RumbleOn, Inc. (NASDAQ:RMBL), the leading powersports retail group in the United States, has reported its first-quarter 2024 financial results, showcasing its progress in executing its ambitious Vision 2026 strategy. Despite facing industry-wide challenges, the company has demonstrated its ability to navigate the dynamic market environment and position itself for long-term success.

Financials

In the first quarter of 2024, RumbleOn reported revenue of $307.8 million, a decrease of 8.0% compared to the same period in the prior year. This decline was primarily driven by a 7.9% decrease in powersports vehicle sales and a 10.5% decrease in parts, service, and accessories revenue. However, the company's finance and insurance (F&I) revenue remained relatively stable, declining by only 5.1% year-over-year.

The company's gross profit for the quarter was $82.6 million, down 8.5% from the first quarter of 2023. This decrease was largely attributable to the lower revenue, as well as a 4.7% decline in total gross profit per vehicle sold. Notably, the company's pre-owned vehicle gross margins improved significantly, reaching 17.5% compared to 11.0% in the prior-year period, showcasing the success of its Cash Offer technology in sourcing high-quality pre-owned inventory.

RumbleOn's selling, general, and administrative (SG&A) expenses decreased by 14.4% to $73.9 million, reflecting the company's ongoing efforts to streamline its operations and enhance efficiency. This reduction in SG&A expenses, coupled with the stable performance of the F&I business, enabled RumbleOn to report an operating income of $5.2 million, a significant improvement from the $0.7 million operating loss in the first quarter of 2023.

The company's net loss for the quarter was $10.3 million, compared to a net loss of $16.7 million in the same period last year. This improvement was driven by the lower SG&A expenses and a reduction in interest expense, which decreased by 19.9% to $12.1 million.

Liquidity

RumbleOn's balance sheet remains strong, with $63.4 million in total cash and restricted cash as of March 31, 2024. The company's availability under its powersports inventory financing credit facilities totaled $149.3 million, providing ample liquidity to support its operations and growth initiatives. Cash flow from operating activities for the quarter was $3.0 million, which was positively impacted by the completion of the RumbleOn Finance loan portfolio sale in early 2024.

Outlook

Looking ahead, RumbleOn remains focused on executing its Vision 2026 strategy, which aims to achieve annual revenues in excess of $1.7 billion, annual adjusted EBITDA of greater than $150 million, and annual adjusted free cash flow of $90 million or more by the end of 2026. The company's three strategic pillars – leveraging international scale, running the best-performing dealerships in America, and maintaining an aligned and efficient corporate office – are guiding its efforts to drive long-term shareholder value.

Recent Developments

In the first quarter, RumbleOn made progress on several fronts. The company's powersports dealership group delivered nearly flat earnings on an 8% reduction in revenue, demonstrating its ability to effectively manage costs in a challenging environment. Additionally, the company announced plans to open its first standalone pre-owned powersports retail center, leveraging its Cash Offer technology to source high-quality inventory and provide a differentiated customer experience.

RumbleOn's vehicle transportation services segment, Wholesale Express, also contributed to the company's performance, with revenue declining by 3.4% but EBITDA growing by nearly 8% due to the team's focus on cost management.

The company's management team remains confident in its ability to navigate the current market conditions and continue executing on its Vision 2026 strategy. RumbleOn's CEO, Michael Kennedy, stated, "While the Q1 results were largely in line with our expectations, when looking at each operating segment, HQ cost reductions and the company as a whole, we delivered some solid performance in a tough environment."

Business Overview

RumbleOn's geographic footprint spans 54 retail locations across 13 states, representing a diverse portfolio of powersports franchises. The company's revenue is primarily generated from four key business lines: powersports vehicles (69.8% of total revenue), parts, service, and accessories (17.2%), finance and insurance (8.4%), and vehicle transportation services (4.6%).

In terms of the company's financial performance, RumbleOn reported annual revenue of $1,366.4 million and a net loss of $215.5 million for the fiscal year ended December 31, 2023. The company's annual operating cash flow was -$62.0 million, and its annual free cash flow was -$77.8 million.

Regarding the company's liquidity, RumbleOn ended the first quarter of 2024 with $63.4 million in total cash and restricted cash, and $149.3 million in availability under its powersports inventory financing credit facilities. This strong liquidity position provides the company with the financial flexibility to execute its strategic initiatives and navigate the evolving market landscape.

Risks and Challenges

While RumbleOn faces industry-wide challenges, such as high inflation, rising interest rates, and inventory management, the company's management team remains focused on driving operational efficiency, leveraging its unique capabilities in the pre-owned powersports market, and delivering on its ambitious Vision 2026 goals. The company's progress in the first quarter, particularly in managing costs and improving pre-owned vehicle gross margins, suggests that RumbleOn is well-positioned to navigate the current market environment and continue its transformation into a leading player in the powersports industry.