LMP Automotive Holdings, Inc. Announces Record Growth and Third Quarter Financial Results
Revenue Increased 73% to $13.4M
Gross Profit was $1.1M
Shareholder Equity of $31.6M
Adjusted EBITDA was ($0.01) Per Share
Adjusted Net Loss was ($.05) Per Share
All financial comparisons stated below are versus Q2 2020, unless otherwise noted
FORT LAUDERDALE, Fla., Nov. 12, 2020 (GLOBE NEWSWIRE) -- 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 Highlights
All 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 Results
All 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 Call
Management 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 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 EBITDA
The 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 | 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 | 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 Margin
The 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 | |||||||||||||
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 Margin
The 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 | |||||||||
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 1900
Fort Lauderdale, FL 33394
investors@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.
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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.”
