Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lazydays Holdings Inc (GORV, Financial) has made significant progress in inventory health, reducing older model units and maintaining a healthy stock of newer models.
- The company has successfully increased its used procurement, enhancing its used inventory which typically generates higher lead volumes and contributes positively to sales funnel.
- Lazydays Holdings Inc (GORV) has improved its finance and insurance performance, increasing F&I per unit and financing penetration, which boosts gross profit generation in this critical revenue stream.
- Despite a challenging market, the company has managed to control costs effectively, maintaining SG&A expenses close to last year's levels even with additional locations.
- Lazydays Holdings Inc (GORV) has secured additional financial support and liquidity, raising $15 million through an expansion of its mortgage financing, which strengthens its cash position.
Negative Points
- The company experienced a decrease in total revenue by 8.5% and a significant decline in new unit sales by 11.1% in the first quarter of 2024 compared to the same period in 2023.
- Lazydays Holdings Inc (GORV) reported a pretax loss and anticipates continued challenges in increasing unit volume throughout 2024.
- Gross profit per unit for both new and used units has decreased due to aggressive discounting and market conditions, impacting overall profitability.
- Finance and insurance revenue declined by 5.6% during the quarter, primarily due to a decrease in unit volume and higher chargebacks.
- Service, body, and parts revenue decreased by 20.6%, with a corresponding decrease in gross profit by 18.9%, indicating challenges in these areas of the business.
Q & A Highlights
Q: Can you discuss the current challenges in motorized unit sales and how you're balancing your inventory?
A: (John North - CEO, Director) We're being cautious with motorized units due to slower movement, especially high-end diesel pushers. We're focusing on segments like Class C, which remain profitable. Our inventory strategy is nuanced, depending on the store location and historical sales data. We're committed to motorized units but are adapting our approach based on current market dynamics.
Q: How has the demand for used units changed, and what is the impact on your sales strategy?
A: (Amber Dillard - VP, Operations) Demand for used units, especially models from 2016 to 2021, is very strong, offering quick sales and high gross profits. We're focusing on acquiring these units selectively to meet consumer demand for more affordable options, avoiding late-model units that may carry a pandemic-related quality stigma.
Q: What are your expectations for gross profit per unit for new and used units in Q2 and beyond?
A: (John North - CEO, Director) It's challenging to provide specific guidance under current market conditions. We're balancing price and volume carefully, with healthier inventory allowing for better pricing. However, ongoing discounts on older models by competitors could affect our pricing strategy and volume.
Q: Can you provide insights into your financial strategies for managing inventory and capital through 2024?
A: (Kelly Porter - CFO) We've reduced our new inventory significantly and are managing used inventory strategically. Financially, we've secured additional capital through mortgage financing and modified our financial covenants to navigate the economic environment better. Our focus remains on improving operational efficiencies and financial performance.
Q: What is your approach to the upcoming model year '25 rollouts in terms of inventory and pricing?
A: (John North - CEO, Director) We anticipate a slight price increase for towables and a higher increase for motorized units due to chassis cost pressures. Our inventory strategy is cautious, ensuring we have the capacity to integrate new models effectively while maintaining healthy stock levels.
Q: How are you addressing the challenges in the parts and service segments?
A: (John North - CEO, Director) We're focusing more on service operations, recognizing its potential for consistent revenue and higher margins. Efforts include recruiting technical staff and partnering with trade schools to address labor shortages. This shift is part of a broader strategy to balance sales with service to enhance customer satisfaction and operational stability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
