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RumbleOn Reports Fourth Quarter and Full Year 2022 Financial Results

Announces Record Full Year and Q4 Powersports Unit Sales

Executes on $15 Million+ of SG&A Cost Reductions

Creating strategic partnership with Camping World (NYSE: CWH)

Provides 2023 Outlook

RumbleOn, Inc. (NASDAQ: RMBL) (the “Company” or “RumbleOn”), the nation's first technology-based powersports platform, today announced operational and financial results for the three months and full year ended December 31, 2022. RumbleOn management is hosting an investor call to discuss the Company’s results today, March 16, 2023, at 7:30 am CT (8:30 am ET).

Full-Year 2022 Financial and Operational Highlights

  • Total Unit Sales of 81,037 across Powersports and Automotive Segments.
  • Total Powersports Unit Sales of 73,413 with Used Powersports Units of 31,764.
  • Powersports Segment Revenue of $1.4 billion, including the elimination of $71.0 million1, representing 78% of Total Company Revenue of $1.8 billion.
  • Powersports Segment Gross Profit of $429.9 million, comprising over 95% of Total Company Gross Profit.
  • Net Loss of $(261.5) million with Diluted Loss per Share of $(16.48). Full-year GAAP EPS reflects a $350.3 million non-cash impairment charge. Excluding the effects of the non-cash impairment charge and other non-recurring items, but including stock-based compensation expense, Adjusted Net Income of $37.3 million with Adjusted Diluted Earnings per Share of $2.35.
  • Adjusted EBITDA of $120.1 million, driven by Powersports gross margin compression and reduced gross profit contribution from the automotive segment.

Fourth Quarter 2022 Financial and Operational Highlights

  • Total Unit Sales of 18,419 across Powersports and Automotive Segments, impacted by the exiting of the Automotive Segment.
  • Total Powersports Unit Sales of 17,550 with Used Powersports Units of 6,917, resulting in New: Used ratio of 1.54x, which increased slightly from the prior quarter.
  • Powersports Segment Revenue of $320.5 million, including the elimination of $18.6 million1. Powersports segment revenue was 87% of Total Company Revenue of $369.5 million,
  • Powersports Segment Gross Profit of $89.7 million comprising over 96% of Total Company Gross Profit of $93.1 million; Total Company Gross Profit Margin of 25.2% declined 60 bps sequentially.
  • Net Loss of $(287.7) million with Diluted Loss per Share of $(17.80). Fourth quarter GAAP EPS reflects a $350.3 million pre-tax non-cash impairment charge. Excluding the effects of the non-cash impairment charge and other non-recurring items, but including stock-based compensation expense, Adjusted Net Loss of $(11.0) million with Adjusted Diluted Loss per Share of $(0.68).
  • Adjusted EBITDA of $18.7 million, impacted by lower gross profit contribution from the Automotive segment combined with modest gross margin compression in the Powersports segment.
  • Significant Financial Flexibility with cash, including restricted cash, of $58.6 million and total available liquidity of $196.1 million as of December 31, 2022, inclusive of availability under Powersports inventory financing credit facility of $75.0 million, announced on October 26, 2022.
  • Signed an engagement letter with JP Morgan to review our balance sheet initiatives and options for 2023.
  • Completed 3 “Tuck-In” acquisitions, 2 Polaris and 1 Honda franchise, in Texas. These acquisitions were funded from operating cash for a total purchase price of $4.8 million.
  • Paid down $15 million of long-term debt.

Management Commentary

Marshall Chesrown, RumbleOn's Chairman and Chief Executive Officer commented, “Our fourth quarter results reflect forward-looking actions taken to better position the business for 2023 and beyond. We are aggressively addressing macroeconomic uncertainties, as we operate in an environment of normalized inventory levels and associated margin pressures. We are building a solid foundation for long-term profitable growth, all while making prudent, timely and disciplined investments in technology and customer experience improvements online and in our stores. Further, the fulfillment process being rolled out will enable our operations and teams to become more agile to meet customer demand through diligent on time inventory management and customer selection and service.”

“With an ongoing focus on maintaining financial health and a strong balance sheet, we remain committed to a completely self-funded business model for growth. In the fourth quarter, we pre-paid $15M in principal and recently signed an engagement letter with JP Morgan to review our balance sheet initiatives and options for 2023. As we look to 2023 and beyond, we are continuing to implement our five pillar strategy to achieve our near and long term financial targets, driving sustainable shareholder value,” concluded Chesrown.

