RumbleOn(RMBL) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated $244.7 million of adjusted EBITDA in Q1 2025, down slightly compared to the same quarter last year despite a 20.5% decline in revenue [9][10] - Total adjusted SG&A expenses were $57.5 million, representing 85.6% of gross profit, down from $72.6 million or 87.9% of gross profit in the same quarter last year [10] - Cash outflows from operating activities were $6.9 million for Q1 2025, compared to cash inflows of $17 million for the same period in 2024 [14] Business Line Data and Key Metrics Changes - The Powersports Group sold 13,186 total major units, down 20.5% year over year, with new unit sales down 23.7% and pre-owned unit sales down 13.9% [11] - Gross margins for new units improved to 13.5% from 12.5% year over year, while pre-owned gross margins were 16.3%, down from 19.5% due to an elevated margin in the previous year [11] - Revenue from the powersports dealership group was $239.2 million, down 18.5% year over year, primarily due to lower major unit volume [13] Market Data and Key Metrics Changes - The asset-light vehicle transportation services segment, Wholesale Express, saw revenue decline by 61.5% year over year, with gross profit decreasing 68.6% to $1.1 million [14] - The overall decline in unit sales during the quarter impacted revenue and gross profit across various segments [12] Company Strategy and Development Direction - The company is focused on improving operational discipline and customer service, aiming for long-term financial success despite current challenges [8] - New key management additions are expected to strengthen the company's market position and align with strategic growth goals [6][7] - The company is actively evaluating opportunities to optimize its capital structure and lower its cost of capital [15] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to tariffs and shifting consumer preferences, but the company is seeing robust demand in the pre-owned segment [7][8] - Management expressed confidence in the actions taken to position the company for long-term success, despite a difficult macroeconomic backdrop [4][8] Other Important Information - The company is engaged in a comprehensive search for a new CFO to lead future growth [6] - The company has fully repaid $38.8 million of convertible notes due on January 2 [14] Q&A Session Summary Question: How aggressive does the company want to be with the cash offer tool for pre-owned inventory? - The company can be aggressive with the cash offer tool, but it depends on the quality of the inventory available [17][18] Question: What are the expectations for inventory levels by year-end? - The company expects inventory levels to be about where they ended in 2024, possibly a little higher due to inflation [20][22] Question: What is the message from OEM partners regarding tariffs? - OEMs are currently absorbing tariff costs, and there is hope for a return to normal operating conditions soon [25][26]