Attached files
Exhibit
99.2
Investor
Presentation Script
March
15, 2021
RumbleOn – Project Wheelie Deal Announcement Prepared
Remarks
[Dylan]
Good
morning everyone, thank you for joining us on a conference call to
discuss our full year 2020 results and the proposed business
combination of RumbleOn and RideNow. The companies have issued a
joint press release and investor presentation regarding the
proposed business combination, which can be found on
RumbleOn’s Investor Relations website at
investors.rumbleon.com.
Joining
me on the call today are RumbleOn’s CEO, Marshall Chesrown,
RumbleOn’s CFO Steve Berrard, and RideNow’s CEO Mark
Tkach.
Details
of our financial results and additional Management commentary are
available in our earnings release, which can be found on the
Investor Relations section of the website at
investors.rumbleon.com. Please note that this call will be
simultaneously webcast on the Investor Relations section of the
Company’s corporate website. This conference call is the
property of RumbleOn, and any taping or other reproduction is
expressly prohibited without prior written consent.
Before
we start, I would like to remind you that the following discussion
contains forward-looking statements that involve risks and
uncertainties that may cause actual results to differ materially
from those discussed here. Additional information that could cause
actual results to differ from forward-looking statements can be
found in RumbleOn’s periodic SEC filings.
The
forward-looking statements in this conference call, including
responses to your questions, are based on current expectations as
of today, and RumbleOn assumes no obligation to update or revise
them, whether as a result of new developments or otherwise, except
as required by law.
Also
the following discussion may contain non-GAAP financial measures.
For a reconciliation of these non-GAAP financial measures, please
see our earnings release.
Now
I’ll turn the call over to Marshall. Marshall?
[Marshall]
Thanks,
Dylan.
Today
is an exciting day for powersports enthusiasts across the
country.
As you
saw in our press release this morning, RumbleOn and RideNow are
combining to create the first - and only - omnichannel powersport
platform in the US, offering the fastest, easiest, and most
transparent transaction process available today.
The
RideNow Powersports group is the nation’s largest powersports
retailer with more than 40 full-service locations across 11 states.
The Company sold over 45,000 powersport units in 2020, generating
approximately $899.4 million of revenue, $90.3 million in net
income and approximately $96.6 million of adjusted EBITDA. Its
footprint is strategically concentrated in sunbelt states like
Arizona, Texas, and Florida that are benefitting from population
growth and year-round powersports demand. Combining
RumbleOn’s disruptive eCommerce platform with RideNow’s
dominant retail footprint will provide powersports enthusiasts with
a best-in-class transaction experience. For our customers, this is
about offering a simple, safe, hassle-free and flexible experience.
Shop for your next powersports vehicle from our robust selection of
new and used inventory, access financing options 100% online,
receive a cash offer for a vehicle you own today, or trade-in any
vehicle type toward your next powersports experience. And now even
if you transact online, you’ll have the benefit of the best
parts and service experience in the industry.
Our
business models are complementary to each other, and together we
will revolutionize the powersports transaction experience. Together
we tackle an industry that is more than $100B domestically with
considerable tailwinds benefitting our customers. Powersport
vehicle sales are seeing strong demand and continue to experience
significant growth as consumers pursue an outdoor lifestyle.
Millennials and Gen X want unique experiences. The average
powersports buyer is younger and from a broader demographic than
ever before. There has never been a better time to be in the
industry. And we are the first to offer this industry a true
omnichannel solution.
We will
continue to serve our many dealer partners, who also stand to
benefit from this combination. As a reminder, we launched RumbleOn
3.0 in August 2020 to help drive the powersports industry to the
next generation technology platform. 3.0 will still bring
traditional brick and mortar powersports dealers across the country
online, including markets not served by our RideNow footprint. We
offer the opportunity for incremental sales volume to dealer groups
large or small, regardless of their geographic location. Most do
not have the ability to support a 100% online transaction
efficiently, and certainly not with the technological
sophistication and automation that powers RumbleOn. Dealers around
the country are choosing RumbleOn's technology solutions to lead
their transformation to transact digitally.
We
announced the launch of 3.0 in August of 2020. At that time, we had
more than 18,000 powersport listings on our site, from over 130
dealer locations around the country. We’ve since massively
scaled the offering, and currently have more than 50,000 listings
from over 300 dealer locations from coast to coast on our
platform.
