Lazydays Holdings(US:GORV)2023-04-27 17:43Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $295.7 million, a decrease of 21.4% compared to the same period in 2022, reflecting a continued softening of sales volumes and discounting of 2022 model year inventory [15][16] - Adjusted net income was $1.2 million for the quarter, down from $28.2 million in the previous year, resulting in zero adjusted earnings per share compared to $1.27 in 2022 [18] - Total SG&A as a percentage of gross profit was 82%, with adjusted SG&A at 79%, showing sequential improvement from Q4 2022 [17] Business Line Data and Key Metrics Changes - New unit sales declined 18.9% in the quarter, with gross profit per unit (excluding LIFO) declining 38.6% to $12,132 [16] - Used unit sales (excluding wholesale) declined 15.6%, with gross profit per unit down 30% to $13,359 [16] - Revenue from service, body, and parts business increased by 6.3% to $15 million [16] Market Data and Key Metrics Changes - The company ended the quarter with a 207-day supply of new vehicle inventory, a decrease of 43 days from year-end, and a 77-day supply on used inventory, a decrease of one day [15] - The company noted that credit remains available for customers despite higher interest rates impacting some customers' willingness to take out loans [7][20] Company Strategy and Development Direction - The company is focused on expanding its footprint by opening new locations, with a new store in Council Bluffs, Iowa, and three more locations under construction to be completed in Q3 2023 [11] - There is a strong emphasis on enhancing digital capabilities to improve customer experience and promote growth, with a new VP of Marketing joining the team [12] - The company is committed to capital deployment, prioritizing internal investments and real estate ownership, followed by acquisitions [23] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future performance despite macroeconomic headwinds, noting that the worst is behind them in terms of inventory management and sales velocity [9][11] - The company is experiencing improved month-on-month operations from January through April, with expectations for seasonal growth as weather improves [10][27] Other Important Information - The company has cash and cash equivalents of $41 million as of March 31, with additional liquidity from un-financed real estate estimated at $51.6 million [19][20] - The company is comfortably in compliance with debt covenants, with a covenant leverage ratio of 0.63 at the end of the quarter [22] Q&A Session Summary Question: Monthly trends in the quarter and seasonality - Management noted that Q1 showed sequential improvement, with March significantly better than January and February, and April pacing ahead of March [25][26] Question: Inventory mix and costs - Management indicated healthy demand for used units, with a focus on retailing more and being cautious with reconditioning to avoid pricing issues [28][29] Question: Consumer demand for 2023 models - Management stated that 2022 models require significant discounting, while 2023 models are still bringing good margins, with careful management of inventory arrivals [37][40] Question: Changes in OEM pricing strategy - Management reported no material changes in OEM pricing strategies regarding rebates and discounting for 2023 models [46]