LMP Automotive Holdings, Inc. (NASDAQ:LMPX) (“LMP” or 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 third quarter
2020 financial results for the period ended September 30, 2020. As
previously announced, Management will hold a conference call at
4:30p.m. ET today to review and discuss the Company's business and
results.
Summary of Q3 2020 Results All financial
comparisons stated below are versus Q2 2020, unless otherwise
noted
- Revenue totaled $13.371 million, an increase of 73%
- Total gross profit was $1.121 million
- Gross profit margin was 8.4%
- Net loss was $752,000, or ($.08) per share based on 9.92
million weighted average shares outstanding.
- Cash, shareholder equity, and current shares outstanding at the
end of the quarter was $3,330,118 $31,629,124, and 9,985,880,
respectively.
- Adjusted EBITDA1 was ($68) thousand or ($0.01) per share.
- Adjusted EBITDA margin was (0.5%).
- Adjusted net loss was $541,000, or ($0.05) per share.
Third Quarter 2020 Financial Results
Discussion All financial comparisons stated below are
versus Q2 2020, unless otherwise noted
Total revenue in the third quarter of 2020
increased 73% to $13.371. million, compared to $7.715 million in
the second quarter of 2020. The growth in sequential revenue in the
third 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 third quarter of 2020
decreased 30% to $1.121 million, compared to $1.608 million in the
second quarter of 2020 primarily driven by the higher mix of sales
versus subscriptions and ‘sales-type’ lease contracts.
The Company’s SG&A expenses were $881,538
during the three-month period ended September 30, 2020, an increase
of $206,403 versus $675,135 during the three-month period ended
June 30, 2020. The increase is mainly due to expenses related to
payroll of approximately $95,000 to build our management team and
outside services of approximately $83,000.
Acquisition, consulting, and legal expenses were
$419,322 during the three months ended September 30, 2020, as
compared to $280,650 during the previous three-month period ended
June 30, 2020 due to increased activity.
Net loss in the third quarter of 2020 totaled
$752,087, or a loss of $0.08 per share, compared to a net income of
$216,102, or a profit of $0.02 per share, in the second quarter of
2020. Total shares outstanding as of September 30, 2020 were
9,985,880, versus 9,924,506 on June 30, 2020.
Cash totaled $3,330,118 at September 30, 2020.
This represented a decrease of $14,320,320 from $17,650,438 at June
30, 2020. The decrease was primarily the result of vehicle
purchases, purchase of real estate for our dealership location and
escrow deposits for contracted dealership and related real estate
acquisitions.
Additional Third
Quarter 2020 HighlightsAll financial comparisons
stated below are versus Q2 2020, unless otherwise noted.
Q3 2020 GAAP
Results
- Revenue of $13,371,336, an increase of $5,655,572 as compared
to Q2 2020;
- Subscription fees revenue of $430,760, as compared to $505,931
in Q2 2020;
- Total gross profit of $1,121,360, as compared to $1,608,905 in
Q2 2020;
- Net loss of $752,087 a decrease of $968,189 as compared to Q2
2020;
- Net automotive inventory was $9,156,854 at the close of the
third quarter of 2020;
- Net loss per share of $0.08, 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 9,985,880 shares; and
- Stockholder equity at the end of the third quarter was $31.6
million, a decrease of $575 thousand from Q2 2020.
Q3 2020 Non-GAAP
ResultsAll financial comparisons stated below are versus
Q2 2020, unless otherwise noted. .
- Adjusted EBITDA2 was ($68,833), a decrease of $693,950 as
compared to Q2 2020;
- Adjusted Net (Loss) Income was (541,248), a decrease of
$782,843 as compared to Q2 2020;
- Subscription Leasing margin1 increased from 82.5% to 83.2% as
compared to Q2 2020; an increase of 1%
- Vehicle Sales Margins1 decreased from 13.8% to 3.9% as compared
to Q2 2020, a decrease of 9.9%
2020 Outlook
Sales
LMP Management is positioning the business for strong growth in
2021. We are aiming to close several of our contracted acquisitions
previously announced this quarter and expect to have their
inventory integrated to our e-commerce platform and App,
lmpmotors.com and lmpsubscriptions.com within weeks of closing and
launch our hybrid e-commerce model of home delivery, site-to-store,
and ship-from-store. We expect upon close; the acquisitions will be
immediately accretive to our earnings.
We intend on placing initial orders amounting to
over $100M for new 2021 model vehicle inventory for our flexible
subscription and leasing offerings and expect deliveries beginning
this quarter and throughout 2021 for distribution from our
Southeast and Northeast hubs.
Management believes that the unprecedented
demand for new and used vehicles as a result of a combination of
the pent-up demand caused by the pandemic and OEM shutdowns has
created extreme volatility in vehicle prices and presents abnormal
downside risk to values when supply normalizes. We have chosen to
limit our pre-owned vehicle inventory and order new vehicles as
noted above to mitigate the risk of a material inventory impairment
in 2021 as well as conserve cash for our anticipated closings of
certain of our contracted acquisitions.
