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LH

Lazydays Holdings, Inc. (LAZY)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue declined 22.6% year over year to $238.7M, with a net loss of $44.2M (diluted EPS $(3.22)); adjusted net loss was $18.4M (adjusted diluted loss per share $(1.42)) .
  • Sequential gross margin improved meaningfully to 19.9% from 14.0% in Q1, driven by healthier inventory mix and higher per-unit profitability despite lower average selling prices .
  • Management announced further August cost reductions targeting ~$25M annual savings, closed Waller (TX) and consolidated to one location in Surprise (AZ), and secured a nonbinding $5M incremental mortgage facility with associated warrants (666,667 @ $5.25) to bolster liquidity while negotiating credit covenant amendments .
  • Potential stock reaction catalysts: visible execution on $25M cost saves by Q4, resolution of covenant waiver/amendment and incremental financing, and continuation of F&I per unit improvements amid a towable-heavy, current-model inventory .

What Went Well and What Went Wrong

What Went Well

  • Sequential gross margin and per-unit profitability improved: “improving F&I per unit and achieving substantial total gross margin improvement sequentially… same store F&I was over $5,300 per unit, up 6.9%, despite average selling prices being lower by ~17%” — CEO John North .
  • Inventory currency and mix strengthened: new inventory is “26% model year 2025 and 69% model year 2024… over 75% of our inventory is towable product, up from 70% at the same time last year” — CEO .
  • Liquidity and lender support: temporary waiver approved by 100% of syndicated lenders; CFO: “We believe we have adequate liquidity to continue to navigate the current macroeconomic environment.” .

What Went Wrong

  • Demand softness outweighed seasonal expectations: “seasonal improvement in sales volume we had anticipated… did not materialize” — CEO .
  • YoY top-line and margin pressure: revenue down 22.6% to $238.7M; total gross margin down 210 bps YoY to 19.9% .
  • Elevated financing costs and tax valuation allowance effects: floor plan interest expense $5.7M and other interest $5.8M; income tax expense $23.8M, contributing to GAAP net loss .

Financial Results

Key Metrics (quarterly)

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$198.029 $270.586 $238.694
Net Income ($USD Millions)$(107.965) $(21.980) $(44.221)
Diluted EPS ($USD)$(7.59) $(1.67) $(3.22)
Total Gross Profit Margin (%)21.6% 14.0% 19.9%
Income from Operations ($USD Millions)$(127.011) $(16.581) $(8.518)
SG&A as % of Revenue (As Reported)23.6% 18.1% 21.4%

YoY Comparison (Q2)

MetricQ2 2023Q2 2024
Total Revenues ($USD Millions)$308.380 $238.694
Net (Loss) Income ($USD Millions)$3.560 $(44.221)
Diluted EPS ($USD)$0.12 $(3.22)
Total Gross Profit Margin (%)22.0% 19.9%

Segment Revenue Breakdown (Q2)

Revenue Line ($USD Millions)Q2 2023Q2 2024
New Vehicle Retail$182.752 $143.333
Pre-Owned Vehicle Retail$90.991 $60.908
Vehicle Wholesale$1.716 $3.268
Finance & Insurance$17.742 $16.041
Service, Body, Parts & Other$15.179 $15.144
Total Revenues$308.380 $238.694

KPIs and Unit Economics

KPIQ2 2023Q1 2024Q2 2024
New Retail Units Sold1,979 2,055 2,036
Pre-Owned Retail Units Sold1,388 1,466 1,149
ASP New ($)92,346 74,263 70,458
ASP Pre-Owned ($)65,555 54,281 53,009
Avg Gross Profit/Unit ex-LIFO — New ($)12,552 2,704 6,412
Avg Gross Profit/Unit ex-LIFO — Pre-Owned ($)13,461 6,396 9,976
F&I Per Unit ($)5,029 4,919 5,084

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EBITDA (Non-GAAP)FY 2024Anticipate positive EBITDA in FY24 No quantitative update; company did not reconcile FY24 EBITDA; focus on cost actions Maintained qualitative; added cost-saves focus
Adjusted Operational Cash FlowFY 2024Anticipate positive adjusted operational cash flow No quantitative update; not reconciled Maintained qualitative
Pre-Tax IncomeFY 2024Anticipate a pre-tax loss Not explicitly updated; operating environment remains challenging; pursuing cost reductions Maintained
Annual Cost Savings Run-Rate2H 2024 onwardN/A~$25M annual savings targeted from August cost actions New
Store Footprint Actions2H 2024N/AClosed Waller (TX) and consolidated Surprise (AZ) to one location New
Inventory MixCurrent as of Aug ’24~85% MY2024 new inventory as of Q1 26% MY2025; 69% MY2024; <140 MY2023 units; >75% towables More current model year; towable mix up

