Lazydays (LAZY) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2022 Item 1 – Financial Statements Presents Lazydays Holdings, Inc.'s unaudited condensed consolidated financial statements and notes for Q1 2022 Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, at quarter-end Condensed Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Total Assets | $752,826 | $698,128 | | Total Liabilities | $481,402 | $437,019 | | Total Stockholders' Equity | $216,441 | $206,126 | | Inventories | $283,997 | $242,906 | | Floor plan notes payable | $230,347 | $192,220 | Condensed Consolidated Statements of Income Details the company's revenues, costs, and net income for the reporting period Condensed Consolidated Statements of Income Highlights (Amounts in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Total Revenues | $376,161 | $270,993 | | Cost applicable to revenues | $276,973 | $206,875 | | Income from operations | $38,629 | $22,423 | | Net income | $28,284 | $8,844 | | Basic EPS | $1.44 | $0.45 | | Diluted EPS | $1.17 | $0.35 | - Total revenues increased by approximately $105.2 million, or 38.8%, for the three months ended March 31, 2022, compared to the same period in 2021[181] - Net income more than tripled, increasing by $19.4 million, for the three months ended March 31, 2022, compared to the prior year period[18][203] Condensed Consolidated Statement of Stockholders' Equity Outlines changes in stockholders' equity, including net income and stock repurchases Stockholders' Equity Changes (Amounts in thousands) | Metric | Balance at December 31, 2021 | Balance at March 31, 2022 | | :-------------------------- | :--------------------------- | :------------------------ | | Total Stockholders' Equity | $206,126 | $216,441 | | Net income | - | $28,284 | | Repurchase of treasury stock | - | $(19,175) | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Amounts in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash (Used In) Provided By Operating Activities | $(17,433) | $24,823 | | Net Cash Used In Investing Activities | $(7,896) | $(6,167) | | Net Cash Provided By (Used In) Financing Activities | $16,767 | $(2,699) | | Net (Decrease) Increase In Cash | $(8,562) | $15,957 | | Cash - Ending | $89,558 | $79,469 | - Cash used in operating activities for Q1 2022 was primarily due to increases in receivables ($20.8 million) and inventories ($41.4 million)[203] - Cash provided by financing activities in Q1 2022 was mainly from net borrowings on the M&T Floor Plan Line of Credit ($38.1 million) and proceeds from stock option exercises ($1.4 million), partially offset by treasury stock repurchases ($19.2 million)[205] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the financial statements NOTE 1 – BUSINESS ORGANIZATION AND NATURE OF OPERATIONS Describes the company's business, operations, and geographic presence - Lazydays Holdings, Inc. operates recreational vehicle (RV) dealerships in sixteen locations across nine states (Florida, Colorado, Arizona, Tennessee, Minnesota, Indiana, Oregon, Washington, Wisconsin) and a dedicated service center in Texas[29] - The company sells and services new and pre-owned RVs, related parts and accessories, and arranges financing and extended service contracts through third-party providers[29] NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Details the accounting principles and methods used in preparing financial statements Revenue Disaggregation (Amounts in thousands) | Revenue Type | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | New vehicle revenue | $217,436 | $167,411 | | Pre-owned vehicle revenue | $123,024 | $77,470 | | Parts, accessories, and related services | $12,666 | $10,261 | | Finance and insurance revenue | $21,635 | $14,608 | | Campground and other revenue | $1,400 | $1,243 | | Total | $376,161 | $270,993 | Net Finance Revenue (Amounts in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Gross finance and insurance revenues | $23,748 | $16,054 | | Additions to charge-back allowance | $(2,113) | $(1,446) | | Net Finance Revenue | $21,635 | $14,608 | - Vehicle and parts inventories are recorded at the lower of cost or net realizable value using the LIFO method[38] Earnings Per Share (EPS) (Amounts in thousands, except per share data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Basic income per common share | $1.44 | $0.45 | | Diluted income per common share | $1.17 | $0.35 | - Advertising and promotion costs totaled approximately $7,677 thousand for the three months ended March 31, 2022, up from $4,412 thousand in the prior year[48] - The company's operations are seasonal, with modestly higher vehicle sales volumes in the first half of each year, particularly in Florida and Arizona during winter