RideNow Group (RDNW) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue declined 12% year-over-year to $336.8 million, reflecting industry headwinds, lower pre-owned and new vehicle sales, and cautious consumer demand.

• Net loss narrowed to $0.7 million from $13.6 million in Q2 2023, with loss per share improving to $(0.02) from $(0.83), driven by significant cost reductions.

• Operating income improved to $15.4 million from $0.8 million in Q2 2023, reflecting cost savings and operational efficiency.

• Positive free cash flow was delivered in the first half of 2024, totaling $28.2 million, compared to negative $11.6 million in the prior year.

• Opened the first pre-owned center in Houston, with further growth via acquisitions and greenfield opportunities under consideration.

Financial highlights

• Gross profit fell 15.5% year-over-year to $89.9 million; adjusted EBITDA decreased 19.8% to $16.2 million.

• SG&A expenses dropped $28.9 million year-over-year, with adjusted SG&A totaling $70.8 million (78.7% of gross profit), a 19.4% decrease.

• Powersports dealership group retailed 16,800 major units, down 12.8% year-over-year; new unit gross margin was 12.2% (down from 15.4%), pre-owned gross margin improved to 17% (up from 14.5%).

• Parts, services, and accessories revenue was $56.9 million with $26.2 million gross profit; financing and insurance revenue reached $29.7 million, with GPU up 2.7% year-over-year.

• Ended the quarter with $71.1 million in total cash and restricted cash; non-vehicle debt was $209.1 million; total debt at June 30, 2024 was $543.1 million.

Outlook and guidance

• Management remains focused on Vision 2026, targeting annual revenue over $1.7 billion, Adjusted EBITDA above $150 million, and adjusted free cash flow of $90 million or more.

• Expectation to reduce new inventories by $60 million by year-end and to continue positive free cash flow.

• Management expects current cash and operating cash flow to be sufficient for at least the next twelve months, but notes potential need for additional financing depending on business conditions.

• No formal top-line guidance provided, but Q3 is expected to remain strong before a seasonal Q4 decline.