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Lazydays Holdings, Inc. (LAZY)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 revenue fell 18.7% year over year to $198.0M, with total gross margin at 21.6% versus 22.3% in Q4 2022; GAAP diluted EPS was -$7.59, driven largely by a non-cash goodwill impairment of $118.0M .
  • Adjusted diluted EPS was -$1.09 (excludes goodwill impairment, LIFO, acquisition expenses), and adjusted net loss was $13.8M versus adjusted net income of $0.9M in Q4 2022 .
  • Management highlighted sequential unit volume improvement in Dec–Feb, healthier inventory (>80% current model year), and improving vehicle gross profit from December to February; 2024 focus is volume/store performance with an expectation of a Q1 pre-tax loss and positive full-year net income and operational cash flow .
  • Liquidity/capital structure actions included a new $35.0M mortgage facility, covenant waivers through Q2 2024, and year-end cash of $58.1M (approximately $45M as of March 7, 2024); management expects operational cash flow positive for the remainder of 2024 .
  • Likely stock reaction catalysts: the $118M goodwill impairment and directional guidance (pre-tax loss in Q1 but return to profitability thereafter), alongside tangible signs of inventory normalization and early-2024 operational cash flow improvements .

What Went Well and What Went Wrong

What Went Well

  • Unit volumes increased meaningfully both sequentially and year over year in December, January, and February, supported by higher marketing and aggressive discounting of 2022–2023 inventory; vehicle sales gross profit improved from December to February and current model year exposure exceeded 80% of new inventory (CEO) .
  • The service/body/parts segment expanded margin in Q4 (53.3% vs 46.9% YoY, +640 bps), supporting gross profit stability amid retail margin pressure .
  • Early 2024 operational cash flow turned positive; CFO cited ~$45M cash as of March 7 and expects operational cash flow positive for the remainder of 2024 (with covenants relaxed and waivers in place) .

What Went Wrong

  • Q4 revenue declined 18.7% YoY to $198.0M; new vehicle ASP fell 14.3% YoY, average gross profit per new unit declined 33% YoY, and pre-owned average gross profit per unit fell 31% YoY, reflecting pricing pressure and mix normalization .
  • Floor plan interest expense more than doubled YoY to $7.2M in Q4; total other expense rose 175.5% YoY, amplifying losses amid higher rates and larger inventory balances .
  • A $118.0M non-cash goodwill impairment led to net loss of $108.0M and GAAP diluted EPS of -$7.59; adjusted diluted EPS was -$1.09, highlighting significant non-GAAP adjustments required to assess core performance .

Financial Results

Quarterly Trend (Q2 2023 → Q3 2023 → Q4 2023)

MetricQ2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$308.4 $280.7 $198.0
Diluted EPS (GAAP) ($)$0.12 -$0.48 -$7.59
Adjusted Diluted EPS ($)$0.14 -$0.29 -$1.09
Total Gross Margin (%)22.0% 19.4% 21.6%

Q4 YoY Comparison (Q4 2022 → Q4 2023)

MetricQ4 2022Q4 2023
Revenue ($USD Millions)$243.5 $198.0
Diluted EPS (GAAP) ($)-$0.24 -$7.59
Adjusted Diluted EPS ($)-$0.02 -$1.09
Total Gross Margin (%)22.3% 21.6%

Segment Revenue Breakdown

Segment ($USD Millions)Q2 2023Q3 2023Q4 2023
New vehicle retail$182.8 $172.9 $99.4
Pre-owned vehicle retail$91.0 $75.1 $72.4
Vehicle wholesale$1.7 $2.1 $2.5
Finance and insurance$17.7 $16.5 $11.1
Service, body and parts and other$15.2 $14.2 $12.7
Total Revenue$308.4 $280.7 $198.0

KPIs

KPIQ2 2023Q3 2023Q4 2023
Retail units sold – New1,979 2,046 1,264
Retail units sold – Pre-owned1,388 1,162 1,164
Retail units sold – Total3,367 3,208 2,428
ASP – New ($)$92,346 $84,505 $78,600
ASP – Pre-owned ($)$65,555 $64,595 $62,228
Avg gross profit per unit (ex-LIFO) – New ($)$12,552 $9,148 $10,044
Avg gross profit per unit (ex-LIFO) – Pre-owned ($)$13,461 $13,224 $10,812
F&I per unit ($)$5,029 $4,954 $4,357
Floor plan interest expense ($USD Millions)$5.8 $6.3 $7.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Pre-tax profitabilityQ1 2024Not disclosedAnticipates pre-tax loss in Q1, return to profitability thereafter New (directional)
Net incomeFY 2024Not disclosedAnticipates positive net income for full year 2024 New (raised vs no prior)
Operational cash flowFY 2024Not disclosedAnticipates positive operational cash flow for full year 2024 New (raised vs no prior)
Inventory healthCurrentNot disclosed>80% of new inventory is current model year units Update (improving mix)
Store openings/expansion revenueSteady stateNot disclosedNewly acquired Orangewood RV (AZ) and RVzz (UT) plus Ft. Pierce (FL) expected to add ~$110M at steady state New (additive)
Greenfield Surprise, AZ revenueSteady stateNot disclosedSurprise, AZ dealership expected to add ~$50M at steady state New (additive)
Liquidity & covenants4Q23–2Q24Standard covenantsWaiver for 4Q23 and first two quarters of 2024; relaxed in Q3; return to standard by YE 2024 Relaxed (temporary)
Cash balanceAs of Dec 31, 2023 and Mar 7, 2024Not disclosedCash $58.1M at year-end; ~$45M as of Mar 7 Update

Earnings Call Themes & Trends

Note: No Q4 2023 earnings call transcript was available; company scheduled a call on March 8, 2024 .

