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LMP Automotive Holdings, Inc. (LMPX)·Q2 2021 Earnings Summary

Executive Summary

  • Q2 2021 delivered a step-change in scale: revenue reached $140.0M, gross profit $26.4M, and gross margin 18.9% as acquisitions drove growth; GAAP net loss was $(1.33)M and basic EPS was $(0.42), while non-GAAP Adjusted EBITDA accelerated to $11.1M ($1.10/share) and Adjusted Net Income to $8.6M ($0.86/share) .
  • Sequentially, revenue surged from $33.0M (Q1) to $140.0M (Q2) and Adjusted EBITDA rose from $1.9M to $11.1M; vs internal Q1 guidance for Q2 ($147M revenue, $10.3M adj. EBITDA), actuals were a small revenue shortfall but an EBITDA beat, reflecting stronger margins and non-GAAP adjustments from acquisitions .
  • Management raised medium-term ambition via M&A: upon closing announced deals, run-rate targets are ~$1.4B revenue and $88M Adjusted EBITDA, with a broader goal of 80–100 locations and $6.5–$7.8B revenue / $317–$376M Adjusted EBITDA over time; near-term 2H annualized outlook remains ~$610M revenue and $44M Adjusted EBITDA .
  • Key catalysts: continued industry supply-demand imbalance benefiting margins, aggressive acquisition pipeline, dealership density expansion, and e-commerce platform build-out; note discrepancy between press release and call on cash including escrow ($27.6M vs $97.6M), which requires follow-up given potential transcription or reporting variance .

What Went Well and What Went Wrong

  • What Went Well

    • Rapid scale-up from acquisitions: revenue grew to $140.0M (+$132.3M YoY), gross profit to $26.4M, and gross margin expanded to 18.9%; Adjusted EBITDA reached $11.1M and Adjusted Net Income $8.6M as acquired stores contributed .
    • Strategic M&A pipeline and run-rate ambitions: “Upon closing... run rate to be approximately $1.4 billion [revenue], $88 million [Adjusted EBITDA], and $8.04 [Adjusted EBITDA per share]” and broader goal of $6.5–$7.8B revenue and $317–$376M Adjusted EBITDA under an 80–100 location footprint .
    • Favorable industry backdrop supporting margins: “Demand continues to outpace supply for new vehicles... we expect this to continue into 2022” which bolsters pricing and service economics .

  • What Went Wrong

    • GAAP profitability headwinds: despite operating income of $1.55M, GAAP net loss was $(1.33)M and basic EPS $(0.42), driven by higher interest, SG&A from acquisitions, and noncontrolling interest effects .
    • Operating expenses spiked with integration: total OpEx rose to $24.5M vs $0.96M YoY, reflecting acquisition-related costs and acquired store operating expenses, pressuring GAAP earnings .
    • Data inconsistency risk: press release cited cash including escrow of $27.6M as of August 10, while the call referenced $97.6M, necessitating reconciliation before capital deployment assessments .

Financial Results

MetricQ2 2020Q1 2021Q2 2021
Revenue ($USD Millions)$7.716 $33.0 $140.032
Gross Profit ($USD Millions)$1.387 n/a$26.426
Gross Profit Margin (%)18.0% 18.1% (company remark) 18.9%
Operating Income ($USD Millions)$0.288 n/a$1.546
EBITDA ($USD Millions)$0.565 n/a$1.085
Net Income - (IS) ($USD Millions)$0.216 n/a$(1.333)
Basic EPS ($USD)$0.02 n/a$(0.42)
Total Operating Expenses ($USD Millions)$0.956 n/a$24.541
Cash And Equivalents ($USD Millions)n/an/a$24.3

Segment Revenue Breakdown

Segment RevenueQ2 2020 ($USD)Q2 2021 ($USD)
New Vehicle Retail$0.000 $70,682,739
Used Vehicle Retail$1,077,481 $31,774,745
Used Vehicle Wholesale$1,505,920 $20,258,677
Finance & Insurance, net$0.000 $4,666,221
Service, Body & Parts$0.000 $9,669,150
Fleet and Other$5,132,363 $2,980,227
Total Revenues$7,715,764 $140,031,759

KPIs (GAAP and Non-GAAP)

KPIQ2 2020Q2 2021
Adjusted EBITDA ($USD Millions)$0.679 $11.053
Adjusted EBITDA per Share ($USD)$0.07 $1.10
Adjusted Net Income ($USD Millions)$0.330 $8.635
Adjusted EPS ($USD)$0.03 $0.86
EBITDA ($USD Millions)$0.565 $1.085
Gross Profit Margin (%)18.0% 18.9%

Notes:

  • Non-GAAP adjustments included noncontrolling interests/employee bonuses & stock comp ($7.305M), warrant liability ($0.939M), acquisition expenses ($0.324M), consulting/legal/auditing ($1.298M), equity-based comp ($0.102M), and prior-year legal settlement, reconciled to GAAP .
  • Interest expenses and other items: floorplan interest $(0.223)M, other interest expense $(1.071)M, other income $(0.956)M in Q2 2021 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2021$147M (Q1 call) $140.0M actual Lower vs guide
Adjusted EBITDAQ2 2021$10.3M (Q1 call) $11.1M actual Raised vs guide
Revenue (annualized)2H 2021~$610M (Q1 call) ~$610M reiterated Maintained
Adjusted EBITDA (annualized)2H 2021~$44M (Q1 call) ~$44M reiterated Maintained
Run-rate RevenuePost-announced acquisitions~$910M (Q1 call) ~$1.4B (Q2 PR) Raised
Run-rate Adjusted EBITDAPost-announced acquisitions~$53M (Q1 call) ~$88M (Q2 PR) Raised
Network ExpansionThrough end of next year80–100 locations (goal) 80–100 locations (on track) Maintained

