LMP Automotive Holdings, Inc.
Q1 2020 Earnings Call Transcript
Published:
- Operator:
- This is the conference operator. Welcome to the LMP Automotive Holdings 2020 First Quarter Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]I would now like to turn the conference over to John Mattio, Investor Relations for LMP Automotive. Please go ahead.
- John Mattio:
- Thank you, operator. Welcome everyone to LMP Automotive Holdings’ first quarter 2020 earnings call. Joining us from the company and presenting to you today is Mr. Sam Tawfik, President and Chief Executive Officer. After the company’s prepared comments, we have allocated time for questions in the Q&A session.Before we begin, I would like to remind everyone that some of the statements in this conference call including statements regarding expected future financial results and industry growth may contains forward-looking statements. Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect its business, operating results, financial condition and stock value.Factors that could cause actual results to differ materially from those currently anticipated includes
- Sam Tawfik:
- Thank you, John, and thank you everyone for joining the call today in unprecedented times. And I hope everybody is healthy and safe.Let me start by saying, we have been busy. During the past quarter, well, let's say during the past several months. We have executed upon an IPO, we have done a follow-on offering in February, an asset purchase, as well as acquisition due diligence. We were positioning ourselves rapidly going into the first quarter of the year.That all said, everybody knows what happened, and then in the beginning of March, actually little before March, the pandemics and we were practically shut down. All that said, we made a lot of moves in order to accommodate the environment, irrelevant and that the company's revenue increased 76% quarter-over-quarter, our gross profits increased by 50% quarter-over-quarter, and due to the capital raising efforts in the IPO, our cash, shareholder equity increased about $18 million, and $32 million in shareholder, equity, respectively quarter-over-quarter. So, it has been a long quarter. This company has been public for approximately two normal months. And we’re more very impressed with our achievements.Let me highlight some more, revenues in the first quarter and as I mentioned, 76%, and $5.3 million, as compared to 2019, gross profits in the first quarter increased 50% to $820,000, as compared to the fourth quarter of last year, adjusted EBITDA was a loss of $770,000 -- $771,000 if you add back cash, shareholder equity and shares outstanding at the end of the first quarter was 18 million, 32 million, and 9.9 million new shares outstanding, respectively.Despite the pandemic and the slowdown in business, we saw certain months in the first quarter of April and a alumnus year actually -- sorry, let me rephrase, despite the pandemic and slowdown in business we saw during certain months of last quarter and April of this year, we've seen a surge in business in the month of May.We believe due to the combination of the distribution of payload protection program checks to consumers and the pent-up of demand that was created by the charter and place orders before staying at home on leases that will or have expired, not in the last sort of phase with our historical results and current revenue run rate.If this trajectory continues, we expect to have strong results in the second quarter and we're extraordinarily pleased with our balance sheet and cash position. We think we can take advantage of opportunistic acquisitions and expect multiples in the near future. We've actually invested in that pipeline, given our SG&A was high last quarter and the combination of positioning for growth, investing in the acquisition pipeline, and due-diligence, professional fees amongst other things.So all-in-all, we believe we had a very good quarter given all those circumstances and we believe that position to capitalize in the future; given we don't have much -- we don't have much legacy overhead infrastructure to write down like most of the larger companies. And we have a great balance sheet position at RBS and we can take advantage of potentially bargain prices with dealerships that we're looking at, given today's environment.That all said, I'm going to hand it back to John. And let them answer some questions and answers.
- Operator:
- [Operator Instructions]The first question comes from Chris Evans [ph] with Leland Street Capital [ph]. Please go ahead. Mr. Evans. Chris Evans, your line is now live. Please go ahead.
- Unidentified Analyst:
- Hey, Sam. Thanks for doing the call.
- Sam Tawfik:
- Thank you, Chris. Thanks again.
- Unidentified Analyst:
- Quite a good reference. My question is in reference to the environment for making acquisitions at dealerships. What's it like? What are you hearing? What's the feel? Has that changed and gotten a little tighter here?
- Sam Tawfik:
- Had the acquisitions gotten tighter, is your question?
- Unidentified Analyst:
- Yes. As in, the willingness, or the prices to make deals, but obviously their business has retraced substantially. I would imagine the terms of deals have changed also.
- Sam Tawfik:
- Yes. We're seeing more interest from more deals. It's been averaging over one deal a week coming to our table. But we've built the current pipeline. So we believe that not starting from scratch on a new deal, although we're tabling it, and speaking to them, working on the current pipeline deals that we've invested in last quarter makes the most sense.And that said, what we're seeing is flexibility and price now and, obviously, flexibility in terms now, given the capital markets have changed. The combination and the price in terms makes for an attractive deal. My experience has been the best companies that have been built, including the ones I've built in the past, were built during recessions, better to not chase prices up.So you're seeing that willingness for several reasons. The sellers that were selling are ready, wanted to sell. When they wake up every morning and look at this environment, it gets a little frustrating, I'm sure. They now would like to sell more and retire and not have to go through this shocking type event.We've had a 10-year build-on, call it, in business in general where everyone got comfortable, thinking nothing terrible can happen. And then it's just going to get better every year. But now this is sort of like a wakeup call and you have sellers being very flexible. And that's what we're saying right now.
- Unidentified Analyst:
- And would you say this current environment plays into your hands, like the subscription-type business in the car industry?
- Sam Tawfik:
- Absolutely. From an acquisitions point of view and our business strategy is online anyway so we're fortunate that more consumers are getting that online experience in general and want that online experience in general, such less delivered, et cetera.Secondly, they want that more flexible alternative rather than committing to a really four or five-year lease these days, or finance. The flexibility of a subscription and swapping it into a lower payments, giving it back without a huge penalty and loss residual in a sense, is very attractive. That's part of the spike we're seeing in business.
- Unidentified Analyst:
- Okay, great. Thanks Sam. Congrats on the quarter.
- Sam Tawfik:
- Thank you, Chris.
- Operator:
- Thank you. There are no further questions at this time. I'll now turn the conference back over to Mr. Tawfik for any closing remarks.
- Sam Tawfik:
- Okay, great. Thanks for joining and stay happy, safe, and healthy out there and we'll see you on the next earnings call. Thank you very much.
- Operator:
- Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for participating and have a pleasant day.