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What changed in RideNow Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RideNow Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+244 added−256 removedSource: 10-K (2025-03-14) vs 10-K (2023-12-31)

Top changes in RideNow Group, Inc.'s 2024 10-K

244 paragraphs added · 256 removed · 171 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFollowing our organizational restructuring, our pre-owned inventory strategy, including our Cash Offer technology, is led by an experienced senior leader utilizing a centralized set of standards for acquisitions made online, in stores and through auctions. 2 Grow organically and through strategic acquisitions Our Vision 2026 plan includes growing our powersports segment both organically by adding new customers through our online and in-store locations, by adding brands to existing locations and by acquiring new strategic retail locations.
Biggest changeGrow organically and through strategic acquisitions Our plan includes growing our powersports segment both organically by adding new customers through our online and in-store locations, by adding brands to existing locations and by acquiring new strategic retail locations. Our team has substantial experience in identifying suitable acquisition candidates, negotiating purchase terms and conditions and integrating newly acquired businesses.
We have a portfolio of trademark registrations in the United States, including registrations for “RideNow,” the RideNow logo, “RumbleOn,” and the RumbleOn logo. We are the registered holder of a variety of domestic and international domain names, including “Rumbleon.com.” Seasonality The powersports industry is a seasonal business with sales strongest in the spring and summer months.
We have a portfolio of trademark registrations in the United States, including registrations for “RideNow,” the RideNow logo, “RumbleOn,” and the RumbleOn logo. We are the registered holder of a variety of domestic domain names, including “Rumbleon.com.” Seasonality The powersports industry is a seasonal business with sales strongest in the spring and summer months.
We face competition from traditional franchised dealers who sell both new and pre-owned vehicles, independent pre-owned powersports dealers, and private parties. We believe that the principal competitive factors in our industry are consumer experience (sales, delivery, service and after sales care) and quality, breadth and depth of product selection.
We face competition from traditional franchised dealers who sell both new and pre-owned vehicles, independent pre-owned powersports dealers, and private parties. We believe that the principal competitive factors in our industry are consumer experience (sales, delivery, service and after 1 Table of Contents sales care) and quality, breadth and depth of product selection.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), are available under the Investor Relations tab of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available under the Investor Relations tab of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
Our Cash Offer technology is a point of differentiation that enables us to purchase pre-owned inventory online. Express operates in the U.S. transportation services industry, which is highly fragmented. We compete against many transportation services companies, including trucking companies, freight brokers, freight forwarders, and other brokers.
Our RideNow Cash Offer technology is a point of differentiation that enables us to purchase pre-owned inventory online from customers located nationwide. Express operates in the U.S. automotive transportation services industry, which is highly fragmented with low barriers to entry. We compete against many transportation services companies, including trucking companies, freight brokers, freight forwarders, and other brokers.
Powersports Segment Our powersports business is the largest powersports retail group in the United States (as measured by reported revenue, major unit sales and dealership locations), offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products.
Powersports Segment We believe our powersports business is the largest powersports retail group in the United States offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products.
Additionally, the SEC website located at www.sec.gov contains the information we file or furnish electronically with the SEC. 4
Additionally, the SEC website located at www.sec.gov contains the information we file or furnish electronically with the SEC. 3 Table of Contents
The enactment of new laws and regulations or the interpretation of existing laws and regulations in an unfavorable way may affect the operation of our business, directly or indirectly, which could result in substantial regulatory compliance costs and civil or criminal penalties. Employees As of December 31, 2023, we had 2,357 full time and 55 part-time employees.
The enactment of new laws and regulations or the interpretation of existing laws and regulations in an unfavorable way may affect the operation of our business, directly or indirectly, which could result in substantial regulatory compliance costs and civil or criminal penalties.
We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of December 31, 2023, w e operated 54 retail locations that offer a wide variety of brands.
We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services.
Given this seasonality, we expect our quarterly results of operations, including our revenue, gross profit, net income (loss), and cash flow to vary accordingly. 3 Government Regulation Various aspects of our business are subject to federal and state laws and regulations, including state and local dealer licensing requirements, federal and state consumer finance laws, the United States Department of Transportation motor-carrier rules and regulations, federal, state and local environmental laws and regulations, including the U.S.
Government Regulation Various aspects of our business are subject to federal and state laws and regulations, including state and local dealer licensing requirements, federal and state consumer finance laws, the United States Department of Transportation motor-carrier rules and regulations, federal, state and local environmental laws and regulations, including the U.S.
We believe that our dedication to quality, simple and hassle-free transportation services, and our focus on customer relationships drive our business. Vision 2026 We expect to create long-term per-share value for our shareholders by operating the best performing, most profitable powersports retail group in the United States.
We believe that our dedication to quality, simple and hassle-free transportation services, and our focus on customer relationships are key aspects of our business. Our Long-Term Strategy We aim to create long-term shareholder value by operating the best performing, most profitable powersports retail group in the United States. To achieve these objectives, we are pursuing the following goals and strategies.
Although we believe that these independent sources are reliable, we have not independently verified and cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained herein, and our beliefs and estimates based on such data, may not be reliable.
Market and Industry Data Some of the market and industry data contained in this 2024 Form 10-K is based on independent industry publications or other publicly available information. Although we believe that these independent sources are reliable, we have not independently verified and cannot assure you as to the accuracy or completeness of this information.
This proprietary technology is a fast and efficient mechanism to offer cash for pre-owned vehicles and provides us with a unique source of market data. Our Cash Offer technology is a point of differentiation that enables us to access a nationwide market of pre-owned vehicles and introduces us to customers outside of our physical retail footprint.
Our RideNow Cash Offer technology is a point of differentiation that enables us to access a nationwide market of pre-owned vehicles and introduces us to customers outside of our physical retail footprint. Our pre-owned inventory strategy utilizes a centralized set of standards for acquisitions made online, in stores and through auctions.
We believe that leveraging our inventory within our large network is a competitive advantage in the highly fragmented powersports market with respect to OEMs and consumers. We have also centralized certain activities and decisions with respect to our inventory mix and supply.
We source new inventory from original equipment manufacturers (“OEMs”), and we invest our resources to align with their brand standards and performance objectives. We believe that leveraging our inventory within our large network is a competitive advantage in the highly fragmented powersports market with respect to OEMs and consumers.
Our team has substantial experience in identifying suitable acquisition candidates, negotiating purchase terms and conditions and integrating newly acquired businesses. We identify acquisition candidates based on a variety of factors, including authorized brands, geographic location and service offerings. Acquiring additional locations also helps us further leverage our corporate cost structure.
We identify acquisition candidates based on a variety of factors, including authorized brands, geographic location and service offerings. Acquiring additional locations also helps us further leverage our corporate cost structure. We are continually evaluating our dealership footprint and may divest locations that are no longer accretive for our business.
Use our proprietary Cash Offer technology to accelerate growth of our pre-owned inventory An expansive selection of pre-owned inventory enhances the customer experience by ensuring each visitor can find a powersports vehicle that matches his or her preference. Our Cash Offer technology directly connects us with consumers and allows us to acquire high-quality, pre-owned powersports vehicles at scale.
We have also centralized certain activities and decisions with respect to our inventory mix and supply. Leverage our proprietary RideNow Cash Offer technology to accelerate growth of our pre-owned inventory An expansive selection of pre-owned inventory enhances the customer experience by ensuring our visitors can find a powersports vehicle that matches their preference.
ITEM 1. BUSINESS. Unless the context otherwise requires, all references in this section to “we,” “our,” “us,” “RumbleOn,” and the “Company” refer to RumbleOn, Inc. and its consolidated subsidiaries at December 31, 2023. Forward-Looking and Cautionary Statements This 2023 Form 10-K contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
Unless the context otherwise requires, all references in this section to “we,” “our,” “us,” “RumbleOn,” and the “Company” refer to RumbleOn, Inc. and its consolidated subsidiaries and any predecessor entities.
Our Company RumbleOn, Inc. operates primarily through two operating segments: our powersports dealership group and our transportation services entity, Wholesale Express, LLC (“Express”). We were incorporated in 2013. We have grown primarily through acquisitions, the largest to date being our 2021 acquisition of the RideNow business followed by our 2022 acquisition of the Freedom Entities.
ITEM 1. BUSINESS. Our Company RumbleOn, Inc. operates through two operating segments: a powersports dealership group and a vehicle transportation services entity, Wholesale Express, LLC (“Express”). The Company was incorporated in 2013 and has grown primarily through acquisitions. The Company is headquartered in the Dallas Metroplex and completed its initial public offering in 2017.
Leverage our national scale to run the best performing dealerships in America We seek to provide customers with a seamless experience, broad selection, and access to our specialized and experienced team members, including sales staff and technicians. Our network of convenient retail locations allows us to offer services throughout the powersports vehicle life cycle.
In addition to these activities, we continue to focus on reducing our cost structure by identifying and eliminating expenses that do not further our strategic goals. Run the best performing dealerships in America We seek to provide customers with a seamless experience, broad selection, and access to our specialized and experienced team members, including sales staff and technicians.
We completed the wind down of our wholesale automotive business on June 30, 2023, and financial information attributed to it is reflected as discontinued operations. On December 29, 2023, the Company sold its consumer loans portfolio underwritten by its subsidiaries, RumbleOn Finance, LLC and ROF SPV I, LLC.
Former Operations Discontinued operations represents the results of our wholesale automotive business, which was wound down as of June 30, 2023. Also, on December 29, 2023, the Company sold its consumer loans portfolio underwritten by two subsidiaries. Our Industry The powersports retail marketplace in the United States is highly fragmented.
This chart is provided for illustrative purposes only and does not reflect all legal entities owned or controlled by us: Technology We protect our technology and other intellectual property through a combination of trademarks, domain names, copyrights, trade secrets, patented technology, and contractual provisions and restrictions on access and use of our proprietary information and technology.
As of December 31, 2024, we had 1,928 full-time and 36 part-time employees. 2 Table of Contents Technology We protect our technology and other intellectual property through a combination of trademarks, domain names, copyrights, trade secrets, and contractual provisions and restrictions on access and use of our proprietary information and technology.
Our team members are the heart of our operation. Our incentive-based compensation encourages our dealership general managers to think and behave like owners and to focus on profitable operations and great customer experiences. We source new inventory from original equipment manufacturers (“OEMs”), and we invest our resources to align with their brand standards and performance objectives.
