LMP Automotive Holdings, Inc. (NASDAQ:LMPX)
(the "Company"), an e-commerce and facilities-based platform for
consumers who desire to buy, sell, subscribe for or finance
pre-owned and new automobiles, today announced its first quarter
2020 financial results for the period ended June 30, 2020. As
previously announced, Management will hold a conference call at
5:30 p.m. ET to review and discuss the Company's business and
results.
Summary of Q2 2020 Results All financial
comparisons stated below are versus Q1 2020, unless otherwise
noted
- Revenue totaled $7.716 million, an increase of 44%;
- Total gross profit was $1,521 million, an increase of 85%;
- Gross profit margin was 19.7%, an increase of 85%;
- Net income was $216 thousand, an increase of $1.936 million to
.02 per share based on 9.92 million shares issued and
outstanding;
- Net Income margin was 2.8%, an increase from (32.2%);
- Cash, shareholder equity, and current shares outstanding at the
end of the quarter was $17,650,438, $32,203,868, and 9,924,506,
respectively;
- Adjusted EBITDA1 was $625 thousand, an increase of $1.396
million to $0.06 per share;
- Adjusted EBITDA1 margin was 8.1%, an increase from (14.4)
%;
- Adjusted net income was $242 thousand, and $0.02 per
share;
- Adjusted net income margin was 3.1%;
Sam Tawfik, the Company’s Chairman and Chief
Executive Officer commented, “The strong sequential improvements
throughout the quarter, coupled with our responsiveness to the
current environment, led us to the highest quarterly revenue and
earnings per share in our history. This record performance
illustrates the immense opportunity that exists within our industry
that we are exploiting through continued growth and the activation
of our e-commerce sales, subscription, and dealership acquisition
strategy. The way the team handled the dynamic and difficult
environment is a testament to what the future can bring….we have
only just begun and are extremely proud of our team,” Mr. Tawfik
added, “In July, we announced an agreement to purchase our first
Franchise Dealership located in the Southeast region of the United
States. We are seeing a robust acquisition market as we continue to
build our pipeline of prospective dealership acquisitions and
intend accelerating our acquisition strategy moving forward.
Looking forward, we are as optimistic as ever and focused on our
next-generation of innovation and growth as we roll-out e-commerce
home delivery, site-to-store, and ship-from-store delivery
strategies for our customers and demonstrate the value of our
e-commerce hybrid model at the growing list of auto dealerships we
intend to acquire”.
Tawfik concluded, “At LMP, we
intend to demonstrate rapid, efficient, and profitable expansion in
the online-centric economy. LMP is focused on acquiring dealer
groups to create concentrated clusters of dealerships to derive
maximum SG&A efficiency while expanding consumer product
and delivery optionality. At the same time, we plan on
maintaining each dealership’s local brand recognition and online
presence while simultaneously aggregating the dealership’s new and
used inventory on lmpmotors.com. By leveraging our access to
acquired dealership inventories we can create one of the largest
and most diverse online stores, providing consumers multiple
vehicle and ownership. We plan to grow revenues and earnings
of dealerships that we acquire by adding e-commerce and
subscription options for their customers as well as “tech” enabling
them. We believe this combined approach will produce continued
revenue and earnings growth for us and our shareholders.”
Second Quarter 2020 Financial Results
Discussion All financial comparisons stated below
are versus Q1 2020, unless otherwise noted
Total revenue in the second quarter of 2020
increased 44% to $7.716 million, compared to $5.350 million in the
first quarter of 2020. The growth in sequential revenue in the
second quarter of 2020 was primarily driven by the increase in
sales from ‘sales-type’ lease contracts, and increased vehicle
sales revenues.
Gross profit in the second quarter of 2020
increased 85% to $1.521 million, compared to $820,428, in the first
quarter of 2020. The growth in sequential gross profits was driven
by the gross margins recognized on sales-type lease contracts and
increased gross margins on vehicle sales revenues.
The Company’s SG&A expenses were $675,135
during the three-month period ended June 30, 2020, a decrease of
$1,025,481 versus $1,700,616 during the three-month period ended
March 31, 2020. The decrease is mainly due to expenses related to
payroll of approximately $596,000, travel costs of approximately
$202,000, contingencies of approximately $111,000, outside services
of approximately $81,000 and administrative expenses approximately
$35,000 associated with the Company’s follow-on public offering and
asset purchase in February 2020.