months and northern locations during spring[51] - Three major manufacturers accounted for 49.8%, 29.1%, and 17.2% of RV purchases during the three months ended March 31, 2022[52] Geographic Revenue Concentrations | Location | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--------- | :-------------------------------- | :-------------------------------- | | Florida | 52% | 61% | | Tennessee | 13% | 12% | | Arizona | <10% | 12% | | Colorado | <10% | 11% | - The COVID-19 pandemic initially caused significant sales declines in March 2020, leading to workforce reductions and temporary salary cuts[56][61][58] - Sales improved from May 2020 due to increased consumer demand for outdoor activities[56][61][58] - As of March 31, 2022, $6,626 thousand of PPP Loans had been forgiven[57] NOTE 3 – BUSINESS COMBINATION Reports on recent acquisitions and their financial impact on the company - The company completed the acquisitions of Chilhowee Trailer Sales, Inc. (March 2021), BYRV, Inc. (August 2021), and Burlington RV Superstore, Inc. (August 2021)[68][69][70] - Total assets acquired from BYRV and 'Other' (Chilhowee and Burlington) amounted to $46,772 thousand, generating $34,970 thousand in goodwill[71][72] - These acquisitions contributed approximately $51,855 thousand in revenue and $5,851 thousand in income before income taxes for the three months ended March 31, 2022[74] Pro Forma Financial Information (Amounts in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $376,161 | $323,530 | | Income before income taxes | $37,257 | $20,636 | | Net income | $28,284 | $13,833 | NOTE 4 – INVENTORIES Provides a breakdown of inventory components and valuation methods Inventories (Amounts in thousands) | Inventory Type | March 31, 2022 | December 31, 2021 | | :----------------------------- | :------------- | :---------------- | | New recreational vehicles | $217,263 | $177,744 | | Pre-owned recreational vehicles | $69,206 | $66,013 | | Parts, accessories and other | $8,425 | $7,586 | | Less: excess of current cost over LIFO | $(10,897) | $(8,437) | | Total | $283,997 | $242,906 | NOTE 5 – ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Details current liabilities, including accounts payable and accrued expenses Accounts Payable, Accrued Expenses and Other Current Liabilities (Amounts in thousands) | Category | March 31, 2022 | December 31, 2021 | | :------------------------------------------ | :------------- | :---------------- | | Accounts payable | $31,639 | $28,356 | | Other accrued expenses | $4,900 | $5,064 | | Customer deposits | $12,404 | $8,511 | | Accrued compensation | $5,130 | $8,564 | | Accrued charge-backs | $8,706 | $8,243 | | Accrued interest | $358 | $261 | | Total | $63,137 | $58,999 | NOTE 6 – LEASES Outlines the company's lease arrangements, liabilities, and related costs - As of March 31, 2022, the weighted-average remaining lease term for operating leases was 7.4 years, with a weighted-average discount rate of 5.0%[82] - Operating lease costs for the three months ended March 31, 2022, were $1,586 thousand[83] Maturities of Lease Liabilities as of March 31, 2022 (Amounts in thousands) | Maturity Date | Operating Leases | | :-------------- | :--------------- | | 2022 | $4,797 | | 2023 | $6,257 | | 2024 | $5,238 | | 2025 | $4,310 | | 2026 | $3,108 | | Thereafter | $13,296 | | Total lease payments | $37,006 | | Less: Imputed interest | $6,252 | | Present value of lease liabilities | $30,754 | - The company has finance leases resulting from failed sale-leaseback agreements for properties in Murfreesboro, TN, and with CARS-DB13, LLC[85][86] NOTE 7 – DEBT Details the company's debt instruments, credit facilities, and repayment schedules - The company's M&T Facility was amended and restated on July 14, 2021, to an approximately $369.1 million aggregate credit facility, maturing on July 14, 2024[91] M&T Floor Plan Line of Credit (Amounts in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Floor plan notes payable, gross | $230,911 | $192,868 | | Debt discount | $(564) | $(648) | | Floor plan notes payable, net | $230,347 | $192,220 | - As of March 31, 2022, the M&T Term Loan had $9,367 thousand outstanding, and the M&T Mortgage balance was $5,625 thousand[97][93] - The company received $8,704 thousand in PPP Loans, with $6,626 thousand forgiven as of March 31, 2022[99] Future Maturities of Long Term Debt (Amounts in thousands) | Years ending December 31, | Amount | | :------------------------ | :----- | | 2022 | $3,421 | | 2023 | $3,575 | | 2024 | $9,762 | | 2025 | $400 | | 2026 | $- | | Total | $17,158 | NOTE 8 – INCOME TAXES Explains income tax expense, effective tax rates, and deferred tax assets/liabilities - Income tax expense for the three months ended