Our network of convenient retail locations allows us to offer services throughout the powersports vehicle life cycle. Our incentive-based compensation encourages our dealership general managers to think and behave like owners and to focus on profitable operations and great customer experiences.
We source high quality pre-owned inventory online via our proprietary Cash Offer technology, which allows us to purchase pre-owned units directly from consumers. 1 Vehicle Transportation Services Segment Express provides asset-light transportation brokerage services facilitating automobile transportation primarily between and among dealers.
Vehicle Transportation Services Segment Express provides asset-light transportation brokerage services facilitating automobile transportation primarily between and among dealerships and auctions. We provide services focused on pre-owned vehicles to clients across the United States through our established network of pre-qualified carriers.
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Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in forward-looking statements.
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As of December 31, 2024 , w e operated a total of 56 dealerships located in Alabama, Arizona, California, Florida, Georgia, Kansas, Massachusetts, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas and Washington. We source high quality pre-owned inventory online via our proprietary RideNow Cash Offer technology, which allows us to purchase pre-owned units directly from consumers.
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Factors that could cause or contribute to such differences in our actual results include, but are not limited to, those discussed in this 2023 Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC”).
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Our RideNow Cash Offer technology directly connects us with consumers and allows us to acquire high-quality, pre-owned powersports vehicles at scale. This proprietary technology is a fast and efficient mechanism to offer cash for pre-owned vehicles and provides us with a unique source of market data.
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Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to revise or update forward-looking statements, except as required by law. Market and Industry Data Some of the market and industry data contained in this 2023 Form 10-K is based on independent industry publications or other publicly available information.
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Our Team We have recently experienced significant changes to our executive team. Effective January 13, 2025, the Company and Michael Kennedy, the Chief Executive Officer (“CEO”) of the Company, entered into a separation agreement which provided that Mr. Kennedy’s employment with the Company terminated.
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These acquisitions added 54 powersports dealerships to our Company. During 2023, we experienced significant changes to our management team and board of directors. During the year we added several qualified non-employee directors, including the two co-founders of the RideNow business.
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On the same day, the Chairman of the Company’s Board of Directors (the “Board”), Michael Quartieri, became our CEO, and Cameron Tkach was appointed to serve as Executive Vice President and Chief Operating Officer. Tiffany Kice became the Company’s Chief Financial Officer (“CFO”) on June 24, 2024, and Brandy Treadway became the Company’s Chief Legal Officer on February 12, 2024.
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On November 1, 2023, Michael Kennedy, an accomplished powersports industry veteran with over three decades of experience in strategy, commercial operations, financial management, and manufacturing at leading powersports companies, joined the Company as chief executive officer and director.
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Given this seasonality, we expect our quarterly results of operations, including our revenue, gross profit, net income (loss), and cash flow to vary accordingly.
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In addition, we implemented a series of plans to reduce our outstanding debt and announced several cost savings initiatives, including an organizational restructuring and reduction in headcount.
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As a result, you should be aware that the market and industry data contained herein, and our beliefs and estimates based on such data, may not be reliable. Available Information Our Internet website is located at www.rumbleon.com.
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Collectively, our dealerships represent over 500 powersports franchises representing 52 different brands of motorcycles, ATVs, SXSs, PWCs, snowmobiles, and other powersports products. Our dealerships are located in Alabama, Arizona, California, Florida, Georgia, Kansas, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas, and Washington.
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We provide services focused on pre-owned vehicles to clients in all 50 states through our established network of pre-qualified carriers. Former Operations Through June 2023, we participated in the wholesale automotive industry through our wholly owned distributor of pre-owned automotive inventory, Wholesale, Inc. and our exotics automotive retailer, AutoSport USA, Inc., which did business under the name Got Speed.
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Our Industry We operate primarily in the powersports industry through our 54 dealership locations, offering significant scale and breadth of products and services. The powersports retail marketplace in the United States is highly fragmented with over 8,500 dealership locations--most of which are owned by a single entity.
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In pursuit of these objectives, we have outlined our Vision 2026 plan, which includes the following goals and strategies. In addition to these activities, we continue to focus on reducing our corporate cost structure by identifying and eliminating expenses that do not further our strategic goals.
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We are continually evaluating our dealer footprint and may divest locations that are no longer accretive for our business. Organizational Structure The following chart summarizes our organizational structure as of December 31, 2023.
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Available Information Our Internet website is located at www.rumbleon.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

87 edited+27 added−12 removed98 unchanged
Biggest changeWe are subject to interest rate risk in connection with our floorplan payables and our other debt instruments that could have a material adverse effect on our profitability. Our floorplan payables, revolving credit facility, and other debt instruments are subject to variable interest rates.
Biggest changeIf we are unable to obtain adequate financing or financing on terms satisfactory to us, our ability to sell certain powersports vehicles may be reduced, which could adversely affect our business, operating results and financial condition. 8 Table of Contents We are subject to interest rate risk in connection with our floorplan payables and our other debt instruments that could have a material adverse effect on our profitability.
There is substantial competition in the transportation services industry. Competition in the transportation services industry is intense and broad-based. We compete against traditional and non-traditional companies, including transportation providers that own or operate their own equipment, third-party freight brokers, technology services companies, freight brokers, carriers offering transportation services services, and on-demand transportation service providers.
There is substantial competition in the transportation services industry. Competition in the transportation services industry is intense and broad-based. We compete against traditional and non-traditional companies, including transportation providers that own or operate their own equipment, third-party freight brokers, technology services companies, freight brokers, carriers offering transportation services, and on-demand transportation service providers.
The level of indebtedness, including the applicable interest payments, could also reduce funds available for working capital, capital expenditures, and other general corporate purposes, and may create competitive disadvantages for us relative to 8 competitors with lower debt levels. If our financial performance does not meet our current expectations, then our ability to service the indebtedness may be adversely impacted.
Our level of indebtedness, including the applicable interest payments, could also reduce funds available for working capital, capital expenditures, and other general corporate purposes, and may create competitive disadvantages for us relative to competitors with lower debt levels. If our financial performance does not meet our current expectations, then our ability to service the indebtedness may be adversely impacted.
In addition, governmental or private civil actions related to the antitrust laws could result in orders suspending or terminating our ability to do business or otherwise altering or limiting certain of our business practices, including the manner in which we handle or disclose pricing information, or the imposition of significant civil or criminal penalties, including fines or the award of significant damages against us in class action or other civil litigation. 14 Other.
In addition, governmental or private civil actions related to the antitrust laws could result in orders suspending or terminating our ability to do business or otherwise altering or limiting certain of our business practices, including the manner in which we handle or disclose pricing information, or the imposition of significant civil or criminal penalties, including fines or the award of significant damages against us in class action or other civil litigation.
We are subject to compliance audits of our operations by many of these authorities. 13 Vehicle Sales. Our sale and purchase of powersports vehicles, both new and pre-owned, related products and services and third-party finance products, are subject to the state and local dealer licensing requirements in the jurisdictions in which we have retail locations.
We are subject to compliance audits of our operations by many of these authorities. Vehicle Sales. Our sale and purchase of powersports vehicles, both new and pre-owned, related products and services and third-party finance products, are subject to the state and local dealer licensing requirements in the jurisdictions in which we have retail locations.
We are subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle, retail installment sales, leasing, finance and insurance, marketing, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, environmental, vehicle emissions and fuel economy, and health and safety.
We are subject to a wide range of federal, state, and local laws and regulations, such as those relating to motor vehicle, retail installment sales, finance and insurance, marketing, licensing, consumer protection, consumer privacy, escheatment, anti-money laundering, environmental, vehicle emissions and fuel economy, and health and safety.
Further, if a manufacturer fails to produce desirable vehicles or develops a reputation for producing undesirable vehicles or produces vehicles that do not comply with applicable laws or government regulations, our revenue could be adversely affected as consumers shift their vehicle purchases away from that brand.
If a manufacturer fails to produce desirable vehicles or develops a reputation for producing undesirable vehicles or produces vehicles that do not comply with applicable laws or government regulations, our revenue could be adversely affected as consumers shift their vehicle purchases away from that brand.
As a result, these competitors may be able to respond more quickly with new technologies and to 10 undertake more extensive marketing or promotional campaigns. If we are unable to compete with these companies, the demand for our vehicles, products, and services could substantially decline.
As a result, these competitors may be able to respond more quickly with new technologies and to undertake more extensive marketing or promotional campaigns. If we are unable to compete with these companies, the demand for our vehicles, products, and services could substantially decline.
Also, in the future, these stockholders may acquire or dispose of shares of our Class B common stock and thereby increase or decrease their ownership stake in us. Significant fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our Class B common stock.
Also, in the future, these three stockholders may acquire or dispose of shares of our Class B common stock and thereby increase or decrease their ownership stake in us. Significant fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our Class B common stock.
If the channels for new or pre-owned vehicle acquisition were disrupted, for example as a result of another COVID-like lockdown, technology challenges, customers holding onto their vehicles due to significant valuation decreases and negative equity positions, non-acceptance of online transactions, poor customer ratings, or other such events, the Company may not have enough inventory to meet customer demand, which may adversely affect our business, financial condition, and results of operations.
If the channels for new or pre-owned vehicle acquisition were disrupted, for example as a result of another COVID-like lockdown, technology challenges, customers holding onto their vehicles due to significant valuation decreases and negative equity positions, non-acceptance of online transactions, poor customer ratings, higher tariffs, or other such events, the Company may not have enough inventory to meet customer demand, which may adversely affect our business, financial condition, and results of operations.
Our facilities and business operations are subject to laws and regulations relating to environmental protection and health and safety, and our employment practices are subject to various laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws.
Facilities and Personnel. Our facilities and business operations are subject to laws and regulations relating to environmental protection and health and safety, and our employment practices are subject to various laws and regulations, including complex federal, state, and local wage and hour and anti-discrimination laws.
In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock. 16 ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that the products sold by the Company caused property damage or personal injury could damage brand image and our reputation with existing and potential consumers and have a material adverse effect on our business, financial condition and results of operations.
In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that the products sold by us caused property damage or personal injury could damage brand image and our reputation with existing and potential consumers and have a material adverse effect on our business, financial condition and results of operations.
In addition to these laws and regulations that apply specifically to our business, we are also subject to laws and regulations affecting public companies, including securities laws and Nasdaq listing rules.
