RumbleOn Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
RDNW$5.44+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001596961-24-000053
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001596961-24-000081
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 63 previous paragraphs and 65 current paragraphs.
39 unchanged; 10 reworded; 16 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Recent Developments
Current report
Term Loan Credit Agreement
Current report
At June 30, 2024, the Company was not in compliance with certain leverage ratio financial covenants under the Credit Agreement as of such date. On August 6, 2024, the Company, the Subsidiary Guarantors party thereto, Oaktree and the lenders party thereto executed Amendment No. 8 to the Credit Agreement (“Amendment No. 8”), pursuant to which, among other things: (i) the leverage ratios were revised and made less restrictive through December 31, 2024, (ii) the level of liquidity required by the minimum liquidity covenant was increased from $25.0 million to $30.0 million starting June 30, 2024 and continuing through the maturity of the term loan, and (iii) a compliance certificate is required to be submitted affirming compliance with the then effective leverage and liquidity tests upon any full or partial cash settlement of the convertible senior 6.75% promissory notes due January 1, 2025.
Current report
Amendment No. 8 was made effective as of June 30, 2024, and the lenders agreed in Amendment No. 8 that no event of default exists or arises from such financial covenants as of such date. The Company agreed to pay a one-time fee of 0.5% of the loan amount in cash, and the additional 0.5% interest was extended through March 31, 2025.
Current report
The foregoing description of Amendment No. 8 does not purport to be complete and is qualified in its entirety by reference to the full text of Amendment No. 8 which is included as Exhibit 10.2 to this report and incorporated herein by reference.
Current report
J.P. Morgan Floor Plan Line
Current report
At June 30, 2024, the Company was not in compliance with the “Minimum EBITDA” financial covenant as of such date. On August 6, 2024, the JPM Credit Line was amended to relax the applicable financial covenants for the remainder of its term, and the term was extended from October 25, 2024 to December 31, 2024. The Company paid approximately $1.2 million of the outstanding balance of the JPM Credit Line, and terms of the credit line were revised to reduce the commitment level to $12.0 million initially, to provide for further reductions through the revised maturity date, and to reduce the advance rate of incremental floored units from 75% to 65% of cost.
Current report
Results of Continuing Operations
Current report
Total powersports revenue for the quarter decreased 12.7% compared to the same period in 2023 primarily due to lower revenue from pre-owned vehicle retail sales on lower inventory of pre-owned vehicles. Revenue from new vehicle sales was also lower in the quarter; however, the impact from the decline in number of new vehicles sold was partially offset by a $506 increase in average revenue per new vehicle sold. The overall decline in retail sales contributed to a decline in F&I and PSA revenue for the quarter.
Current report
Total Vehicle Transportation Services revenue increased for the second quarter and first half of 2024 compared to the prior year comparable periods. The impact from higher revenue per vehicle transported was partially offset by a lower number of vehicles transported for the second quarter. For the six months ended June 30, 2024, revenue per vehicle transported was slightly lower than the prior year comparable period while the number of vehicles transported in the first half of 2024 was higher. Gross profit was lower in the quarter and first half of 2024 compared to the prior periods.
Current report
Selling, general and administrative expenses (“SG&A”) decreased $28.9 million for the quarter and $41.3 million for the first half of 2024 primarily due to our cost savings initiatives as well as some expenses in 2023 that did not recur in 2024. In last year’s second quarter and first half, SG&A included $4.7 million of charges related to a proxy contest and reorganization of our board of directors and $3.8 million of personnel restructuring costs primarily associated with the separation of a former officer of the Company. In addition, the second quarter of 2023 included $3.4 million and the first half of 2023 included $5.4 million of charges associated with the RumbleOn Finance loan portfolio that was sold at the end of 2023. Facilities expense in the second quarter and first half of 2024 included a $0.9 million gain on the partial termination of a warehouse lease that was no longer needed. SG&A as a percentage of gross profit improved 1,490 basis points for the quarter and 1,070 basis points for the first half.
Current report
Depreciation and amortization decreased for the quarter and the first half compared to the same periods in 2023, primarily due to lower amortization expense for non-compete agreements related to prior acquisitions.