Acquisition, consulting, and legal expenses were
$280,650 during the three months ended June 30, 2020, as compared
to $398,270 during the previous three-month period ended March 31,
2020. The decrease in expenses in the second quarter is mainly due
to costs associated with prospective acquisition due diligence and
the Company’s follow on offering in February 2020.
Net income in the second quarter of 2020 totaled
$ 216,102, or a profit of $0.02 per share, compared to a net loss
of $1,720,188, or a loss of $0.18 per share, in the first quarter
of 2020. Total shares outstanding as of June 30, 2020 were
9,924,506, versus 9,326,054 on March 31, 2020.
Cash totaled $17,650,438 at June 30, 2020. This
represented a decrease of $372,840 from $18,023,278 at March 31,
2020. The decrease was primarily the result of vehicle
purchases.
Additional Second Quarter 2020 HighlightsAll
financial comparisons stated below are versus Q1 2020, unless
otherwise noted.
Q2 2020 GAAP Results
- Revenue of $7,715,764, an increase of $2,366,051 as compared to
Q1 2020;
- Subscription fees revenue of $505,931, as compared to $573,722
in Q1 2020;
- Total gross profit of $1,520,773, an improvement of $700,345 as
compared to Q1 2020;
- Net income of $216,102, an increase of $1,936,290 as compared
to Q1 2020;
- Net automotive inventory was $11,505,588 at the close of the
second quarter of 2020;
- Net income per share of $0.02, based on weighted average shares
of common stock outstanding of 9.9 million shares;
- Shares of common stock outstanding at the end of the quarter
was 9,924,506 shares; and
- Stockholder equity at the end of the year was $32.2 million, an
increase of $182 thousand from Q1 2020.
Q2 2020 Non-GAAP ResultsAll financial
comparisons stated below are versus Q1 2020, unless otherwise
noted.
- Adjusted EBITDA2 was $625,117, an increase of
$1,396,106 as compared to Q1 2020;
- Adjusted Net Income was $241,695, an increase of $1,261,639 as
compared to Q1 2020;
- Subscription Leasing margin1 decreased from 91.9% to 82.5% as
compared to Q1 2020; a decrease of 24.4%;
- Vehicle Sales Margins1 increased from 5.2% to 13.8% as compared
to Q1 2020, an increase of 301.4%.
2020 Outlook
Sales
LMP Management identified a sales rebound in
April, which continued to improve throughout the quarter.
Management also witnessed this sales strength continued in July
through the first part of August.
LMP believes COVID-19 has caused a re-evaluation
of shopping behavior. Many people who previously would not have
considered buying a car online are giving it a second thought. In a
recent CarGurus survey, 60% of respondents said they were open to
buying a car online vs. 32% before. LMP believes this shift began a
while ago and is here to stay.
E-commerce
We expect to launch our subscription e-commerce
mobile app available at the Apple App Store and Google Play store,
along with our next generation e-commerce website this quarter. We
expect this to enhance our customer experience, as well as
onboarding and processing customer orders quicker, which we hope
will result in an increase in future sales.
We believe LMP’s subscription and e-commerce
technology overlaid at dealerships we intend to acquire will
continue to demonstrate the value of our hybrid model of home
delivery, site-to-store, and ship-from-store.
Acquisitions
We are seeing a robust acquisition market as we
continue to build our pipeline of prospective dealership
acquisitions and intend on accelerating our acquisition strategy
moving forward, as well as integrating the inventory of our
prospective acquisition targets to our main lmpmotors.com online
store and mobile app.
Conference Call Management
will host an investor conference call at 5:30 p.m. ET on Friday,
August 14, 2020 to discuss the Company’s Second Quarter 2020
Financial Results and conclude with Q&A from participants. All
interested parties can join the call by dialing (855) 327-6837 or
(631) 891-4304. A webcast of the call may be accessed at:
http://public.viavid.com/index.php?id=141103.
An archived webcast of the conference call will
be accessible from the Investor Relations section of the company's
website, https://investors.lmpah.com/.
A telephonic replay of the conference call will be available
through Friday, August 28, 2020 by dialing (844) 512-2921 or (412)
317-6671 and entering passcode 10010651.