March 31, 2022, was $8,973 thousand (24.1% effective tax rate), compared to $5,477 thousand (38.2% effective tax rate) in the prior year[101] - The effective tax rate differs from the federal statutory rate primarily due to state/local income taxes, non-deductible stock-based compensation, and changes in the fair value of warrant liabilities[102] NOTE 9 – COMMITMENTS AND CONTINGENCIES Discloses significant commitments, legal proceedings, and executive compensation - Robert T DeVincenzi was appointed interim CEO effective January 1, 2022, with a monthly base salary of $37.5 thousand, a one-time transition payment of $25 thousand, and stock awards[106] - The CFO's offer letter provides for an initial base salary of $325 thousand per year and a target bonus of 75% of base salary[107] - Non-employee directors receive annual cash compensation of $50 thousand, plus additional fees for committee service[108] - The company is a party to multiple legal proceedings but does not believe their ultimate resolution will have a material adverse effect on its business or financial condition[109] NOTE 10 – PREFERRED STOCK Details the terms, rights, and dividends of the company's preferred stock - The company issued 600,000 shares of Series A Preferred Stock for gross proceeds of $60,000 thousand as part of a private placement[110] - Series A Preferred Stock ranks senior, has voting rights on an as-converted basis, and is convertible at an initial price of $10.0625 per share[112] - Dividends accrue at an initial rate of 8% per annum, compounded quarterly, on each $100 Issue Price[113] - Five-year warrants to purchase 596,273 shares of common stock at an exercise price of $11.50 per share were issued in conjunction with the Series A Preferred Stock[117] - A dividend payment of $1,184 thousand on Series A Preferred Stock was declared for the three months ended March 31, 2022[121] NOTE 11 – STOCKHOLDERS' EQUITY Reports on common stock, preferred stock, stock options, and repurchase programs - The company is authorized to issue 100,000,000 shares of common stock and 5,000,000 shares of preferred stock[122] - The Board authorized a stock repurchase program of up to $25 million through December 31, 2022 (September 2021), and an additional $45 million in February 2022 ($20 million through July 31, 2022, and $25 million through December 31, 2022)[124] - During Q1 2022, the company repurchased 1,086,797 shares of common stock for $19,175 thousand[125] Warrants Outstanding Activity | Metric | Shares Underlying Warrants | Weighted Average Exercise Price | | :----------------------------- | :------------------------- | :------------------------------ | | Warrants outstanding January 1, 2022 | 3,419,105 | $11.50 | | Exercised | (57,143) | $11.50 | | Warrants outstanding March 31, 2022 | 3,361,962 | $11.50 | Stock Option Activity | Metric | Shares Underlying Options | Weighted Average Exercise Price | | :----------------------------- | :------------------------ | :------------------------------ | | Options outstanding at January 1, 2022 | 1,286,672 | $11.87 | | Granted | 25,032 | $30.00 | | Exercised | (124,489) | $10.85 | | Options outstanding at March 31, 2022 | 1,187,215 | $12.36 | - Total unrecorded compensation cost related to all non-vested awards was $3,778 thousand as of March 31, 2022, expected to be amortized over approximately 2.8 years[135] NOTE 12 – FAIR VALUE MEASURES Describes the valuation methods and fair value of financial instruments, including warrants Warrant Liabilities (Amounts in thousands) | Category | March 31, 2022 | December 31, 2021 | | :------------------ | :------------- | :---------------- | | PIPE Warrants | $11,748 | $13,603 | | Private Warrants | $1,491 | $1,690 | | Total warrant liabilities | $13,239 | $15,293 | - PIPE Warrants are classified as Level 1 financial instruments due to observable market prices, while Private Warrants are Level 3 and valued using a Black-Scholes option-pricing model with unobservable inputs[139][140] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial condition and operations for Q1 2022, covering performance, liquidity, and risks Business Overview Describes the company's business, operations, and geographic presence - Lazydays Holdings, Inc. operates as a holding company for RV dealerships, offering RV sales, repair, services, financing, insurance, parts, accessories, and camping facilities[149] - The company operates 16 dealerships and a dedicated service center, featuring over 4,000 new and pre-owned RVs and nearly 500 service bays[150][151] - Lazydays employs approximately 1,500 people and attracts customers from all states except Hawaii[151] Highlights Overview of key business developments and achievements during the period - Commenced sales and service operations at new dealerships in Murfreesboro, Tennessee (January 2021) and Monticello, Minnesota (March 2022)[153][160] - Completed acquisitions of Chilhowee Trailer Sales, Inc. (March 2021), BYRV, Inc. (August 2021), and Burlington RV Superstore, Inc. (August 2021)[153][155][156] - Entered into an amended and restated credit agreement with M&T Bank for an approximately $369.1 million aggregate credit facility (July 2021)[154] - Authorized stock repurchase programs of up to $25 million (September 2021) and an additional $45 million (February 2022)[157][159] COVID-19 Developments Discusses the impact of the COVID-19 pandemic on the company's operations and financial performance - The COVID-19 pandemic led to significant early declines in sales in March 2020, prompting cost-saving measures[161] - Cost-saving actions included a 25% workforce reduction, temporary senior management salary cuts, and suspension of 2020 annual pay increases and 401k match[162][166] - Sales improved from May 2020, likely due to increased consumer demand for outdoor travel and leisure activities that permit social distancing[163] - As of March 31, 2022, $6,626 thousand of PPP Loans had been forgiven[162] How the Company Generates Revenue Explains the primary sources and categories of the company's revenue Revenue Contribution by Category | Category | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------ | :-------------------------------- | :-------------------------------- | | New vehicles | 57.8% | 61.8% | | Pre-owned vehicles | 32.7% | 28.6% | | Other | 9.5% | 9.6% | | Total | 100.0% | 100.0% | - New and pre-owned RV sales accounted for approximately 91% of total revenues for the three months ended March 31, 2022, and 90% for the same period in 2021[167] Key Performance Indicators Identifies and analyzes the key metrics used to evaluate the company's financial and operational performance - Gross profit (excluding depreciation and amortization) increased to $99.2 million (26.4% gross margin) for Q1 2022, from $64.1 million (23.7% gross margin) for Q1 2021[169] - New and pre-owned vehicle margins (excluding LIFO impacts) increased from 18.6% in Q1 2021 to 21.4% in Q1 2022, driven by scarcity of dealer inventory[170] - SG&A expenses as a percentage of gross profit improved to 56.4% in Q1 2022 from 58.8% in Q1 2021, reflecting improved operating leverage and business growth[172] - Adjusted EBITDA is a key non-GAAP measure used by management to evaluate financial performance, compare results, and for planning purposes[173][174] Results of Operations Provides a detailed analysis of the company's financial performance for the reporting period Summary Financial Data (Amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $376,161 | $270,993 | | Gross profit (excluding depreciation and amortization) | $99,188 | $64,118 | | Income from operations | $38,629 | $22,423 | | Net income | $28,284 | $8,844 | - Total revenue increased by 38.8% to $376.2 million in Q1 2022[181] - New and pre-owned vehicle sales revenue increased by 39.0% to $340.5 million, driven by an increase in new vehicle units sold (2,125 to 2,270) and average selling price ($78,400 to $95,600)[182][183] - Pre-owned vehicle sales units (excluding wholesale) increased from 1,072 to 1,478, with average revenue per unit rising from $67,800 to $78,800[184] - Other revenue increased by 36.7% to $35.7 million, with finance and insurance revenue up 48.1% to $21.6 million[185][186] - Selling, general and administrative (SG&A) expenses increased by 48.2% to $55.9 million, primarily due to overhead from new dealerships and increased performance wages[190] - Interest expense increased by $1.0 million to $2.9 million, mainly due to higher floorplan balances[191] Non-GAAP Financial Measures Reconciles non-GAAP financial measures, such as Adjusted EBITDA, to their most directly comparable GAAP measures EBITDA and Adjusted EBITDA Reconciliation (Amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income | $28,284 | $8,844 | | Subtotal EBITDA | $44,253 | $19,412 | | Adjusted EBITDA | $44,760 | $27,822 | EBITDA and Adjusted EBITDA Margin | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net income margin | 7.5% | 3.3% | | Subtotal EBITDA margin | 11.8% | 7.2% | | Adjusted EBITDA Margin | 11.9% | 10.3% | - Adjusted EBITDA excludes depreciation, amortization, interest expense, income tax expense, stock-based compensation, transaction costs, LIFO adjustments, PPP loan forgiveness, and changes in fair value of warrant liabilities[197] Liquidity and Capital Resources Analyzes the company's ability to generate and manage cash flow, and its sources of funding Cash Flow Summary Summarizes the company's cash flows from