Lazydays Holdings, Inc. (GORV) on Q1 2025 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Lazydays RV Holdings First Quarter 2025 Conference Call. At this time, all participants are on a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Needles, Chief Financial Officer. Thank you. Please go ahead.
Jeff Needles: Thank you, operator, and welcome, everyone. Thank you for joining us today as we discuss Lazydays' first quarter performance for 2025. As a reminder, today's call is being webcast live and will also be archived on our website for future listening. With me on this morning's call is Ron Fleming, Interim Chief Executive officer, and Amber Dillard, Chief Operating Officer. We will begin with some opening remarks from Ron, followed by an overview of our operational performance for the first quarter from Amber, and I will then discuss our financial performance. Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks, uncertainties, assumptions, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as on our investor relations section of our website. Accordingly, forward-looking statements should not be relied upon as prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate. We can make no guarantee about future performance, and we undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable GAAP measures. Before we begin, please note that we will not be fielding questions following the conclusion of prepared remarks. We encourage you to refer to our earnings release and SEC filings for further information. With that, I'll turn the call over to Ron.
Ron Fleming: Thank you, Jeff. Good morning, everyone, and thank you for joining us today. Last quarter, we outlined a clear two-part strategy aimed at building a more resilient and adaptable business, one that aligns with our commitment to driving long-term shareholder value. This strategy focuses on optimizing our dealership footprint, maximizing the operational performance of the stores within that footprint. As I look back on the first quarter of 2025, I am pleased to report encouraging progress on both fronts. With respect to our dealership footprint, as previously announced, we completed the sale of five dealerships to Camping World in February and March. This transaction allowed us to significantly delever our balance sheet by repaying approximately $145 million in debt, a substantial portion of which was funded from the dealership sales. The Camping World transaction also drove a $10 million year-over-year reduction in SG&A expenses due to reduced overhead personnel and marketing costs. Further advancing our strategic footprint optimization, we entered into a letter of intent with General RV Center in March to divest three additional stores, our locations in Fort Pierce, Florida, Longmont, Colorado, and Mesa, Arizona. This strategic decision was driven by our recognition of geographic redundancy and our confidence in our ability to continue to serve these markets from our other nearby stores. Similar to our transaction with Camping World, we expect this transaction upon completion to add cash to our balance sheet, reduce our indebtedness, and drive continued improvement in overhead and SG&A expenses. Looking ahead, we remain committed to evaluating opportunities that allow us to refine our footprint and reinforce our financial position. As always, our decisions will be guided by the best interest of all our stakeholders, including our employees, customers, OEM partners, and shareholders. Turning to our operational performance, we are pleased with our results for the first quarter of 2025, which were much improved as compared to our results from the fourth quarter and the first quarter of 2024. Gross profit margins were up across all product lines, leading to a notable increase in gross profit despite a lower volume of sales. Moreover, our lower sales volume can be attributed to a deliberate reduction of prior model year inventory as well as our lower store count following our right-sizing actions. We are confident in our ability to drive profitability with the stores and inventory we have in place. Lastly, I would like to take a moment to comment on the macro environment and particularly the potential impact of tariffs on our business and our industry. We are closely monitoring any potential price change for new RV units, and we are working with our OEM partners and suppliers to understand what impact that might present. While we are seeing some data suggesting decreased customer demand as a result of tariffs, we are optimistic that those concerns will diminish as we continue to see positive trends with respect to tariff relief. We are comforted by the fact that the RV lifestyle is an affordable one, and we believe American consumers will continue to be attracted to the joys of RV ownership, be that through the purchase of a new unit or a used unit at their local Lazyday store. With that, I'll turn the call over to Amber to discuss our operational performance in more detail.