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2024)Trend
Demand/Macro SeasonalityQ4 2023: Challenging environment; anticipated Q1 pre-tax loss then profitability . Q1 2024: expected seasonal volume lift did not materialize .July run rate similar to end of June; expect normal seasonality with slow Aug/Sep given FL/AZ footprint Persistent weakness with typical seasonality
Inventory Health/MixQ4: >80% current MY inventory . Q1: ~85% MY2024 .26% MY2025, 69% MY2024; >75% towables; <140 MY2023 Improving currency; towable mix rising
Used Unit ProcurementQ1: Focus to procure more used units .Trade-ins off ~50% vs historical; increased direct procurement; consignment >60% of July units Greater reliance on direct/consignment sourcing
Cost ReductionsQ4/Q1: Operational focus, no quantified run-rate.Implemented Aug cost cuts targeting ~$25M annual savings Accelerating cost actions
Financing/Liquidity & CovenantsQ4: Covenant waivers and $35M mortgage facility . Q1: Amendment for covenant flexibility through Q1’25; +$15M mortgage/warrants .Temporary waiver executed; nonbinding $5M incremental mortgage/warrants; long-term debt presented as current; liquidity $41.37M vs $31M minimum Ongoing covenant/financing management
F&I PerformanceQ1: F&I per unit $4,919 .Same-store F&I >$5,300 per unit; +6.9% YoY Improving penetration and per-unit F&I

Management Commentary

  • “Our team has focused on maintaining healthy vehicle inventory, improving F&I per unit and achieving substantial total gross margin improvement sequentially… our same store F&I was over $5,300 per unit, up 6.9%, despite average selling prices being lower by approximately 17% on a blended basis.” — John North, CEO .
  • “Given the current unit sales volume, we have implemented further cost reduction actions in August… We anticipate these decisions will save approximately $25 million annually. We have also closed our Waller, Texas dealership, and consolidated our retail operations… in Surprise, Arizona.” — CEO .
  • “We appreciate the continued flexibility from our syndicated lenders, as well as the increased support we received from Coliseum. We believe we have adequate liquidity to continue to navigate the current macroeconomic environment.” — Kelly Porter, CFO .

Q&A Highlights

  • Seasonality and outlook: Baseline assumption for Q3 was similar run-rate to late Q2, with typical seasonal slowing in Aug/Sep given concentration in FL/AZ .
  • Inventory strategy: Focus on affordable units and judicious restocking by region; refining mix in newer stores rather than large restocking .
  • Cost savings buckets: People, marketing, floor plan; minimal cash cost to achieve, with full run-rate effects expected in Q4 .
  • Used sourcing/consignment: Increasing efforts to procure used units directly and via consignment; >60% of July units acquired through consignment, reducing floor plan costs and inventory risk .
  • Strategic transactions: Not contemplating significant store divestitures or business combinations at this time; focus on strategic financing .

Estimates Context

  • S&P Global consensus estimates for Q2 2024 were unavailable for LAZY at the time of this analysis; therefore, we cannot determine beat/miss versus SPGI consensus for revenue or EPS. Values retrieved from S&P Global were unavailable due to mapping constraints.
  • Third-party transcript summaries reported misses versus non-SPGI estimates; however, in line with methodology, we anchor comparisons on SPGI and note the unavailability .

Key Takeaways for Investors

  • Sequential margin and per-unit profitability improved despite lower ASPs; sustaining F&I per unit momentum and a towable-heavy, current-model inventory should support gross margin stability into seasonally slower months .
  • The ~$25M annual cost-reduction program is a near-term catalyst; look for Q4 realization in SG&A and operational metrics, with potential cash flow improvements .
  • Liquidity runway is supported by lender waivers and incremental mortgage financing (including a nonbinding $5M advance with warrants), but continued covenant management remains a key execution risk; monitor amendments and classification of debt .
  • Demand remains soft and trade-in activity ~50% below historical levels; direct and consignment used sourcing strategies can mitigate inventory risk and floor plan costs .
  • Expect typical seasonal slowing in Aug/Sep; with heavy exposure to FL/AZ markets, focus on pricing discipline, mix optimization, and service/F&I attachment rates .
  • Watch for inventory currency and towable mix to continue improving, potentially aiding margins even if ASPs remain pressured .
  • Strategic posture remains “no significant divestitures or business combinations”; expect financial rather than structural levers near term .