Greetings, and welcome to the RumbleOn Incorporated's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Tom Zalewski, Vice President, Finance and Treasurer. Thank you, and please go ahead. Thank you, operator. Good morning, everyone, and thank you for joining us on this conference call to discuss RumbleOn's first quarter 2024 financial results. Joining me on the call today are Mike Kennedy, RumbleOn's Chief Executive Officer, and Blake Lawson, RumbleOn's Chief Financial Officer. Our Q1 results are detailed in the press release we issued earlier this morning, and supplemental information will be available in our first quarter Form 10-Q, once filed. Before we start, I'd like to remind you that the following discussion contains forward-looking statements, including but not limited to, RumbleOn's market opportunities and future financial results, and involves risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found on RumbleOn's periodic and other SEC filings. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and RumbleOn assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Also, the following discussion contains non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, please see our earnings release issued earlier this morning. Now I'll turn the call over to Mike Kennedy, RumbleOn's CEO. Mike? Thanks, Tom. Good morning, everyone, and thank you for your interest in RumbleOn and for joining us this morning. Earlier this morning, RumbleOn reported our first quarter financial results. That release and this call are significant as we begin to talk about our company performance and results through the new company framework described on our call back in March and detailed in our 10-K filing. I'm excited to talk about the very early stages of work and results that point us to our Vision 2026. I'll begin with a recap of our recent performance delivered during the quarter. But first, I wanna take a moment to acknowledge the announcement in our recent 8-K related to Blake Lawson's decision to leave RumbleOn. Blake is leaving on a very positive note. He continues to lead the finance functions of our company, and he will remain in place through our annual meeting on June fourth. Although we've only worked together for a short period of time, I can see that his dedication to RumbleOn has been remarkable, and he has truly been an asset in the turnaround of the company. We wish him well in his future endeavors. Now, turning to the results from the quarter. Let me first kick things off with an overview of our Powersports dealership group. The team retailed 15,508 total Powersports major units during the quarter, which is down 4.4% from the same quarter last year. Total new Powersports major unit sales were 10,503, or up 0.6% to the same quarter last year, while pre-owned unit sales totaled 5,005, or down 13.4%. As I stated on our last call, on a day supply basis, our new inventory levels are heavy and our pre-owned inventory is light. Our team continues to work closely with our manufacturer partners to align new inventory levels to the current market realities. Gross margin for major unit sales was challenged on new and positive on pre-owned, trends we expect to continue throughout 2024. New unit gross margins for the quarter were 12.4%, compared to 15.2% the same quarter last year, driven by overstocking in the industry and compounded by our decision to exit non-core product lines and overassorted brands not aligned with our Vision 2026. I'm excited to report pre-owned gross margins of 17.5% for the quarter, compared to 11% in the same quarter last year. This performance is important to highlight as it shows the progress on the execution by the entire teams of our Vision 2026 strategy to leverage our Cash Offer technology to grow the pre-owned business. I'll share some additional analysis within the quarter on this segment. Of the 5,000 pre-owned units sold during the quarter, over 50% of those were not impacted by the fourth quarter inventory write-down. When we study the acquisition costs of our inventory acquired through Cash Offe r, we are seeing very nice improvements on a per unit basis. While it's early days, we are encouraged that everyone is working as one team and in one direction, and the results from an acquisition cost and gross margin perspective are what we expect. As a related and important note, following up from our previously announced intention to open up our first pre-owned center sometime this year, I'm now excited to share that we expect to open this greenfield location by July. Final details of the site are being worked out by the team, and we'll announce the launch, along with other details this summer. Our parts, service, and accessories, or fixed operations business, delivered $52.9 million of revenue and $23.6 million of gross profit, or GPU of $1,522, down $160, or 9.5%. The decrease comes primarily from accessories, apparel, and motor clothes, offset slightly by parts. We believe this decrease is also attributable to a couple of elements, including the macro environment with inflationary pressures and high interest rates, and our reduction in pre-owned inventory and unit volume that impacts the amount of internal work we run through our system to prepare those units for sale. Our F&I teams delivered impressive results, with $25.8 million in revenue, or $1,664 of GPU, down just 0.9% year-over-year, despite elevated consumer interest rates and a challenged macro environment. We believe this trend will continue based