RumbleOn(RMBL) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, revealing a $32.2 million net loss for Q2 2025, primarily due to a $34.0 million impairment charge, and a shift to a $4.7 million stockholders' deficit Condensed Consolidated Balance Sheet Highlights | Account | June 30, 2025 ($M) | December 31, 2024 ($M) | | :--- | :--- | :--- | | Total Assets | $712.3 | $755.2 | | Cash | $44.7 | $85.3 | | Inventory, net | $274.9 | $240.6 | | Franchise rights and other intangible assets | $127.8 | $161.9 | | Total Liabilities | $717.0 | $718.5 | | Vehicle floor plan notes payable | $240.2 | $209.9 | | Long-term debt, net of current maturities | $218.0 | $212.0 | | Total Stockholders' Equity (Deficit) | ($4.7) | $36.7 | Condensed Consolidated Statement of Operations Highlights (Q2) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | | Total Revenue | $299.9 | $336.8 | | Gross Profit | $83.9 | $89.9 | | Impairment of franchise rights | $34.0 | $0.0 | | Operating Income (Loss) | ($18.8) | $15.4 | | Net Loss | ($32.2) | ($0.7) | | Net Loss Per Share | ($0.85) | ($0.02) | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 ($M) | 2024 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | $4.0 | $29.2 | | Net cash used in investing activities | ($2.9) | ($1.4) | | Net cash used in financing activities | ($38.0) | ($33.7) | | Net Change in Cash and Restricted Cash | ($36.9) | ($5.9) | - The company operates through powersports dealership and vehicle transportation services segments, and will change its name to RideNow Group, Inc. (ticker RDNW) effective August 13, 2025[17][19][20] - A $34.0 million impairment charge on franchise rights was recorded in Q2 2025, driven by economic uncertainty and depressed stock price, significantly contributing to the quarterly operating loss[33][34] - Post-quarter, on August 10, 2025, the Term Loan Credit Agreement was amended, extending maturity to September 2027, and $10.0 million in subordinated loans were secured from related parties to prepay senior debt[40][59][77] - The company is subject to an SEC investigation initiated in June 2024 concerning former CEO's resource use and related-party transactions, and is defending a lawsuit from the former CEO seeking over $57.5 million in damages[71][73] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes Q2 and H1 2025 financial performance, noting an 11.0% revenue decline, a $32.2 million net loss driven by impairment, and recent debt restructuring for flexibility Overall Results of Operations (Q2) | Metric | Q2 2025 ($M) | Q2 2024 ($M) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $299.9 | $336.8 | (11.0)% | | Total Gross Profit | $83.9 | $89.9 | (6.7)% | | SG&A Expenses | $66.7 | $71.4 | (6.6)% | | Impairment of franchise rights | $34.0 | $0.0 | NM | | Operating Income (Loss) | ($18.8) | $15.4 | (222.1)% | | Net Loss | ($32.2) | ($0.7) | NM | - The Vehicle Transportation Services segment's revenue plummeted 91.4% year-over-year in Q2 2025, primarily due to the departure of key employees, including most brokers, early in the year[99] - Powersports segment revenue decreased by $23.0 million in Q2 2025, driven by lower new retail unit sales volume, partially offset by increased pre-owned retail vehicle volume[96] - In August 2025, the company extended its term loan maturity to September 2027 and secured $10.0 million in new subordinated loans to prepay $20.0 million of senior debt, projected to reduce annual cash interest payments by $3.4 million[83][84][112] Liquidity Resources | Resource | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | Cash | $44.7 | $85.3 | | Restricted cash | $15.1 | $11.4 | | Availability under powersports inventory financing | $125.9 | $146.2 | | Committed liquidity resources available | $185.7 | $242.9 | Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - As a smaller reporting company, RumbleOn, Inc. is not required to provide disclosures under this item[121] Controls and Procedures Disclosure controls and procedures were ineffective as of June 30, 2025, due to a material weakness in IT system user access and segregation of duties, with remediation underway - The CEO and Interim CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025[123] - Ineffectiveness stems from a material weakness in user access and segregation of duties within IT systems supporting financial reporting processes[123][124] - Management's remediation plan includes enhancing system access review processes and improving governance and reporting over these controls[126][129] PART II - OTHER INFORMATION Legal Proceedings The company faces an SEC investigation regarding former CEO's resource use and related-party transactions, alongside a $57.5 million lawsuit from the former CEO for wrongful termination - On June 28, 2024, the company received an SEC subpoena for an investigation covering January 1, 2021, onwards, related to the former CEO, related-party transactions, and disclosures[132] - The former CEO, Marshall Chesrown, is suing the company in Delaware Superior Court, seeking $7.5 million in termination compensation and $50.0 million in general and reputational damages[134] - The company cannot predict the outcome or timing of the SEC investigation or the litigation with its former CEO, but intends to vigorously defend the claims[133][135] Risk Factors No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the company's 2024 10-K have occurred[136] Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[137] Exhibits This section lists key exhibits filed with the Form 10-Q, including name change, executive agreements, stock plan amendments, and debt restructuring documents - Key exhibits filed include: - Certificate of Amendment for the name change to RideNow Group, Inc. - Amendment No. 10 to the Term Loan Credit Agreement - Form of Commitment Letter for the subordinated loans - Certifications by the Principal Executive Officer and Principal Financial Officer[138]