Fourth Quarter 2022 — Summary Financial Results

Reconciliation of GAAP to non-GAAP financial measures are provided in accompanying financial schedules.

Unless otherwise noted, all comparisons in the narrative are on a sequential basis for the three months ended December 31, 2022, as compared to the three months ended September 30, 2022.

 

(Unaudited)

$ in millions except per share amounts

Three Months Ended

 

Change

 

Dec 31, 2022

 

Sep 30, 2022

 

Dec 31, 2021

 

Sequential

 

Year-over-Year

Total Unit Sales (#)

18,419

 

19,908

 

17,037

 

(7.5)%

 

8.1%

 

 

 

 

 

 

 

 

 

 

Total Revenue1

$369.5

 

$450.7

 

$430.3

 

(18.0)%

 

(14.1)%

Gross Profit

$93.1

 

$116.3

 

$90.1

 

(20.0)%

 

3.3%

Gross Profit Margin

25.2%

 

25.8%

 

20.9%

 

(60) bps

 

430 bps

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

$(287.7)

 

$3.0

 

$20.7

 

nm

 

nm

Diluted Earnings (Loss) per Share

$(17.80)

 

$0.19

 

$1.35

 

nm

 

nm

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$18.7

 

$25.7

 

$24.3

 

(27.3)%

 

(23.0)%

Adjusted Net Income (Loss)

$(11.0)

 

$4.4

 

$9.0

 

(350.0)%

 

(222)%

Adjusted Diluted Earnings (Loss) per Share

$(0.68)

 

$0.27

 

$0.60

 

(351.9)%

 

(213)%

nm = not meaningful

 

 

 

 

 

Total Unit Sales of 18,419 declined (7.5)%, driven by the Company's strategic decision to purchase fewer automotive units during the quarter, combined with the anticipated seasonal impact experienced in Powersports. The Powersports Segment made up approximately 95.3% of total unit sales in the fourth quarter with the Automotive segment comprising the remaining approximately 4.7%.

Total Revenue of $369.51 million declined (18.0)%. The Powersports Segment revenue made up approximately 86.8% of total revenue in the fourth quarter, the Automotive Segment made up approximately 10.2%, and the Vehicle Logistics Segment made up approximately 3.0%.

Total Gross Profit of $93.1 million declined (20.0)%. The Powersports Segment contributed approximately 96.4% of total gross profit in the fourth quarter, and the Vehicle Logistics and Automotive Segments made up approximately 2.9% and 0.7%, respectively.

Operating Expenses were $98.1 million, or 26.6% of revenue, compared to $102.8 million, or 21.9% of revenue. Total stock-based compensation was $2.1 million down from $2.6 million in the prior quarter.

Net Loss was $(287.7) million, reflecting a $350.3 million pre-tax non-cash impairment charge. Earnings (loss) per diluted share was $(17.80) compared to $0.19.

Adjusted Net Income (Loss) was $(11.0) million, or 3% of revenue, compared to $4.4 million or 1% of revenue. Adjusted earnings per diluted share was $(0.68) compared to $0.27.

Adjusted EBITDA was $18.7 million compared to $25.7 million. The (27.3)% sequential decrease in adjusted EBITDA was primarily driven by modest gross margin compression in the Powersports Segment and lower gross profit contribution from the Automotive Segment.

Cash as of December 31, 2022, including restricted cash, was approximately $58.6 million, and total debt was $635.2 million. Availability under our short-term revolving credit facilities totaled approximately $137.5 million. Total Available Liquidity, defined as cash and cash equivalents, including restricted cash, plus availability under our short-term revolving credit facilities totaled approximately $196.1 million.

Cash Flow used in Operating Activities was $(18.9) million for the year ended December 31, 2022, which was negatively impacted by $45.1 million of cash used for inventory purchases not financed by trade floorplan credit facilities.

Weighted Average Basic and Diluted Shares of Class B common stock outstanding were 15,871,005 for the year ended December 31, 2022. As of December 31, 2022, RumbleOn had 16,184,264 total shares of Class B common stock and 50,000 shares of Class A common stock outstanding.