LMP believes COVID-19 has caused a reevaluation
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 compared to 32% before. LMP believes this shift
began a while ago and is here to stay. We believe our company is
well positioned to benefit from this paradigm shift.
E-commerce
We expect to launch our e-commerce sales App
that will be integrated with our existing subscription App
available in the Apple App store and Google Play stores in
December. We expect this to further enhance our customer
experience, as well as onboarding and processing customer orders
quicker, resulting in an increase in future sales.
We believe LMP’s subscription and e-commerce
technology overlayed at dealerships we intend to acquire, and our
current and future distribution hubs will continue to demonstrate
the value of our hybrid model of home delivery, site-to-store, and
ship-from-store.
Acquisitions
We have received multiple attractively priced,
acceptable financing proposals to finance some of our contracted
dealership acquisitions and intend on selecting finance partners
shortly.
Conference CallManagement will host an investor
conference call at 4:30 p.m. ET on Thursday, November 12, 2020 to
discuss the Company’s Third Quarter 2020 Financial Results and
conclude with Q&A from participants. All interested parties can
join the call by dialing (877) 407-3982 or (201) 493-6780. A
webcast of the call may be accessed at:
http://public.viavid.com/index.php?id=141993
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 Thursday, November 26, 2020 by dialing (844) 512-2921 or
(412) 317-6671 and entering passcode 13712001.
Non-GAAP Financial MeasuresThe
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 |
|
Q3 2020 |
|
Q2
2020 |
|
Change |
Net income (loss) |
|
$ |
(752,087 |
) |
|
$ |
216,102 |
|
|
|
|
Interest expense |
|
|
161,188 |
|
|
$ |
71,583 |
|
|
|
|
Tax |
|
|
- |
|
|
$ |
- |
|
|
|
|
Depreciation and amortization
expense – |
|
|
|
|
|
|
|
|
|
|
|
Property, equipment, leasehold improvements, and intangibles |
|
|
167,103 |
|
|
$ |
143,094 |
|
|
|
|
Depreciation expense – fleet
vehicles |
|
|
171,719 |
|
|
$ |
134,209 |
|
|
|
|
Inventory impairment |
|
|
- |
|
|
$ |
- |
|
|
|
|
Acquisition and financing
related costs |
|
|
183,244 |
|
|
$ |
60,129 |
|
|
|
|
Adjusted EBITDA |
|
$ |
(68,833 |
) |
|
$ |
625,117 |
|
|
$ |
(693,950 |
) |
Adjusted EBITDA margin |
|
|
(0.5 |
)% |
|
|
8.1 |
% |
|
|
(111 |
)% |
Adjusted Net Income (Loss)
Reconciliation
of Adjusted Net Income
(Loss) |
|
Q3 2020 |
|
Q2 2020 |
|
Change |
Net income (loss) |
|
$ |
(752,087 |
) |
|
$ |
216,102 |
|
|
|
Acquisition and financing
related costs |
|
|
183,244 |
|
|
|
60,129 |
|
|
|
Stock Option Expense |
|
|
27,595 |
|
|
|
(34,536 |
) |
|
|
Contingency Accrual |
|
|
- |
|
|
|
- |
|
|
|
Adjusted net income/(loss) |
|
$ |
(541,248 |
) |
|
$ |
241,695 |
|
|
(782,943 |
) |
Adjusted net income/(loss)
margin |
|
|
(4.0 |
)% |
|
|
3.1 |
% |
|
(324 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Q3 2020 |
|
Q2 2020 |
|
Change from Q2 2020 |
Total subscription fees |
|
$ |
430,760 |
|
|
$ |
503,782 |
|
|
|
Subscription and rental cost
of revenues |
|
$ |
(72,576 |
) |
|
$ |
(88,132 |
) |
|
|
Gross profit (loss) |
|
$ |
358,184 |
|
|
$ |
415,650 |
|
|
$ |
(57,466 |
) |
Subscription Leasing
Margin |
|
|
83.2 |
% |
|
|
82.5 |
% |
|
|
(13.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Q3 2020 |
|
Q22020 |
|
Change from Q2
2020 |
Vehicle sales revenue |
|
$ |
12,743.366 |
|
|
$ |
7,083,217 |
|
|
|
Vehicle sales cost of
revenues |
|
|
(12,249,977 |
) |
|
$ |
(6,106,859 |
) |
|
|
Gross profit (loss) |
|
$ |
493,389 |
|
|
$ |
976,358 |
|
|
$ |
(482,969 |
) |
Vehicle sales
margin |
|
|
3.9 |
% |
|
|
13.8 |
% |
|
|
(49.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Investor
Relations:
LMP Automotive Holdings, Inc.500 East Broward
Boulevard, Suite 1900Fort Lauderdale, FL
33394investors@lmpah.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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