Other. In addition to these laws and regulations that apply specifically to our business, we are also subject to laws and regulations affecting public companies, including securities laws and Nasdaq listing rules.
We may not be able to acquire the number of powersports vehicles to satisfy consumer demand or our expectations for the business. A material part of our plan is predicated on being able to have sufficient inventory of powersports vehicles, both new and pre-owned, to satisfy customer demand or meet our financial objectives.
We may not be able to acquire sufficient powersports inventory to satisfy consumer demand or our expectations for the business. A material part of our strategic plan is predicated on being able to have sufficient inventory of powersports vehicles, both new and pre-owned, to satisfy customer demand or meet our financial objectives.
From time to time, we may be precluded under agreements with certain manufacturers from acquiring additional franchises, or subject to other adverse actions, to the extent we are not meeting certain performance criteria at existing stores until performance improves in accordance with the agreements, subject to applicable state franchise laws.
From time to time, we may be precluded under agreements with certain manufacturers from acquiring additional franchises or selling or consolidating existing franchises, or subject to other adverse actions, to the extent we are not meeting certain performance criteria at existing stores until performance improves in accordance with the agreements, subject to applicable state franchise laws.
We locate our communications, network, and computer hardware used to operate our website and mobile applications at facilities in various parts of the country to minimize the risk and create an environment where we can remain online if one of the facilities in which our equipment is housed goes offline.
We locate our communications, network, and computer hardware used to operate our website at facilities in various parts of the country to minimize the risk and create an environment where we can remain online if one of the facilities in which our equipment is housed goes offline.
A material weakness is a deficiency, or a combination of deficiencies, in our ICOFR, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We have identified material weaknesses in our ICOFR in recent periods.
A material weakness is a deficiency, or a combination of deficiencies, in our ICOFR, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We have identified and disclosed material weaknesses in our ICOFR in recent periods.
Key incentive programs include: (i) customer rebates on new vehicles; (ii) dealer incentives on new vehicles; (iii) special financing or leasing terms; (iv) warranties on new and pre-owned vehicles; and (v) sponsorship of pre-owned vehicle sales by authorized new vehicle dealers. Vehicle manufacturers often make changes to their incentive programs.
Key incentive programs include: (i) customer rebates on new vehicles; (ii) dealer incentives on new vehicles; (iii) special financing on new or pre-owned vehicles; (iv) warranties on new and pre-owned vehicles; and (v) sponsorship of pre-owned vehicle sales by authorized new vehicle dealers. Vehicle manufacturers often make changes to their incentive programs.
As a result, these individuals may have the ability to exert substantial influence over actions to be taken or approved by our stockholders, including the election of directors and the approval of any merger, consolidation, or sale of all or substantially all of our assets.
As a result, these three stockholders may have the ability to exert substantial influence over actions to be taken or approved by our stockholders, including the election of directors and the approval of any merger, consolidation, or sale of all or substantially all of our assets.
We are subject to a variety of federal, state, and local environmental laws and regulations that pertain to our operations. The regulations concern material storage, air quality, waste handling, and water pollution control. The regulations also regulate our use and operation of gasoline storage tanks, gasoline dispensing equipment, oil tanks, and paint booths among other things.
We are subject to a variety of federal, state, and local environmental laws and regulations that pertain to our operations. The regulations concern material storage, air quality, waste handling, water pollution control and emissions of greenhouse gases. The regulations also regulate our use and operation of gasoline storage tanks, gasoline dispensing equipment, oil tanks, and paint booths among other things.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our website features, software, and functionality or obtain and use information that we consider proprietary. Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion.
Despite our efforts to protect our proprietary rights, unauthorized parties including former employees may attempt to copy aspects of our website features, software, and functionality or obtain and use information that we consider proprietary. Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion.
Our business involves the use, handling, and disposal of hazardous materials and wastes, including motor oil, gasoline, solvents, lubricants, paints, and other substances. We manage our compliance through permitting and operational control. Facilities and Personnel.
Our business involves the use, handling, and disposal of hazardous materials and wastes, including motor oil, gasoline, solvents, lubricants, paints, and other substances. We manage our compliance through permitting and operational control.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. Anti-takeover provisions may limit the ability of another party to acquire us, which could adversely impact our stock price.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 15 Table of Contents Anti-takeover provisions may limit the ability of another party to acquire us, which could adversely impact our stock price.
A breach of any of these covenants or our inability to comply with the required financial ratios or financial condition tests could result in a default under our debt agreements that, if not cured or waived, could result in acceleration of all 9 indebtedness outstanding thereunder and cross-default rights under our other debt.
A breach of any of these covenants or our inability to comply with the required financial ratios or financial condition test could result in a default under our debt agreements that, if not cured or waived, could result in the acceleration of all indebtedness outstanding thereunder and cross-default rights under our other debt.
In addition, in the event of default under our credit facilities, the affected lenders could foreclose on the collateral securing such credit facility and require repayment of all borrowings outstanding thereunder.
In addition, in the event of default under our Credit Agreement, the affected lenders could foreclose on the collateral securing such credit facility and require repayment of all borrowings outstanding thereunder.
Adverse conditions affecting one or more of the powersports manufacturers with which we hold franchises, or their inability to deliver a desirable mix of vehicles could have a material adverse effect on our new powersports vehicle retail business.
Adverse conditions affecting one or more of the powersports manufacturers with which we hold franchises, or their inability to deliver a desirable mix of vehicles, could have a material adverse effect on our new and pre-owned powersports vehicle retail business.
If we fail to comply with the DOT regulations or if those regulations become more stringent, we could be subject to increased inspections, audits, or compliance burdens. Regulatory authorities could take remedial action including imposing fines, suspending, or shutting down our Express operations. Environmental Laws and Regulations.
If we fail to comply with the DOT regulations or if those regulations become more stringent, we could be subject to increased inspections, audits, or compliance burdens. Regulatory authorities could take remedial action including imposing fines, suspending, or shutting down our Express operations. 13 Table of Contents Environmental Laws and Regulations.
For example, manufacturers can set performance standards with respect to sales volume, sales effectiveness, and customer satisfaction, and require us to obtain manufacturer consent before we can acquire dealerships selling a manufacturer’s vehicles.
For example, manufacturers can set performance standards with respect to sales volume, sales effectiveness, and customer satisfaction, and require us to obtain manufacturer consent before we can acquire, sell or relocate dealerships selling a manufacturer’s vehicles.
Part II, Item 9A of this 2023 Form 10-K describes the remediation plan for the material weaknesses affecting our ICOFR as of December 31, 2023. We cannot assure that the measures we are taking to remediate these material weaknesses will be sufficient or that such measures will prevent future material weaknesses.
Part II, Item 9A of this 2024 Form 10-K describes the remediation plan for the material weakness affecting our ICOFR as of December 31, 2024. We cannot assure that the measures we are taking to remediate this material weakness will be sufficient or that such measures will prevent future material weaknesses.
If we are unable to effectively remediate these material weaknesses and maintain effective ICOFR, we may fail to prevent or detect material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial statements.
If we are unable to effectively remediate this material weakness and maintain effective ICOFR, we may fail to prevent or detect material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial statements.
As a result of these identified material weaknesses, our disclosure controls and procedures as of December 31, 2023 and 2022, respectively, were determined not to be effective at a reasonable assurance level as of each of those dates.
As a result of previously identified material weaknesses, our disclosure controls and procedures as of December 31, 2024 and 2023, respectively, were determined not to be effective at a reasonable assurance level as of each of those dates.
In addition, the loss of any senior management or other key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all.
In addition, the loss of any senior management or other key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all. We have experienced a high level of turnover in our senior management team.
Consumers are increasingly shopping for new and pre-owned powersports vehicles, vehicle repair and maintenance services, and other vehicle products and services online and through mobile applications, including through third-party online 6 and mobile sales platforms, with which we compete.
Consumers are increasingly shopping for new and pre-owned powersports vehicles, vehicle repair and maintenance services, and other vehicle products and services online and through mobile applications, including through third-party online 5 Table of Contents and mobile sales platforms, with which we compete.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition, and prospects could be adversely affected.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, or we are unable to obtain additional capital, including from any of our stockholders, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition, and prospects could be adversely affected.
We depend on key personnel to operate our business, and if we are unable to retain, attract, and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed. We believe our success will depend on the efforts and talents of our executives and employees, including Michael Kennedy, our chief executive officer.
We depend on key personnel to operate our business, and if we are unable to retain, attract, and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed. We believe our success will depend on the efforts and talents of our executives and employees.
If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, results of operations and financial condition. We are subject to various legal proceedings. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, results of operations and financial condition.
If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, results of operations and financial condition. We are subject to various legal proceedings from time to time, which can require significant expenditures.
The restrictions contained in the covenants could: (i) limit our ability to plan for or react to market conditions, to meet capital needs, or otherwise to restrict our activities or business strategy; and (ii) adversely affect our ability to finance our operations, enter into acquisitions or divestitures or engage in other business activities that would be in our interest.
The restrictions contained in the covenants could: (i) limit our ability to plan for or react to market conditions, to meet capital needs, or otherwise to restrict our activities or business strategy; and (ii) adversely affect our ability to finance our operations, enter into acquisitions or divestitures or engage in other business activities that would be in our interest. 7 Table of Contents We have incurred and expect to incur a substantial amount of interest expense.
Although we intend to self-fund our growth initiatives, if we determine to raise additional capital through issuances of equity or debt, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.
If we decide to raise additional capital through issuances of equity, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.
We rely on a combination of patent, trademark, trade secret, and copyright law and contractual restrictions to protect our intellectual property, including our proprietary Cash Offer technology.
We rely on a combination of trademark, trade secret, and copyright law as well as on contractual restrictions with employees and third parties to protect our intellectual property, including our proprietary RideNow Cash Offer technology.
We have a substantial amount of debt, which has had and will continue to have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, and we have a substantial amount of interest expense.
We have a substantial amount of debt, which has had and will continue to have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. Our debt agreements impose operating and financial restrictions on us.
If the amounts outstanding under the credit facilities or any of our other indebtedness were to be accelerated, our assets may not be sufficient to repay in full the amounts owed to the lenders or to our other debt holders.
If the amounts outstanding under the credit facilities or any of our other indebtedness were to be accelerated, our assets may not be sufficient to repay in full the amounts owed to the lenders or to our other debt holders We may require additional financing or capital to pursue acquisitions or because of unforeseen circumstances.
