Lazydays Holdings, Inc.
Q4 2020 Earnings Call Transcript

Published: 18 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Lazydays Holdings, Inc. Fourth Quarter 2020 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would now like to turn the call over to Debbie Harrell, Controller. Thank you, and please go ahead.

[Debbie Harrell:]

Thank you, operator. Good morning, and thank you for joining us for our fourth quarter and year end 2020 financial results conference call. I'm Debbie Harrell, Corporate Controller at Lazydays. We issued the company's earnings press release this morning. A copy of the earnings release is available under the Events and Presentations section of the Investor Relations page of our website and has been furnished as an exhibit to our current report on Form 8-K with the SEC.

[Nick Tomashot:]

Thank you, Debbie. Please note that unless stated otherwise, the quarter and fiscal year results comparisons are versus the same three and 12-month periods ended December 31, 2019. Revenues for the quarter were $196.6 million up $51.7 million or 35.7% from 2019. Revenue from the sale of recreational vehicles or RVs was $176.6 million for the quarter up $50.1 million or 39.6%. Total RV unit sales excluding wholesale units were 2,129 for the quarter, up 544 units or 34.3%. Q4 revenue from the sale of new recreational vehicles was $117.4 million up $43.1 million or 57.9%. New RV unit sales were 1,337 up 463 units or 52.9%. The average selling price of new RVs for the quarter was $87,000 up $2,500 or 3%. Q4 revenue from the sale of pre-owned RVs was $59.2 million up $7.1 million or 13.5%. Pre-owned RV unit sold excluding wholesale units were 792, up 81 units or 11.4%. The average selling price of pre-owned recreational vehicles was $71,000 up 4% versus the fourth quarter of 2019. Revenues in our other channels consist of sales of parts, accessories and related service, finance and insurance or F&I revenue as well as campground and miscellaneous revenue. In total, revenue from these other lines of business was $19.9 million, up $1.5 million or 8.4% compared to 2019. The increase was driven by an F&I revenue increase of $1.8 million or 22.1% to $10 million offset by a small 0.8% or $0.1 million decrease in parts and service revenue and a $0.2 million decrease in campground and miscellaneous revenues.

[Bill Murnane:]

Thank you, Nick. Good morning, everyone. We have and continued to experience very strong demand for RVs. In addition inventory continues to be tight. The combination of robust demand and tight inventory has had and continues to have a very positive impact on our margins. Our inventory position improved modestly in Q4. But inventory has been relatively flat to slightly down so far this quarter. Our dealership inventory levels are well below historical and desired levels.

[Operator:]

your first question comes from Steven Dyer with Craig-Hallum. Your line is open.

[Steven Dyer:]

Congratulations on the good results. A couple of questions just around demand, it's obviously very strong. Are you seeing any differences regionally in demand and then I guess as you look at the year Q1 typically your seasonally strongest quarter, would you anticipate that will be the same this year or might they'll look fairly similar given that inventory should improve throughout the year?

[Bill Murnane:]

Yes, I think a couple of things. Your first question Steve demand has been strong everywhere and I wouldn't say anywhere outpaced, any location outpaced others in a significant way. There's always modest differences. One of the things I do think we're noticing in currently, is some of the northern dealership experienced a little stronger demand than they normally would, so their seasonality is actually benefiting from the strong demand and I think given the additions we've made to our network I think over time and this year included you're going to see our future quarters be more similar or stronger than they have been in the past relative to the first quarter. I can't say that they're going to be as strong as our Q1. But they're going to continue to get stronger because lot of the dealerships we've added have been in more summer related markets and so I think you're going to see a much more balance and that's part of our strategy to have much more balanced revenue stream throughout the year and not as heavily focused on Q1.

[Steven Dyer:]

Yes, got it. And then a couple of questions around M&A. you've done a decent amount I think this last year. Would you anticipate the pace to be similar or faster or slower etc. in 2021? And now the multiples that you're seeing on these are they fairly similar to what you're used to or is the boom kind of I guess dragging multiples up as well?

