8-K
RideNow Group, Inc. (RDNW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 10, 2020
RumbleOn, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 001-38248 | 46-3951329 |
|---|---|---|
| (State<br>or Other Jurisdiction of Incorporation) | (Commission File<br>Number) | (I.R.S.<br>Employer Identification No.) |
| 901<br>W. Walnut Hill Lane Irving, Texas | 75038 | |
| --- | --- | |
| (Address<br>of Principal Executive Offices) | (Zip<br>Code) |
(214) 771-9952
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, If Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name<br>of each exchange on which registered |
|---|---|---|
| Class B<br>Common Stock, $0.001 par value | RMBL | The<br>Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 10, 2020, RumbleOn, Inc. (the “Company”) issued a press release reporting its results for the third quarter of 2020. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press<br>release dated November 10, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RUMBLEON, INC. | ||
|---|---|---|
| Date:<br>November 10, 2020 | By: | /s/ <br>Steven R. Berrard |
| Steven<br>R. Berrard | ||
| Chief<br>Financial Officer |
rmbl_ex991
Exhibit 99.1
RumbleOn Reports Record Gross Profit Margin and Earnings per Share for the Third Quarter 2020
Achieved Record Earnings per Share Profit of $0.67 versus $(7.66) Loss per Share in Q3 2019
Grew Total Gross Profit per Vehicle 261% Year-over-Year
For the First Time, Company Reports Adjusted EBITDA positive quarter at $4.7 million; Net Income of $1.5 million
DALLAS
- RumbleOn, Inc (NASDAQ: RMBL), an e-commerce company using innovative technology to aggregate and distribute pre-owned vehicles to and from both consumers and dealers, today announced financial results for the three months ended September 30,
“Q3 was another record-breaking quarter for RumbleOn,” said Marshall Chesrown, RumbleOn’s CEO. “We generated positive adjusted EBITDA for the first time in the Company’s history and grew total gross profit per vehicle more than 260% year-over-year.”
“In Q3, we reported $117.3 million in revenue, a 39% increase from Q2, on 4,263 units. Additionally, we grew overall gross margin to 14.3% and gross margin on vehicles sold to 13.6%, both of which are records for RumbleOn, demonstrating continued progress towards long term sustainable profitability. RumbleOn has had an incredible year thus far operationally and financially, and I’m very pleased to report that despite the unique challenges presented to the company and the economy during 2020, our strategy is working,” continued Chesrown.
Third Quarter 2020 Financial Highlights
A year ago, in Q3 2019, the Company set a goal of achieving an adjusted EBITDA positive quarter in 2020, a goal that was reached in the third quarter. Despite the impact of COVID-19, which has resulted in significantly reduced commercial activity and total inventory in the market, the Company’s third quarter results are the strongest in its short history.
Unless otherwise noted, all comparisons are on a year-over-year basis for the three months ended September 30, 2020.
●
Total vehicle unit sales of 4,263, down from 10,894
●
Total revenue was $117.3 million, down from $220.3 million
o
Powersports revenue was $7.3 million
o
Automotive revenue was $99.3 million
o
Transportation and Vehicle Logistics revenue was $10.4 million
o
Other revenue was $0.3 million
●
Gross profit was $16.8 million or 14.3% of revenue, as compared to $12.0 million or 5.5% of revenue
o
Gross margin on vehicles sold was 13.6%, the highest in the Company’s history, and up from 4.8%. Gross profit per vehicle was $3,411 per vehicle, up 260.7% compared to 2019.
o
Powersports gross profit per powersport vehicle sold was $2,271
o
Automotive gross profit per automotive vehicle sold was $3,652
o
Transportation and Vehicle Logistics gross profit per vehicle delivered was $97
●
Sales, general and administrative expenses were $13.3 million, or 11.3% of revenue, a decrease of 30.1% from $19.0 million
●
Operating income was $3.0 million, or 2.5% of total revenue, up from operating loss of $(7.5) million or (3.4)% of revenue
●
Net Income was $1.5 million, or $0.67 per basic and fully diluted share, as compared to net loss of $8.9 million or a loss of $(7.66) per share. Weighted average basic and fully diluted shares outstanding in Q3 were 2,234,838 shares of common stock outstanding and 1,158,915 shares in Q3 2019
●
Adjusted EBITDA was $4.7 million in Q3, compared to a loss of $(4.8) million
Adjusted EBITDA is a non-GAAP financial measure. Reconciliations of non-GAAP financial measures used in this release are provided in the attached financial tables.
Business Highlights
●
RumbleOn launched the newest generation of its platform, RumbleOn 3.0 in August. As of today, there are more than 37,000 total listings available on RumbleOn.com from powersports dealers in over 200 locations, across 36 states.