We have incurred, and expect to continue to incur, a number of non-recurring costs associated with our 5 acquisitions. Our failure to identify, acquire or successfully integrate additional retail locations could adversely affect our business, financial condition, and results of operation.
We have incurred, and expect to continue to incur, a number of non-recurring costs associated with our acquisitions and the closing of retail locations. Our failure to identify successfully rationalize our dealership footprint could adversely affect our business, financial condition, and results of operations.
Concerns about our practices with regard to the collection, use or disclosure of personal information or other privacy related matters, even if unfounded, could harm our business and operating results. 12 There are numerous federal, state, and local laws around the world regarding privacy and the collection, processing, storing, sharing, disclosing, using, and protecting of personal information and other data, the scope of which are changing, subject to differing interpretations, and which may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules.
There are numerous federal, state, and local laws around the world regarding privacy and the collection, processing, storing, sharing, disclosing, using, and protecting of personal information and other data, the scope of which are changing, subject to differing interpretations, and which may be costly to comply with and may be inconsistent between countries and jurisdictions or conflict with other rules.
The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisition opportunities. These activities can divert management time and focus from operating our business to addressing acquisition challenges.
The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisition opportunities. The closing or consolidation of existing retail locations may not result in immediate cost savings. These activities can divert management time and focus from operating our business.
Manufacturers can also establish new franchises or relocate existing franchises, subject to applicable state franchise laws. The establishment or relocation of franchises in our current markets could have a material adverse effect on the business, financial condition, and results of operations of our retail locations in the market in which the action is taken.
The establishment or relocation of franchises in our current markets could have a material adverse effect on the business, financial condition, and results of operations of our retail locations in the market in which the action is taken.
Our competition includes: (i) franchised powersports dealerships in its markets that sell the same or similar new and pre-owned vehicles; (ii) privately negotiated “peer-to-peer” sales of pre-owned powersports vehicles; (iii) other pre-owned powersports vehicle retailers, including regional and national rental companies; (iv) internet-based pre-owned powersports vehicle brokers that sell pre-owned vehicles to consumers; (v) service center and parts supply chain stores; and (vi) independent service and repair shops.
Our competition includes: (i) franchised powersports dealerships in our markets that sell the same or similar new and pre-owned vehicles; (ii) privately negotiated “peer-to-peer” sales of pre-owned powersports vehicles; (iii) other pre-owned powersports vehicle retailers; (iv) internet-based pre-owned powersports vehicle brokers that sell pre-owned vehicles to consumers; (v) service center and parts supply chain stores; and (vi) independent service and repair shops. 9 Table of Contents We do not have a material cost advantage over other retailers in purchasing new powersports vehicles from manufacturers.
Accordingly, our interest expense will fluctuate with changing market conditions and will increase if interest rates rise. Instability or disruptions of the capital markets, including credit markets, or the deterioration of our financial condition due to internal or external factors, could restrict or prohibit our access to capital markets and increase our financing costs.
Instability or disruptions of the capital markets, including credit markets, or the deterioration of our financial condition due to internal or external factors, could restrict or prohibit our access to capital markets and increase our financing costs.
The trading market for our Class B common stock may be influenced by the research and reports that industry or securities analysts publish about us or our business.
If securities analysts issue adverse or misleading opinions regarding our stock or cease to publish research or reports about our business, our stock price and trading volume could decline. The trading market for our Class B common stock may be influenced by the research and reports that industry or securities analysts publish about us or our business.
We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations. Failure to comply with current or new laws and regulations could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation.
Failure to comply with current or new laws and regulations could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation.
A significant increase in interest rates or decrease in manufacturer floorplan assistance could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Restrictive covenants in our debt agreements could limit the implementation of our business strategy. Our debt agreements impose operating and financial restrictions on us.
A significant increase in interest rates or decrease in manufacturer floorplan assistance could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
For the year ended December 31, 2023, OEMs representing 10% or more of RumbleOn’s revenue from new powersports vehicle sales were as follows: Manufacturer (Powersports Vehicle Brands): % of Total New Vehicle Revenue Polaris 29.3% BRP 25.6% Harley-Davidson 11.3% In addition, the powersports manufacturing supply chain spans the globe.
For 2024, OEMs representing 10% or more of RumbleOn’s revenue from new powersports vehicle sales were as follows: Manufacturer (Powersports Vehicle Brands): % of Total New Vehicle Revenue Polaris 28.0% BRP 22.5% Harley-Davidson 12.4% In addition, the powersports manufacturing supply chain spans the globe.
The failure to meet financial covenants under the Oaktree Credit Agreement, or to obtain a waiver, would have a material adverse effect on our business, financial condition, and results of operation. We may require additional financing or capital to pursue acquisitions or because of unforeseen circumstances.
The failure to meet financial covenants under the Credit Agreement, or to obtain a waiver, would have a material adverse effect on our business, financial condition, and results of operations.
These broad market fluctuations may cause declines in the market price of our Class B common stock, which may make it difficult for you to resell shares of our Class B common stock owned by you at times or at prices that you find attractive. 15 If securities analysts issue adverse or misleading opinions regarding our stock or cease to publish research or reports about our business, our stock price and trading volume could decline.
These broad market fluctuations may cause declines in the market price of our Class B common stock, which may make it difficult for you to resell shares of our Class B common stock owned by you at times or at prices that you find attractive.
If we reach any of these limits, we may be prevented from making further acquisitions, or we may be required to dispose of certain dealerships, which could adversely affect our future growth. We cannot provide assurance that manufacturers will approve future acquisitions timely, if at all, which could significantly impair the execution of our acquisition strategy.
If we reach any of these limits, we may be prevented from making further acquisitions, or we may be required to dispose of certain dealerships, which could adversely affect our future growth.
Regulatory and Government Risks If state laws that protect powersports retailers are repealed, or weakened, our retail locations may be more susceptible to termination, non-renewal, or renegotiation of their dealer agreements, which could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, if vendors, developers, or other third parties that we work with violate applicable laws or our policies, such violations may also put consumer or dealer information at risk and could in turn harm our reputation, business, and operating results. 12 Table of Contents Regulatory and Government Risks If state laws that protect powersports retailers are repealed, or weakened, our retail locations may be more susceptible to termination, non-renewal, or renegotiation of their dealer agreements, which could have a material adverse effect on our business, results of operations, and financial condition.
In the event of a manufacturer safety recall, we may be required to stop selling certain vehicles, which could impact our revenue and profitability. Failure to adequately protect our intellectual property could harm our business and operating results.
In the event of a manufacturer safety recall, we may be required to stop selling certain vehicles, which could impact our revenue and profitability. Natural disasters, adverse weather and other events can disrupt our business.
We believe that our proprietary Cash Offer technology provides us with a competitive advantage in purchasing pre-owned powersports vehicles directly from customers.
Further, our vehicle manufacturers may decide to award additional franchises in our markets in ways that negatively impact our sales. We believe that our proprietary RideNow Cash Offer technology provides us with a competitive advantage in purchasing pre-owned powersports vehicles directly from customers.
Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class actions, or by governmental entities in civil or criminal investigations and proceedings.
If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, results of operations and financial condition. Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class actions, or by governmental entities in civil or criminal investigations and proceedings.
In particular, we must perform system and process evaluation and testing of our ICOFR to allow management to report on the effectiveness of our ICOFR. In addition, we are required to have our independent registered public accounting firm attest to the effectiveness of our ICOFR.
In addition, we are required to have our independent registered public accounting firm attest to the effectiveness of our ICOFR.
Any of these restrictions or any changes or deterioration of these relationships could have a material adverse effect on our business, financial condition, results of operations, and cash flows. 7 We are dependent on our relationships with the manufacturers of the vehicles we sell, which can exercise a great deal of control and influence over our day-to-day operations, as a result of the terms of our agreements with them.
We are dependent on our relationships with the manufacturers of the vehicles we sell, who can exercise a great deal of control and influence over our day-to-day operations, as a result of the terms of our agreements with them.
We provide transportation services through external carriers to transport vehicles, including transportation providers that own or operate their own equipment, and we are subject to business risks and costs associated with the transportation industry. We provide transportation services through external carriers to transport vehicles between and among customers or distribution network providers, and auction partners.
We provide transportation services through external carriers to transport vehicles between and among customers or distribution network providers, and auction partners.
These actions could expose us to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties including, but not limited to, suspension or revocation of licenses to conduct business.
These actions could expose us to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties including, but not limited to, suspension or revocation of licenses to conduct business. 14 Table of Contents Risks Related to Ownership of our Class B Common Stock Our largest stockholders may have the ability to exert substantial influence over actions to be taken or approved by our stockholders.
Any errors, defects, disruptions, or other performance or reliability problems with our network operations could cause interruptions in access to our products, as well as delays and additional expense in arranging new facilities and services, and could harm our reputation, business, operating results, and financial condition.
Any errors, defects, disruptions, or other performance or reliability problems with our network operations could cause interruptions in access to our products, as well as delays and additional expense in arranging new facilities and services, and could harm our reputation, business, operating results, and financial condition. 11 Table of Contents Disruptions or breaches involving our or our third-party providers’ IT systems could interrupt our operations, compromise our reputation, expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition and results of operations.
If we fail to preserve the value of our retail brands, maintain our reputation, or attract consumers, our business could be adversely impacted. Our sales of powersports vehicles and gross profit may be adversely impacted by declining prices for new or pre-owned vehicles and short supply of new or pre-owned vehicles.
If we fail to preserve the value of our retail brands, maintain our reputation, or attract consumers, our business could be adversely impacted.
Additional financing or capital may not be available when we need it, on terms that are acceptable to us, or at all.
Although we currently intend to self-fund our growth initiatives, under certain circumstances we may determine that it is necessary or advisable to raise additional financing or capital. Additional financing or capital may not be available when we need it, on terms that are acceptable to us, or at all.
Because our dealer agreements grant only a non-exclusive right to sell a manufacturer’s product within a specified market area, our revenue, gross profit, and overall profitability may be materially adversely affected if competing dealerships expand their market share. Further, our vehicle manufacturers may decide to award additional franchises in our markets in ways that negatively impact our sales.
We typically rely on our advertising, merchandising, sales expertise, service reputation, strong local branding, and location to sell our products and services. Because our dealer agreements grant only a non-exclusive right to sell a manufacturer’s product within a specified market area, our revenue, gross profit, and overall profitability may be materially adversely affected if competing dealerships expand their market share.
