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8-K - FORM 8-K - RumbleOn, Inc. | rmbl_8k.htm |
Exhibit 99.1
RumbleOn Reports Second Quarter 2020 Results
Achieved Earnings Per Share Profit of $0.47 versus $(11.69) Loss
per Share in Q2 2019
Grew Total Gross Profit per Vehicle 74% Year-over-Year
Q3
is Showing the Strongest Demand and Highest Online Activity in the
Company’s History
DALLAS- RumbleOn, Inc (NASDAQ: RMBL), an e-commerce company using
innovative technology to aggregate and distribute pre-owned
vehicles to and from both consumers and dealers, today announced
financial results for the three months ended June 30,
2020.
“We
have demonstrated solid progress on our march to profitability the
past several quarters and I am pleased to report that we generated
double digit gross margin as a percent of sales and $1.0 million in
net income in the quarter, despite the challenging macroeconomic
backdrop. In 2019, we demonstrated our ability to rapidly scale
RumbleOn and exited the year with our eye on achieving
profitability. We have taken prescriptive measures to drive gross
margin expansion, gross profit per unit improvements and reduce
operating expenses and our second quarter results are evidence of
our ability to rationalize our expense profile and take advantage
of market trends cost effectively,” commented Marshall
Chesrown, Chief Executive Officer.
“The
COVID-19 pandemic has brought headwinds and tailwinds to this
industry. Thus far in the third quarter we are experiencing the
highest online activity, strongest demand and highest valuations we
have seen in our history.”
“A
rapid digital transformation is underway in all industries around
the world. Now more than ever, consumers are looking for online
solutions, and organizations must be prepared to conduct their
business and engage their customers online. All retailers need new
ways to reach customers, and dealers need access to tools and
technology to stay competitive in the ‘new normal’ of
online transactions. RumbleOn’s technology was purpose-built
to enable a 100% online experience and with the launch of RumbleOn
3.0, our technology platform, tools, and ancillary products and
services will be available to all powersport dealers. Our platform
will be a vital solution for dealers as the need to bring more and
more elements of vehicle transactions online reverberates around
the world. Not only will RumbleOn’s dealer-centric offering
improve participating powersport dealers’ ability to compete
in online-only transactions, it will expand the monetization
opportunities of our technology platform.”
“We
continue to see fluctuations in market trends, but our nimble
business model has enabled us to make operational changes that we
believe will enable us to emerge stronger than ever. We have been
methodical in our approach to vehicle acquisition, and as a result
we are beginning to experience meaningful progress towards our goal
of achieving sustainable profitability,” continued
Chesrown.
Second Quarter 2020 Financial Highlights
Last
fall, the Company made the decision to take prescriptive steps to
accelerate profitability by taking a disciplined approach to sales
volume. As a reminder, in Q2 of last year, RumbleOn reported record
unit sales of 13,928 and record revenue of $270.2 million, making
top line year-over-year comparisons challenging. However, the
Company believes that despite the adverse impact of the COVID-19
pandemic, which resulted in significantly reduced commercial
activity, including a decrease in unit purchases and sales of
vehicles, the Company’s second quarter results demonstrate
the operational improvements it has made across the
organization.
All
comparisons are year-over-year for the three months ended June 30,
2020 unless otherwise stated.
●
Total vehicle unit sales of 3,694, down
from 13,928
●
Total revenue was $84.3 million, down from $270.2
million
o
Powersports revenue was $8.2 million
o
Automotive revenue was $68.3 million
o
Transportation revenue was $7.7
million
o
Other revenue was
$0.2 million
●
Gross profit was $8.5 million or 10.0% of revenue, as compared to
$15.6 million or 5.8% of revenue
o
Gross margin on vehicles sold was
8.5%, the highest in the
Company’s history, and up from
5.3%. Gross profit per vehicle was $1,752 per vehicle, up
74%
o
Powersports gross profit per powersport vehicle
sold was $781
o
Automotive gross profit per automotive
vehicle sold was
$2,046
●
Sales, general and administrative expenses were
$11.2 million, a decrease
of 55% from $25.0
million
●
Insurance proceeds
were $5.6 million in the quarter. See the section titled
“Insurance Proceeds” below for additional
details
●
Operating income was $2.4 million, or 2.8% of total revenue,
including the effect of insurance proceeds, up from operating loss
of $(9.8) million or (3.6)% of revenue
●
Net Income was
$1.0 million, or $0.47
per basic and fully diluted share, including the effect of $5.6
million of insurance proceeds as compared to net loss of $13.0
million or a loss of $(11.69) per share. Basic and fully diluted
shares in Q2 were 2,214,241 shares of common stock outstanding and
1,111,809 shares in Q2 2019
●
Adjusted EBITDA
loss, which excludes the $5.6 million insurance payment, was $(1.3)
million in Q2, compared to a loss of $(6.9) million
Adjusted
EBITDA is a non-GAAP financial measure. Reconciliations of
non-GAAP financial measures used in this release are provided in
the attached financial tables.