[Bill Murnane:]

I think the pace should be similar to what we've been experiencing more recently that's certainly our plan and the pipeline feels like that should be the case. Multiples aren't really in line with what we've been paying historically. But earnings have improved. So anyway I think we're paying a little higher only because the bottom line is improved. So we're paying similar multiple on a higher earnings stream. That makes sense?

[Steven Dyer:]

Yes. And then last one from me and I'll turn it over. Your dedicated parts and service locations, I guess, what are you seeing there? I know still early but are you seeing business there sort of commensurate with the boom in interest and so forth, and is that a concept you think about doing again in different locations?

[Bill Murnane:]

Yes, we'll definitely consider doing that in other locations. The challenge we've had at our current location in Texas, we've had two challenges one very recent is the revenue generation and adding capacity in line with the revenue generation. It's taken us a little more work to generate revenue, to bring customers in. customers typically will go back to the dealership where they bought the product. So we've got to break that cycle and since this is our first, we're figuring out how to break that cycle and it's working. It's just taking us probably a little longer than we thought to do that. Certainly the storms that hit Texas because we're in Houston. The storms that hit Texas this winter did not help that effort at all. It shut down not only the state but us for a while. But we're very pleased with their progress. This should be a great year for them in terms of making progress and yes service centers are an important part of our future strategy.

[Steven Dyer:]

Got it. Okay. I'll turn it over. Thanks guys.

[Operator:]

Your next question comes from Fred Wightman with Wolfe. Your line is open.

[Fred Wightman:]

I was hoping we could dig into the inventory commentary in the release. If we just look at what you guys had posted in that mid-January preannouncement you talked about shipments were exceeding customer demand and inventory levels were growing. But the language in the release today looked a little bit different. So can you talk about, is that change in language due more to a pickup in retail? Are you seeing some of the deliveries slow? What are sort of the puts and takes there?

[Bill Murnane:]

I would say, they continue to fight different issues on the delivery side, Fred and we thought most of those were behind them. They aren't all behind them. I mean every day in the paper you read about in different industries supply chain difficulties and we thought we'll be past that by now. We aren't. On the other side of the equation, demand is quite strong. Our sales are quite strong and as I noted in my remarks, we aren't able to recognize a lot of those sales yet because of the product but our pending sales continues to grow, so that's part of the equation as well and we're just - it's two months later and we're a little smarter than we were back then on the last couple of quarters. It's a combination of both sides of that equation.

[Fred Wightman:]

Great, super helpful. And just a final one and maybe Bill, at a high level could you talk about how you think the cadence for this year will look for you guys. I mean if we look at the releases from last year, retail really picked up in mid-April, you guys are lapping I think it's 55% unit growth in May. I mean big, big numbers and what is sort of the internal house view for what would constitute - successful anniversary for some of those big numbers?

[Bill Murnane:]

Our goal internally is to add the resources to continue to grow off of those numbers and I know we don't disclose same store sales. But we would like to grow same stores off of last year. Obviously, we're going to get growth out of the new dealerships we're adding. But we're adding resources both on the sales side and on the service side to be able to grow throughout our network over the next year and I think we've proven we can generate the leads, we can find the customers. We've got to be able to process them from a sales and service perspective, is probably going to be the bigger challenge in 2021.

[Fred Wightman:]

Perfect. Thanks guys.

[Operator:]

Your next question comes from David Kanen with Kanen Wealth Management. Your line is open.

[David Kanen:]

Congratulations, nice quarter. First question in regards to mapping difficult comps from last year, previous caller helped me to get a little bit of perspective on it. So you're basically saying that you think that you can execute upon gross year-over-year with a favorable margin backdrop. I recall once things kind of opened up in May and June you were doing about $7 million to $8 million month in EBITDA. Do you think that you will be able to grow the bottom-line year-over-year, if the sales are up or has something changed within your cost structure? Would you get leverage on that incremental growth?