Most recently, we have identified material weaknesses in two areas, as disclosed in this 2023 Form 10-K. If we are unable to effectively remediate these material weaknesses and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
If we are unable to effectively remediate this material weakness and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, investors could lose confidence in our financial and other public reporting, which would harm our business.
In addition, from time to time, it is possible that concerns will be expressed about whether our products, services, or processes compromise the privacy of our users.
In addition, from time to time, it is possible that concerns will be expressed about whether our products, services, or processes compromise the privacy of our users. Concerns about our practices with regard to the collection, use or disclosure of personal information or other privacy-related matters, even if unfounded, could harm our business and operating results.
Our failure to successfully manage our transportation services and fulfillment process could cause a disruption in our inventory supply chain and distribution, which may adversely affect our operating results and financial condition. 11 Technology Risks We rely on Internet search engines to drive traffic to our website, and if we fail to appear prominently in the search results, our traffic would decline, and our business would be adversely affected.
Our failure to successfully manage our transportation services and fulfillment process could cause a disruption in our inventory supply chain and distribution, which may adversely affect our operating results and financial condition.
As a result, investors could lose confidence in our financial and other public reporting, which would harm our business. We are required to comply with Section 404 of the Sarbanes-Oxley Act (“SOX”), which requires public companies to maintain effective internal control over financial reporting (“ICOFR”).
We are required to comply with Section 404 of the Sarbanes-Oxley Act (“SOX”), which requires public companies to maintain effective internal control over financial reporting (“ICOFR”). In particular, we must perform system and process evaluation and testing of our ICOFR to allow management to report on the effectiveness of our ICOFR.
We may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under our debt agreements.
They also impose certain financial test ratios and financial condition tests that we must satisfy in future periods to remain in compliance with the terms applicable to our debt. We may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive or financial covenants under our debt agreements.
In the event that the Company is unable to comply with the current less restrictive covenants, or the original covenants in the future, there is no assurance that the Company will be able to obtain a subsequent adjustment of such financial covenants.
There is no assurance that the Company will be able to comply with these covenants, or if we fail to remain in compliance, will be able to obtain relief from such financial covenants in the future.
We are dependent on our relationships with the manufacturers of powersports vehicles we sell and are subject to restrictions imposed by these vehicle manufacturers.
Such continued disruptions or increased tariffs could have a material adverse effect on our business, results of operations, financial condition, and cash flows. We are dependent on our relationships with the manufacturers of powersports vehicles we sell and are subject to restrictions imposed by these vehicle manufacturers.
Sales and traffic are typically slowest in the winter but increase in spring and summer, coinciding with tax refund season and the coming warmer months. Our business is also impacted by cyclical trends affecting the overall economy, as well as by actual or threatened severe weather events.
Sales and traffic are typically slowest in the winter but increase in spring and summer, coinciding with tax refund season and the coming warmer months.
Additionally, a shift in consumer’s vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenue, margins, and results of operations. We participate in a highly competitive market for powersports products and services, and pressure from existing and new companies may adversely affect our business and operating results.
Additionally, a shift in consumer’s vehicle preferences driven by pricing, fuel costs or other factors may have a material adverse effect on our revenue, margins, and results of operations. Changes in trade policies, including the imposition of tariffs, may have a material adverse impact on the Company’s business, results of operations and profitability.
We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we fail to attract well-qualified employees or retain and motivate existing employees, our business could be materially and adversely affected.
We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we can prevent former employees from attempting to compete with us.
In other instances, manufacturers have chosen to supply new vehicles to the market in excess of demand at reduced prices which has the effect of reducing demand for pre-owned vehicles. During COVID-19, we experienced an imbalance in demand and supply for new and pre-owned powersports vehicles and the price for pre-owned vehicles increased.
In some cases, manufacturers have chosen to supply new vehicles to the market in excess of demand at reduced prices, which can reduce demand for pre-owned vehicles.
New inventory is ultimately controlled by our OEMs and their willingness to allocate inventory to us and their ability to manufacture and distribute a sufficient number of powersports vehicles. Pre-owned inventory is acquired directly from consumers via our proprietary Cash Offer technology or consumer trade-in transactions or auctions.
Pre-owned inventory is acquired directly from consumers via our proprietary RideNow Cash Offer technology or consumer trade-in transactions or auctions.
Our success depends in part on our ability to grow our business both organically and through strategic acquisitions, and our plans and strategies may not be realized. Our strategic plan includes leveraging our nation-wide network of dealerships, using our proprietary Cash Offer technology to grow our pre-owned inventory, reducing our cost structure, and acquiring strategic retail locations.
Business and Operational Risks Our success depends in part on our ability to grow our business both organically and through strategic acquisitions, and our plans and strategies may not be realized.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCentral to this effort will be our technical solution that we are implementing that will provide near real time monitoring of our data and enterprise computing networks. Employees outside of our corporate information security organization also have a role in our cybersecurity defenses and they are immersed in a corporate culture supportive of security, which we believe improves our cybersecurity.
Biggest changeEmployees outside of our corporate information security organization also have a role in our cybersecurity defenses and they are immersed in a corporate culture supportive of security, which we believe improves our cybersecurity. Assessing, identifying, monitoring, and managing cybersecurity-related risks are included in our overall risk management processes.
The corporate information security organization manages an enterprise security structure with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience in an effort to minimize the business impact should an incident occur.
The corporate information security organization manages an enterprise security structure with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience in an effort to minimize the business impact should an incident occur. Central to this effort is our technical solution that provides monitoring of our data and enterprise computing networks.
To the extent a heightened cybersecurity related risk is identified, risk owners will be assigned to develop risk mitigation plans, which are then tracked to completion. The annual risk assessment will be presented to the Board of Directors.
Cybersecurity-related risks are included in the population of risks that are evaluated to assess top risks to the Company on an annual basis. To the extent a heightened cybersecurity related risk is identified, risk owners will be assigned to develop risk mitigation plans, which are then tracked to completion. An annual risk assessment is presented to the Board.
Senior leadership, including our Senior Director of Information Security, regularly briefs the Board of Directors on our cybersecurity and information security posture and the Board of Directors is apprised of cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us. The full Board retains oversight of cybersecurity because of its importance to RumbleOn.
The Board oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior leadership regularly briefs the Board on our cybersecurity and information security posture and the Board is apprised of cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us.
Our corporate information security team is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response. The current Senior Director of Information Security has extensive information technology and program management experience.
The full Board retains oversight of cybersecurity because of its importance to RumbleOn. Our corporate information security team is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
While RumbleOn maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. No previous cybersecurity incidents have materially affected us, including our business strategy, results of operations or financial condition. Future cybersecurity threats or incidents may materially affect our business strategy, results of operations or financial condition.
While RumbleOn maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. 16 Table of Contents
Removed
The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Removed
We are finalizing our IT Risk Management Program that will outline the steps to be followed in the event of an incident, from incident detection to mitigation, recovery, and notification, including notifying functional areas (e.g. legal), as well as senior leadership and the Board, as appropriate.
Removed
Assessing, identifying, monitoring, and managing cybersecurity-related risks are being included in our overall risk management processes. Cybersecurity-related risks are included in the population of risks that are evaluated to assess top risks to the Company on an annual basis.
Removed
No previous cybersecurity incidents have materially affected us, including our business strategy, results of operations or financial condition. Future cybersecurity threats or incidents may materially affect our business strategy, results of operations or financial condition. 17

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES. At December 31, 2023, we operated 54 powersports retail locations.
Added
At December 31, 2024, we operated 56 powersports dealerships from leased facilities as follows: State # of Dealerships Alabama 1 Arizona 14 California 2 Florida 8 Georgia (1) 2 Kansas 1 Massachusetts 1 Nevada 3 North Carolina 1 Ohio 2 Oklahoma 1 South Dakota 1 Texas (2) 17 Washington 2 Total 56 (1) One of these dealership locations was included in the 2023 sale-leaseback transaction that is being accounted for as a finance lease.
Removed
The following were our key facilities, including retail locations and fulfillment centers: Powersports Retail Locations and Fulfillment Centers BMW Motorcycles of Huntsville +1 AL Indian Motorcycle Kansas City +4 KS RideNow Powersports Huntsville +1 AL RideNow Powersports Kansas City +4 KS Harley-Davidson Saquaro (Tucson) AZ Indian Motorcycle Concord +5 NC Old Pueblo Harley-Davidson AZ RumbleOn Fulfillment Concord +5 NC RideNow Powersports Apache Junction AZ Ducati Las Vegas +6 NV RideNow Powersports Goodyear AZ Indian Las Vegas +6 NV RideNow Powersports on Ina AZ RideNow Powersports on Boulder NV RideNow Powersports Surprise AZ RideNow Powersports on Rancho NV RideNow Powersports Tucson AZ RumbleOn Fulfillment - Las Vegas NV Tucson Indian AZ Powder Keg Harley-Davidson OH Arrowhead Harley-Davidson AZ Fort Thunder Harley-Davidson OK Harley-Davidson Scorpion (Chandler) AZ RideNow Powersports Sturgis SD Indian Motorcycle Chandler +2 AZ Black Gold Harley-Davidson TX RideNow Powersports Chandler +2 AZ RideNow Powersports Burleson* TX BMW Chandler +2 AZ RideNow Powersports Decatur TX Indian Motorcycle Peoria +3 AZ RideNow Powersports Fort Worth* TX RideNow Powersports Peoria +3 AZ RideNow Powersports Hurst *+7 TX RideNow Fulfillment 3333 Phoenix AZ BMW Motorcycles of Hurst *+7 TX RideNow Powersports Phoenix AZ RumbleOn Fulfillment - Fort Worth TX Roadrunner Harley-Davidson AZ Central Texas Harley-Davidson TX Harley-Davidson El Patron (El Cajon) CA Dallas Harley-Davidson TX RideNow SoCal CA RideNow Powersports Dallas* TX RideNow Gainesville FL RideNow Powersports Denton TX RideNow Powersports Beach Blvd FL RideNow Powersports Farmers Branch TX RumbleOn Fulfillment - Ocala FL RideNow Powersports Lewisville* TX Indian Motorcycle Daytona Beach # FL RideNow Powersports Weatherford* TX RideNow Powersports Ocala FL RideNow Powersports McKinney* TX RideNow Powersports Daytona Beach FL RideNow Powersports Austin +8 TX RideNow Powersports Jacksonville FL BMW Austin +8 TX RideNow Powersports Tallahassee FL RideNow Powersports Forney TX Warhorse Harley-Davidson FL RideNow Powersports Georgetown TX RideNow Powersports Canton GA Rattlesnake Mountain Harley-Davidson WA RideNow Powersports McDonough* GA RideNow Powersports Tri-Cities WA (*) Location included in the 2023 failed sale-leaseback transaction and is being accounted for as a finance lease.