Non-GAAP Financial
Measures The Company has provided in this
release certain non-GAAP financial measures, including Adjusted
EBITDA, Adjusted Net Income, Subscription Leasing Margin and
Vehicle Sales Margin, to supplement its financial results that are
prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”). Management
uses these financial metrics internally in analyzing the Company’s
financial results to assess operational performance and to
determine the Company’s future capital requirements. The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for the financial
information prepared in accordance with GAAP. The Company believes
that both management and investors benefit from referring to these
financial metrics in assessing our performance and when planning,
forecasting, and analyzing future periods. The Company believes
these financial metrics are useful to investors and others to
understand and evaluate the Company’s operating results and it
allows for a more meaningful comparison between the Company’s
performance and that of competitors. Our use of Adjusted EBITDA,
Adjusted Net Income, Subscription Leasing Margin and Vehicle Sales
Margin have limitations as analytical tools, and you should not
consider these performance measures in isolation from or as a
substitute for analysis of our results as reported under
GAAP. Because of these limitations, you should consider these
financial metrics along with other financial performance measures,
including total revenues, total gross profit and net loss presented
in accordance with GAAP.
Adjusted EBITDAThe Company
defines Adjusted EBITDA as net income (loss) before interest
expense, income tax expense, depreciation (including vehicle
depreciation and impairment) and amortization, as well as one-time
costs such as acquisition and financing related costs. The
following table provides a reconciliation of Adjusted EBITDA to net
income, the most directly comparable GAAP financial measure, on a
historical basis and for each of the periods indicated.
Reconciliation
of Net Income (loss) to Adjusted EBITDA |
|
Q2 2020 |
|
Q1 2020 |
|
Change |
Net income (loss) |
|
$ |
216,102 |
|
|
$ |
(1,720,188 |
) |
|
|
|
Interest expense |
|
$ |
71,583 |
|
|
$ |
42,791 |
|
|
|
|
Tax |
|
|
- |
|
|
$ |
- |
|
|
|
|
Depreciation and amortization
expense – Property, equipment, leasehold improvements, and
intangibles |
|
$ |
143,094 |
|
|
$ |
78,434 |
|
|
|
|
Depreciation expense – fleet
vehicles |
|
$ |
134,209 |
|
|
$ |
228,763 |
|
|
|
|
Inventory impairment |
|
$ |
0 |
|
|
$ |
91,742 |
|
|
|
|
Acquisition and financing
related costs |
|
$ |
60,129 |
|
|
$ |
507,469 |
|
|
|
|
Adjusted EBITDA |
|
$ |
625,117 |
|
|
$ |
(770,989 |
) |
|
$ |
1,396,106 |
|
Adjusted EBITDA margin |
|
|
8.1 |
% |
|
|
(14.4 |
)% |
|
|
181.1 |
% |
Adjusted Net Income (Loss)
Reconciliation
of Adjusted Net Income (Loss) |
|
Q2 2020 |
|
Q1 2020 |
|
Change |
Net income (loss) |
|
$ |
216,102 |
|
|
$ |
(1,720,188 |
) |
|
|
Acquisition and financing
related costs |
|
|
60,129 |
|
|
|
507,469 |
|
|
|
Stock Option Expense |
|
|
(34,536 |
) |
|
|
79,022 |
|
|
|
Contingency Accrual |
|
|
- |
|
|
|
113,753 |
|
|
|
Adjusted net income/(loss) |
|
$ |
241,695 |
|
|
$ |
(1,019,944 |
) |
|
1,261,639 |
|
Adjusted net income/(loss)
margin |
|
|
3.1 |
% |
|
|
(20.0 |
%) |
|
123.7 |
% |
Subscription Leasing MarginThe Company
calculates Subscription Leasing Margin by deducting subscription
and rental cost of revenues from subscription fee and rental
revenues adjusted for non-recurring, material adjustments.
The following table provides a reconciliation of Subscription
Leasing Margin to subscription fee and rental revenues, the most
directly comparable GAAP financial measure, on a historical basis
and for each of the periods indicated.
Reconciliation
of Subscription Fees Revenues to Subscription Leasing
Margin |
|
Q2 2020 |
|
Q1 2020 |
|
Change from Q1 2020 |
Total subscription fees |
|
$ |
503,782 |
|
|
$ |
590,463 |
|
|
|
Subscription and rental cost
of revenues |
|
$ |
(88,132 |
) |
|
$ |
(47,704 |
) |
|
|
Gross profit (loss) |
|
$ |
415,650 |
|
|
$ |
542,759 |
|
|
$ |
(127,109 |
) |
Subscription Leasing
Margin |
|
|
82.5 |
% |
|
|
91.9 |
% |
|
|
(23.4 |
)% |
Vehicle Sales MarginThe Company calculates
Vehicle Sales Margin by deducting vehicle sales cost of revenues
and from vehicle sales revenue.
