Lazydays (US:LAZY)2025-03-31 20:02Part I Business Lazydays operates 22 RV dealerships, selling and servicing RVs and related products, and began selling dealerships to Camping World in 2024 to streamline operations - The company operates 22 RV dealerships across multiple states, with its largest, located near Tampa, Florida, considered the world's largest in terms of on-site inventory1718 - Core business includes selling new and pre-owned RVs, arranging financing and insurance, and providing parts and services; the company represents over 30 original equipment manufacturers (OEMs)1621 - In November 2024, the company agreed to sell several dealerships and associated real estate to Camping World Holdings, Inc; however, in March 2025, Camping World opted not to close on two of these locations (Portland, OR and Council Bluffs, IA)23 - The company received a notice from Nasdaq on January 23, 2025, for failing to meet the $1.00 minimum bid price requirement for continued listing, and has until July 22, 2025, to regain compliance4950 Risk Factors The company faces substantial doubt about its going concern ability due to a $180.0 million net loss, limited credit, internal control weaknesses, and delisting risk - The company's financial condition raises substantial doubt about its ability to continue as a going concern, having incurred a $180.0 million net loss in 2024 and having its revolving credit facility eliminated5859 - Management identified material weaknesses in internal controls related to IT general controls (user access, change management) and turnover in key accounting positions61 - The business is heavily dependent on a few key manufacturers, with Thor Industries, Winnebago Industries, and Forest River, Inc. supplying approximately 51%, 26%, and 19% of new RV inventory, respectively, in 202466 - The company's credit facilities contain restrictive covenants; a change in control is an event of default, and the company must comply with various financial ratios and tests to avoid default120126127 - As of December 31, 2024, Coliseum and its affiliates hold 72% of the company's common stock (on an as-exercised warrant basis), giving them significant influence over corporate actions133 - The company's common stock is at risk of being delisted from the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00 per share136 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None138 Cybersecurity The company maintains a cybersecurity program led by its CTO, reporting quarterly to the Board, and has identified no material cybersecurity threats - Cybersecurity risk management is overseen by the Chief Technical Officer (CTO), who has over 25 years of experience in technology and information security143 - The Board of Directors receives quarterly reports on cybersecurity risks and material incidents from the CTO144 - The company has not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition142 Properties As of March 24, 2025, Lazydays owns 5 properties and leases 12 properties, with its largest being a 126-acre leased facility in Tampa, Florida - As of March 24, 2025, the company owns 5 properties and leases 12 properties145 - The largest dealership property is located in Tampa, Florida, covering 126 acres with a 384,000 square foot facility; the lease for this property expires in 2035146 Legal Proceedings The company is involved in ordinary course legal proceedings not expected to materially affect its financial condition or operations - The company is a party to multiple legal proceedings from the ordinary course of business but does not expect a material adverse effect from their resolution147 Mine Safety Disclosures This item is not applicable to the company - None148 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under "GORV", has not paid dividends, and issued significant shares in late 2024 via a PIPE offering and preferred stock exchange - The company's common stock is listed on the Nasdaq Capital Market under the symbol "GORV"150 - No cash dividends have been paid, and none are planned for the foreseeable future152 - | Date | Common Stock Issued | | :--- | :--- | | November 15, 2024 | 45,748,450 | | December 27, 2024 | 49,866,710 | Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2024, Lazydays faced significant financial challenges with a $180.0 million net loss and 19.5% revenue decline, leading to strategic asset sales, a PIPE offering, and credit facility amendments Recent Developments The company undertook strategic transactions in late 2024 and early 2025, including dealership sales to Camping World, a $28.3 million PIPE offering, and preferred stock exchange, amid a Nasdaq deficiency notice - Entered into agreements to sell seven dealerships and certain real estate to Camping World for approximately $48.5 million for the real estate and $1.0 million per facility for the assets; in March 2025, Camping World elected not to close on two of the locations168171 - Raised net proceeds of approximately $28.3 million on November 15, 2024, by selling 29,126,212 shares of common stock at $1.03 per share in a PIPE offering174 - Exchanged all 600,000 outstanding shares of Series A Convertible Preferred Stock for 66,488,948 