Announced Acquisition Contribution Guidance

DealMarketExpected Annualized Revenue ($USD)Expected Annualized Adjusted EBITDA ($USD)
GM & Nissan dealershipsTexas~$250M~$27M
Kia dealership + real estateConnecticut~$40M~$1.9M
Chrysler Dodge Jeep Ram + real estateNew York~$80M~$2.6M
Kia dealershipNew York~$82M~$2.7M

Earnings Call Themes & Trends

TopicQ4 2020 (Prior)Q1 2021 (Prior)Q2 2021 (Current)Trend
Supply/demand backdropIndustry transformation underway; acquisitions ramp to >$500M annualized revenue Expect tight supply and elevated demand to persist for several years, supporting margins “Demand continues to outpace supply... expect this to continue into 2022” Strengthening tailwind
M&A strategy & footprintPlan to add 80–100 dealerships; multi-year revenue/EBITDA ambitions Outlook lifted: $535M FY21 revenue to $580–$590M in FY22; Q2 guide $147M revenue, $10.3M adj. EBITDA Run-rate ambitions increased to ~$1.4B revenue / $88M adj. EBITDA; detailed new deals in TX/CT/NY Upward revision
E-commerce platformFeatures roadmap, app timeline and inventory integration across acquisitions Cross-pollination driving organic users up ~85%; no paid ads; margin-positive Continued platform build with online financing, trade-in offers, delivery scheduling Continued execution
Subscriptions (flex lease)Transforming mix; modest contribution Paused due to OEM fleet supply constraints; redeploy capital to dealerships Focus remains on higher ROIC in franchise stores vs subscriptions Deprioritized
Regional expansionInitial acquisitions across multiple regions Focus on domestic and economy imports at lower multiples in TX/Midwest/East Coast Signed definitive agreements in TX/CT/NY adding density Accelerating

Management Commentary

  • “On an annualized basis in the second half of this year, we are expecting revenue to be approximately $610 million and Adjusted EBITDA of $44 million or $4.38 per share.” – Sam Tawfik, CEO .
  • “Upon closing of all the acquisitions... run rate to be approximately $1.4 billion [revenue], $88 million [Adjusted EBITDA], and $8.04 [Adjusted EBITDA per share].” – Sam Tawfik, CEO .
  • “Demand continues to outpace supply for new vehicles. We expect this to continue into 2022...” – Richard Aldahan, COO .
  • “Our pipeline of prospective dealership acquisitions is more active than we have ever seen... on track to achieve our goal of 80 to 100 locations within our network by the end of next year...” – Sam Tawfik, CEO .
  • E-commerce roadmap includes certified trade-in offers, real-time financing, protection plans, and scheduling delivery/pickup to improve SG&A efficiency .

Q&A Highlights

  • Valuation/stock recognition: Management emphasized execution and earnings growth as the driver of stock value—“the stock follows earnings”—with focus on business plan delivery .
  • Limited external analyst participation in Q2; prior quarters discussed M&A pipeline, subscriptions pause due to OEM constraints, and service margins benefitting from vehicle aging .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates (EPS, revenue, EBITDA) for Q2 2021 via S&P Global; data was unavailable due to missing CIQ mapping for LMPX. As a result, beats/misses versus consensus cannot be quantified at this time [SpgiEstimatesError; attempted].
  • Internal guidance comparison indicates actual Q2 revenue ($140.0M) was modestly below the $147M outlook, while Adjusted EBITDA ($11.1M) exceeded the $10.3M outlook, suggesting stronger margins/non-GAAP adjustments than anticipated .

Key Takeaways for Investors

  • Acquisitions are the primary growth engine: outsized sequential revenue and Adjusted EBITDA gains validate the partner-led consolidation model; near-term focus should be on closing timelines and integration cadence .
  • Industry supply constraints remain a margin tailwind; expect continued strength in pricing, F&I, and service, underpinning profitability into 2022 .
  • Monitor GAAP-to-non-GAAP bridge: significant adjustments (warrant liability, bonuses/stock comp, acquisition-related expenses) drove the swing to $11.1M Adjusted EBITDA; persistence and magnitude of these adjustments will shape quality-of-earnings debates .
  • Watch leverage and interest expense: other interest expense of $(1.07)M and floorplan interest of $(0.223)M in Q2 highlight the cost of scaling via acquisitions; interest trajectory will matter for GAAP profitability paths .
  • Resolve cash discrepancy: reconcile $27.6M vs $97.6M cash including escrow figures between press release and call before concluding on liquidity available for M&A closings .
  • Near-term trading: headlines on deal closings, run-rate updates, and continued margin strength likely serve as catalysts; lack of consensus estimate visibility may reduce “beat/miss” trading dynamics until SPGI mapping is available .
  • Medium-term thesis: delivery on network expansion (80–100 locations) and execution of e-commerce features should sustain growth and operating leverage; focus on ROIC of acquired dealerships and stability of demand/supply backdrop .