Amber Dillard: Thanks, Ron, and good morning, everyone. In discussing our operational performance, I believe it is informative to compare our 2025 first quarter results to the fourth quarter of 2024 as these comparisons demonstrate the progress we have made in the execution of the operational turnaround plan we articulated last quarter. Excluding the store divestitures completed in Q1, we saw an increase in both new and used unit volume relative to the fourth quarter of 2024. Our new unit sales were up 18% in the first quarter versus the fourth quarter, driven by a healthier inventory mix and seasonal favorability. Meanwhile, our used unit sales were up 19% in the first quarter versus the fourth quarter, driven by improved market conditions, better customer engagement, and the robust consignment inventory program we announced last quarter. Consignment units drive increased lead activity and allow us to capture more consumer price points and bring more customers into the Lazy Days family, all while generating healthy margins with no carrying costs on the inventory. Of note, our unit sales improved sequentially month-over-month in the first quarter. Gross profit per unit sold increased 39% in the first quarter, a significant improvement from the fourth quarter. This is reflective of the continued actions we are taking to optimize our inventory mix and brand offerings. Our total gross profit margin was 26% in the first quarter compared to 19% in the fourth quarter. Additionally, our SG&A expenses significantly decreased from the fourth quarter despite our selling and servicing more RVs. We continue to see significant opportunity in finance and insurance, where our F&I revenue was over $5,000 per unit, a slight decrease from the fourth quarter. Notably, our finance penetration in the first quarter remained strong at approximately 70%, reflecting our ability to partner with our lenders to offer a range of financing options that meet the needs of all of our customers. As mentioned, we continue to focus on maintaining a healthy inventory position and balance while refining our consignment inventory program in the first quarter. Our trade-ins on vehicle sales came in over 8% higher in the first quarter of 2025 versus the same time period in 2024. We believe this is reflective of increasing consumer confidence and pent-up demand to trade as COVID buyers are starting to see an intersection of the amortization and depreciation curve, allowing them the ability to trade vehicles and overcome negative equity. That said, we are actively monitoring consumer demand as tariffs, supply chain shortages, and other macroeconomic trends remain uncertain. As of today, our new inventory is comprised of 82% model year 2025 and 2026 units and 18% prior model year units, up significantly from last quarter. Of note, while we have seen a shift towards single-axle towables and first-time buyers, our motorized inventory sales improved 11% in the first quarter versus the fourth quarter, reflecting continued demand from buyers in the motorized space. We could continue to partner with strategic OEMs who maintain a balance in production and retail demand, build a quality product consumers can rely on, and allow us to maximize inventory turns and reduce our aging costs. We remain focused on offering a large selection of inventory in all segments to allow our customers the ability to stay within the Lazydays' family, no matter what unit their adventure calls for. In summary, we continue to see a tremendous opportunity to improve the operational performance of the stores within our footprint. Moreover, we believe we can take actions to achieve improved performance without relying solely on market stabilization, as demonstrated by our first-quarter results. We are committed to serving as a true partner to our customers, OEMs, and lenders across the full RV ownership value chain, and we look forward to providing additional updates on our progress in future quarters. With that, I'll turn the call over to Jeff.
Jeff Needles: Thanks, Amber. As we turn to our first-quarter results, please note that, unless stated otherwise, the 2025 first quarter comparisons are versus the same period in 2024, and our overall financial results reflect expenses incurred as a result of previously discussed transactions and planned divestitures. New unit sales were down 36%, or 912 units in the quarter, driven by previously announced divestitures. Average selling price for new units was 15% better for the quarter, a result of improved channel health and stronger, higher-priced unit sales at the January Super Show. Pre-owned retail unit sales were down 48%, or 655 units, during the quarter, also reflective of divestitures and partially driven by a decision in the prior years to move units by discounting sales prices. Offsetting lower unit sales, gross margins were much improved. New vehicle gross margins were 11% for the quarter, or 7% higher compared to the prior year period. Used vehicle gross margins were 21% for the quarter, or 10% higher compared to the prior year period. Focusing on the top line, net sales for the quarter were $166 million, a decrease of $104 million or 39% compared to the prior year period. As mentioned, this decrease was in line with our deliberate reduction of inventory and lower store count for the company. For the quarter, we achieved a gross margin of 24%, excluding LIFO adjustments, representing a 10% increase compared to the prior year. Gross profit for the quarter was $44 million, an increase of $6 million compared to the prior year period. SG&A expenses improved to $39 million for the quarter, compared to $49 million in the prior year period, primarily driven by reduced overhead personnel and marketing expenses resulting from operating seven fewer stores, including a divestiture of five locations to Camping World. We expect overhead and SG&A expenses will continue to decline as we continue to make adjustments to our cost structure and complete our divestitures of three additional stores to General RV Center during the second quarter of 2025. Our increased gross profit and decreased SG&A expenses contributed to improved operating results. We had a loss from operations of $2.3 million for the quarter, which included non-cash impairment charges of $2.9 million, relating to indefinite, lived, and tangible assets. Excluding impairment charges, our results for the quarter would have been income from operations of $600,000 compared to a loss from operations of $16.6 million in the prior period. For the quarter, we had an adjusted EBITDA loss of $4 million, an improvement compared to our loss of $18 million in the prior year period. During the quarter, we reduced debt by $145 million, comprising of $95 million in floor plan debt, $47 million in mortgage debt, and $2.5 million on our revolving line of credit, all contributing to meaningful deleveraging of the business. We continue through the year. Our focus remains on strengthening our balance sheet to support long-term growth and stability and to continuing our positive trend of improved operational performance. I'll now turn the call back to Ron for his closing remarks.
Ron Fleming: Thanks, Jeff. In closing, we have made meaningful progress against our stated priorities, and the earlier results are promising. We are committed to continuing to execute our turnaround plan and to unlocking value for our shareholders. Thank you to everyone for joining us on today's call.
Operator: Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time, and enjoy the rest of your day.