Current report
(2) Amount as of June 30, 2024 included $47.5 million for the JPM Credit Line (as defined below) that was reduced to $12.0 million effective August 6, 2024.
Current report
At June 30, 2024, the Company was not in compliance with certain leverage ratio financial covenants under the Credit Agreement. On August 6, 2024, the Company, the Subsidiary Guarantors party thereto, Oaktree and the lenders party thereto executed Amendment No. 8 to the Credit Agreement (“Amendment No. 8”), pursuant to which, among other things: (i) the leverage ratios were revised and made less restrictive through December 31, 2024, (ii) the level of liquidity required by the minimum liquidity covenant was increased from $25.0 million to$30.0 million starting June 30, 2024 and continuing through the maturity of the term loan, and (iii) a compliance certificate is required to be submitted affirming compliance with the then effective leverage and liquidity tests upon any full or partial cash settlement of the convertible senior 6.75% promissory notes due January 1, 2025. The Company agreed to pay a one-time fee of 0.5% of the loan amount in cash, and the additional 0.5% of interest was extended through March 31, 2025.
Current report
Included in the availability under powersports financing credit facilities is the JPM Credit Line that had an advance limit of $47.5 million, of which $13.2 million was used as of June 30, 2024. At June 30, 2024, the Company was not in compliance with the “Minimum EBITDA” financial covenant as of such date. On August 6, 2024, the JPM Credit Line was amended to relax the applicable financial covenants for the remainder of its term, and the term was extended from October 25, 2024 to December 31, 2024. The Company paid approximately $1.2 million of the outstanding balance of the JPM Credit Line, and the terms of the credit line were revised to reduce the commitment level to $12.0 million initially, to provide for further reductions through the revised maturity date, and to reduce the advance rate of incremental floored units from 75% to 65% of cost.
Current report
Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, and other business and risk factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 as amended and supplemented in subsequent filings. We believe that current cash and short-term investment balances plus cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months; however, there can be no assurance that we will not require additional financing within this time frame.
Removed paragraphs (14)
Previous report
Powersports Segment
Previous report
Vehicle Transportation Services Segment
Previous report
Powersports Segment
Previous report
Vehicle Transportation Services Segment
Previous report
Results of Operations
Previous report
NM = not meaningful
Previous report
Powersports ($ in millions except per unit)
Previous report
The total number of vehicles sold decreased by 636 to 16,585. Overall, the average revenue per retail vehicle sold decreased $747, primarily driven by more competitive macroeconomic conditions.
Previous report
Gross profit per vehicle decreased by $250 to $5,099. The decrease is primarily attributable to the competitive pressures of new vehicles, particularly with the mix skewed toward new vehicles.
Previous report
Vehicle Transportation Services
Previous report
Vehicles transported grew 4.4% with 3.4% lower revenue and gross profit flat with first quarter last year, as we focused on gaining volume and leveraging our costs.
Previous report
Selling, general and administrative (“SG&A”) expenses decreased $12.4 million primarily due to our cost savings initiatives that were implemented in 2023, including a workforce reduction and the absorption of certain outside services by our internal team. As a percentage of gross profit, SG&A improved 610 basis points.
Previous report
Depreciation and amortization decreased by $1.2 million for the three months ended March 31, 2024, as compared to the same period in 2023. The overall decrease is primarily driven by lower amortization of the various non-compete agreements resulting from prior acquisitions.
Previous report
Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement date.
Reworded paragraphs (10)
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes, and the MD&A included in our 2023 Form 10-K, as well as our unaudited condensed consolidated financial statements and the accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q. Terms not defined in this MD&A have the meanings ascribed to them in the condensed consolidated financial statements. Unless otherwise noted, comparisons are of results for the quarter ended March 31, 2024 to the quarter ended March 31, 2023.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes, and the MD&A included in our 2023 Form 10-K, as well as our unaudited condensed consolidated financial statements and the accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q. Terms not defined in this MD&A have the meanings ascribed to them in the condensed consolidated financial statements. Unless otherwise noted, comparisons are of results for the quarter ended June 30, 2024, or second quarter, to the quarter ended June 30, 2023. The six months ended June 30, 2024 and 2023 are referred to as the first half of 2024 and 2023, respectively.
