Business context and reporting period
Issuer: RumbleOn, Inc. (Nasdaq: RMBL); the filing is for the fiscal year ended December 31, 2022, not solely the fourth quarter. RumbleOn operates powersports retail and online sales, vehicle logistics, and an automotive wholesale business it planned to wind down. Results include RideNow for all of 2022 and Freedom Powersports from its February 2022 acquisition date; comparisons with 2021 are therefore materially affected by acquisitions.
Key financial results
Amounts below are in U.S. dollars; financial statement values are reported in thousands unless indicated otherwise.
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $1.793 billion | $924.2 million |
| Gross profit / gross margin | $452.7 million / approximately 25.2% | $158.2 million / approximately 17.1% |
| Operating loss | $287.1 million | $8.9 million |
| Net loss | $261.5 million | $9.7 million |
| Adjusted EBITDA (non-GAAP) | $120.1 million | $31.0 million |
| Net cash used in operating activities | $18.9 million | $32.2 million |
| Cash and restricted cash at year-end | $58.6 million | $52.0 million |
| Total debt, net of discounts and issuance costs | $599.8 million | $384.6 million |
The 2022 operating loss includes $350.3 million of noncash goodwill and franchise-rights impairment charges. Interest expense increased to $53.9 million from $16.4 million. The company reported a $72.6 million income tax benefit. Adjusted EBITDA is a company-defined non-GAAP measure and should not be treated as a substitute for GAAP earnings or cash flow.
Material changes versus the prior comparable period
- Revenue rose about 94%, principally reflecting the RideNow and Freedom acquisitions and growth in powersports, parts and service, and finance and insurance revenue. Automotive revenue declined $126.6 million as the company reduced activity in that business.
- Powersports retail unit sales increased; however, revenue per retail vehicle fell from $21,778 to $19,825 and gross profit per retail unit fell from $7,294 to $6,159, as market pricing normalized and supply-demand imbalances eased.
- Gross profit increased, but SG&A also rose to $366.4 million from $164.1 million, reflecting the acquired businesses, larger workforce and store footprint, and integration costs.
- Year-end debt, net of discounts and issuance costs, increased to $599.8 million. Cash used in investing fell substantially from 2021, when major acquisition spending included RideNow.
Liquidity, debt, outlook and risks
At December 31, 2022, the company reported $48.6 million of cash, $10.0 million of restricted cash, and $137.5 million of availability under short-term revolving facilities, for $196.1 million of stated committed liquidity resources. Inventory was $331.7 million and current liabilities were $311.7 million. Management said existing working capital and financing arrangements were expected to fund operations for at least one year from the financial statement date. This assessment should be considered alongside the company’s substantial debt and cash used in operations.
Debt includes $225.4 million of vehicle floorplan borrowings, a $346.1 million Oaktree term loan principal balance, a $25.0 million RumbleOn Finance facility, and $38.8 million face value of convertible notes. The Oaktree rate was 11.92% at year-end; floorplan rates were generally 6%–16%. Variable rates, collateral requirements, restrictive covenants, and refinancing or repayment demands are material risks.
The company expected to wind down wholesale automotive operations in the first half of 2023; its 2023 revenue forecast for that segment included only the year-end remaining inventory, and management expected the segment to cease operations during 2023. The filing provides no clear consolidated revenue or earnings guidance. Management described continued investment in technology, inventory centralization, fulfillment locations, and online sales, subject to performance and available operating cash flow. In March 2023, the company engaged J.P. Morgan to review balance-sheet initiatives and options.
- Financial reporting controls: Management concluded internal control over financial reporting was ineffective at year-end due to a material weakness involving insufficient accounting resources and related process controls after the RideNow integration. The auditor issued an adverse opinion on internal controls, while giving an unqualified opinion on the financial statements. Management stated it was pursuing remediation; timing was not assured.
- Consumer finance facility: After year-end, RumbleOn Finance failed an interest-rate-spread requirement. The lender had indicated no current intention to demand repayment, and the company intended to sell the loan portfolio and repay the approximately $25 million balance.
- Impairment and estimates: Impairments were based on valuation assumptions and followed fourth-quarter declines in market capitalization and other factors. Changes in forecasts, discount rates, or market conditions could affect asset valuations.
- Other risks and contingencies: Demand and margins are sensitive to consumer credit costs, inflation, rates, inventory availability, OEM allocations, seasonality, and competition. The filing reports no material legal proceeding beyond routine litigation and says a RideNow-owner settlement resolved pending claims without incremental consideration; it separately records $8.4 million of settlement charges for former minority shareholders.
- Governance: Former directors announced plans to nominate candidates for the 2023 annual meeting, creating the possibility of a proxy contest.
Important facts for investors to verify
- Reconcile the $350.3 million impairment charge and assess the assumptions supporting remaining goodwill and franchise-rights values.
- Review debt maturities, borrowing-base availability, covenant compliance, variable-rate exposure, and the outcome of the announced balance-sheet review.
- Track operating cash flow, inventory funding, consumer-finance portfolio sale and facility repayment, and whether management’s one-year liquidity assessment remains valid.
- Monitor remediation and independent testing of the material weakness, including the auditor’s future internal-control opinion.
- Verify the timing and financial effects of the automotive wind-down, and whether powersports margins and unit economics stabilize as pricing normalizes.
- Check subsequent filings for consolidated guidance, new financing or asset sales, acquisition activity, and developments in the proxy contest.