●
Late in Q3 RumbleOn began adding Boats and personal watercraft listings. There are already nearly 500 listings available today with many more in the pipeline as boat-specific dealers are brought onto the platform. RV listings began being tested in Q3 as a further potential opportunity for expansion in 2021.
●
RumbleOn began business to business dealer-only weekly auctions in Q3. This method of redistribution is beneficial for both RumbleOn and the dealers and decreases vehicle time to sale.
Fourth Quarter 2020 Commentary and Outlook
“In 2019 we demonstrated our ability to scale revenue, in 2020 we are demonstrating we can achieve profitability, and we look forward to demonstrating our ability to scale with sustainable profitability in 2021 and beyond,” said Marshall Chesrown. “Another objective we outlined in 2019 was to reach EBITDA profitability on a full year basis in 2021, and we believe we have the right strategy in place to reach that goal.”
Chesrown continued, “During the three-months ended September 30, 2020, average selling prices increased as market prices remained high industry-wide. The effect of these higher market prices resulted in lower levels of inventory available to purchase for resale, causing a decline in unit sales beginning in September as compared to July and August. We believe this supply and demand imbalance will continue to impact seasonally adjusted fourth quarter volume, particularly given the worldwide rise in COVID-19 cases.”
Given the uncertainty of the ongoing impact and unprecedented conditions surrounding the COVID-19 pandemic, we cannot predict the overall effect to RumbleOn, our customers, regional business partners, and others that we work with. As a result, we believe it is prudent to continue to withhold guidance until we can better gauge market conditions and have a clearer understanding of the lasting impact from the COVID-19 pandemic.
Conference Call Details
RumbleOn’s management will host a conference call to discuss its financial results on Tuesday, November 10, 2020 at 8:30 a.m. Eastern Time. A live webcast of the call can be accessed from RumbleOn’s Investor Relations website. An archived version will be available on the website after the call. Investors and analysts can participate in the conference call by dialing (877) 242-2259, or (212) 231-2903 for callers outside of the United States. A telephonic replay will be available for seven days, beginning two hours after the call. To listen to the replay please dial (844) 512-2921, or (412) 317-6671 for callers outside the United States (replay pin: 21971989).
About RumbleOn
Founded in 2017, RumbleOn (NASDAQ: RMBL) is an e-commerce company using innovative technology to aggregate and distribute pre-owned automotive and powersport vehicles to and from both consumers and dealers, 100% online. RumbleOn is disrupting the pre-owned vehicle supply chain by providing dealers with technology solutions such as virtual inventory, and a 24/7 distribution platform, and consumers with an efficient, timely and transparent transaction experience, without leaving home. Whether buying, selling, trading or financing a vehicle, RumbleOn enables dealers and consumers to transact without geographic boundaries in a transparent, fast and friction free experience. For more information, please visit http://www.rumbleon.com.
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. Non-GAAP financial measures for the three and nine months ended September 30, 2020 used in this release include: adjusted EBITDA.
Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative 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 or loss adjusted to add back interest expense including debt extinguishment and depreciation and amortization, and certain charges and expenses, such as non-cash compensation costs, acquisition related costs, derivative income, financing activities, litigation expenses, severance, new business development costs, technology implementation costs and expenses, and facility closure and lease termination costs, as these charges and expenses are not considered a part of our core business operations and are not 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.
Cautionary Note Regarding 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 RumbleOn’s expectations as of the date of this report and speak only as of the date of this report and are advised to consider the factors listed under the heading “Forward-Looking Statements” and “Risk Factors” in RumbleOn’s SEC filings, as may be updated and amended from time to time. RumbleOn undertakes 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.