operating, investing, and financing activities Cash Flow Summary (Amounts in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(17,433) | $24,823 | | Net cash used in investing activities | $(7,896) | $(6,167) | | Net cash provided by (used) in financing activities | $16,767 | $(2,699) | | Net (decrease) increase in cash | $(8,562) | $15,957 | Net Cash from Operating Activities Analyzes cash generated or used by core business operations - The company used $17.4 million in operating activities for Q1 2022, a shift from $24.8 million provided in Q1 2021[203] - This change was primarily due to increases in receivables ($20.8 million) and inventory ($41.4 million)[203] Net Cash from Investing Activities Details cash flows related to asset acquisitions and disposals - Cash used in investing activities was $7.9 million for Q1 2022, mainly for purchases of property and equipment[204] Net Cash from Financing Activities Explains cash flows from debt, equity, and dividend transactions - Cash provided by financing activities was $16.8 million for Q1 2022, primarily from net borrowings on the M&T Floor Plan Line of Credit ($38.1 million) and proceeds from stock option exercises ($1.4 million)[205] - These inflows were partially offset by treasury stock repurchases ($19.2 million), long-term debt repayments ($1.8 million), and dividend payments ($1.2 million)[205] Funding Needs and Sources Assesses the company's liquidity, capital resources, and future funding plans - As of March 31, 2022, the company had $89.6 million in cash and $112.4 million in working capital[207] - The company expects to meet liquidity needs for the next twelve months through cash on hand, cash from operations, and borrowing capacity[206] - Capital expenditures for Q1 2022 were $7.9 million, including $5.6 million for land purchases for future greenfield development[207] Short-Term Material Cash Requirements Outlines anticipated cash needs for the next twelve months, including capital spending and debt - Anticipated discretionary capital spending for maintaining current operations is approximately $7 million in 2022[209] - Planned spending includes $3.6 million to complete the Elkhart dealership facility and an additional $5.6 million for future greenfield land purchases, expected to be financed through leasing partners[209] - Financing commitments require $3.4 million in 2022 for long-term debt and $1.5 million for financing leases[211] - Additional funds are available through the $25 million M&T revolving credit line[212] Long-Term Material Cash Requirements Details financial obligations and capital needs extending beyond one year - Known obligations beyond twelve months include approximately $8 million in annual maintenance capital and $12.6 million in long-term debt repayment[215] - Average greenfield dealership development costs $16-20 million (land and development, financed via leases) plus $1.5 million in self-funded start-up operational capital[215] - Average acquisition costs $4-13 million, plus RV inventory financed through the floorplan facility[215] M&T Credit Facility Describes the terms and outstanding balances of the company's primary credit facility - The M&T Facility was amended and restated on July 14, 2021, to an approximately $369.1 million aggregate credit facility, including a $327 million floor plan, $11.3 million term loan, $25 million revolving credit, and $5.8 million mortgage loan facility[220] - As of March 31, 2022, $230.9 million was outstanding under the M&T Floor Plan Line of Credit, $9.4 million under the M&T Term Loan, and $5.6 million on the M&T Mortgage[225] - The M&T Floor Plan Line of Credit can finance new vehicle inventory, up to $90 million for pre-owned, and $1.0 million for company vehicles, with principal due upon sale[222] Contractual and Commercial Commitments Reports on significant contractual obligations and agreements - No material changes in contractual and commercial commitments occurred during Q1 2022 outside the ordinary course of business[227] Cyclicality Discusses how economic conditions and market factors influence RV sales - RV vehicle unit sales are historically cyclical, fluctuating with general economic conditions, consumer confidence, discretionary spending, fuel prices, interest rates, and credit availability[228] Seasonality and Effects of Weather Explains the impact of seasonal trends and weather on vehicle sales - The company experiences modestly higher vehicle sales volumes in the first half of each year, influenced by warm climates in Florida and Arizona during winter, and spring months in northern locations[229] - Severe weather events, such as hurricanes in Florida, could damage property and inventory, and decrease dealership traffic[230] Critical