Full Year 2023 — Financial Outlook

RumbleOn is providing its outlook for the full year 2023 as follows:

  • Total Powersports and Transportation Revenue of $1.4 billion to $1.6 billion, compared to Powersports and Transportation Revenue of $1.46 billion in 2022.
  • Powersports GPU of approximately $5,700 compared to $6,159 in 20222.
  • Adjusted EBITDA of $95 million to $105 million.

Our financial guidance includes the following assumptions:

  • Combined Powersports new and used retail unit growth of approximately 5%.
  • We expect continued gross margin pressure in the first half as new unit supply imbalances normalize.
  • The $15 million SG&A reductions will begin to benefit our business in early 2023.
  • This does not include any growth from acquisitions or tuck-ins, nor does it have a built-in overlay from fulfillment or technological opportunities that we create over the course of 2023.

Fourth Quarter 2022 — Segment Results

Unless otherwise noted, all comparisons are on a sequential basis for the three months ended December 31, 2022, as compared to the three months ended September 30, 2022.

Powersports Segment

 

(Unaudited)

$ in millions except per unit

Three Months Ended

 

Change

 

Dec 31, 2022

 

Sep 30, 2022

 

Dec 31, 2021

 

Sequential

 

Year-over-Year

Unit Sales (#)

 

 

 

 

 

 

 

 

 

New

10,633

 

9,973

 

8,070

 

6.6%

 

32%

Used

6,917

 

8,420

 

5,408

 

(17.9)%

 

28%

Total Powersports Unit Sales

17,550

 

18,393

 

13,478

 

(4.6)%

 

30%

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

`

 

 

 

 

 

 

New

$149.8

 

$165.4

 

$126.7

 

(9.4)%

 

18%

Used

$77.8

 

$106.5

 

$74.5

 

(26.9)%

 

4%

Finance & Insurance, net

$27.6

 

$31.6

 

$23.0

 

(12.7)%

 

20%

Parts, Services, and Accessories

$65.3

 

$62.2

 

$50.9

 

5.0%

 

28%

Total Powersports Revenue

$320.5

 

$365.7

 

$275.1

 

(12.4)%

 

17%

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

New

$25.3

 

$32.1

 

$25.1

 

(21.2)%

 

1%

Used

$10.4

 

$18.2

 

$8.4

 

(42.9)%

 

24%

Finance & Insurance, net

$27.6

 

$31.6

 

$23.0

 

(12.7)%

 

20%

Parts, Services, and Accessories

$26.4

 

$29.1

 

$23.0

 

(9.3)%

 

15%

Total Powersports Gross Profit

$89.7

 

$111.0

 

$79.5

 

(19)%

 

13%

Powersports GPU3

$5,420

 

$6,348

 

$6,445

 

(14.6)%

 

(16)%

Used Powersports Units, which includes used retail and wholesale Powersports Units, declined (17.9)% sequentially. Sequential declines are primarily the result of our decision to slow down used vehicle acquisition while new inventory normalized.

Used Powersports Revenue declined (26.9)% sequentially due to anticipated seasonality. Used Powersports Gross Profit declined (42.9)% sequentially, due primarily to lower unit sales and anticipated seasonality.

New Powersports Revenue declined (9.4)% sequentially, despite a 6.6% increase in unit sales, driven by increased supply of new inventory and unfavorable price mix in consumer demand. New Powersports Gross Profit declined (21.2)% sequentially, due primarily to higher inventory acquisition costs.

Powersports GPU was $5,420, as compared to $6,348 in the prior quarter.3

Automotive Segment

 

(Unaudited)

$ in millions

Three-Months Ended

 

Change

 

Dec 31, 2022

 

Sep 30, 2022

 

Dec 31, 2021

 

Sequential

 

Year-over-Year

Automotive Unit Sales (#)

869

 

1,515

 

3,559

 

(42.6)%

 

(75.6)%

Automotive Revenue

$37.8

 

$70.0

 

$144.2

 

(46.0)%

 

(73.8)%

Automotive Gross Profit

$0.7

 

$1.9

 

$7.8

 

(63.2)%

 

(91.0)%

Revenue from the Automotive Segment declined (46.0%) sequentially, primarily driven by the Company's strategic decision to purchase fewer automotive units during the quarter and wind down its automotive business.

