RumbleOn, Inc. (Nasdaq: RMBL) — Form 10-Q Summary
Period ended June 30, 2020. The filing identifies RumbleOn, Inc. as the registrant; this differs from the “Ridenow Group, Inc.” company name in the request metadata. RumbleOn operates an online marketplace and vehicle distribution business across powersports and automotive, plus vehicle logistics and transportation services.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $84.3 million | $270.2 million | $228.5 million | $493.4 million |
| Gross profit (margin) | $8.5 million (10.0%) | $15.6 million (5.8%) | $7.1 million (3.1%) | $29.6 million (6.0%) |
| Operating income (loss) | $2.4 million | $(9.8) million | $(17.5) million | $(16.6) million |
| Net income (loss) | $1.0 million | $(13.0) million | $(21.0) million | $(21.3) million |
| Operating cash flow | Not separately provided | Not separately provided | $0.6 million | $(33.5) million |
- Q2 revenue fell approximately 69% year over year; six-month revenue declined approximately 54%. Vehicle sales volume fell sharply, while average selling prices generally increased.
- Q2 operating income and net income included a $5.6 million insurance recovery related to the Nashville tornado, recorded as a reduction of SG&A. Without that recovery, the quarter would have reported an operating loss and net loss.
- Six-month results included an $11.7 million automotive inventory impairment from the tornado. Adjusted EBITDA, a non-GAAP measure, was a loss of $1.3 million for Q2 and $8.0 million for the six months, compared with losses of $6.9 million and $11.6 million, respectively, in 2019.
- At June 30, cash was $3.1 million and restricted cash was $5.5 million. Current assets were $56.0 million versus current liabilities of $52.7 million. Inventory was $31.5 million.
- Debt, net of unamortized discounts and issuance costs, was reported at $71.0 million; gross debt before those deductions was approximately $83.9 million. This included $37.0 million outstanding on the NextGear inventory floor-plan line and $38.75 million principal on convertible senior notes. NextGear advances are secured by inventory and payable on demand.
- As of August 13, management reported approximately $11.1 million cash, including $5.5 million restricted, and about $31 million of remaining NextGear availability. These later-date figures differ from the June 30 liquidity table, which reported $18.0 million availability under short-term revolving facilities.
Material changes and operating trends
- Automotive revenue fell to $68.3 million in Q2 from $233.9 million a year earlier; powersports revenue declined to $8.2 million from $30.3 million. Transportation revenue was $7.7 million versus $6.0 million.
- In the first half, the company sold 11,114 vehicles, compared with 26,031 in 2019. Average days to sale increased, reflecting changed sales conditions and inventory activity.
- Automotive gross margin improved to 8.5% in Q2 from 4.2% a year earlier, while powersports gross margin declined to 8.2% from 13.8%. Transportation gross profit per delivered vehicle rose to $94 from $74.
- SG&A declined to $11.2 million in Q2 from $25.0 million and to $29.2 million in the first half from $45.4 million, reflecting staffing cuts, reduced marketing, lower transaction-related costs and deferred discretionary spending.
- First-half operating cash flow turned positive, supported in part by inventory reduction and working-capital movements. Cash from financing was $2.1 million, versus $39.7 million in the prior-year period; the company raised equity, issued notes and received PPP proceeds while repaying floor-plan and other debt.
Outlook, risks and unusual items
- Management attributed the downturn to COVID-19 restrictions and uncertainty, lower market activity, and a March 3 tornado that damaged Nashville facilities and inventory. It reported that unit sales rebounded from April lows during May and June; management said June and July gross margins were the highest in company history, but cautioned that those levels were not expected to persist long term.
- The company expects to resume measured spending on inventory, marketing, technology and infrastructure as demand recovers, but gave no quantified revenue, earnings or cash-flow guidance and cautioned that recovery timing is uncertain.
- Management stated that COVID-19-related uncertainty and the company’s circumstances raise substantial doubt about its ability to continue as a going concern, although it believes liquidity measures may be sufficient. The statements contain no adjustments for the outcome of this uncertainty.
- The company received $5.2 million in PPP loans at 1% interest; forgiveness is uncertain. The tornado inventory claim is disputed as to applicable policy limits, and the business-interruption claim remained under negotiation. Management cautioned that the amount and timing of insurance recoveries are not assured.
- The filing gives inconsistent tornado inventory-advance amounts: the financial statements and notes report $5.615 million, while one MD&A passage says $5.865 million. The filed statements record $5.615 million as an insurance recovery and receivable.
- Other risks include dependence on third-party vehicle auctions and financing, seasonality, potential need for additional capital, debt repayment and dilution exposure, and uncertain consumer demand. Management reported disclosure controls were effective and no material legal proceedings.
Key facts investors should verify
- Whether the $5.615 million insurance recovery is final, and the resolution and potential proceeds of the remaining inventory, property and business-interruption claims.
- Current unrestricted cash, restricted-cash requirements, actual availability and borrowing terms under NextGear, and whether demand repayment or collateral terms change.
- Progress toward PPP loan forgiveness and the company’s ability to fund operations and meet debt obligations given the disclosed going-concern substantial doubt.
- Whether the reported June–July margin improvement can be sustained as sales volumes recover, and how much reported Q2 profitability depended on the insurance recovery.
- Reconciliation of the $5.615 million versus $5.865 million tornado-advance disclosure and of the June 30 versus August 13 liquidity figures.