RumbleOn, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| As of<br><br><br>September 30,<br><br><br>2020 | As of<br><br><br>December 31,<br><br><br>2019 | |
|---|---|---|
| ASSETS | ||
| Current<br>assets: | ||
| Cash | $3,412,772 | $49,660 |
| Restricted<br>cash | 5,545,892 | 6,676,622 |
| Accounts<br>receivable, net | 11,342,600 | 8,482,707 |
| Inventory | 11,424,094 | 57,381,281 |
| Prepaid<br>expense and other current assets | 2,506,910 | 1,210,474 |
| Total<br>current assets | 34,232,268 | 73,800,744 |
| Property<br>and equipment, net | 6,494,940 | 6,427,674 |
| Right-of-use<br>assets | 5,926,393 | 6,040,287 |
| Goodwill | 26,886,563 | 26,886,563 |
| Other<br>assets | 174,457 | 237,823 |
| Total<br>assets | $73,714,621 | $113,393,091 |
| LIABILITIES<br>AND STOCKHOLDERS' EQUITY | ||
| Current<br>liabilities: | ||
| Accounts<br>payable and other accrued liabilities | $10,720,627 | $12,421,094 |
| Accrued<br>interest payable | 807,360 | 749,305 |
| Current<br>portion of convertible debt | 960,338 | 1,363,590 |
| Current<br>portion of long-term debt | 17,640,426 | 59,160,970 |
| Total<br>current liabilities | 30,128,751 | 73,694,959 |
| Long-term<br>liabilities: | ||
| Note<br>payable | 1,974,218 | 1,924,733 |
| Convertible<br>Debt | 26,681,826 | 20,136,229 |
| Derivative<br>liabilities | 20,345 | 27,500 |
| Other<br>long-term liabilities | 5,399,716 | 4,722,101 |
| Total<br>long-term liabilities | 34,076,105 | 26,810,563 |
| Total<br>liabilities | 64,204,856 | 100,505,522 |
| Commitments<br>and contingencies (Notes 4, 7, 8, 9, 13, 18) | ||
| Stockholders'<br>equity: | ||
| Class<br>B Preferred stock, $0.001 par value, 10,000,000 shares authorized,<br>0 and 0 shares issued and outstanding as of September 30, 2020 and<br>December 31, 2019 | - | - |
| Common<br>A stock, $0.001 par value, 50,000 shares authorized, 50,000 shares<br>issued and outstanding as of September 30, 2020 and December 31,<br>2019 | 50 | 50 |
| Common<br>B stock, $0.001 par value, 4,950,000 shares authorized, 2,191,633<br>and 1,111,681 shares issued and outstanding as of September 30,<br>2020 and December 31, 2019 | 2,192 | 1,112 |
| Additional<br>paid in capital | 108,396,284 | 92,268,213 |
| Accumulated<br>deficit | (98,888,761) | (79,381,806) |
| Total<br>stockholders' equity | 9,509,765 | 12,887,569 |
| Total liabilities<br>and stockholders' equity | $73,714,621 | $113,393,091 |
RumbleOn, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three-Months Ended September 30, | Nine-Months Ended September 30, | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Revenue: | ||||
| Pre-owned<br>vehicle sales: | ||||
| Powersports | $7,303,131 | $27,144,202 | $38,641,607 | $84,379,049 |
| Automotive | 99,315,335 | 187,108,303 | 281,242,442 | 611,871,819 |
| Transportation<br>and vehicle logistics | 10,440,367 | 6,058,546 | 25,191,459 | 17,417,846 |
| Other | 198,571 | 9,272 | 672,450 | 9,272 |
| Total<br>revenue | 117,257,404 | 220,320,323 | 345,747,958 | 713,677,986 |
| Cost<br>of revenue: | ||||
| Powersports | 5,606,366 | 24,280,599 | 33,691,814 | 74,367,614 |
| Automotive | 86,473,154 | 179,672,614 | 257,045,834 | 585,163,984 |
| Transportation<br>and vehicle logistics | 8,373,829 | 4,352,585 | 19,324,621 | 12,523,281 |
| Cost<br>of revenue before impairment loss | 100,453,349 | 208,305,798 | 310,062,269 | 672,054,879 |
| Impairment<br>loss on automotive inventory | - | - | 11,738,413 | |
| Total<br>cost of revenue | 100,453,349 | 208,305,798 | 321,800,682 | 672,054,879 |
| Gross<br>profit | 16,804,055 | 12,014,525 | 23,947,276 | 41,623,107 |
| Selling,<br>general and administrative | 13,279,151 | 19,010,939 | 42,509,865 | 64,458,520 |
| Insurance<br>recovery proceeds | - | - | (5,615,268) | - |
| Depreciation<br>and amortization | 536,381 | 473,670 | 1,567,697 | 1,283,333 |
| Operating<br>income (loss) | 2,988,523 | (7,470,084) | (14,515,018) | (24,118,746) |
| Interest<br>expense | (1,488,090) | (2,031,697) | (5,187,256) | (5,351,689) |
| Change<br>in derivative liability | (13,518) | 630,000 | 7,155 | 820,000 |
| Gain<br>(Loss) on early extinguishment of debt | - | - | 188,164 | (1,499,250) |