Gross Profit was down due to a decrease in unit sales and gross profit per unit sold, driven by less favorable macroeconomic conditions and the Company’s decision to focus on its powersports segment.

Vehicle Logistics Segment

 

(Unaudited)

$ in millions

Three-Months Ended

 

Change

 

Dec 31, 2022

 

Sep 30, 2022

 

Dec 31, 2021

 

Sequential

 

Year-over-Year

Vehicles Transported (#)

18,390

 

23,992

 

21,847

 

(23.3)%

 

(15.8)%

Vehicle Logistics Revenue

$11.5

 

$15.5

 

$12.7

 

(25.8)%

 

(9.4)%

Vehicle Logistics Gross Profit

$2.9

 

$3.6

 

$2.8

 

(19.4)%

 

3.6%

Revenue from the Vehicle Logistics Segment was down (25.8)% sequentially, driven by a decline in the number of vehicles transported, and a slight decline in revenue per vehicle transported from $647 in the third quarter to $628 in the fourth quarter.

Gross profit for this segment was down (19.4)% sequentially, driven by a decline in the number of vehicles transported, partially offset by a slight increase in gross profit per vehicle transported from $148 in the third quarter to $159 in the fourth quarter.

Conference Call Details

RumbleOn's management will host a conference call to discuss its operational and financial results on March 16, 2023 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). A live and archived webcast can be accessed from RumbleOn's Investor Relations website. To access the conference call telephonically, callers may dial 1-877-407-9716 (or 1-201-493-6779 for callers outside of the United States) and enter conference ID 13735860.

About RumbleOn

RumbleOn is the nation’s first technology-based powersports platform. Headquartered in the Dallas Metroplex, RumbleOn provides the only technology-led platform in powersports with a broad footprint of physical locations, full-line manufacturer representation and high-quality used inventory to transform the entire customer experience. Our goal is to integrate the best of both the physical and digital, and make the transition between the two seamless. To learn more please visit us online at https://www.rumbleon.com/.

Cautionary Note on Forward-Looking Statements

This press release may contain "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the date of this press release and are advised to consider the factors listed under the heading "Forward-Looking Statements" and "Risk Factors" in the Company's SEC filings, as may be updated and amended from time to time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Use of Non-GAAP Financial Measures

As required by the rules of the Securities and Exchange Commission ("SEC"), we provide reconciliations of the non-GAAP financial measures contained in this press release to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this release.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income (loss), and Adjusted net income (loss) margin are non-GAAP financial measures and should not be considered as alternatives to operating income or net income as a measure of operating performance or cash flows or as a measure of liquidity. Non-GAAP financial measures are not necessarily calculated the same way by different companies and should not be considered a substitute for or superior to U.S. GAAP.

Adjusted EBITDA is defined as net income (loss) adjusted to add back interest expense, depreciation and amortization, changes in derivative liability, non-cash stock-based compensation costs, transaction costs, litigation expenses, and other non-recurring costs, as these recoveries, charges and expenses are not considered a part of our core business operations and are not necessarily an indicator of ongoing, future company performance.

Adjusted EBITDA is one of the primary metrics used by management to evaluate the financial performance of our business. We present adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe it is helpful in highlighting trends in our operating results, because it excludes, among other things, certain results of decisions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure and capital investments.

Adjusted net income (loss) is defined as net income (loss) adjusted to add back transaction costs, purchase accounting adjustments and other non-recurring costs which include items not indicative of our ongoing operating performance.

With respect to our 2023 adjusted EBITDA target, a reconciliation of this non-GAAP measure to the corresponding GAAP measure is not available without unreasonable effort due to the complexity of the reconciling items that we exclude from this non-GAAP measure.