Added
(2) Seven of these dealership locations were included in the 2023 sale-leaseback transaction that is being accounted for as a finance lease. In addition, we operated four leased warehouses at December 31, 2024.
Removed
(+) These locations share the same building with one of our other dealerships. (#) Owned property, subject to lien. All other properties are leased. 18

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe investigation remains ongoing and as of the date of this filing, the Company has made no final determination as to what action to take. On July 7, 2023, Mr. Chesrown provided the Board a letter of resignation (the “Resignation Letter”) describing Mr.
Biggest changeOn June 11, 2023, Mr. Chesrown delivered a resignation letter to the Board in his capacity as CEO (the “CEO Resignation Letter”) and on July 7, 2023, Mr.
Chesrown conducted a pre-suit mediation in October 2023, as required in his employment agreement, but did not resolve the matter. On March 13, 2024, Mr. Chesrown filed suit against the Company in Delaware Superior Court for the claims asserted in his Resignation Letter. Mr.
Chesrown conducted a pre-suit mediation in October 2023, as required in his employment agreement, but did not resolve the matter. On March 13, 2024, Mr. Chesrown filed suit against the Company in Delaware Superior Court for the claims asserted in his Resignation Letters. Mr.
Chesrown’s disagreement with several recent corporate governance, disclosure and other actions taken by the Company, the Board and certain of its members, and indicated his intent to pursue legal claims. The Company disagrees with the characterization of the allegations and assertions described in the Resignation Letter. The Company and Mr.
Chesrown further detailed his disagreement with actions taken by the Company, the Board and certain of its members and indicated his intent to pursue legal claims. The Company disagrees with the characterization of the allegations and assertions described in the Resignation Letters. The Company and Mr.
ITEM 3. LEGAL PROCEEDINGS. We are not a party to any material legal proceedings as set forth in Item 103 of Regulation S-K, other than ordinary routine litigation incidental to our business. As previously disclosed, the Company is conducting an investigation of certain allegations surrounding Marshall Chesrown’s use of Company resources.
ITEM 3. LEGAL PROCEEDINGS. We are not a party to any material legal proceedings as set forth in Item 103 of Regulation S-K, other than ordinary routine litigation incidental to our business and as set forth below.
Chesrown is seeking a declaratory judgment that he resigned with good reason, termination compensation damages in the amount of $7.5 million, general and reputational damages in the amount of $50 million, punitive damages, attorney's fees and litigation costs. We intend to defend these claims vigorously; however, we can provide no assurance regarding the outcome of this matter.
Chesrown is seeking a declaratory judgment that he resigned with good reason, termination compensation damages in the amount of $7.5 million, general and reputational damages in the amount of $50.0 million, punitive damages, attorney's fees and litigation costs. The parties are now engaged in the initial stages of discovery.
Added
SEC Investigation On June 28, 2024, the Company received a subpoena from the SEC requesting documents created during or relating to the period from January 1, 2021 through the date of the subpoena.
Added
The subpoena covers documents relating to, among other matters, the Company’s previously disclosed internal investigation into the use of Company resources by former Chairman and CEO Marshall Chesrown; the Company’s review, consideration and approval, and the underlying terms of, related party transactions; employment, compensation, reimbursement and severance arrangements; and disclosures and communications to customers and investors regarding the company’s RideNow Cash Offer tool and certain of its technology.
Added
The Company is in the process of gathering and has commenced production of the requested documents. The Company is cooperating with the SEC’s inquiry.
Added
The Company cannot predict the ultimate outcome or timing of the SEC investigation, what, if any, actions may be taken by the SEC or the effect that such actions may have on the business, prospects, operating results and financial condition of the Company. 17 Table of Contents Delaware Litigation As previously disclosed, the Company began an investigation of certain allegations surrounding Marshall Chesrown’s use of Company resources in 2023.
Added
Chesrown delivered a resignation letter to the Board in his capacity as a member of the Board of Directors (the “Board Resignation Letter” and together with the CEO Resignation Letter, the “Resignation Letters”). In the CEO Resignation Letter, Mr.
Added
Chesrown indicated that he was resigning for “good reason” under his employment agreement and described his disagreement with several recent corporate governance, disclosure and other actions taken by the Company, the Board and certain of its members. In the Board Resignation Letter, Mr.
Added
The subject matter of the litigation overlaps with the investigation begun by the Company in 2023. As of the date of this filing, the Company has not decided what further actions, if any, may be taken with regard to the investigation allegations.
Added
We intend to defend the litigation claims vigorously; however, we can provide no assurance regarding the outcome of this matter.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−1 removed0 unchanged
Biggest changeMarket Information Our Class B Common Stock is listed on the Nasdaq Global Select Market (“NASDAQ”) under the symbol “RMBL.” Holders of Common Stock As of March 18, 2024, we had approximately 50 stockholders of record of 35,153,241 outstanding shares of Class B Common Stock and two holders of record of 50,000 outstanding shares of Class A Common Stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES. Market Information Our Class B Common Stock trades under the symbol RMBL and is listed on the Nasdaq Capital Market (“NASDAQ”). As of March 3, 2025, there were approximately 50 stockholders of record of our Class B Common Stock.
Dividends We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. In addition, there were two holders of record of our Class A Common Stock. Dividends We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock.
Any cash dividends in the future to common stockholders will be payable when, as and if declared by our board of directors, based upon the Board's assessment. Therefore, there can be no assurance that any dividends on the common stock will ever be paid.
We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders would be payable when, as and if declared by our Board, based upon the Board's assessment. ITEM 6. RESERVED. Not applicable.
Removed
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+30 added−53 removed15 unchanged
Biggest changeResults of Operations ($ in millions) 2023 2022 $ Change % Change Revenue Powersports vehicles $ 951.4 $ 1,033.9 $ (82.5) (8.0) % Parts, service, accessories 241.8 247.6 (5.8) (2.3) % Finance and insurance, net 117.0 123.4 (6.4) (5.2) % Vehicle transportation services 56.2 54.0 2.2 4.1 % Total revenue 1,366.4 1,458.9 (92.5) (6.3) % Gross Profit Powersports vehicles 118.9 194.2 (75.3) (38.8) % Parts, service, accessories 110.3 112.2 (1.9) (1.7) % Finance and insurance 117.0 123.4 (6.4) (5.2) % Vehicle transportation services 13.7 11.9 1.8 15.1 % Total Gross Profit 359.9 441.7 (81.8) (18.5) % SG&A expenses 347.3 354.5 (7.2) (2.0) % Impairment of goodwill and franchise rights 60.1 324.3 (264.2) (81.5) % Depreciation and amortization 22.0 23.0 (1.0) (4.3) % Operating Loss (69.5) (260.1) 190.6 (73.3) % Non-operating income (expense): Interest expense (77.2) (52.1) (25.1) 48.2 % Other income (expense) (8.4) 4.2 (12.6) NM Forgiveness of PPP loan — 2.5 (2.5) (100.0) % Loss from continuing operations before income taxes (155.1) (305.5) 150.4 (49.2) % Income tax provision (benefit) - continuing operations 59.3 (72.0) 131.3 NM Loss from continuing operations $ (214.4) $ (233.5) $ 19.1 (8.2) % NM = not meaningful. 23 Revenue Total revenue for 2023 was $92.5 million lower than in 2022, primarily due to the decline in revenue from powersports vehicles sold, partially offset by higher revenue from vehicle transportation services.
Biggest changeTotal Gross Profit Per Unit Total gross profit per vehicle transported represents the difference between the price received from non-affiliated customers and our cost to contract an independent third-party transporter divided by the number of third-party vehicles transported. 21 Table of Contents Results of Operations ($ in millions) 2024 2023 $ Change % Change Revenue Powersports vehicles $ 842.6 $ 951.4 $ (108.8) (11.4) % Parts, service, accessories 206.2 241.8 (35.6) (14.7) % Finance and insurance, net 102.4 117.0 (14.6) (12.5) % Vehicle transportation services 58.0 56.2 1.8 3.2 % Total revenue 1,209.2 1,366.4 (157.2) (11.5) % Gross Profit Powersports vehicles 104.0 118.9 (14.9) (12.5) % Parts, service, accessories 94.5 110.3 (15.8) (14.3) % Finance and insurance 102.4 117.0 (14.6) (12.5) % Vehicle transportation services 13.4 13.7 (0.3) (2.2) % Total gross profit 314.3 359.9 (45.6) (12.7) % SG&A expenses 275.4 347.3 (71.9) (20.7) % Impairment of goodwill and franchise rights 39.3 60.1 (20.8) (34.6) % Depreciation and amortization 14.3 22.0 (7.7) (35.0) % Operating loss (14.7) (69.5) 54.8 78.8 % Non-operating expense: Floor plan interest expense (16.0) (13.2) (2.8) 21.2 % Other interest expense (48.1) (64.0) 15.9 (24.8) % Other expense — (8.4) 8.4 (100.0) % Total non-operating expense (64.1) (85.6) 21.5 (25.1) % Loss from continuing operations before income taxes (78.8) (155.1) 76.3 49.2 % Income tax provision (benefit) - continuing operations (0.2) 59.3 (59.5) NM Loss from continuing operations $ (78.6) $ (214.4) $ 135.8 63.3 % NM = not meaningful.
Unless otherwise noted, comparisons are of results for the year ended December 31, 2023 (2023 or “this year”) to those for the year ended December 31, 2022 (2022 or “last year”). Overview RumbleOn, Inc. operates primarily through two operating segments: our powersports dealership group and Wholesale Express, LLC (“Express”), a vehicle transportation services provider. We were incorporated in 2013.
Unless otherwise noted, comparisons are of results for the year ended December 31, 2024 or “this year” to those for for the year ended December 31, 2023 or “last year.” Overview RumbleOn, Inc. operates through two operating segments: our powersports dealership group and Wholesale Express, LLC (“Express”), a vehicle transportation services provider. We were incorporated in 2013.