shares of common stock, eliminating a liquidation preference of approximately $68.5 million175176 - Received a Nasdaq deficiency notice on January 23, 2025, for its stock price being below the $1.00 minimum bid requirement and has until July 22, 2025, to regain compliance177 Results of Operations In 2024, total revenue decreased 19.5% to $871.6 million, gross profit fell 29.7%, and net loss widened to $180.0 million due to market contraction, discounting, and impairment charges - | Metric | 2024 | 2023 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $871.6M | $1,082.7M | ($211.2M) | (19.5)% | | New Vehicle Revenue | $513.0M | $631.7M | ($118.7M) | (18.8)% | | Pre-owned Vehicle Revenue | $224.9M | $323.3M | ($98.4M) | (30.4)% | | Total Gross Profit | $160.9M | $228.7M | ($67.9M) | (29.7)% | | Gross Margin | 18.5% | 21.1% | (260 bps) | | - New vehicle revenue decreased due to a 4.9% drop in units sold and a 14.6% decrease in average selling price per unit, as the company discounted older model year inventory184186 - Pre-owned vehicle revenue decreased due to a 15.5% drop in units sold and a 17.6% decrease in average selling price; the company also recorded $3.0 million in write-downs on pre-owned inventory187188 - Impairment charges totaled $39.1 million in 2024, primarily from a $21.4 million loss on assets held for sale and a $17.7 million impairment of definite-lived intangible assets associated with those dealerships196 - Net loss widened to $179.96 million in 2024 from $110.27 million in 2023206 - Adjusted EBITDA was negative $58.7 million in 2024, a sharp decline from a positive $11.6 million in 2023206 Liquidity and Capital Resources The company's liquidity is severely pressured, raising going concern doubts, with cash at $24.7 million, eliminated revolving credit, and reduced floor plan facilities, relying on operations and outside capital - The company's financial state raises substantial doubt about its ability to continue as a going concern; it incurred a $180.0 million net loss in 2024 and has no access to a revolving credit facility for general working capital238239 - | Cash Flow Summary (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $94,354 | ($36,480) | | Net cash used in investing activities | ($8,128) | ($192,964) | | Net cash (used in) provided by financing activities | ($119,609) | $225,842 | | Net decrease in cash | ($33,383) | ($3,602) | - The M&T Credit Agreement was amended, permanently eliminating the ability to borrow under the Revolving Credit Facility; the Floor Plan Credit Facility commitment was reduced from $400.0 million to $325.0 million, and further to $265.0 million in March 2025219222224 - The company has a term loan from Coliseum (a related party) with an outstanding principal of $42.9 million as of Dec 31, 2024; the loan is secured by most of the company's real estate230232234 Critical Accounting Policies and Estimates Critical accounting policies involve significant judgment in intangible and long-lived asset impairment, leading to $21.4 million and $17.7 million charges in 2024, and LIFO inventory valuation - The company evaluates indefinite-lived intangible assets (trade names) for impairment annually or when trigger events occur, using a relief from royalty method; no impairment was recorded in 2024 for these assets248 - Long-lived and definite-lived intangible assets are tested for impairment when circumstances indicate their carrying amount may not be recoverable; in 2024, this resulted in a $21.4 million loss on assets held for sale and a $17.7 million impairment on definite-lived intangibles associated with those dealerships250 - Inventories are valued at the lower of cost or net realizable value, using the Last-In, First-Out (LIFO) method; the LIFO reserve was $28.4 million at the end of 2024, up from $24.6 million in 2023251252 Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for 2023-2024, including the auditor's unqualified opinion with a going concern emphasis, detailing financial position, operations, and cash flows Report of Independent Registered Public Accounting Firm The auditor issued an unqualified opinion but highlighted substantial doubt about the company's ability to continue as a going concern due to losses and limited capital, identifying asset impairment testing as a critical audit matter - The auditor's report explicitly raises "substantial doubt about the Company's ability to continue as a going concern" due to recurring losses, current liabilities exceeding current assets, and lack of borrowing capacity259 - Critical Audit Matters identified were the impairment testing of long-lived assets to be held and used, and the impairment testing of indefinite-lived intangible assets, both of which involve significant management judgment and estimates263266268 Consolidated Financial Statements The 2024 consolidated financial statements show cash decreased to $24.7 million, a $180.0 million net loss, and negative $119.6 million financing cash flow, reflecting financial deterioration - | Balance Sheet (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $24,702 | $58,085 | | Total Assets | $675,830 | $937,739 | | Floor plan notes payable | $306,036 | $446,783 | | Total Liabilities | $602,481 | $724,549 | | Total Stockholders' Equity | $73,349 | $156,997 | - | Statement of Operations (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Total Revenue | $871,562 | $1,082,747 | | Gross Profit | $160,855 | $228,742 | | Net Loss | ($179,963) | ($110,266) | | Loss Per Share (Basic) | ($8.90) | ($8.41) | Notes to Consolidated Financial Statements The notes detail the going concern uncertainty, asset impairments ($118.0 million goodwill, $17.7 million intangibles), asset sales ($21.4 million loss), amended credit facilities, and significant equity transactions - Note 2 reiterates that conditions exist which raise substantial doubt about the Company's ability to continue as a going concern286287288 - Note 8 discloses a full $118.0 million goodwill impairment charge in 2023 and a $17.7 million impairment of definite-lived intangible assets in 2024 related to dealerships held for sale345348 - Note 9 details the assets and liabilities of dealerships held for sale, which resulted in a recorded loss of $21.4 million in 2024357358 - Note 14 details the amended M&T Credit Agreement, which eliminated the revolving credit facility and reduced the floor plan facility to $265.0 million subsequent to year-end; it also details the $35 million term loan from related party Coliseum, which was increased by $15 million in May 2024372378388390 - Note 19 describes the November 2024 PIPE offering that raised approximately $28.3 million and the exchange of all 600,000 shares of Series A Preferred Stock for common stock407413 - Note 22 discloses subsequent events, including the closing of five dealership sales to Camping World in early 2025, Camping World's decision not to purchase two other locations, the Nasdaq deficiency notice, and a new non-binding letter of intent to sell three more stores to General RV Center436437447 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes or disagreements with its accountants on accounting and financial disclosure - None448 Controls and Procedures Management concluded disclosure controls were not effective as of December 31, 2024, due to material weaknesses in IT general controls and accounting personnel turnover, with remediation efforts ongoing - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024450 - A material weakness exists due to ineffective design and implementation of IT general controls (ITGCs) in user access, program change management, and security administration455457 - An additional material weakness was identified due to turnover in accounting positions, resulting in insufficient resources to perform financial reviews and maintain effective controls455458 - Remediation efforts include hiring a new CFO and CTO, engaging third-party experts, and redesigning controls; however, the material weaknesses are not yet considered fully remediated459461 Other Information No officers or directors adopted or terminated Rule 10b5-1 trading arrangements in Q4 2024 - No officers or directors adopted or terminated Rule 10b5-1 trading arrangements in Q4 2024462 Part III Part III incorporates information on directors, executive officers, corporate governance, compensation, security ownership, and related transactions by reference from the forthcoming 2025 proxy statement Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance, including the Code of Business Conduct, is incorporated by reference from the 2025 proxy statement - The company has adopted a Code of Business Conduct applicable to all directors, officers, and employees, which is available on its website465 - All other information required by this item is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders467 Executive Compensation Executive compensation information is incorporated by reference from the company's 2025 annual meeting proxy statement - Information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders468 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information for beneficial owners and management is incorporated by reference from the 2025 proxy statement - Information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders469 Certain Relationships and Related Transactions, and Director Independence Information on related party transactions and director independence is incorporated by reference from the 2025 proxy statement - Information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders470 Principal Accounting Fees and Services Principal accounting fees and services information is incorporated by reference from the 2025 proxy statement - Information is incorporated by reference from the proxy statement for the 2025 annual meeting of stockholders471 Part IV Exhibits, Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including key agreements like asset purchase, credit, and loan agreements - This section references the financial statements from Item 8 and confirms all required schedules are included within the financial statements or notes473474 - A comprehensive list of exhibits is provided, including major contracts, credit agreements, and governance documents filed with the report475476477 Form 10-K Summary The company has not provided a Form 10-K summary - None479