RumbleOn(RMBL)2025-03-14 01:11Business Operations - As of December 31, 2024, RumbleOn operated a total of 56 powersports dealerships across 13 states in the U.S.[12] - The company has a workforce of 1,928 full-time and 36 part-time employees as of December 31, 2024[25]. - RumbleOn's proprietary RideNow Cash Offer technology allows for the acquisition of high-quality pre-owned powersports vehicles directly from consumers, enhancing inventory and customer experience[22]. - The powersports retail marketplace in the U.S. is highly fragmented, with competition from traditional dealers and independent pre-owned dealers[16]. - The company aims to grow its powersports segment through both organic growth and strategic acquisitions, focusing on adding new customers and brands[23]. - RumbleOn's operations are subject to various federal and state regulations, which could impact business continuity and result in compliance costs[28]. - The company relies heavily on marketing and advertising to attract customers, but there is a risk that these efforts may not be profitable if they do not lead to sufficient user acquisition[42]. - The company is dependent on relationships with vehicle manufacturers, which can impose restrictions that may adversely affect operations and growth strategies[47]. - The company has experienced increases in labor, fuel, and service costs due to inflation, which could have a material adverse effect on its financial condition[61]. - The company does not have a material cost advantage over other retailers in purchasing new powersports vehicles, relying on advertising and local branding for sales[66]. - The proprietary RideNow Cash Offer technology is seen as a competitive advantage, but low barriers to entry in the online marketplace may lead to increased competition[67]. - The company benefits from sales incentives and promotional programs from manufacturers, and any reduction in these programs could adversely affect sales volume and financial results[71]. - The company relies heavily on third parties for product and service delivery, and a cybersecurity incident at a key supplier could adversely affect its operations[111]. Financial Performance - Total revenue for 2024 was 157.2 million or 11.5% compared to 108.8 million or 11.4%, totaling 45.6 million, totaling (14.7) million in 2024, a positive change of (69.5) million in 2023[145]. - The company reported a loss from continuing operations of 135.8 million or 63.3% from 58.0 million in revenue, an increase of 56.2 million in 2023[145]. - SG&A expenses decreased by 275.4 million in 2024[145]. - Total revenue for the powersports segment decreased by 12,884 higher than those sold via wholesale channels, but overall average revenue per vehicle decreased by 45.2 million, influenced by macroeconomic conditions and included a 1.8 million, driven by a 6.2% increase in the number of vehicles transported[153]. Debt and Cash Flow - The company has incurred significant debt, which limits its flexibility to respond to changing business conditions and may adversely affect its ability to finance operations and pursue acquisitions[54]. - As of June 30, 2024, the company was not in compliance with certain leverage ratio financial covenants, leading to amendments in its Credit Agreement to revise ratios and increase liquidity requirements to 563.8 million in 2023 to 102.8 million[168]. - Net cash provided by operating activities improved by 38.9 million in 2023 to a cash inflow of 19.1 million in 2023 to a net inflow of 20.0 million[171]. - Net cash used in financing activities changed from a cash inflow of 80.6 million in 2024, a decrease of 38.8 million in principal plus accrued interest under its 6.75% convertible senior notes on January 2, 2025[134]. Internal Controls and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which could impact the accuracy of financial statements[39]. - A material weakness in internal control over financial reporting was identified, particularly in user access and segregation of duties related to key financial systems as of December 31, 2024[196]. - Independent auditors BDO USA, P.C. issued an adverse opinion on the effectiveness of internal control over financial reporting due to the identified material weakness[197]. - Management plans to enhance processes for reviewing and provisioning access to key financial systems and ensure appropriate segregation of duties[198]. - Additional accounting resources with required technical expertise have been hired to address the material weakness[199]. - The review and approval process for intercompany transactions and account reconciliations has been enhanced[199]. - Management will monitor the effectiveness of remedial measures and controls, which will not be considered remediated until they operate effectively for a sufficient period[201]. - No changes in internal control over financial reporting were identified that materially affected the control environment during the quarter ended December 31, 2024[202]. Market and Economic Conditions - The powersports industry is seasonal, with sales peaking in spring and summer, affecting quarterly financial results[27]. - The powersports industry is sensitive to economic conditions, with inflation impacting costs and consumer demand, which could adversely affect the company's financial performance[61]. - Retail powersports sales are cyclical, historically experiencing downturns due to oversupply and weak demand, potentially leading to reduced revenue per vehicle sold and margins[62]. - Changes in trade policies, including tariffs, may adversely impact the company's business and profitability, particularly with inventory sourced from countries like Mexico, Canada, and China[63]. - The powersports retail and service industry is highly competitive, with pressure from both existing and new companies affecting business and operating results[64]. - Cybersecurity risks and potential breaches of IT systems could materially impact the company's operations and financial condition[81]. - Changes in state laws protecting powersports retailers could lead to increased susceptibility to termination or non-renewal of dealer agreements, adversely affecting business operations[87]. Corporate Governance - The company has never declared or paid any cash dividends on its common stock and intends to reinvest earnings into business development and expansion[103]. - As of March 1, 2025, three stockholders beneficially own approximately 54.8% of the company's voting power, potentially influencing major corporate actions[100]. - The market price of the company's Class B common stock has experienced significant volatility, influenced by external factors beyond its control[101]. - The company is currently subject to reduced reporting requirements as a "smaller reporting company," which may affect the attractiveness of its common stock to investors[104]. - The company faces various legal proceedings that could require significant expenditures and adversely impact its financial condition if outcomes are unfavorable[98]. - The company maintains cybersecurity insurance, but costs related to cybersecurity threats may not be fully covered, posing a risk to its financial stability[112].