RumbleOn, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands; except per share amounts)

 

 

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

48,579

 

 

$

48,974

 

Restricted cash

 

 

10,000

 

 

 

3,000

 

Accounts receivable, net

 

 

33,758

 

 

 

40,166

 

Inventory

 

 

331,721

 

 

 

201,666

 

Prepaid expense and other current assets

 

 

7,424

 

 

 

6,335

 

Total current assets

 

 

431,482

 

 

 

300,141

 

Property and equipment, net

 

 

76,078

 

 

 

21,417

 

Right-of-use assets

 

 

161,822

 

 

 

133,112

 

Goodwill

 

 

21,142

 

 

 

260,922

 

Intangible assets, net

 

 

247,413

 

 

 

302,066

 

Deferred tax assets

 

 

58,115

 

 

 

 

Other assets

 

 

31,158

 

 

 

10,091

 

Total assets

 

 

1,027,210

 

 

 

1,027,749

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other current liabilities

 

 

82,618

 

 

 

77,317

 

Vehicle floor plan note payable

 

 

225,431

 

 

 

97,278

 

Current portion of long-term, convertible debts, and notes payable

 

 

3,645

 

 

 

4,476

 

Total current liabilities

 

 

311,694

 

 

 

179,071

 

Long-term liabilities:

 

 

 

 

Senior secured note

 

 

317,494

 

 

 

253,438

 

Convertible debt, net

 

 

31,890

 

 

 

29,242

 

Line of credit and notes payable

 

 

25,000

 

 

 

150

 

Operating lease liabilities

 

 

126,695

 

 

 

114,687

 

Deferred tax liabilities

 

 

 

 

 

7,586

 

Other long-term liabilities

 

 

8,422

 

 

 

11,930

 

Total long-term liabilities

 

 

509,501

 

 

 

417,033

 

Total liabilities

 

 

821,195

 

 

 

596,104

 

Commitments and contingencies (Notes 2, 8, 9, 10, 11, 12, 14,19, 21)

 

 

 

 

Stockholders’ equity:

 

 

 

 

Common A stock, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding as of December 31, 2022 and December 31, 2021

 

 

0

 

 

 

0

 

Class B stock, $0.001 par value, 100,000,000 shares authorized, 16,184,264 and 14,882,022 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

 

 

16

 

 

 

15

 

Additional paid-in capital

 

 

585,937

 

 

 

550,055

 

Accumulated deficit

 

 

(375,619

)

 

 

(114,106

)

Class B stock in treasury, at cost, 123,089 shares as of December 31, 2022 and December 31, 2021

 

 

(4,319

)

 

 

(4,319

)

Total stockholders’ equity

 

 

206,015

 

 

 

431,645

 

Total liabilities and stockholders’ equity

 

$

1,027,210

 

 

$

1,027,749

 

 

RumbleOn, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

Vehicles sales

 

 

 

 

 

 

 

Powersports

$

227,537

 

 

$

201,996

 

 

$

1,033,919

 

 

$

323,303

 

Automotive

 

37,840

 

 

 

144,233

 

 

 

334,273

 

 

 

460,888

 

Parts, service and accessories

 

65,294

 

 

 

59,971

 

 

 

247,562

 

 

 

66,969

 

Finance and insurance, net

 

27,671

 

 

 

(3,655

)

 

 

123,576

 

 

 

29,133

 

Vehicle logistics

 

11,168

 

 

 

27,803

 

 

 

54,038

 

 

 

43,878

 

Total revenue

 

369,510

 

 

 

430,348

 

 

 

1,793,368

 

 

 

924,171

 

Cost of revenue:

 

 

 

 

 

 

 

Powersports

 

191,877

 

 

 

167,679

 

 

 

839,768

 

 

 

264,872

 

Automotive

 

37,181

 

 

 

136,391

 

 

 

323,423

 

 

 

430,142

 

Parts, service and accessories

 

38,884

 

 

 

27,857

 

 

 

135,358

 

 

 

36,702

 

Vehicle logistics

 

8,428

 

 

 

8,320

 

 

 

42,160

 

 

 

34,278

 

Total cost of revenue

 

276,370

 

 

 

340,247

 

 

 

1,340,709

 

 

 

765,994

 

 

 

 

 

 

 

 

 

Gross profit

 

93,140

 

 

 

90,101

 

 

 

452,659

 

 

 

158,177

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

91,972

 

 

 

71,056

 

 

 

366,387

 

 

 

164,077

 

Impairment of goodwill and franchise rights

 

350,315

 

 

 

 

 

 

350,315

 

 

 

 

Insurance recovery

 

 

 

 

 

 

 

 

 

 

(3,135

)

Depreciation and amortization

 

6,156

 

 

 

3,155

 

 

 

23,079

 

 

 

6,103

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(355,303

)

 

 

15,890

 

 

 

(287,122

)

 

 

(8,868

)

 

 

 

 

 