on a strong set of OEM-supported finance offerings, combined with our team's strength in this area and our own internal process and capability. So all in, revenue from our Powersports Dealership Group was $293.5 million, down 8.2% to the same quarter last year. The decrease in revenue is attributed to lower pre-owned volume, a lower total major unit average selling price, or ASP, by $500, and decrease in volume coming from our fixed operations. Total GPU for the group was $5,099, down $250, or 4.7%, from the same quarter last year, and in line with our expectations as we manage coming off COVID, navigate the headwinds of inflated industry inventories and a high interest rate environment. Looking at our EBITDA for our Powersports Dealership Group, we are pleased that our first quarter EBITDA was $17.7 million, compared to $17.8 million for the first quarter last year. Although our Powersports group had lower revenue and gross profit compared to last year, we were able to effectively manage expenses at the dealership level to maintain a similar level of EBITDA, which reflects that we are operating more efficiently. Turning now to our asset-light Vehicle Transportation Services operating group. For the first quarter, Wholesale Express revenue was down 3.4%, while EBITDA grew nearly 8% to $1.4 million. Thanks again to our focus on managing costs. We continue to uncover ways to operate more efficiently, and this is showing up in our corporate headquarters expense, which was $10.1 million during the quarter, down from $15.1 million last year. As a result of these initiatives, total company EBITDA increased from $4 million last year to $9 million this year for the first quarter. Let's talk about SG&A expenses for the quarter, as this has been such a key component of our work over the past several months. Total company SG&A expenses totaled $73.9 million, or 89.5% of gross profit, compared to the same quarter last year of $86.3 million, or 95.6% of gross profit. SG&A expenses were 14.3% lower than the same quarter last year. This reduction was in line with our expectations, and we expect this trend to continue as we move through the year. Finally, let's turn to our balance sheet. We ended the quarter with $63.4 million in total cash, and non-vehicle net debt was roughly $203 million. Availability under our short-term revolving floor plan credit facilities totaled approximately $149 million. Total available liquidity, defined as unrestricted cash availability under floor plan credit facilities, totaled approximately $213 million. Cash flow provided by operating activities was $3 million for the three months ended March 31, which was positively impacted by the completion of the RumbleOn Finance loan portfolio sale in early 2024. Delivering positive free cash flow in 2024 is our expectation for the year, even while paying the high rates on our corporate debt and with the elevated floor plan expense, with a current cash interest expense run rate of around $50 million. Lastly, I'd like to share some thoughts relative to the early days of our execution of Vision 2026. As a reminder, by the end of calendar year 2026, we expect to have annual revenues in excess of $1.7 billion, annual adjusted EBITDA of greater than $150 million, and annual adjusted free cash flow of $90 million or more. While the Q1 results were largely in line with our expectations, when looking at each operating segment, HQ cost reductions, and the company as a whole, we delivered some solid performance in a tough environment. The Powersports segment delivered nearly flat earnings on an 8% reduction in revenue, and overall, the company was able to deliver an 8% improvement in adjusted EBITDA on an 8% top-line reduction through effective cost management. As I said back in March, we remain steadfast in achieving Vision 2026, while recognizing we are operating in a dynamic environment that might get us to our target sooner, or alternatively, it may take us a bit longer. But make no mistake, achieving Vision 2026 is the plan. Let me briefly touch on the three strategic pillars. Remember the lead-off strategy, leveraging our national scale to run the best-performing dealerships in America, supported by an aligned and efficient corporate office. Now that we've had a chance to share our vision and strategic pillars with key manufacturing partners, important credit partners, and key vendors, I'd like to share some initial reflections. I'm confident that our quest to run the best-performing dealerships is focusing our leadership team on what is most important. Aligning to our key manufacturing partners and putting our energy and focus on driving local market performance while delivering great rider experiences, is building momentum within the operations. Plans are being fine-tuned and adjusted as needed as we align the organization to drive the business through this lens. Secondly, as demonstrated in our first quarter SG&A performance, we are pleased with the progress thus far and ready to extract additional savings to gain more operating leverage through developing an aligned and efficient HQ. Second pillar of our strategy has us focused on growing our RideNow Cash Offer tool as a point of differentiation to grow the pre-owned business. While it's certainly early days, the gross margin performance on pre-owned is very encouraging.... As we enjoy a lower overall acquisition cost through Cash Offer and gear up for our first pre-owned standalone dealership, we are optimistic about this work