[Bill Murnane:]

Yes, I think nothing has changed in our cost structure, Dave. In fact we're getting more leverage out of our cost structure. We add dealerships and I think Nick gave some commentary on that. In terms of we can't give specifics. But you heard me say that we think the strong margin environment will remain through the end of this year and if we can add and this is the challenge. If we can add sales and service resources to the organization which we're trying aggressively to add now. We think we have plenty of leads to be able to grow, same stores off of last year's number and obviously provide additional growth.

[David Kanen:]

Okay.

[Bill Murnane:]

That's our goal, but there are some challenges that come with that goal.

[David Kanen:]

Okay, understood and then on the subject of M&A, could you quantify for us in terms of M&A already done in 2020 and 2021, what is the annual run rate in terms of revenue on those new locations and then there was a very large transaction that was consummated by your competitor RV retailers I believe it was 12 dealerships based out in North Carolina. Could you give a little color on that and did you participate or did you not and kind of how you looked at that because it was a fairly large on, that would have moved the needle, I'd like to just get your view line?

[Bill Murnane:]

We don't disclose any run rates or break out individual dealerships, Dave. So I can't really comment on that. And we don't comment on acquisitions or negotiations. All I can say, is we're very disciplined in our approach to acquisitions in terms of the types of dealerships, location of the dealerships and the price that we're willing to pay. We're not going to overpay just to get dealerships. We can enter - there's a lot of different ways to enter markets and it doesn't make sense for us to overpay for the dealership.

[David Kanen:]

Okay, so I take that as an implication that they were asking too much in .

[Bill Murnane:]

We're not making any comment on any particular negotiation. We're just commenting on our approach to M&A.

[David Kanen:]

Okay, good luck. Appreciate the color. Thank you.

[Operator:]

your next question comes from Joseph Altobello with Raymond James. Your line is open.

[Joseph Altobello:]

Just a couple quick ones. I guess first, could you talk about inventory between new and used. I'm curious if your used inventory is even tighter than what you're seeing on used side at this point?

[Bill Murnane:]

Yes, I think. Do you want to comment on the?

[Nick Tomashot:]

We'd also like to have more used inventory and you can say that our growth rate in used relative to new has been a little bit less. We're actively working to source product. In fact, we've seen our used inventory levels relative to year ago comparisons are actually more favorable than what we're seeing on the new side in terms of the decline. New inventories are down more than used.

[Bill Murnane:]

A couple additional comments on the used side we've seen our trade ratio come up a little bit, which is always beneficial towards used inventory and our buyers are doing a great job of finding used inventory out there. It's a little bit better situation on the used side. We don't have enough. We'd love to have a lot more used. But it's whole better situation than on the new side at least over the last couple of months.

[Joseph Altobello:]

Is it older product on the used side or is it later models?

[Bill Murnane:]

It's probably more later models. We only will buy stuff that's 10 years older, younger. I would say the mix is similar to what we've historically seen.

[Nick Tomashot:]

And we're still holding our standard as to what we do keep on our lot and we wholesale units that are trade in, that aren't just suitable for being sold through Lazydays.

[Joseph Altobello:]

Got it. Okay and secondly, in terms of the potential changes that are being discussed within on tax policy. Could that spur more dealers to look to sell? Is that coming up at all in your conversations when you talk about acquisitions?

[Bill Murnane:]

It's hard to tell what's going on in the back of their minds, Joe. I honestly don't know. It isn't front and center in terms of driving decision making. But perhaps it's in the back of the mind. But we really don't know.

[Joseph Altobello:]

Okay, great. Thank you.

[Operator:]

Okay and there are no further questions. I'll turn the call back over to Bill Murnane for closing remarks.

[Bill Murnane:]

Great. Well thanks everyone for joining us this quarter. We appreciate all your support and we look forward to speaking with you again next quarter. Have a great week. Thanks everyone.

[Operator:]

This concludes today's conference call. You may now disconnect.