 

 

 

Interest expense

 

(16,809

)

 

 

(8,299

)

 

 

(53,868

)

 

 

(16,405

)

Other income

 

4,043

 

 

 

 

 

 

4,331

 

 

 

 

Change in derivative liability

 

 

 

 

(25

)

 

 

39

 

 

 

(8,799

)

PPP loan forgiveness

 

 

 

 

2,110

 

 

 

2,509

 

 

 

2,682

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

(368,069

)

 

 

9,676

 

 

 

(334,111

)

 

 

(31,390

)

 

 

 

 

 

 

 

 

Income tax benefit

 

(80,344

)

 

 

(10,984

)

 

 

(72,598

)

 

 

(21,665

)

Net income (loss)

$

(287,725

)

 

$

20,660

 

 

$

(261,513

)

 

$

(9,725

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

16,161,483

 

 

 

15,055,084

 

 

 

15,871,005

 

 

 

6,920,318

 

Earnings (loss) per share - basic

$

(17.80

)

 

$

1.37

 

 

$

(16.48

)

 

$

(1.41

)

Weighted average number of common shares outstanding - diluted

 

16,161,483

 

 

 

15,263,736

 

 

 

15,871,005

 

 

 

6,920,318

 

Earnings (loss) per share - diluted

$

(17.80

)

 

$

1.35

 

 

$

(16.48

)

 

$

(1.41

)

 

RumbleOn, Inc.

Condensed Consolidated Statements of Cash Flows

For the Two Years Ended December 31, 2022

(Unaudited)

(Dollars in thousands)

 

 

 

2022

 

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net loss

$

(261,513

)

 

$

(9,725

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

23,079

 

 

 

6,103

 

Amortization of debt discount

 

6,383

 

 

 

4,386

 

Forgiveness of PPP loan

 

(2,509

)

 

 

(2,682

)

Stock based compensation expense

 

9,372

 

 

 

29,219

 

Impairment loss on goodwill and franchise rights

 

350,315

 

 

 

 

(Gain) loss from change in value of derivatives

 

(39

)

 

 

8,799

 

Deferred taxes

 

(76,637

)

 

 

(22,545

)

Principal payments received on finance receivables

 

 

 

 

 

Originations of loan receivables, net of principal payments received

 

(27,934

)

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

5,913

 

 

 

(9,756

)

Inventory

 

(102,323

)

 

 

(53,226

)

Prepaid expenses and other current assets

 

(248

)

 

 

(1,102

)

Other assets

 

284

 

 

 

(4,528

)

Other liabilities

 

1,606

 

 

 

4,748

 

Accounts payable and accrued liabilities

 

(4,904

)

 

 

3,013

 

Floor plan trade note borrowings

 

60,268

 

 

 

15,119

 

Net cash used in operating activities

 

(18,887

)

 

 

(32,177

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Acquisitions, net of cash received

 

(69,584

)

 

 

(371,314

)

Purchase of property and equipment

 

(5,617

)

 

 

(5,646

)

Technology development

 

(7,003

)

 

 

(1,871

)

Net cash used in investing activities

 

(82,204

)

 

 

(378,831

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Proceeds from new secured debt

 

84,500

 

 

 

261,451

 

Repayment of debt and mortgage notes

 

(49,235

)

 

 

 

Repayments of (proceeds from) issuance of notes

 

(2,117

)

 

 

(10,413

)

Increase in borrowings from non-trade floor plans

 

49,548

 

 

 

17,187

 

Proceeds from RumbleOn Finance (“ROF”) credit facility for the purchase of consumer finance loans

 

25,000

 

 

 

 

Net proceeds from sale of common stock

 

 

 

 

191,241

 

Net cash provided by financing activities

 

107,696

 

 

 

459,466

 

NET CHANGE IN CASH

 

6,605

 

 

 

48,458

 

Cash and restricted cash at beginning of period

 

51,974

 

 

 

3,516

 

Cash and restricted cash at end of period

$

58,579

 

 

$

51,974

 

 

RumbleOn, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Twelve Months Ended

 

Dec 31,

 

Sept 30,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss)

$

(287,726

)

 

$

3,039

 

 

$

20,660

 

 

$

(261,513

)

 

$

(9,725

)

Add back:

 

 

 

 

 

 

 

 

 