and its meaningful point of differentiation in our business, providing a competitive advantage in the marketplace and potentially very large area of high return growth for our company. And lastly, I'd like to touch on the third pillar of our Vision 2026 plan, capital allocation, and our focus on generating long-term per share value for our shareholders. As a leading consolidator in the powersports dealership industry, I'm often asked: Why haven't you acquired a dealership lately? I tend to think about the quote from one of my favorite books, The Outsiders, where author Will Thorndike writes, "With acquisitions, patience is a virtue, as is occasional boldness." We continue to be in discussions with a growing pipeline of acquisition opportunities, and we believe we are close to finalizing what is my first deal as CEO of the company. We are also excited to announce the opening of a new greenfield franchise location this month, which will be called Indian Motorcycle of Cincinnati. It's an exciting move that demonstrates confidence from the team at Indian in our capabilities and adds our second dealership to the Cincinnati market and our fifty-fifth dealership in our company. Our position as a leading consolidator in the industry, along with our distinct advantages in the pre-owned market, put us in a position to deploy our capital effectively in both acquiring dealerships and opening greenfield locations. Before we turn it over for questions, I'd like to take a moment and talk about our team. We are proud of our team's performance in the first quarter, and we are focused on adapting to the challenging market dynamics. This includes working with our manufacturing partners and analyzing store operations to ensure we have the right level of focus on profitable operations and rider experiences, while also ensuring the necessary tools are in place to deliver on our vision. We will never lose sight of our first principle of generating long-term per share value for our shareholders. This concludes our prepared remarks, and we look forward to answering any questions you may have. Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from the line of Eric Wold from B. Riley Securities. Please go ahead. Thank you, and good morning, everyone. A few questions. I guess first off, I know the March quarter is typically one of inventory build kind of into the selling season, and we saw that in the numbers. But can you talk about, I guess, how that compared to what you would normally see in a build period in prior years? And then if you also remain on track for your goal of reducing inventories by $60 million this year. Yeah, thanks, Eric. This is Mike. I'll take a stab at answering that question. So first off, we feel really good about our project to get inventories down, which what we communicated back in March was a target for the year of $60 million. I would say within the quarter, you know, probably January, inventory came in pretty heavy from momentum from the fall and, you know, depending on the OEM, the ordering window and lead times, and they're different for every different OEM. And then as we started to exit the quarter, things came down, which would be in reverse what we typically see in Q1, right? Usually, they grow throughout Q1 and even at the beginning of Q2 as we come into the full season. So, they're the plans coming in well, nicely. We're positive about the results. Team's working really hard and partnering with our manufacturing partners to make sure we do it the right way. Perfect. And then the new standalone pre-owned retail center, can you talk about what the plans are for that location, I guess. And what do you expect to see from it? Is this to act as a hub for kind of acquiring refurbishing vehicles for other dealerships, or will it essentially be acting as kind of a standalone autonomous operation and not doing anything for other dealerships? Yeah. So I, I missed a piece of that question, but let me, let me give you a little bit of color around it, Eric. We're excited about it. As a reminder, it's a pilot for us, right? We've not done this, we've not done this yet. We haven't announced the specific location, but the ideal location for this pilot, for our kinda conditions of success was a healthy, strong motorcycle market overall, and ideally, a market that the RideNow network is not in today. And so the idea is, we're gonna leverage the fact that we buy more pre-owned motorcycles in the country than anybody else and feed that to, you know, a good, solid location in this market, and then bring the RideNow processes into place and see if we can't make a big impact. You know, it's a different ballgame going into market without an OEM, right? An OEM brand, you put the sign out front, and that brings a lot of energy, a lot of leverage with that OEM brand to drive traffic and interest and awareness. So this will be a new test for our team from a marketing perspective to stand up on our own. But we feel good about it. Our team is very optimistic about the financials and the return, and we're really excited about it. Take us to the other part of the question. Is that location essentially just gonna be acquiring vehicles for it and it only? Or will there be some acquisition of vehicles that will be refurbished at that location and then sent to other dealerships in the network? Hey, Eric, this is Blake. If I understand your question correctly, it's not going to be like a distribution center for other dealerships where we do the used vehicle