Previous wording
Our powersports segment is the largest powersports retail group in the United States (as measured by reported revenue, major unit sales and dealership locations), offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products. We also offer parts, apparel, accessories, finance & insurance products and services (“F&I”), and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of March 31, 2024, we operated 54 retail locations consisting of hundreds of powersports franchises (representing various brands of motorcycles, ATVs, SXSs, PWCs, snowmobiles, and other powersports products) in Alabama, Arizona, California, Florida, Georgia, Kansas, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas, and Washington.
Current wording
Our powersports segment is the largest powersports retail group in the United States (as measured by reported revenue, major unit sales and dealership locations), offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products. We also offer parts, apparel, accessories, finance & insurance products and services (“F&I”), and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of June 30, 2024, we operated 55 retail locations consisting of hundreds of powersports franchises (representing various brands of motorcycles, ATVs, SXSs, PWCs, snowmobiles, and other powersports products) in Alabama, Arizona, California, Florida, Georgia, Kansas, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas, and Washington.
Previous wording
Gross profit generated on vehicle sales reflects the difference between the vehicle selling price and the cost of revenue associated with acquiring the vehicle and preparing it for sale. Cost of revenue includes the vehicle acquisition cost, inbound transportation cost, and particularly for pre-owned vehicles, reconditioning costs. The aggregate gross profit and gross profit per vehicle vary across vehicle type, make, model, etc. as well as through retail and wholesale channels, and with regard to gross profit per vehicle, are not necessarily correlated with the sale price. Vehicles sold through retail channels generally have the highest dollar gross profit per vehicle given the vehicle is sold directly to the consumer. Pre-owned vehicles sold through wholesale channels, including directly to other dealers or through auction channels, including our dealer-to-dealer auction market, generally have lower margins and do not enable any other ancillary gross profit attributable to financing and accessories. Factors affecting gross profit from period to period include the mix of new versus pre-owned vehicles sold, the distribution channel through which they are sold, the sources from which we acquired such inventory, retail market prices, our average days to sale, and our pricing strategy. We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of demand/supply imbalances in our sales channels, which could temporarily lead to gross profits increasing or decreasing in any given channel.
Current wording
Gross profit generated on vehicle sales reflects the difference between the vehicle selling price and the cost of revenue associated with acquiring the vehicle and preparing it for sale. Cost of revenue includes the vehicle acquisition cost, inbound transportation cost, and particularly for pre-owned vehicles, reconditioning costs. The aggregate gross profit and gross profit per vehicle vary across vehicle type, make, model, etc. as well as through retail and wholesale channels, and with regard to gross profit per vehicle, are not necessarily correlated with the sale price. Vehicles sold through retail channels generally have the highest dollar gross profit per vehicle given the vehicle is sold directly to the consumer. Pre-owned vehicles sold through wholesale channels generally have lower margins and do not enable any other ancillary gross profit attributable to financing and accessories. Factors affecting gross profit from period to period include the mix of new versus pre-owned vehicles sold, the distribution channel through which they are sold, the sources from which we acquired such inventory, retail market prices, our average days to sale, and our pricing strategy. We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of demand/supply imbalances in our sales channels, which could temporarily lead to gross profits increasing or decreasing in any given channel.
Previous wording
Total Powersports revenue decreased by $26.1 million in the first quarter of 2024, with the majority of the decrease coming from sales of pre-owned retail vehicles and PSA. Pre-owned retail unit sales were down 13.4%, and revenue per pre-owned retail vehicles sold was down 11.3%. Demand for pre-owned units was impacted by the broad availability of new retail vehicles, with unit sales of new retail vehicles increasing slightly.
Current wording
Total powersports revenue decreased $72.8 million for the first half of 2024, with the majority of the decrease coming from lower sales of pre-owned vehicles in the retail channel. Pre-owned retail unit sales and average revenue per pre-owned vehicle were both down. While new retail unit sales were also down, the impact on revenue was partially offset by higher revenue per new vehicle sold.
Previous wording
Total powersports gross profit decreased $7.6 million. Lower gross profit for new retail vehicles, F&I and PSA drove the decline in gross profit, and was partially offset by improved gross profit for pre-owned vehicles. Competitive pressures resulted in lower pricing and compressed gross profit for new units.