The
business combination with RideNow is a natural evolution of our 3.0
strategy. This combination will create the only omnichannel
customer experience in powersports and the largest publicly traded
powersports dealership platform. With more than 7,000 powersports
dealers in the US and 85% of these dealers who own only a single
location, this industry remains ripe for consolidation. Our
technology, OEM relationships, winning culture and new financial
partners make us the partner of choice for dealers around the
country. Many of them, like RideNow, will get to know us through
RumbleOn 3.0.
Concurrent
with the transaction announcement, we released our financial
results for the full year 2020. Before Steve discusses our results
and the transaction details, I’d like to introduce Mark
Tkach, RideNow’s CEO. Mark and his partner Bill Coulter have
established a remarkable track record of organic sales growth,
accretive acquisitions, and consistent profitability. At the
closing of this transaction, Mark and Bill will become two of the
largest shareholders of RumbleOn and I couldn’t imagine
better partners with whom to create this transformational
combination. Mark, welcome to the RumbleOn family.
[Mark]
Thanks
Marshall.
Today
is a transformative day for me and the [1,800] thousand RideNow
team members who are dedicated to providing our customers with a
best-in-class experience. This combination is about bringing that
experience to another level. We began working with RumbleOn in
August of last year as part of their RumbleOn 3.0 launch. We listed
our entire catalogue of new and used inventory with RumbleOn.com
and the incremental leads, sales volume and advanced capabilities
RumbleOn’s technology brought successfully expanded our
online capabilities.
We are
solidifying this partnership today and believe we can unlock
significant synergies as a combined company. The first omnichannel
consumer experience available in powersports enables us to reach
more consumers than either company could independently.
RumbleOn’s technology and online capabilities combined with
RideNow’s physical locations and brand will expand our
product and inventory, which will drive an increase in sales and
improved monetization. And, as Marshall mentioned, operating as a
public company will help further our industry consolidation
efforts.
We also
look forward to servicing former and future RumbleOn customers. We
don’t sell vehicles, we sell a lifestyle and an experience.
With RideNow, consumers have the ability to go to a trusted shop
for maintenance and repairs, apparel and accessories, all of which
will allow us to continue the connection with our combined
customers, increasing their lifetime value and enhancing their
overall powersports experience.
This is
a people business, and we’ve known the RumbleOn team for many
years. They are the right people to help realize the full potential
of our combined company. Bill and I are excited to join forces with
Marshall and the entire RumbleOn executive team. We look forward to
a partnership that will forever change powersports retail and
deliver value to our fellow shareholders.
Now
I’ll pass the call over to Steve.
[Steve]
Before
discussing the transaction details, I will first provide a brief
overview of RumbleOn’s Full year 2020 results and some color
on what our financial results would look like on a proforma
basis.
For the
full year 2020, RumbleOn sold 18,024 units and generated revenue of
$416.4 million, as compared to 43,143 units and $840.6 million in
2019. The decrease in vehicles sold resulted from (i) the adverse
impact of COVID-19 pandemic on commercial activity resulting in
lower levels of inventory available for purchase causing lower unit
sales but higher average selling prices due to the supply and
demand imbalance; (ii) a reduction in automotive unit sales
resulting from the significant damage to the Company’s
operating facilities and inventory held for sale in Nashville as a
result of the March 2020 tornado; (iii) our continued disciplined
approach to sales volume and margin growth; and (iv) a reduction in
per vehicle advertising expenditures.
RumbleOn’s
full year gross profit was $31.6 million, or 7.6% of revenue, an
improvement from gross margins of 6.0% in 2019. The increase was
due in part to COVID-19 creating supply and demand imbalances which
led to higher average selling prices and margins. The improved
gross margin were also a result of our continued disciplined
approach to sales volume and margin growth as we take prescriptive
steps to drive towards sustainable future
profitability.
Total
SG&A for the year was $53.7 million, a decrease of nearly $33
million from the $86.6 million reported in 2019. The reduction in
SG&A was a result of a decrease in vehicles sold resulting in a
corresponding reduction in selling expenses, sales related
compensation, and marketing spend for the year ended December 31,
2020 as compared to 2019; (ii) a reduction in automotive vehicle
sales resulting from the significant damage to the Company's
operating facilities and inventory held for sale in Nashville as a
result of the tornado; and (iii) a reduction in staffing levels and
adjusted purchasing levels to align with demand and market
conditions and a deferral of discretionary growth expenditures such
as travel, facilities, information technology investments due to
the adverse impact of COVID-19 on commercial activity.
