RideNow Group (RDNW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $295 million, down 12.7%–13% year-over-year, with net loss from continuing operations improving to $11.2 million from $16.5 million in Q3 2023.

• $30 million in incremental capital commitments from top shareholders, including a $10 million fully backstopped equity rights offering, support full repayment of convertible notes due January 1, 2025, and liquidity.

• Cost savings initiatives reduced SG&A expenses by $19.1 million for the quarter, improving SG&A as a percentage of gross profit by 370 basis points.

• Positive free cash flow and operating cash inflows for the first nine months of 2024, with significant progress in inventory reduction and cost savings.

• Focus remains on operational excellence, cost optimization, and achieving Vision 2026 goals despite a challenging macro environment.

Financial highlights

• Q3 2024 revenue was $295 million (down from $338.1 million in Q3 2023); Adjusted EBITDA was $6.8 million, down 26.1% year-over-year.

• Gross profit for Q3 was $74.3 million, down 19.2% year-over-year; operating income for Q3 was $5.3 million (vs. $0.2 million loss prior year).

• Adjusted SG&A expenses were $64.3 million (86.5% of gross profit), a 21.7% decrease from the prior year.

• Cash inflows from operations were $68.6 million for the nine months ended September 30, compared to outflows of $8.5 million in the prior year.

• Ended Q3 with $66.7 million in total cash and $217 million in non-vehicle net debt.

Outlook and guidance

• Confident in achieving the $50 million new inventory reduction target by year-end.

• Targeting Adjusted SG&A at 75% of gross profit as part of Vision 2026.

• Long-term goals include annual revenue over $1.7 billion, Adjusted EBITDA above $150 million, and free cash flow of $90 million or more.

• Management expects current cash, operations, and new capital commitments to be sufficient for at least the next twelve months, but notes potential need for additional financing if conditions change.

• Expect further improvement in SG&A as a percent of gross profit in 2025 due to ongoing cost optimization.