Recent Business Highlights
●
RumbleOn announced
a dealer-centric pilot program with CarGurus. CarGurus is
leveraging RumbleOn’s technology, logistics transportation
and distribution services to facilitate the testing of inventory
acquisition for dealers to source inventory directly from
consumers, 100% online.
●
RumbleOn announced
the upcoming launch of RumbleOn.com 3.0. RumbleOn.com 3.0 will
allow dealers to list both new and used powersports on our site, as
well as giving them access to our unparalleled technology for cash
offers, RumbleOn Finance and an enhanced Dealer Direct platform
offering B2B wholesale transactions along with virtual
inventory.
●
RumbleOn announced
that more than 100 dealers across 29 states will participate in
RumbleOn.com 3.0 at launch. These franchises and independent
powersport dealers maintain thousands of new and used powersports
listings which will be available on RumbleOn.com.
●
RumbleOn appointed
Michael Marchlik and Adam Alexander to its Board of
Directors.
●
RumbleOn hired
Rocco Falabella as Strategic Relationship Director and Marc
Holstein as Director of Business to Business
Technology.
Third Quarter 2020 Commentary and Outlook
“We
are optimistic that our strategy to take a disciplined approach to
sales volume to benefit margins will continue to pay off in
Q3,” said Chesrown. “The velocity of the rebound we
experienced beginning in May was beyond our expectations. Though we
are still below the monthly unit volumes experienced in January and
February, gross margin on units sold in June and July were the
highest in RumbleOn’s history. We don’t believe the
margin levels we saw during the past two months will continue over
the long term, but will stabilize as demand
levels.”
“While
we are seeing increased activity, there is still much uncertainty
in the macro environment that could impact our industry. We expect
to continue to see steady bottom-line improvements, however we
anticipate the return to ‘business as usual’ will take
time. In the meantime, we will continue to take a conservative
approach to sales volume for the rest of 2020 as we focus on high
margin revenue, adding more dealers to our platform and continuing
to march towards our near-term profitability goals," 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 continue to withhold guidance until we can better gauge market
conditions and have a clearer understanding of the lasting impact
from the COVID-19 pandemic.
Insurance Proceeds
Our
business was impacted from a direct hit by the tornado that struck
Nashville on March 3rd. The Company maintains insurance coverage
for damage to its facilities and inventory, as well as business
interruption insurance. During Q1 2020 RumbleOn recorded a $11.7
million non-cash inventory impairment loss which included $4.4
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. In July 2020, the insurer made an advance against the
final settlement of the damage claim on inventory of $5,615,268.
This recovery has been recorded as a separate component of income
from continuing operations for the three-month period ended June
30, 2020. The Company expects to recover its insured losses
resulting from the damage to the Company's facilities including
inventory held for sale, as further discussed in our financial statements,
however no assurance can be given regarding the amounts, if any,
that will be ultimately recovered or when such amounts, if any,
will be recovered.
Conference Call Details
RumbleOn’s
management will host a conference call to discuss its financial
results on Friday, August 14, 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 (877) 273-6127, or
(647) 689-5394 for callers outside of North America (conference ID:
2089921). 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: 2089921).
About RumbleOn
Founded
in 2017, RumbleOn (NASDAQ: RMBL) is an e-commerce company using
innovative technology to aggregate and distribute pre-owned
automotive and powersport vehicles to and from both consumers and
dealers, 100% online. RumbleOn is disrupting the pre-owned vehicle
supply chain by providing dealers with technology solutions such as
virtual inventory, and a 24/7 distribution platform, and consumers
with an efficient, timely and transparent transaction experience,
without leaving home. Whether buying, selling, trading or financing
a vehicle, RumbleOn enables dealers and consumers to transact
without geographic boundaries in a transparent, fast and friction
free 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 June 30, 2020 used in this release include:
adjusted EBITDA.
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
EBITDA is defined as net income or 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. In Q2 2020, we also subtracted from net income $5.6
million in insurance proceeds to arrive at our adjusted
EBITDA.