reconditioning there. It's going to be a location where we acquire, through our Cash Offer tool, a lot of good quality inventory in that market and put it in that particular dealership. Perfect. That helps, Blake. And then just the final question for me. Obviously, you continued to pay down debt in the first quarter. I know this might be tough without guidance out there for 2024, but is there some level of an estimate of, you know, how much additional debt you think you could pay down this year, maybe at a minimum? And when do you think you'll be in a position, you know, if the market accommodates, to, you know, restructure, refinance the high rate Oaktree debt? Yeah. So, we don't really have any requirements to pay down debt this year. We've met all of our principal payments, and so anything we did would be voluntary, I guess, and it would be out of, you know, just free cash generated that made sense for our business and our balance sheet. But we don't have any requirements, and so I don't anticipate that we will be paying down any of our term debt. Got it. Thank you both- I'm not sure that totally answered your question. Well, no, I think I get it. I mean, obviously, I know one of the risks or one of the issues you had is that it's not a, you know, revolving credit facility. So I get it. You probably would not wanna pay down that, you know, with cash you would not be able to get back until you kind of restructure that into more accommodating structure. When do you think that might come into play? You know, and how much does the prepayment period or the need for better interest rates or market environment, is this something you think you can do in the back half of this year, or this might be more of a 2025 before you can look to address that? We're looking at all options right now. I think, you know, it's probably depending on, you know, what we can structure, it's probably an early 2025 thing. Where, you know, the prepayment runs out in August. You know, it's only 1%. So, but we're definitely exploring all of our options right now to be ready to do that when the time is right. Perfect. Thank you, guys. Thanks, Eric. Your next question is from the line of Seth Basham from Wedbush Securities. Please go ahead. Thanks a lot, and good morning. My first question is on the new market. If you could provide some color on how you think the spring season is shaping up, updates on incentives and promotional pressure in the industry, that would be helpful. Yeah, thanks, Seth. You know, we don't normally talk about mid-quarter performance, but you know, I'll give you a couple of reflections. I think the promotional activity coming from OEMs is extremely high right now. I mean, across the board. I mean, I've never seen with some brands, haven't seen this level of activity and potency of activity in the marketplace. So, you know, I think, you know, on the negative side, it's high inflation realities coming off of COVID. You know, high interest rates are sort of the negatives. On the positives, you know, there's a lot of selection of inventory in the marketplace, and incentives are pretty strong, whether it's factory rebates or interest rate buydowns. So, you know, I think, I think there's some challenges out there, which we're all feeling. At the same time, you know, OEMs are responding and have responded here just in the last few weeks with even more, power in the marketplace. And so I think that's, you know, there will be some offset in there as we manage through the spring. That's helpful. On the pre-owned side, how much of the decline in units is being driven by the market versus your own inventory initiatives? When should we see some stabilization in used volumes? Yeah, that's a great question. I, you know, I think it's a combination of a few different things. You know, I think going back to new inventories, right? You heard in my remarks that our new inventory is heavy on a day supply. And, you know, I think there are some buyers that walk in and say, "Hey, I'm gonna buy a new, you know, motorcycle or, you know, powersport unit." And then there are some that are dead set on pre-owned, and then there are some that just shop for, you know, a deal or a specific unit that they fall in love with. Right now, the whole industry, and us included, are heavy on a new perspective. We are light on pre-owned. Some of that's coming off of COVID, some of that's cleaning our own house up. So I think, I think the growth or the lack of growth in pre-owned unit sales in Q1 is probably a combination of being heavy on new. Our inventory is light. But the team is rooting out all kinds of avenues of acquiring more product, and we're keeping the stores, you know, adequately filled, even though it's light on a day supply. I think the turns will probably surprise us, and as you saw in the gross margins, they're really, really good. Okay, and then lastly— Go ahead. Sorry, Blake. I was just gonna add one more caveat to that. You know, this, pre-COVID days, prior to the RumbleOn RideNow merger, I don't think we would say that we were really low in used inventory. We actually have a lot more used inventory than we historically had, or that Freedom Powersports had. It's just that our model does call for, you know, a good mix of used and new, and so we feel like we're a little bit light in used because of that. But you, you sell what you have, and right now, we've got more new, so that's, that's what's happening. But I, you know, we're really extremely pleased with the margins that