Interest expense

 

16,810

 

 

 

12,603

 

 

 

8,298

 

 

 

53,869

 

 

 

16,405

 

Depreciation and amortization

 

6,156

 

 

 

6,570

 

 

 

3,155

 

 

 

23,079

 

 

 

6,103

 

Interest income and miscellaneous income

 

287

 

 

 

(38

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

(80,344

)

 

 

496

 

 

 

(10,984

)

 

 

(72,598

)

 

 

(21,665

)

EBITDA

 

(344,817

)

 

 

22,670

 

 

 

21,129

 

 

 

(257,163

)

 

 

(8,882

)

Adjustments:

 

 

 

 

 

 

 

 

 

Stock based compensation

 

2,135

 

 

 

2,605

 

 

 

2,762

 

 

 

9,372

 

 

 

29,219

 

Transaction costs - RideNow and Freedom

 

451

 

 

 

100

 

 

 

766

 

 

 

1,954

 

 

 

4,281

 

Purchase accounting related

 

(592

)

 

 

177

 

 

 

1,388

 

 

 

177

 

 

 

1,388

 

Lease expense associated with favorable related party leases in excess of contractual lease payments

 

1,340

 

 

 

 

 

 

 

 

 

1,340

 

 

 

 

Impairment of goodwill and franchise rights

 

350,315

 

 

 

 

 

 

 

 

 

350,315

 

 

 

 

Litigation settlement expenses

 

8,381

 

 

 

 

 

 

(170

)

 

 

8,381

 

 

 

 

PPP Loan forgiveness

 

 

 

 

(2,509

)

 

 

(2,110

)

 

 

(2,509

)

 

 

(2,682

)

Insurance proceeds

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,135

)

Costs attributable to abandoned fulfillment center project

 

2,141

 

 

 

 

 

 

 

 

 

2,141

 

 

 

 

Other non-recurring costs

 

3,224

 

 

 

2,393

 

 

 

544

 

 

 

9,792

 

 

 

2,025

 

Gain on sale of dealership

 

(3,898

)

 

 

 

 

 

 

 

 

(3,898

)

 

 

 

Costs attributable to store openings and closures

 

 

 

 

233

 

 

 

 

 

 

233

 

 

 

 

Change in derivative and warrant liabilities

 

 

 

 

 

 

 

25

 

 

 

(39

)

 

 

8,799

 

Adjusted EBITDA

$

18,680

 

 

$

25,669

 

 

$

24,334

 

 

$

120,096

 

 

$

31,013

 

For the year ended December 31, 2022 and 2021 and the three months ended September 30, 2022, December 31, 2022 and 2021 adjustments to Adjusted EBITDA are primarily comprised of:

  • Non-cash stock-based compensation expense as reported in the Consolidated Statement of Operations,
  • Transaction costs associated with the RideNow Transaction and Freedom Transactions, which primarily include professional fees and third-party costs,
  • Purchase accounting adjustments, which represent one-time expenses related to the Freedom Transaction and RideNow Transaction,
  • Forgiveness of the PPP loan,
  • Lease expense associated with favorable related party leases in excess of contractual lease payments,
  • Charges for the settlement of disputes and claims with former minority shareholders of RideNow,
  • Expenses attributable to a discontinued project in Fort Worth, Texas,
  • Charges for impairment of goodwill and franchise rights,
  • Gain on the sale of a dealership, and
  • Other non-recurring costs, which include one-time expenses incurred. For the three and twelve months ended December 31, 2022, the balance was primarily comprised of integration costs and professional fees associated with the RideNow and Freedom Transactions, technology implementation, legal matters, establishment of the RumbleOn Finance secured loan facility, and a death benefit to the estate of the Company's former Chief Financial Officer and director. For the three and twelve months ended December 31, 2021, the balance was primarily related to litigation expenses and a death benefit to the estate of the Company's former Chief Financial Officer and director.