Adjusted
EBITDA is one of the primary metrics used by management to evaluate
the financial performance of our business. We present 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
RumbleOn’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 RumbleOn’s SEC filings, as may be updated
and amended from time to time. RumbleOn 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
June 30, 2020
|
As
of
December 31, 2019
|
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
|
$3,061,091
|
$49,660
|
Restricted
cash
|
5,533,832
|
6,676,622
|
Accounts
receivable, net
|
14,796,028
|
8,482,707
|
Inventory
|
31,488,211
|
57,381,281
|
Prepaid expense and
other current assets
|
1,131,320
|
1,210,474
|
Total current
assets
|
56,010,482
|
73,800,744
|
|
|
|
Property and
equipment, net
|
5,973,660
|
6,427,674
|
Right-of-use
assets
|
3,560,045
|
6,040,287
|
Goodwill
|
26,886,563
|
26,886,563
|
Other
assets
|
70,637
|
237,823
|
Total
assets
|
$92,501,387
|
$113,393,091
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts payable
and other accrued liabilities
|
$9,255,126
|
$12,421,094
|
Accrued interest
payable
|
1,619,105
|
749,305
|
Current portion of
convertible debt
|
999,061
|
1,363,590
|
Current portion of
long-term debt
|
40,815,937
|
59,160,970
|
Total current
liabilities
|
52,689,229
|
73,694,959
|
|
|
|
Long-term
liabilities:
|
|
|
Note
payable
|
2,847,662
|
1,924,733
|
Convertible
Debt
|
26,333,584
|
20,136,229
|
Derivative
liabilities
|
-
|
27,500
|
Other long-term
liabilities
|
3,470,617
|
4,722,101
|
Total long-term
liabilities
|
32,651,863
|
26,810,563
|
|
|
|
Total
liabilities
|
85,341,092
|
100,505,522
|
|
|
|
Commitments and
contingencies (Notes 4, 7, 8, 9, 13, 18)
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
Class B Preferred
stock, $0.001 par value, 10,000,000 shares authorized, 0 and 0
shares issued and outstanding as of June 30, 2020 and December 31,
2019
|
-
|
-
|
Common A stock,
$0.001 par value, 50,000 shares authorized, 50,000 shares issued
and outstanding as of June 30, 2020 and December 31,
2019
|
50
|
50
|
Common B stock,
$0.001 par value, 4,950,000 shares authorized, 2,179,907 and
1,111,681 shares issued and outstanding as of June 30, 2020 and
December 31, 2019
|
2,180
|
1,112
|
Additional paid in
capital
|
107,533,741
|
92,268,213
|
Accumulated
deficit
|
(100,375,676)
|
(79,381,806)
|
Total stockholders'
equity
|
7,160,295
|
12,887,569
|
|
|
|
Total liabilities
and stockholders' equity
|
$92,501,387
|
$113,393,091
|
RumbleOn, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
|
Three-Months
Ended June 30,
|
Six-Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
Revenue:
|
|
|
|
|
Pre-owned vehicle
sales:
|
|
|
|
|
Powersports
|
$8,199,396
|
$30,305,687
|
$31,338,476
|
$57,234,846
|
Automotive
|
68,294,841
|
233,856,329
|
181,927,108
|
424,763,517
|
Transportation and
vehicle logistics
|
7,663,500
|
6,017,888
|
14,751,091
|
11,359,300
|
Other
|
183,556
|
-
|
473,879
|
-
|
Total
revenue
|
84,341,293
|
270,179,904
|
228,490,554
|
493,357,663
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
Powersports
|
7,528,810
|
26,137,459
|
28,085,447
|
50,087,015
|
Automotive
|
62,493,015
|
223,996,259
|
170,572,680
|
405,491,371
|
Transportation
|
5,862,734
|
4,428,674
|
10,950,792
|
8,170,696
|
Cost of revenue
before impairment loss
|
75,884,559
|
254,562,392
|
209,608,919
|
463,749,082
|
Impairment loss on
automotive inventory
|
-
|
-
|
11,738,413
|
-
|
Total cost of
revenue
|
75,884,559
|
254,562,392
|
221,347,332
|
463,749,082
|
|
|
|
|
|
Gross
profit
|
8,456,734
|
15,617,512
|
7,143,222
|
29,608,581
|
|
|
|
|
|
Selling, general
and administrative
|
11,174,288
|
25,007,565
|
29,230,714
|
45,447,581
|
|
|
|
|
|
Insurance recovery
proceeds
|
(5,615,268)
|
-
|
(5,615,268)
|
-
|
|
|
|
|
|
