RumbleOn(US:RMBL)2022-11-12 20:27Financial Data and Key Metrics Changes - In Q3 2022, total revenue was $470.3 million, down 13.9% sequentially, primarily due to a nearly 40% decline in the Automotive segment revenue [40] - Total gross profit for Q3 was $116.3 million, down 15.7% from the previous quarter, with a gross profit margin of 24.7%, down from 25.3% [41] - Adjusted net income was $4.4 million, with adjusted diluted earnings per share at $0.27 [47] Business Line Data and Key Metrics Changes - The Powersports segment generated over $385 million in revenue, a decline of 7.1% sequentially, attributed to expected seasonality [40] - Total units sold in Q3 were 19,908, down 14.7% sequentially, with 18,393 units being Powersports, reflecting a sequential decline of 11.2% [39] - The Automotive segment has become a smaller portion of the overall business, with strategic decisions to purchase fewer units impacting revenue [10][11] Market Data and Key Metrics Changes - The company noted resilience in consumer demand for Powersports, with strong demand in segments like new utility vehicles and used motorcycles [30] - Manufacturing and supply chain issues for new vehicle supply are reportedly improving, with OEMs shipping more vehicles [31] - Access to high-quality used inventory remains crucial, with a $75 million financing facility announced to support inventory purchases [33] Company Strategy and Development Direction - The company is focused on improving customer experience and expanding its market share in the Powersports sector [12][14] - Plans include launching a digital end-to-end buying experience in 2023, integrating technology to enhance customer interactions [18][26] - The company is exploring strategic alternatives for the Automotive segment to concentrate on its core Powersports and Vehicle Logistics segments [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the Powersports segment despite macroeconomic pressures, noting no significant reduction in demand indicators [44] - The company anticipates sequential and year-over-year growth in the Powersports and Vehicle Logistics segments, while expecting declines in the Automotive segment [50] - Management is closely monitoring economic conditions and consumer behavior, indicating a proactive approach to potential challenges [34] Other Important Information - A global settlement was reached with former owners of RideNow, providing a mechanism for orderly disposition of RumbleON shares [59] - The company is investing in technology and facilities to support long-term growth, with a focus on building a scalable organization [49][110] Q&A Session Summary Question: Clarification on EBITDA guidance reduction - The adjusted EBITDA guidance was reduced from $145 million to $125 million, inclusive of ongoing investments [64][66] Question: Observations on consumer demand and financing - Management noted that while demand remains strong, there are signs of pressure on consumers due to rising financing rates and prices [70][92] Question: Insights on inventory management and trends - The company is managing day supply effectively and has seen a surprising but manageable growth in inventory levels [106] Question: Future guidance excluding the automotive business - Future guidance for 2023 will exclude the automotive segment, focusing on the Powersports business [118] Question: Trends in consumer trading behavior - There is an increase in consumers needing to sell, often due to economic pressures, but trade-ins are also up due to a higher mix of side-by-sides [120][121]