Given this seasonality, we expect our quarterly results of operations, including our revenue, gross profit, profit/loss, and cash flow, to vary accordingly. Liquidity and Capital Resources Our primary sources of liquidity are available cash and amounts available under our floor plan lines of credit.
Given this seasonality, we expect our quarterly results of operations, including our revenue, gross profit, profit/loss, and cash flow, to vary accordingly. 25 Table of Contents Liquidity and Capital Resources Our primary sources of liquidity are cash and amounts available under our floor plan lines of credit.
The approaches incorporate a number of market participant assumptions including future revenue growth rates, corresponding gross margins, the discount rate, income tax rates, implied control premium and market activity in assessing fair value and are reporting unit specific.
The approaches incorporate a number of market participant assumptions, including future revenue growth rates and corresponding gross margins, the discount rate, income tax rates, implied control premium and market activity, and are reporting-unit specific.
The fair value measurement associated with the quantitative goodwill and indefinite lived intangible assets test is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Significant changes in the underlying assumptions used to value goodwill and franchise rights could significantly increase or decrease the fair value estimates used for impairment assessments.
The fair value measurement associated with the quantitative goodwill and franchise rights tests is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Changes in the underlying assumptions used to value franchise rights could significantly increase or decrease the fair value estimates used for impairment assessments.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See Index to Financial Statements and Financial Statement Schedules beginning on page F-1 of this 2023 Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 32
See Index to Financial Statements and Financial Statement Schedules beginning on page F-1 of this 2024 Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.
Our primary uses of cash from operating activities are purchases of inventory, parts and merchandise, cash used to acquire customers, interest payments on long-term debt and trade floor plans, rental costs for facilities, and personnel-related expenses.
Our primary uses of cash from operating activities are purchases of inventory, parts and merchandise; cash used to acquire customers; interest payments on long-term debt, trade floor plan borrowings, and the finance lease obligation; rental costs for facilities; and personnel-related expenses.
Financing Activities Cash flows from financing activities primarily relate to our short and long-term debt activity and proceeds from equity issuances, which have been used to provide working capital and for general corporate purposes, including paying down our debt.
These costs are not reflected in the proceeds. Cash flows from financing activities primarily relate to our short and long-term debt activity and proceeds from equity issuances, which have been used to provide working capital and for general corporate purposes, including paying down our debt.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. \This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited Consolidated Financial Statements and the accompanying notes included in this 2023 Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the related notes included in this 2024 Form 10-K. This discussion may contain forward-looking statements.
However, if based on the qualitative assessment we conclude that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if we elect to bypass the optional qualitative assessment as provided for under GAAP, we proceed with performing the quantitative impairment test. 31 Fair value estimates used in the quantitative impairment test are calculated using a combination of the income and market approaches.
However, if based on the qualitative assessment we conclude that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if we elect to bypass the optional qualitative assessment as provided for under GAAP, we proceed with performing the quantitative impairment test.
Such adjustments are recognized in cost of revenue on our consolidated statement of operations. During the periods following the COVID-19 pandemic, the Company proactively secured pre-owned vehicles to meet accelerated demand during a challenging supply chain environment experienced by the industry. The imbalances in supply and demand caused increases in the cost to acquire pre-owned vehicles.
During the periods following the COVID-19 pandemic, the Company proactively secured pre-owned vehicles to meet accelerated demand during a challenging supply chain environment experienced by the industry. The imbalances in supply and demand caused increases in the cost to acquire pre-owned vehicles.
We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of demand/supply imbalances in our sales channels, which could temporarily lead to gross profits increasing or decreasing in any given channel.
We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of demand/supply imbalances in our sales channels, which could temporarily lead to gross profits increasing or decreasing in any given channel. 20 Table of Contents Vehicles Sold We define vehicles sold as the number of vehicles sold through retail and wholesale channels in each period.
The following table sets forth a summary of our cash flows: ($ in millions) 2023 2022 Change Net cash used in operating activities of continuing operations $ (38.9) $ (46.7) $ 7.8 Net cash used in investing activities of continuing operations (19.1) (82.2) 63.1 Net cash provided by financing activities of continuing operations 78.2 136.2 (58.0) Net cash used in discontinued operations (1.8) (0.7) (1.1) Net increase in cash and restricted cash $ 18.4 $ 6.6 $ 11.8 Operating Activities Our primary sources of operating cash flows from continuing operations result from the sales of new and pre-owned powersports vehicles and ancillary products.
(2) Repaid on January 2, 2024. 26 Table of Contents The following table sets forth a summary of our cash flows: ($ in millions) 2024 2023 Change Net cash provided by (used in) operating activities $ 99.4 $ (38.9) $ 138.3 Net cash provided by (used in) investing activities 0.9 (19.1) 20.0 Net cash provided by (used in) financing activities (80.6) 78.2 (158.8) Net cash used in discontinued operations — (1.8) 1.8 Net increase in cash and restricted cash $ 19.7 $ 18.4 $ 1.3 Operating Activities Our primary sources of operating cash flows result from the sales of new and pre-owned powersports vehicles and ancillary products.
Other Income (Expense) ($ in millions) 2023 2022 Change Loss on sale of ROF loan portfolio $ (7.9) $ — $ (7.9) Gain on sale of dealership — 3.9 (3.9) Other (0.5) (0.5) — Other income (expense) $ (8.4) $ 4.2 $ (12.6) In 2023 we sold the RumbleOn Finance (“ROF”) loan portfolio at a loss, and in 2022 we sold a dealership in Louisiana for a gain.
Other Income (Expense) ($ in millions) 2024 2023 Change Loss on sale of ROF loan portfolio $ — $ (7.9) $ 7.9 Other — (0.5) 0.5 Other income (expense) $ — $ (8.4) $ 8.4 In 2023, we sold the RumbleOn Finance (“ROF”) loan portfolio at a loss.
We determined that a $12.6 million write down was required to adjust vehicles to net realizable value during the fourth quarter of 2023, as pricing of powersports units had stabilized compared to the volatility experienced in past periods.
We determined that a $12.6 million write down was required to adjust vehicles to net realizable value during the fourth quarter of 2023, as pricing of powersports units had stabilized compared to the volatility experienced in past periods. Newly Issued Accounting Pronouncements See Note 1. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Powersports Segment Our powersports segment is the largest powersports retail group in the United States (as measured by reported revenue, major unit sales and dealership locations), offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products.
We have grown primarily through acquisitions. Powersports Segment We believe our powersports business is the largest powersports retail group in the United States offering a wide selection of new and pre-owned motorcycles, all-terrain vehicles (“ATV”), utility terrain or side-by-side vehicles (“SXS”), personal watercraft (“PWC”), snowmobiles, and other powersports products.
The aggregate gross profit of the powersports segment includes gross profit generated from the sale of new and pre-owned vehicles, any income related to loans originated to finance the vehicle, revenue earned from the sale of F&I products including extended service contracts, maintenance programs, guaranteed auto protection, tire and wheel protection, and theft protection products, gross profit on the sale of PSA products, and gross profit generated from wholesale sales of vehicles. 22 Vehicle Transportation Services Segment Revenue Revenue is derived from freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination.
The aggregate gross profit of the powersports segment includes gross profit generated from the sale of new and pre-owned vehicles, any income related to loans originated to finance the vehicle, revenue earned from the sale of F&I products including extended service contracts, maintenance programs, guaranteed auto protection, tire and wheel protection, and theft protection products, gross profit on the sale of PSA products, and gross profit generated from sales of vehicles in the wholesale market.
Pre-owned vehicles sold through wholesale channels, including directly to other dealers or through auction channels, including our dealer-to-dealer auction market, generally have lower margins and do not enable any other ancillary gross profit attributable to financing and accessories.
Vehicles sold through retail channels generally have a higher gross profit per vehicle given the vehicle is sold directly to the consumer. Pre-owned vehicles sold through wholesale channels, including directly to other dealers or through auction channels, including the dealer-to-dealer auction market, generally have lower margins and do not enable any other ancillary gross profit attributable to F&I and PSA.
Our key operating metrics reflect what we believe will be the primary drivers of our business, including increasing brand awareness, maximizing the opportunity to source vehicles from consumers and dealers, and enhancing the selection and timing of vehicles we make available for sale to our customers.
Key factors impacting our operating results include increasing brand awareness, maximizing the opportunity to source vehicles from consumers and dealers, and enhancing the selection and timing of vehicles we make available for sale to our customers.
Gross profit was also impacted by a $12.6 million write-down of certain pre-owned powersports vehicles to their net realizable value, as selling prices generally came down from their inflated values driven by the pandemic-related shortage of supply.
Gross profit in 2023 included a $12.6 million write-down of certain pre-owned powersports vehicles to their net realizable value recognized in the fourth quarter, as selling prices had generally decreased from their values that had been inflated due to the pandemic-related shortage of supply.
The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions.
Fair value estimates used in the quantitative impairment test are calculated using a combination of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions.
We had the following liquidity resources available at the end of 2023 and 2022: ($ in millions) December 31, 2023 2022 Cash $ 58.9 $ 46.8 Restricted cash (1) 18.1 10.0 Total cash and restricted cash 77.0 56.8 Availability under powersports inventory financing credit facilities 165.0 137.5 Total available liquidity $ 242.0 $ 194.3 (1) Amounts included in restricted cash are primarily comprised of the deposits required under the Company’s various floorplan lines of credit and RumbleOn Finance line of credit.
We had the following liquidity resources available: ($ in millions) December 31, 2024 2023 Cash $ 85.3 $ 58.9 Restricted cash (1) 11.4 18.1 Total cash and restricted cash 96.7 77.0 Availability under powersports floor plan lines of credit 146.2 165.0 Total available liquidity $ 242.9 $ 242.0 (1) Amounts included in restricted cash are primarily comprised of the deposits required under the Company’s various floorplan lines of credit and while it was still outstanding at the end of 2023, the RumbleOn Finance line of credit.
Reconditioning is generally performed by the service departments in our dealerships and includes parts, labor, and other repair expenses directly attributable to a specific vehicle. Intercompany mark-up is eliminated in consolidation. Transportation costs are expensed as incurred. Net realizable value is based on the estimated selling price less costs to complete, dispose and transport the vehicles.
Inventory of a pre-owned vehicle includes the cost to acquire and recondition the vehicle. Reconditioning is generally performed by the service departments in our dealerships and includes parts, labor, and other repair expenses directly attributable to a specific vehicle. Intercompany mark-up is eliminated in consolidation. Transportation costs are expensed as incurred.