Accounting Policies and Estimates Highlights key accounting policies requiring significant management judgment - The company prepares financial statements in accordance with GAAP, requiring estimates, assumptions, and judgments affecting reported amounts[231] - No other material changes in critical accounting policies from those reported in the Annual Report on Form 10-K, other than updates to revenue recognition policies due to ASC 606 and ASC 842[232] Item 3 – Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, market risk disclosures are omitted due to scaled disclosure requirements - The company has elected scaled disclosure requirements available to smaller reporting companies for market risk disclosures[234] Item 4 – Controls and Procedures Identified material weaknesses in IT general controls are being remediated, with financial statements fairly presented - A material weakness was identified in IT general controls concerning program change-management over certain IT systems supporting financial reporting processes[234] - Another material weakness was found in the review of user permissions and separation of duties due to the complexity of the current technology platform[234] - Remediation actions include developing enhanced risk assessment procedures, maintaining ITGC documentation, implementing an IT management review and testing plan, and designing role-based access and permissions[234] - Remediation of the material weakness is expected to be completed prior to the end of fiscal 2022[234] - Despite the material weakness, management concluded that the financial statements in this Form 10-Q fairly present the company's financial position, results of operations, and cash flows[235] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and other disclosures for the reporting period Item 1 – Legal Proceedings Ongoing legal proceedings are not expected to materially impact the company's financial condition or operations - The company is a party to multiple legal proceedings that arise in the ordinary course of business[238] - Management does not believe that the ultimate resolution of these matters will have a material adverse effect on the company's financial condition or operations[238] Item 1A – Risk Factors The company faces diverse risks including warrant fluctuations, internal controls, COVID-19, financing, and market competition - The fair value of warrant liabilities may fluctuate[8] - The company must maintain an effective system of internal controls and accurately report financial results, remediating material weaknesses[8] - The COVID-19 pandemic could result in a net negative impact on the business in the long term, despite increased sales since initial adverse impacts[8] - The company's business is affected by the availability of financing to it and its customers[8] - Success depends significantly on the wellbeing, popularity, and reputation for quality of key manufacturers, particularly Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc[8] - Expansion into new, unfamiliar markets and acquisitions presents increased risks that may prevent profitability[8][9] Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds Details Q1 2022 stock repurchases and unregistered equity sales, including a cashless warrant exercise Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :----------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------- | :----------------------------------------------------------------------------------- | | January 1, 2022 - January 31, 2022 | 314,484 | $16.97 | 1,021,796 | $7,647 | | February 1, 2022 - February 28, 2022 | 459,076 | $17.24 | 1,480,872 | $44,733 | | March 1, 2022 - March 31, 2022 | 313,237 | $18.91 | 1,794,109 | $38,808 | - William Murnane exercised a warrant for 24,276 shares of common stock via cashless exercise on January 5, 2022, which was exempt from registration under Section 3(a)(9) of the Securities Act[243][244] Item 3 – Defaults Upon Senior Securities No defaults on senior securities were reported during the period - No defaults upon senior securities were reported[245] Item 4 – Mine Safety Disclosures No mine safety disclosures were provided in this report - No mine safety disclosures were reported[246] Item 5 – Other Information No other information was reported in this section - No other information was reported[247] Item 6 – Exhibits Lists exhibits filed with Form 10-Q, including employment agreements, certifications, and XBRL financials - Exhibits include the Employment Agreement for Robert DeVincenzi, dated January 3, 2022[251] - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a) and 18 U.S.C. Section 1350 are furnished[251] - The financial statements are formatted in inline XBRL[251]