| Income<br>(loss) before provision for income taxes | 1,486,915 | (8,871,781) | (19,506,955) | (30,149,685) |
| Benefit<br>for income taxes | - | - | - | - |
| Net<br>income (loss) | $1,486,915 | $(8,871,781) | $(19,506,955) | $(30,149,685) |
| Weighted<br>average number of common shares outstanding - basic and fully<br>diluted | 2,234,838 | 1,158,915 | 2,165,167 | 1,098,809 |
| Net<br>income (loss) per share - basic and fully diluted | $0.67 | $(7.66) | $(9.01) | $(27.44) |
RumbleOn, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine-Months Ended September 30, | ||
|---|---|---|
| 2020 | 2019 | |
| CASH<br>FLOWS FROM OPERATING ACTIVITIES | ||
| Net<br>loss | $(19,506,955) | $(30,149,685) |
| Adjustments<br>to reconcile net loss to net cash used in operating<br>activities: | ||
| Depreciation<br>and amortization | 1,567,697 | 1,283,333 |
| Amortization<br>of debt discounts | 1,498,690 | 1,308,061 |
| Share<br>based compensation | 2,425,316 | 2,335,242 |
| Impairment<br>loss on inventory | 11,738,413 | - |
| Impairment<br>loss on fixed assets | 177,626 | - |
| Loss<br>from change in value of derivatives | (7,155) | (820,000) |
| Loss<br>(gain) from extinguishment of debt | (188,164) | 1,499,250 |
| Changes<br>in operating assets and liabilities: | ||
| (Increase)<br>in prepaid expenses and other current assets | (1,296,436) | (261,207) |
| (Increase)<br>decrease in inventory | 34,218,774 | 5,530,532 |
| (Increase)<br>in accounts receivable | (2,859,892) | (1,564,145) |
| Decrease<br>in other assets | 63,366 | (18,403) |
| Decrease<br>in accounts payable and accrued liabilities | (1,691,839) | (5,824,733) |
| Increase<br>in accrued interest payable | 58,055 | 888,821 |
| Net<br>cash provided by (used in) operating activities | 26,197,496 | (25,792,934) |
| CASH<br>FLOWS FROM INVESTING ACTIVITIES | ||
| Cash<br>used for acquisitions; net of cash received | - | (835,000) |
| Purchase<br>of property and equipment | (174,786) | - |
| Proceeds<br>from sales of property and equipment | - | 40,620 |
| Technology<br>development | (1,598,067) | (2,619,551) |
| Net<br>cash used in investing activities | (1,772,853) | (3,413,931) |
| CASH<br>FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds<br>from notes payable and convertible debt | 8,272,375 | 27,455,537 |
| Payments<br>on notes payable | (1,713,825) | (11,134,695) |
| Net<br>repayments on lines of credit | (44,707,736) | (4,660,270) |
| Net<br>proceeds from sale of common stock | 10,780,080 | 15,155,547 |
| Proceeds<br>from PPP loan | 5,176,845 | - |
| Net<br>cash (used in) provided by financing activities | (22,192,261) | 26,816,119 |
| NET<br>CHANGE IN CASH | 2,232,382 | (2,390,746) |
| CASH AND RESTRICTED<br>CASH AT BEGINNING OF PERIOD | 6,726,282 | 15,784,902 |
| CASH AND RESTRICTED<br>CASH AT END OF PERIOD | $8,958,664 | $13,394,156 |
RumbleOn, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
| Three-Months Ended<br><br><br>September 30, | Nine-Months Ended<br><br><br>September 30, | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net income (loss) | $1,486,915 | $(8,871,781) | $(19,506,955) | $(30,149,685) |
| Add back: | ||||
| Interest<br>expense (including debt extinguishment) | 1,488,090 | 2,031,697 | 4,999,092 | 6,850,939 |
| Depreciation<br>and amortization | 536,381 | 473,670 | 1,567,697 | 1,283,333 |
| EBITDA | 3,511,386 | (6,366,414) | (12,940,166) | (22,015,413) |
| Adjustments | ||||
| Impairment<br>loss on automotive inventory | - | - | 11,738,413 | - |
| Impairment<br>loss on fixed assets | - | - | 177,626 | - |
| Insurance<br>recovery proceeds | - | - | (5,615,268) | - |
| Non-cash-stock-based<br>compensation | 862,555 | 689,130 | 2,425,316 | 2,335,242 |
| Acquisition<br>related costs | - | - | - | 378,208 |
| Change<br>in derivative liability | 13,518 | (630,000) | (7,155) | (820,000) |
| Severance | - | 1,079,438 | - | 1,079,438 |
| New<br>business development | - | 426,885 | - | 1,173,928 |
| Litigation<br>expenses | 280,842 | - | 1,027,689 | 61,446 |
| Other<br>non-reoccurring costs | 51,387 | 48,676 | 51,387 | 1,441,603 |
| Adjusted<br>EBITDA | $4,719,688 | $(4,752,285) | $(3,142,158) | $(16,365,548) |
Investor Relations:
The Blueshirt Group
Dylan Solomon