RumbleOn(US: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 $1,209.2 million, a decrease of $157.2 million or 11.5% compared to $1,366.4 million in 2023[145]. - Revenue from powersports vehicles declined by $108.8 million or 11.4%, totaling $842.6 million in 2024[145]. - Gross profit decreased by $45.6 million, totaling $314.3 million in 2024, primarily due to lower revenue from powersports vehicles and ancillary products[145]. - The operating loss improved to $(14.7) million in 2024, a positive change of $54.8 million or 78.8% compared to $(69.5) million in 2023[145]. - The company reported a loss from continuing operations of $(78.6) million in 2024, a reduction of $135.8 million or 63.3% from $(214.4) million in 2023[145]. - The vehicle transportation services segment generated $58.0 million in revenue, an increase of $1.8 million or 3.2% from $56.2 million in 2023[145]. - SG&A expenses decreased by $71.9 million or 20.7%, totaling $275.4 million in 2024[145]. - Total revenue for the powersports segment decreased by $159.0 million, with 7,674 fewer vehicles sold compared to the previous year[151]. - Average revenue per vehicle sold via retail channels was $12,884 higher than those sold via wholesale channels, but overall average revenue per vehicle decreased by $367[151]. - Gross profit for powersports vehicles decreased by $45.2 million, influenced by macroeconomic conditions and included a $12.6 million write-down of inventory[152]. - Vehicle transportation services revenue increased by $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 $30.0 million[56]. - Total debt decreased from $563.8 million in 2023 to $461.0 million in 2024, a reduction of $102.8 million[168]. - Net cash provided by operating activities improved by $138.3 million, increasing from a cash outflow of $38.9 million in 2023 to a cash inflow of $99.4 million in 2024[169]. - Cash flows from investing activities shifted from a net outflow of $19.1 million in 2023 to a net inflow of $0.9 million in 2024, a change of $20.0 million[171]. - Net cash used in financing activities changed from a cash inflow of $78.2 million in 2023 to a cash outflow of $80.6 million in 2024, a decrease of $158.8 million[172]. - The company repaid $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].