TopicPrevious Mentions (Q-2: Q2 2023)Previous Mentions (Q-1: Q3 2023)Current Period (Q4 2023)Trend
Macro/industry demand & pricingRevenue -17% YoY; significant margin compression; ASP normalization; liquidity actions initiated Revenue -16% YoY; margins compressed; continued headwinds; rights offering registered to support growth/liquidity “Challenging operating environment” in Q4; aggressive discounting improved volumes; early-2024 gross profit improving (CEO) Stabilizing volumes; margins recovering from lows
Inventory health/mixDays supply elevated; new inventory days supply ~180; pre-owned ~83 New days ~171; pre-owned ~133 >80% new inventory current model year; new days ~380; pre-owned ~132 Mix improving; elevated days supply
Interest expense & covenantsFloor plan interest rose sharply; metrics within covenants Floor plan interest up; leverage and current ratio within thresholds Floor plan interest $7.2M in Q4; covenant waivers through Q2 2024; relaxed in Q3 Elevated interest; covenant flexibility
Corporate development & footprintM&A (Buddy Gregg), mortgages ($30.6M), greenfields on track Acquisitions (Buddy Gregg, Century RV), openings (Wilmington, OH), closures (Maryville, Burns Harbor) Acquisitions (Orangewood RV, RVzz), opening Ft. Pierce; Surprise, AZ opening; 25 locations nationwide Continued expansion/repositioning
Branding/digital——Rebranding in Jan 2024; new website, logos; ticker changed to GORV Enhanced digital retailing focus
Service/body/parts segmentGross margin ~50.5% (Q2) Gross margin ~50.0% (Q3) Gross margin 53.3% (Q4), +640 bps YoY Improving

Management Commentary

  • CEO John North: “The fourth quarter of 2023 proved to be a challenging operating environment... after increasing our marketing budget and aggressively discounting 2022 and 2023 inventory our unit volumes increased meaningfully both sequentially and year-over-year in December, January and February... we have seen gross profit on vehicle sales improve from December to February... our new inventory is comprised of more than 80% current model year units... adjusted cash flow from operations is positive this quarter to date.”
  • CEO (2024 outlook): “We anticipate a pre-tax loss in the first quarter and a return to profitability thereafter... For the full year 2024, we anticipate both positive net income and operational cash flow.”
  • CFO Kelly Porter: “With cash on hand of $45 million as of today, we believe we have a strong foundation... we have generated positive operational cash flow for the first 70 days of 2024... and we expect to be operationally cash flow positive for the remainder of the year... [credit facility] relax our financial covenants...”

Q&A Highlights

  • Q4 2023 earnings call transcript not available via our document tools; the company scheduled a call at 8:30 AM ET on March 8, 2024, but the transcript was not accessible here. As a result, Q&A details and any guidance clarifications from the live session are unavailable .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q4 2023 revenue and EPS was unavailable through our estimates tool for LAZY and its subsequent ticker GORV at this time (mapping/limit errors encountered). Accordingly, we cannot present “vs. estimates” comparisons and recommend consulting S&P Global directly for consensus data where available.

Key Takeaways for Investors

  • Non-cash impairment obscured core trends; adjusted EPS (-$1.09) and improving early-2024 operational cash flow suggest near-term normalization potential once legacy inventory clears and discounting moderates .
  • Inventory is healthier (>80% current model year), and sequential volume strength into early 2024 plus improving vehicle gross profit from Dec–Feb are constructive for margin trajectory .
  • Elevated floor plan interest remains a headwind; covenant waivers/relaxations through Q2/Q3 2024 create runway to execute store performance improvements and volume recovery .
  • Service/body/parts margin strength (53.3% in Q4) provides earnings ballast amid retail ASP/margin pressure; monitor mix shift and service capacity utilization .
  • Expansion/rebranding could support demand capture and digital conversion; steady-state revenue adds (~$110M acquisitions; ~$50M Surprise, AZ) should contribute as operations ramp .
  • Near-term trading: volatility likely around impairment optics and lack of detailed consensus comparisons; watch monthly unit/margin updates and cash flow progression (management highlighted early-2024 positive operational CFO) .
  • Medium-term thesis: execution on footprint optimization, inventory normalization, and cost discipline (SG&A and interest) will be pivotal to returning to sustainable profitability and cash generation in FY2024 as guided .