For the
full year, RumbleOn’s net loss of $25.0 million and adjusted
EBITDA loss was $5.8 million a significant improvement from the
$45.2 million net loss and $26.4 million adjusted EBITDA loss in
2019.
On a
proforma basis the combined company would have generated approx.
$1.3 billion in revenue, $65.3 million in net income and
approximately $90.8 million in adjusted EBITDA.
We
expect our business combination with RideNow to close in the second
or third quarter of this year, so we are not providing guidance for
standalone RumbleOn for 2021. We believe our business models are
highly complementary and we expect to achieve cost synergies over
time, while driving incremental growth. For 2021, assuming a
combination as of January 1, 2021, we expect a revenue range of
$1.45-$1.55 billion and adjusted EBITDA in the range of $100-$110
million. We expect to drive sustainable long term revenue growth
and strong unit economics, with a long-term revenue target in
excess of $5.0 billion and an adjusted EBITDA margin target in
excess of 10%.
We will
provide historical and pro forma financial statements in future
filings with the SEC.
Under
the terms of the definitive agreement, RumbleOn will combine with
up to 46 entities operating under the RideNow brand for a total
consideration of up to $575.4 million, consisting of $400.4 million
of cash and $175.0 million in RumbleOn Class B common stock.
RumbleOn will finance the cash consideration through a combination
of up to $280.0 million of debt and the remainder through the
issuance of new equity. We have entered into a commitment letter
with Oaktree to provide for the debt financing, subject to certain
conditions.
The
number of shares to be issued to RideNow is subject to adjustment
as described in the definitive agreement. The transaction is
subject to successful completion of the debt and equity financing,
RumbleOn stockholder approval, manufacturer approvals, other
federal and state regulatory approvals, and other customary closing
conditions as described in the definitive agreement.
Upon
closing, the RideNow’s executive management team will join
RumbleOn’s leadership team and the combined company will
continue to be listed on the NASDAQ under ticker symbol
RMBL.
We are
excited by both the business opportunities that a combination with
RideNow will bring to the table and the financial
profile.
With
that, I’ll pass the call back to Marshall for closing
remarks.
[Marshall]
Thanks
Steve.
We are
creating the only omnichannel solution in the powersports industry
– offering an unparalleled customer experience for outdoor
enthusiasts across the country.
We are
thrilled with the combination that will transform the way in which
consumers and dealers transact in the powersports industry. We will
provide more details on our business combination in the coming
months.
Thank
you to all of our customers for your continued trust, to our
employees for your hard work and dedication and to our shareholders
for your continued support.
Thank
you again for joining us this morning. We will keep you posted on
the proposed business combination of RumbleOn and RideNow. We look
forward to seeing many of you on the road.
Operator,
we are ready for questions.
Additional Information about the Transaction and Where to Find
It
In
connection with the Transaction, RumbleOn intends to file relevant
materials with the SEC, including a preliminary proxy statement,
and when available, a definitive proxy statement. Promptly after
filing its definitive proxy statement with the SEC, RumbleOn will
mail the definitive proxy statement and a proxy card to each
RumbleOn stockholder entitled to vote at the meeting of
stockholders relating to the Transaction. INVESTORS AND
STOCKHOLDERS OF RUMBLEON ARE URGED TO READ THESE MATERIALS
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER
RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT RUMBLEON
WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT RUMBLEON, RIDENOW, AND THE
TRANSACTION. The definitive proxy statement, the preliminary proxy
statement, and other relevant materials in connection with the
Transaction (when they become available), and any other documents
filed by RumbleOn with the SEC, may be obtained free of charge at
the SEC’s website (www.sec.gov) or by visiting RumbleOn's
investor relations section at www.rumbleon.com. The information
contained on, or that may be accessed through, the websites
referenced in this presentation is not incorporated by reference
into, and is not a part of, this presentation.
Participants in the Solicitation
RumbleOn
and its directors and executive officers may be deemed participants
in the solicitation of proxies from RumbleOn’s stockholders
with respect to the Transaction. A list of the names of those
directors and executive officers and a description of their
interests in RumbleOn will be included in the proxy statement for
the proposed business combination and will be available at
www.sec.gov. Additional information regarding the interests of such
participants will be contained in the proxy statement relating to
the Transaction when available. Information about RumbleOn’s
directors and executive officers and their ownership of
RumbleOn’s common stock is set forth in RumbleOn’s
definitive proxy statement for its 2020 Annual Meeting of
Stockholders filed with the SEC on July 29, 2020. Other information
regarding the interests of the participants in the proxy
solicitation will be included in the proxy statement relating to
the Transaction when it becomes available. These documents can be
obtained free of charge from the sources indicated
above.