Current wording
Total powersports gross profit decreased $16.3 million for the quarter and $23.9 million for the first half of 2024. Lower gross profit for new retail vehicles, F&I and PSA drove the decline in gross profit for both the second quarter and first half of 2024. Industry pressures resulted in lower pricing and compressed gross profit for new units. The impact on gross profit from lower volumes was partially offset by higher gross profit per pre-owned vehicle sold and improved F&I gross profit per retail vehicle for both the quarter and first half of 2024.
Previous wording
Other interest expense consists of interest and deferred financing costs on the: (i) term loan facility; (ii) finance lease entered into in September 2023; (iii) convertible senior notes; and in 2023, (iv) the ROF Consumer Finance Facility. Interest expense decreased $3.0 million as our overall borrowings were lower, including the pay down of principal on the term loan facility and the pay-off of the RumbleOn Finance consumer finance facility in early January 2024. Other interest expense was also lower due to our adoption of ASU 2020-06, as we are no longer amortizing the debt discount associated with our convertible senior notes. See Note 1 -Description of Business and Significant Accounting Policies, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for more details on our adoption.
Current wording
Other interest expense consists of interest and deferred financing costs on the: (i) term loan facility; (ii) convertible senior notes; (iii) finance lease obligation; and in 2023, (iv) the ROF Consumer Finance Facility. Interest expense decreased for the quarter and first half of 2024 due primarily to lower outstanding principal on the term loan facility and the RumbleOn Finance consumer finance facility being paid off at the beginning of 2024, offset by interest expense on the finance lease obligation that was entered into in September 2023. Other interest expense was also lower due to our adoption of ASU 2020-06, as we are no longer amortizing the debt discount associated with our convertible senior notes. See Note 1 -Description of Business and Significant Accounting Policies, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for more details on our adoption of the new accounting standard.
Previous wording
The following table sets forth a summary of our cash flows for the three months ended March 31, 2024 and 2023:
Current wording
The following table summarizes our cash flows:
Previous wording
Our primary sources of operating cash flows result from the sales of powersports vehicles and ancillary products. Our primary use of cash from operating activities are purchases of inventory, parts and merchandise; marketing costs; interest payments on trade floor plans, long-term debt, and finance lease obligations; rental costs for facilities; and personnel-related expenses. Lower operating cash in the first quarter from lower revenue, higher inventory purchases and the net pay down of trade floor plan borrowings was partially offset by the receipt of cash from the settlement in early 2024 from the sale of the RumbleOn Finance loan portfolio and the benefits of our cost savings initiatives.
Current wording
Our primary sources of operating cash flows result from the sales of powersports vehicles and ancillary products. Our primary use of cash from operating activities are purchases of inventory, parts and merchandise; marketing costs; interest payments on trade floor plans, long-term debt, and finance lease obligations; rental costs for facilities; and personnel-related expenses. Operating cash flows for the first six months of 2024 were $34.8 million better than in the comparable period in the prior year, reflecting the Company’s improved operating performance, primarily driven by the impact of our successful cost savings initiatives and the settlement of the sale of the RumbleOn Finance loan portfolio.
Previous wording
Our investing activities support and expand our operations. Net cash used in investing activities decreased $4.6 million primarily because the prior year included the $3.3 million acquisition of a powersports dealership in Florida.
Current wording
Our investing activities support and expand our operations. Net cash used in investing activities was lower in the first half of 2024 primarily due to lower purchases of property and equipment and because we purchased a powersports dealership in Florida last year.
Previous wording
Cash flows from financing activities primarily relate to our short and long-term debt activity and proceeds from any equity issuances which have been used to provide working capital and for general corporate purposes, including paying down our short-term revolving facilities. In the first quarter this year, cash used was higher primarily from debt repayments of $35.3 million that were partially offset by $19.6 million higher borrowings from non-trade floor plans. Last year's first quarter included the $4.0 million pay down of debt that was offset by increased borrowings from non-trade floor plans.
Current wording
Cash flows from financing activities primarily relate to our short and long-term debt activity. In the first half of this year, cash used in financing activities was higher primarily due to higher repayments of debt and a lower increase in non-trade floor plan borrowings.