RumbleON, Inc. (NASDAQ:RMBL) Q3 2023 Earnings Call Transcript

Operator: [Operator Instructions] Our first questions come from the line of Eric Wold with B. Riley Securities. Please proceed with your question.

Eric Wold: Thanks. Good morning. Just couple of questions. Following up on the inventory comments. Given the current guidance that you have for this year, where would you expect inventories to settle out at year-end as you work to push through some of the non-current model year inventory. And then as you think about returning to a normal cadence in ’24. How should we think about when you start building inventory back up again into ’24, what should look like throughout the year.

Mark Tkach: Well, we feel good currently with our inventory levels. We’re doing well in moving the ’23 product. I think we probably have less than 9% of our product is below ’23 model year. And we’ve already done two large campaigns with two of our larger manufacturers moved a lot of that product out. They are assisting, as I said earlier, with incentives, rebates, some additional buydown on the financing, so we’re seeing good activity on those promotions. And by the end of the year, I think it was our target to really try to get our used inventory lined up, I think we’re in a really good shape.

Blake Lawson: Hi, Eric. This is Blake. I would just add. From a dollar perspective, I believe not much will change, but we are working, certainly, like Mark mentioned on the mix to make room for the 2024 model year. And then on the used side, we’ve still got some overhang there. Again, the dollars are probably in line and the days supply are in line, but we’ve got some aging issues, and we hope to flush that out in Q4. We plan to flesh that out in Q4 and be ready for the selling season in 2024 in the spring.

Eric Wold: Got it. Thank you. And then, second question is kind of on the comments earlier on the acquisition pipeline and once you complete the rights offering and you’ve got some targets that are expected to close in Q1 and then more throughout the remainder of ’24. Just give us a sense of kind of what the environment looks like for acquisitions right now. You have the number of willing sellers increasing, you’re seeing a greater pool of potential targets coming up because of the environment we’re in? And kind of what does that mean for maybe the size of an average target in your pipeline and valuation multiples?

Mark Tkach: Well, we’ll keep them very busy on determining which direction we want to go. We have lots of options, but we really want to focus on what works best for the company, in setting up our platform. I think these will close easily in the first quarter, the two that we’re working on currently and the pipeline will carry us throughout the year. I mean there’s plenty of opportunities, Eric. It’s really just a matter of focusing on what works best for our company and our platform.

Blake Lawson: Yes, Eric, I think as trailing 12-month EBITDA has normalized or is coming down for a lot of [indiscernible] dealerships and stuff, there’s going to even be increased opportunities there at good values.

Operator: Thank you. Our next questions come from the line of Michael Baker with D.A. Davidson. Please proceed with your question.

Michael Baker: Hey. Thanks guys. I just wanted to ask a very big picture question. As I recall, a couple of years ago when we first started looking at you guys, the idea of the vision was RumbleON was going to sort of combine online and in-store, use the new and the customer would have visibility across the entire portfolio of product, again, new, used, online, et cetera, either walking in the store or on their computer. How has the vision changed? We’ve been through now a couple of CEO changes. What is the long-term vision for the company? How has that changed and let’s say in the last 2 years. Is that still the vision, or it seems now it’s a little bit more focused on brick-and-mortar. So just talk about what didn’t work, and what’s the vision of the company longer term?