we're seeing on used right now, and we did a nice, you know, big write-down at the end of the year. But those units are not what are driving these used margins. The used margins are being driven by our Cash Offer tool and the trade-ins we're taking at the right value. So the discipline that we've recently put into place around our used inventory purchasing is gonna pay dividends down the road. And it's exciting to see because we all knew that the used write-down would probably help margins in the first quarter, but that's not where it's being driven from. That's helpful, and it's a good segue to my last question, is just thinking about those GPUs on pre-owned. How different are they for the units acquired via Cash Offer versus trade-ins versus other methods? Yeah. So we, as you can imagine, we did a deep dive on that particular question because we wanted to just make sure that, you know, the inventory reset that we did at year-end wasn't the sole driver. And when we looked at the 5,000+ units that we sold in the first quarter, half of them came through Cash Offer, roughly, and the other half came through the normal channels. And the Cash Offer margin was right up there with the trade-ins in the 19%-20% range. And the write-down units were actually around 17%. So the units that we're taking in right now through Cash Offer are actually very strong in margin, and we anticipate that will continue. Got it. Thank you very much. Ladies and gentlemen, just a reminder, if you have a question, please press star, then the number 1 on your telephone keypad. Your next question is from the line of Mike Baker from D.A. Davidson. Please go ahead. Hi, thanks. I just wanted to ask about where you think you are in terms of the expense savings. Remind us how much in cost you think you've taken out, and you had said in the prepared remarks that you think there's more to go. So if you could just help us frame that up. Thanks. Yeah. I think, in our previous remarks back in March, Blake reminded me, I think we said, what was the total annualized cost taken out? Was it- We were north of $50 million. Yeah, north of $50 million. My remarks today is more about having a continuous improvement mindset on the business. And, you know, because there's always costs coming out of the business, Mike, you know, whether it's inflationary or, you know, compliance or, you know, other things that are coming at the business. So, you know, our mentality is that we're always looking to improve the business, and when you improve the business, a lot of times you find ways you can drive that out. That it gives you headroom on your margins, or it gives you headrooms in SG&A, or and it helps you then offset some of the inflation pressures that are coming our way. I don't have a number to share with you on, you know, go-get number that we're going after, but it's more of a cultural thing to build into our everyday mindset of, of driving costs out and looking at waste and just getting better as an organization. Got it. Okay. That makes sense. One more question, if I could. Any color on trends by product category? In other words, off-road versus on-road, or even by brands. You know, there was a lot of excitement around Harley-Davidson's new launch. Any color on how that's performed? Yeah, great, great question. Yeah, there's, there's a lot to think about in, in our business relative to that. I'll just, I'll keep the remarks sort of pretty high level. You know, we did see... You, you heard my comments that our ASP came down. Some of that was driven by mix, a little bit away from side-by-sides, you know, which generally have a higher ASP and more, on-road motorcycles and, you know, a little bit of also off-road, motorcycles. And, you know, Harley, you know, Harley hit the ground running here in January with their 2024, touring lineup, and they were able to deliver good supply. They also had really high carryover levels in touring product, with some incredibly strong incentives, both on factory rebates as well as, you know, buydowns. So I think it was a nice perfect storm, if you will, for Harley in the early days of the year. We'll see how that plays out as we go through the riding season. Great. Appreciate the color. Thank you. Thanks. Thanks. Your next question is from the line of Kevin Condon from Baird. Please go ahead. Hi, good morning, everyone. This is Kevin in for Craig. Thanks for taking my question. I think in the prepared remarks, you mentioned rationalizing out some, other, other brands or tertiary brands of inventory that you had taken on, amid some of the shortages. I'm just wondering if there's a way to think about how far into that process you are, and maybe what portion of the inventory that you're gonna work down is gonna come from that versus, you know, just managing inventory lower across the board. Yeah, thanks, Kevin. Good question. Yeah, I don't have any specific comments to share around the brands or the categories that we exited. As a reminder, you know, we exited a number of niche brands. We exited most of the marine products that we're in, obviously staying in PWC and a couple of small boat brands. But that's a chunk of what's gonna get us down at $60 million, but the biggest chunk that's gonna get us more healthy inventory is watching that day supply and just getting more efficient in terms of managing our day supply across the board with all of our current lines. Understood. Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation, and you may now disconnect.