The following table provides a reconciliation of Vehicle Sales
Margin to Vehicle Sales Revenue, the most directly comparable GAAP
financial measure, on a historical basis and for each of the
periods indicated.
Reconciliation
of Vehicle Sales Revenue to Vehicle Sales Margin |
|
Q2 2020 |
|
|
Q1 2020 |
|
Change from Q1 2020 |
Vehicle sales revenue |
|
$ |
7,083,217 |
|
|
$ |
4,724,842 |
|
|
|
Vehicle sales cost of
revenues |
|
$ |
(6,106,859 |
) |
|
$ |
(4,481,581 |
) |
|
|
Gross profit (loss) |
|
$ |
976,358 |
|
|
$ |
243,261 |
|
|
$ |
733,097 |
|
Vehicle sales
margin |
|
|
13.8 |
% |
|
|
5.2 |
% |
|
|
301.4 |
% |
ABOUT LMP AUTOMOTIVE HOLDINGS, INC. –
“BUY, SUBSCRIBE, SELL AND REPEAT.”LMP Automotive Holdings,
Inc. (NASDAQ: LMPX) describes its business model as “Buy,
Subscribe, Sell and Repeat.” This means that we “Buy” pre-owned
automobiles primarily through auctions or directly from other
automobile dealers, and new automobiles from manufacturers and
manufacturer distributors at fleet rates. We “Subscribe” the
automobiles to our customers by allowing them to enter into our
subscription plan for automobiles in which customers have use of an
automobile for a minimum of thirty (30) days. LMP’s all-inclusive
vehicle subscription membership includes monthly swaps and covers
insurance, maintenance and upkeep. It offers the flexibility to
upgrade your vehicle to a more premium model or downgrade for a
lesser cost model when you like. We “Sell” our inventory, including
automobiles previously included in our subscription programs, to
customers as well, and then we “Repeat” the whole process.
Media Contact:John
MattioPresident and FounderLamnia International(203)
885-1058jmattio@lamniacom.com
For more information visit:
lmpmotors.com
FORWARD-LOOKING STATEMENTS:This press release
may contain “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, each as amended. Such statements
include, but are not limited to, any statements relating to our
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar matters that are not
historical facts. These statements may be preceded by, followed by
or include the words “aim,” “anticipate,” “believe,” “estimate,”
“expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,”
“potential,” “project,” “projection,” “seek,” “can,” “could,”
“may,” “should,” “would,” will,” the negatives thereof and other
words and terms of similar meanings. Forward-looking statements are
based on management’s current expectations and are subject to risks
and uncertainties that could negatively affect our business,
operating results, financial condition and stock value. Factors
that could cause actual results to differ materially from those
currently anticipated include: our dependence upon external sources
for the financing of our operations; our ability to effectively
executive our business plan; our ability to maintain and grow our
reputation and to achieve and maintain the market acceptance of our
services and platform; our ability to manage the growth of our
operations over time; our ability to maintain adequate protection
of our intellectual property and to avoid violation of the
intellectual property rights of others; our ability to maintain
relationships with existing customers and automobile suppliers, and
develop relationships; and our ability to compete and succeed in a
highly competitive and evolving industry; as well as other risks
described in our SEC filings. There is no assurance that any
forward-looking statements will materialize. You are cautioned not
to place undue reliance on forward-looking statements, which
reflect expectations only as of this date. We expressly disclaim
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in our expectations or any changes in events,
conditions or circumstances on which any such statement is based,
except as required by law.
SOURCE: LMP Automotive Holdings,
Inc.
1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
and Adjusted Net Income margin are non-GAAP financial measures
which are reconciled to the most directly comparable measures
calculated in accordance with GAAP under the caption “Non-GAAP
Financial Measures.”
2 Adjusted EBITDA, Adjusted Net Income, Subscription Leasing
Margin and Vehicle Sales Margin are non-GAAP financial measures
which are reconciled to the most directly comparable measures
calculated in accordance with GAAP under the caption “Non-GAAP
Financial Measures.”
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