121
|
|
Litigation
expenses
|
277,995
|
24,446
|
|
Technology
implementation costs and expenses
|
-
|
215,643
|
|
Adjusted EBITDA
|
$(6,507,161)
|
$(4,674,489)
|
Reconciliation of Adjusted Gross Profit To Gross Loss
and
Adjusted Gross Margin to Gross Margin
(unaudited)
|
|
March 31,
|
|
|
2020
|
|
Total
Revenue
|
$144,424,750
|
|
Cost
of revenue before impairment loss
|
133,999,850
|
|
Gross
profit before impairment loss
|
10,424,900
|
|
Less
impairment loss
|
(11,738,413)
|
|
Gross
loss
|
(1,313,513)
|
|
Add
back impairment loss
|
11,738,413
|
|
Add
back net realizable value adjustments
|
1,218,809
|
|
Adjusted gross profit
|
$11,643,709
|
|
Gross margin (1)
|
(0.9)%
|
|
Adjusted Gross margin (2)
|
8.1%
|
(1) Represents gross loss as a percentage of revenue.
(2) Represents adjusted gross profit as a percentage of
revenue.
Investor
Relations:
The
Blueshirt Group
Dylan
Solomon
investors@rumbleon.com
Source:
RumbleOn, Inc