RumbleOn, Inc. — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021; comparison is FY2020. The filing identifies the registrant as RumbleOn, Inc. (Nasdaq: RMBL), rather than “Ridenow Group, Inc.” Amounts below are in U.S. dollars; financial statement figures are shown in millions unless noted.
Business context and reporting period
RumbleOn operates powersports retail, used-vehicle automotive wholesale, and vehicle logistics businesses, with an online and physical retail model. The August 31, 2021 acquisition of RideNow substantially expanded its powersports operations. RideNow’s results are included only from the acquisition date, so FY2021 comparisons are materially affected by the acquisition and are not like-for-like.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $938.4 million | $416.4 million |
| Gross profit | $158.2 million | $31.6 million reported |
| Operating loss | $8.9 million | $18.6 million |
| Net loss | $9.7 million | $25.0 million |
| Adjusted EBITDA (non-GAAP) | $31.0 million | $(5.8) million |
| Net cash from (used in) operating activities | $(32.2) million | $17.1 million |
| Cash and restricted cash at year-end | $52.0 million | $3.5 million |
| Debt, net carrying amount, excluding leases | $384.6 million | $53.1 million |
FY2020 reported gross profit included an $11.7 million Nashville tornado inventory impairment; the company’s comparison table presents FY2020 gross profit of $43.4 million before that impairment. FY2021 net loss included a $21.7 million income tax benefit, largely reflecting release of a deferred-tax valuation allowance after the RideNow acquisition.
Total revenue rose 125% year over year. Powersports segment revenue was $433.7 million, automotive revenue $460.9 million, and vehicle-logistics revenue $48.8 million before intercompany eliminations. Total vehicles sold were 34,766, versus 18,024 in FY2020. Powersports gross profit per retail vehicle increased to $6,394 from $5,114, while automotive gross profit per vehicle rose to $2,483 from $2,220. These comparisons are affected by the acquisition and changed business mix.
Year-end current assets were $300.1 million and current liabilities $179.1 million. Inventory was $201.7 million, with $97.3 million of vehicle floor-plan debt. The company reported $176.1 million of committed liquidity resources, including $124.1 million available under short-term revolving facilities. Management said existing working capital, operating results, and financing arrangements were expected to fund operations for at least one year from the financial statement date.
Material changes versus FY2020
- RideNow added substantial retail scale, new-vehicle sales, parts and service, and finance-and-insurance revenue. The company reported 41 powersports retail locations at December 31, 2021.
- Revenue and gross profit increased sharply, but SG&A rose to $164.1 million from $53.7 million. FY2021 included $29.2 million of stock-based compensation, including accelerated vesting and award modifications tied to the RideNow transaction.
- Interest expense increased to $16.4 million from $6.5 million, mainly following acquisition financing and assumed floor-plan facilities. Cash used in operations was $32.2 million; cash used in investing was $378.8 million, primarily reflecting acquisitions. Financing activities provided $459.5 million, including equity and debt proceeds.
- Gross debt before unamortized discounts and issuance costs was reported as $420.1 million. The Oaktree term loan had a 9.25% interest rate at year-end and a stated 2026 maturity; the filing also describes restrictive covenants and collateral liens.
Outlook, risks, contingencies, and unusual items
No specific quantitative revenue or earnings guidance is provided. Management described plans to expand technology and inventory integration, grow used-vehicle sales and consumer financing, and roll out fulfillment centers during 2022. It expected COVID-related supply constraints and demand/supply imbalances to continue through 2022. Management also noted seasonal sales patterns, with activity typically stronger in spring and summer.
- Controls: Management concluded internal control over financial reporting and disclosure controls were ineffective at year-end. The auditor issued an adverse opinion on internal control, citing material weaknesses in IT controls, period-end close, inventory controls, acquisition accounting, and the broader control environment. The financial statement audit opinion was unqualified. RideNow’s controls were excluded from the year-end assessment despite representing 85.5% of assets and 39.2% of revenue.
- Acquisition and financing risks: Integration, purchase-accounting estimates, acquisition costs, dilution, elevated debt and interest, and debt-covenant restrictions may affect results and financial flexibility. Freedom Powersports was acquired in February 2022 for approximately $130.0 million, funded with cash, an Oaktree draw, and stock; it is subsequent to the reporting period.
- Operating risks: New-vehicle supply depends on manufacturers; used inventory sourcing, consumer demand and credit availability, competition, transportation costs, and seasonal or adverse economic conditions may affect sales and margins. The company also faces regulatory, data-security, and insurance risks.
- Contingencies and unusual items: The Nashville tornado insurance claims remained under negotiation or dispute; the company gave no assurance of further recoveries. The RideNow purchase-price allocation remained provisional. The filing reports no material legal proceedings beyond routine matters.
- Related parties: The filing describes RideNow-related leases and other transactions involving former executives/directors, as well as a subsequent $3.6 million software license purchase and $30,000 monthly support agreement with a company owned by a director.
Important facts for investors to verify
- How much of FY2021 growth and reported profitability is attributable to RideNow, and how comparable pro forma or same-store results perform.
- Progress and independent testing of remediation for the material weaknesses, including integration of RideNow’s controls.
- Debt terms, covenant headroom, interest-rate exposure, available liquidity, and the cash and share funding of the Freedom acquisition.
- Whether powersports supply constraints, used-inventory sourcing, and gross profit per unit remain favorable as markets normalize.
- Final RideNow purchase accounting, unresolved tornado insurance recoveries, and the impact of related-party arrangements.