RideNow
and its directors and executive officers may also be deemed to be
participants in the solicitation of proxies from the stockholders
of RumbleOn in connection with the Transaction. A list of the names
of such directors and executive officers and information regarding
their interests in the proposed business combination will be
included in the proxy statement relating to the
Transaction.
No Offer or Solicitation
This
presentation does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, by RumbleOn, nor shall there be any sale of
the securities in any state in which such offer, solicitation or
sale would be unlawful before the registration or qualification
under the securities laws of such state. Any offering of the
securities will only be by means of a statutory prospectus meeting
the requirements of the rules and regulations of the SEC and
applicable law.
Forward Looking Statements
Certain
statements made in this presentation are “forward-looking
statements” within the meaning of the “safe
harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as “target,”
“believe,” “expect,” “will,”
“shall,” “may,” “anticipate,”
“estimate,” “would,”
“positioned,” “future,”
“forecast,” “intend,” “plan,”
“project,” “outlook”, and other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. Examples of
forward-looking statements include, among others, statements made
in this presentation regarding the Transaction, including the
benefits of the Transaction, revenue opportunities, anticipated
future financial and operating performance, and results, including
estimates for growth, and the expected timing of the Transaction.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
management’s current beliefs, expectations, and assumptions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are
outside of RumbleOn's control. Actual results and outcomes may
differ materially from those indicated in the forward-looking
statements. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause
actual results and outcomes to differ materially from those
indicated in the forward-looking statements include, among others,
the following: (1) the occurrence of any event, change, or other
circumstances that could give rise to the termination of the
Transaction; (2) the failure to obtain debt and equity financing
required to complete the Transaction; (3) failure to obtain the OEM
approvals; (4) the inability to complete the Transaction, including
due to failure to obtain approval of the stockholders of RumbleOn,
certain regulatory approvals, or satisfy other conditions to
closing in the Agreement; (5) the impact of COVID-19 pandemic on
RumbleOn's business and/or the ability of the parties to complete
the Transaction; (6) the risk that the Transaction disrupts current
plans and operations as a result of the announcement and
consummation of the Transaction; (7) the ability to recognize the
anticipated benefits of the proposed business combination, which
may be affected by, among other things, competition, the ability of
management to integrate the combined company's business and
operation, and the ability of the parties to retain its key
employees; (8) costs related to the Transaction; (9) changes in
applicable laws or regulations; (10) risks relating to the
uncertainty of the projected financial information with respect to
the combined company; and (11) other risks and uncertainties
indicated from time to time in the preliminary and definitive proxy
statements to be filed with the SEC relating to the Transaction,
including those under “Risk Factors” therein, and in
RumbleOn's other filings with the SEC. RumbleOn cautions that the
foregoing list of factors is not exclusive. RumbleOn cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. RumbleOn does not
undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in their expectations or any change in
events, conditions, or circumstances on which any such statement is
based, whether as a result of new information, future events, or
otherwise, except as may be required by applicable law. Neither
RumbleOn nor RideNow gives any assurance that after the Transaction
the combined company will achieve its expectations.
Without
limiting the foregoing, the inclusion of the financial projections
in this presentation should not be regarded as an indication that
RumbleOn considered, or now considers, them to be a reliable
prediction of the future results. The financial projections were
not prepared with a view towards public disclosure or with a view
to complying with the published guidelines of the SEC, the
guidelines established by the American Institute of Certified
Public Accountants with respect to prospective financial
information, or with U.S. generally accepted accounting principles.
Neither RumbleOn’s independent auditors, nor any other
independent accountants, have compiled, examined or performed any
procedures with respect to the financial projections, nor have they
expressed any opinion or any other form of assurance on such
information or its achievability. Although the financial
projections were prepared based on assumptions and estimates that
RumbleOn’s management believes are reasonable, RumbleOn
provides no assurance that the assumptions made in preparing the
financial projections will prove accurate or that actual results
will be consistent with these financial projections. Projections of
this type involve significant risks and uncertainties, should not
be read as guarantees of future performance or results and will not
necessarily be accurate indicators of whether or not such results
will be achieved.