Depreciation and
amortization
|
508,322
|
427,438
|
1,031,317
|
809,663
|
|
|
|
|
|
Operating income
(loss)
|
2,389,392
|
(9,817,491)
|
(17,503,541)
|
(16,648,663)
|
|
|
|
|
|
Interest
expense
|
(1,482,408)
|
(1,874,858)
|
(3,699,166)
|
(3,319,991)
|
|
|
|
|
|
Change in
derivative liability
|
137,488
|
190,000
|
20,673
|
190,000
|
|
|
|
|
|
Loss on early
extinguishment of debt
|
-
|
(1,499,250)
|
188,164
|
(1,499,250)
|
Income (loss)
before provision for income taxes
|
1,044,472
|
(13,001,599)
|
(20,993,870)
|
(21,277,904)
|
|
|
|
|
|
Benefit for income
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net income
(loss)
|
$1,044,472
|
$(13,001,559)
|
$(20,993,870)
|
$(21,277,904)
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic and fully
diluted
|
2,214,241
|
1,111,809
|
2,130,332
|
1,068,257
|
|
|
|
|
|
Net income (loss)
per share - basic and fully diluted
|
$0.47
|
$(11.69)
|
$(9.85)
|
$(19.92)
|
RumbleOn, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
Six Months Ended
June 30,
|
|
|
2020
|
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
Net
loss
|
$(20,993,870)
|
$(21,277,904)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
1,031,317
|
809,663
|
Amortization of
debt discounts
|
1,051,898
|
714,629
|
Share based
compensation
|
1,562,761
|
1,646,112
|
Impairment loss on
inventory
|
11,738,413
|
-
|
Impairment loss on
fixed assets
|
177,626
|
-
|
Loss from change in
value of derivatives
|
(27,500)
|
(190,000)
|
Loss (Gain) from
extinguishment of debt
|
(188,164)
|
1,499,250
|
Changes in
operating assets and liabilities:
|
|
|
Decrease in prepaid
expenses and other current assets
|
79,154
|
576,940
|
(Increase) decrease
in inventory
|
14,154,657
|
(12,902,749)
|
(Increase) in
accounts receivable
|
(6,313,321)
|
(1,148,365)
|
Decrease in other
assets
|
167,186
|
5,545
|
Decrease in
accounts payable and accrued liabilities
|
(2,732,098)
|
(3,721,211)
|
Increase in accrued
interest payable
|
869,800
|
493,039
|
Net cash provided
by (used in) operating activities
|
577,859
|
(33,495,051)
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
Cash used for
acquisitions; net of cash received
|
-
|
(835,000)
|
Purchase of
property and equipment
|
(174,786)
|
-
|
Proceeds from sales
of property and equipment
|
-
|
40,620
|
Technology
development
|
(614,113)
|
(1,919,569)
|
Net cash used in
investing activities
|
(788,899)
|
(2,713,949)
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
Proceeds from notes
payable
|
8,272,375
|
27,455,537
|
Payments on notes
payable
|
(1,521,825)
|
(11,134,695)
|
Net proceeds
(repayments) on lines of credit
|
(20,627,794)
|
8,181,254
|
Net proceeds from
sale of common stock
|
10,780,080
|
15,155,546
|
Proceeds from PPP
loan
|
5,176,845
|
-
|
Net cash provided
by financing activities
|
2,079,681
|
39,657,642
|
|
|
|
NET CHANGE IN
CASH
|
1,868,641
|
3,448,642
|
|
|
|
CASH AND RESTRICTED
CASH AT BEGINNING OF PERIOD
|
6,726,282
|
15,784,902
|
|
|
|
CASH AND RESTRICTED
CASH AT END OF PERIOD
|
$8,594,923
|
$19,233,544
|
|
Three Months
Ended
June
30,
|
|
|
2020
|
2019
|
Net
income (loss)
|
$1,044,472
|
$(13,001,599)
|
Add
back:
|
|
|
Interest expense
(including debt extinguishment)
|
1,482,408
|
3,374,108
|
Depreciation and
amortization
|
508,322
|
427,438
|
EBITDA
|
3,035,202
|
(9,200,053)
|
Adjustments
|
|
|
Insurance recovery
proceeds
|
(5,615,268)
|
-
|
Non-cash-stock-based
compensation
|
716,391
|
956,991
|
Acquisition related
costs
|
-
|
208,252
|
Change in
derivative liability
|
(137,488)
|
(190,000)
|
New business
development
|
-
|
478,543
|
Litigation
expenses
|
607,387
|
37,000
|
Other
non-reoccurring costs
|
51,387
|
770,492
|
Adjusted
EBITDA
|
$(1,342,389)
|
$(6,938,775)
|
Investor
Relations:
The
Blueshirt Group
Dylan
Solomon
investors@rumbleon.com
Source:
RumbleOn, Inc