RumbleOn, Inc.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and

Earnings (Loss) per share to Adjusted Earnings (Loss) per share

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

Three Months Ended

 

Twelve Months Ended

 

Dec 31,

 

Sept 30,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss)

$

(287,726

)

 

$

3,039

 

 

$

20,660

 

 

$

(261,513

)

 

$

(9,725

)

Adjustments:

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs - RideNow and Freedom

 

451

 

 

 

100

 

 

 

766

 

 

 

1,954

 

 

 

4,281

 

Impairment of goodwill and franchise rights

 

350,315

 

 

 

 

 

 

 

 

 

350,315

 

 

 

 

Litigation settlement expenses

 

8,381

 

 

 

 

 

 

(170

)

 

 

8,381

 

 

 

 

PPP Loan forgiveness

 

 

 

 

(2,509

)

 

 

(2,110

)

 

 

(2,509

)

 

 

(2,682

)

Purchase accounting related

 

5,404

 

 

 

2,456

 

 

 

1,388

 

 

 

13,449

 

 

 

1,388

 

Lease expense associated with favorable related party leases in excess of contractual lease payments

 

 

 

 

 

 

 

 

 

 

1,340

 

 

 

 

Costs attributable to store openings and closures

 

 

 

 

 

 

 

 

 

 

233

 

 

 

 

Cost attributable to fulfillment center

 

2,141

 

 

 

 

 

 

 

 

 

2,141

 

 

 

 

Gain on Sale of dealership

 

(3,898

)

 

 

 

 

 

 

 

 

(3,898

)

 

 

 

Change in derivative liability

 

 

 

 

 

25

 

 

 

(39

)

 

 

8,799

 

Insurance proceeds

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,135

)

Other non-recurring costs

 

3,972

 

 

 

2,625

 

 

 

544

 

 

 

9,792

 

 

 

2,025

 

Less: Income tax expense

 

(90,052

)

 

 

(1,311

)

 

 

(12,065

)

 

 

(82,315

)

 

 

(26,273

)

Adjusted Net Income (Loss)

$

(11,012

)

 

$

4,400

 

 

$

9,038

 

 

$

37,331

 

 

$

(25,322

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

16,161,483

 

 

 

16,020,296

 

 

 

15,055,084

 

 

 

15,871,005

 

 

 

6,920,318

 

Earnings (Loss) per share - basic

$

(17.80

)

 

$

0.19

 

 

$

1.37

 

 

$

(16.48

)

 

$

(1.41

)

Adjusted Earnings (Loss) per share - basic

$

(0.68

)

 

$

0.27

 

 

$

0.60

 

 

$

2.35

 

 

$

(3.66

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - diluted

 

16,161,483

 

 

 

16,067,395

 

 

 

15,263,736

 

 

 

15,871,005

 

 

 

6,920,318

 

Earnings (Loss) per share - diluted

$

(17.80

)

 

$

0.19

 

 

$

1.35

 

 

$

(16.48

)

 

$

(1.41

)

Adjusted Earnings (Loss) per share - diluted

$

(0.68

)

 

$

0.27

 

 

$

0.59

 

 

$

2.35

 

 

$

(3.66

)

For the three and twelve months ended December 31, 2022 and 2021 and the three months ended September 30, 2022, adjustments to Net Income (Loss) are primarily comprised of:

  • Acquisition costs associated with the RideNow transaction and Freedom transaction, which primarily include professional fees and third-party costs,
  • Charges for impairment of goodwill and franchise rights,
  • Forgiveness of the PPP loan, and
  • Other non-recurring costs, which include one-time expenses incurred. For the three and twelve months ended December 31, 2022, the balance was primarily comprised of integration costs and professional fees associated with the RideNow and Freedom Transactions, technology implementation, legal matters, establishment of the RumbleOn Finance secured loan facility, and a death benefit to the estate of the Company's former Chief Financial Officer and director. For the three and twelve months ended December 31, 2021, the balance was primarily related to litigation expenses and a death benefit to the estate of the Company's former Chief Financial Officer and director.

_________________________

1 During the year-end process, we identified and corrected a gross up of internal revenue and internal cost of sales for powersports, that has no net impact to gross profit, gross profit per unit, operating income (loss), net income (loss), or Adjusted EBITDA. The 2022 quarterly impact (in thousands) consists of a dollar-for-dollar reduction to both revenue and cost of revenue for each respective three month period and year then ended: $14,719 (Q1), $18,094 (Q2), $19,615 (Q3), $18,569 (Q4), and $70,997 (2022 total).

2 Calculated as total powersports gross profit divided by new and used retail powersports units sold.

3 Calculated as total powersports gross profit divided by new and used retail powersports units sold.

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