Vehicles Sold We define vehicles sold as the number of vehicles sold through retail and wholesale channels in each period. Vehicles sold is the primary driver of our revenue and gross profit. Vehicles sold also impacts complementary revenue streams, such as financing and accessories. Vehicles sold increases our base of customers and improves brand awareness and repeat sales.
Vehicles sold is the primary driver of our revenue and gross profit. Vehicles sold also impacts complementary revenue streams, such as F&I and PSA. Vehicles sold increases our base of customers and improves brand awareness and repeat sales.
We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services.
We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Additionally, we offer a full suite of repair and maintenance services. As of December 31, 2024 , w e operated 56 retail locations located predominantly in the Sunbelt region.
Express provided an immaterial amount of transportation services to our powersports segment. Vehicles Delivered We define vehicles delivered as the number of vehicles delivered from a point of origin to a designated destination under freight brokerage agreements with dealers, distributors, or private parties.
Vehicles Delivered We define vehicles delivered as the number of vehicles delivered from a point of origin to a designated destination under freight brokerage agreements with dealers, distributors, or individuals. Vehicles delivered are the primary driver of revenue and, in turn, profitability in the vehicle transportation services segment.
Vehicle Transportation Services 2023 2022 Change % Change Revenue ($ in millions) $ 56.2 $ 54.0 $ 2.2 4.1 % Gross Profit ($ in millions) 13.7 11.9 1.8 15.1 % Vehicles transported 91,774 84,187 7,587 9.0 % Revenue per vehicle transported $ 612 $ 642 $ (30) (4.7) % Gross Profit per vehicle transported 149 141 8 5.7 % Total revenue for vehicle transportation services increased $2.2 million for 2023 compared to 2022 due to growth in number of vehicles transported.
Vehicle Transportation Services 2024 2023 Change % Change Revenue ($ in millions) $ 58.0 $ 56.2 $ 1.8 3.2 % Gross Profit ($ in millions) 13.4 13.7 (0.3) (2.2) % Vehicles transported 97,468 91,774 5,694 6.2 % Revenue per vehicle transported $ 595 $ 612 $ (17) (2.8) % Gross Profit per vehicle transported 137 149 (12) (8.1) % Total revenue for vehicle transportation services increased $1.8 million due to primarily growth in number of vehicles transported, partially offset by a reduction in revenue per vehicle transported.
For further discussion, see Note 13-Income Taxes. 27 Seasonality Historically, the powersports industry has been seasonal with traffic and sales strongest in the spring and summer quarters. Sales and traffic are typically slowest in the winter quarter but increase in the spring season, coinciding with tax refunds and improved weather conditions.
Sales and traffic are typically slowest in the winter quarter but increase in the spring season, coinciding with tax refunds and improved weather conditions.
Selling prices are derived from historical data and trends, such as sales price and inventory turn data of similar vehicles, as well as independent market resources. Each reporting period, the Company recognizes any necessary adjustments to reflect pre-owned vehicle inventory at the lower of cost or net realizable value.
Net realizable value is based on the estimated selling price less costs to complete, dispose and transport the vehicles. Selling prices are derived from historical data and trends, such as sales price and inventory turn data of similar vehicles, as well as independent market resources.
As disclosed in Note 7, the Company performed its annual impairment test as of October 1, 2023 and recognized a $23.1 million noncash goodwill impairment charge to its powersports reporting unit in the fourth quarter of 2023.
As disclosed in Note 1, the Company performed its annual impairment tests as of October 1, 2024 and recognized an $39.3 million non-cash impairment charge to its franchise rights in the fourth quarter of 2024.
Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed in business combinations. Goodwill is tested for impairment annually as of October 1, or whenever events or changes in circumstances indicate that an impairment may exist.
Franchise rights and the remaining goodwill are tested for impairment annually as of October 1, or whenever events or changes in circumstances indicate that an impairment may exist.
($ in millions) 2023 2022 $ Change % Change Compensation and related costs $ 199.5 $ 209.1 $ (9.6) (4.6) % Facilities 44.5 42.1 2.4 5.7 % General and administrative 43.5 35.8 7.7 21.5 % Advertising and marketing 29.4 30.8 (1.4) (4.5) % Professional fees 13.2 24.0 (10.8) (45.0) % Stock based compensation 12.0 9.4 2.6 27.7 % Technology development and software 5.2 3.3 1.9 57.6 % Total SG&A Expenses $ 347.3 $ 354.5 $ (7.2) (2.0) % During 2023, the Company identified a total of $60 million annualized SG&A expense reductions that were partially implemented throughout 2023.
Selling, General and Administrative (“SG&A”) Expenses ($ in millions) 2024 2023 $ Change % Change Compensation and related costs $ 159.4 $ 199.5 $ (40.1) (20.1) % Facilities 45.2 44.5 0.7 1.6 % General and administrative 32.3 43.5 (11.2) (25.7) % Advertising and marketing 19.1 29.4 (10.3) (35.0) % Professional fees 13.0 13.2 (0.2) (1.5) % Stock based compensation 4.6 12.0 (7.4) (61.7) % Technology development and software 1.8 5.2 (3.4) (65.4) % Total SG&A expenses $ 275.4 $ 347.3 $ (71.9) (20.7) % During 2024, the Company continued to manage costs and implement certain additional cost savings initiatives, resulting in SG&A expenses being lower overall by $71.9 million.
Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement date. The Company may need to obtain additional financing to support its long range plans.
Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement date. The term loan facility shown in the table below is due August 31, 2026, so it becomes current in the third quarter of 2025.
Segment Operating Performance 24 Powersports ($ in millions except per vehicle) 2023 2022 Change % Change Revenue New retail vehicles $ 658.5 $ 641.0 $ 17.5 2.7 % Pre-owned vehicles Retail 260.9 371.7 (110.8) (29.8) % Wholesale 32.0 21.2 10.8 50.9 % Total pre-owned vehicles 292.9 392.9 (100.0) (25.5) % Finance and insurance, net 117.0 123.4 (6.4) (5.2) % Parts, service and accessories 241.8 247.6 (5.8) (2.3) % Total revenue $ 1,310.2 $ 1,404.9 $ (94.7) (6.7) % Gross Profit New retail vehicles $ 95.0 $ 125.8 $ (30.8) (24.5) % Pre-owned vehicles Retail 27.1 67.4 (40.3) (59.8) % Wholesale (3.3) 0.9 (4.2) (466.7) % Total pre-owned vehicles 23.8 68.3 (44.5) (65.2) % Finance and insurance, net 117.0 123.4 (6.4) (5.2) % Parts, service and accessories 110.3 112.2 (1.9) (1.7) % Total gross profit $ 346.2 $ 429.8 $ (83.6) (19.5) % Vehicle Units Sold New retail vehicles 45,706 41,649 4,057 9.7 % Pre-owned vehicles Retail 21,840 28,151 (6,311) (22.4) % Wholesale 5,116 3,613 1,503 41.6 % Total pre-owned vehicles 26,956 31,764 (4,808) (15.1) % Total vehicles sold 72,662 73,413 (751) (1.0) % Revenue per vehicle New retail vehicles $ 14,407 $ 15,390 $ (983) (6.4) % Pre-owned vehicles Retail 11,945 13,204 (1,259) (9.5) % Wholesale 6,263 5,882 381 6.5 % Total pre-owned vehicles 10,866 12,371 (1,505) (12.2) % Finance and insurance, net 1,733 1,768 (35) (2.0) % Parts, service and accessories 3,580 3,547 33 0.9 % Total revenue per retail vehicle $ 18,923 $ 19,823 $ (900) (4.5) % Gross Profit per vehicle New vehicles $ 2,080 $ 3,021 $ (941) (31.1) % Pre-owned vehicles 883 2,151 (1,268) (58.9) % Finance and insurance, net 1,733 1,768 (35) (2.0) % Parts, service and accessories 1,633 1,608 25 1.6 % Total gross profit per vehicle (1) 5,125 6,157 (1,032) (16.8) % ____________________ (1) Calculated as total gross profit divided by new and pre-owned retail powersports units sold. 25 Total powersports vehicle revenue in 2023 for decreased by $94.7 million compared to 2022, with 751 fewer vehicles sold.
Segment Operating Performance 22 Table of Contents Powersports ($ in millions except per vehicle) 2024 2023 Change % Change Revenue New retail vehicles $ 616.4 $ 658.5 $ (42.1) (6.4) % Pre-owned vehicles Retail 202.1 260.9 (58.8) (22.5) % Wholesale 24.1 32.0 (7.9) (24.7) % Total pre-owned vehicles 226.2 292.9 (66.7) (22.8) % Finance and insurance, net 102.4 117.0 (14.6) (12.5) % Parts, service and accessories 206.2 241.8 (35.6) (14.7) % Total revenue $ 1,151.2 $ 1,310.2 $ (159.0) (12.1) % Gross Profit New retail vehicles $ 72.4 $ 95.1 $ (22.7) (23.9) % Pre-owned vehicles Retail 32.5 27.1 5.4 19.9 % Wholesale (0.8) (3.3) 2.5 75.8 % Total pre-owned vehicles 31.7 23.8 7.9 33.2 % Finance and insurance, net 102.4 117.0 (14.6) (12.5) % Parts, service and accessories 94.5 110.3 (15.8) (14.3) % Total gross profit $ 301.0 $ 346.2 $ (45.2) (13.1) % Vehicle Units Sold New retail vehicles 42,464 45,706 (3,242) (7.1) % Pre-owned vehicles Retail 18,275 21,840 (3,565) (16.3) % Wholesale 4,249 5,116 (867) (16.9) % Total pre-owned vehicles 22,524 26,956 (4,432) (16.4) % Total vehicles sold 64,988 72,662 (7,674) (10.6) % Revenue per vehicle New retail vehicles $ 14,516 $ 14,407 $ 109 0.8 % Pre-owned vehicles Retail 11,059 11,945 (886) (7.4) % Wholesale 5,672 6,263 (591) (9.4) % Total pre-owned vehicles 10,043 10,866 (823) (7.6) % Finance and insurance, net 1,686 1,733 (47) (2.7) % Parts, service and accessories 3,395 3,580 (185) (5.2) % Total revenue per retail vehicle (1) 18,556 18,923 (367) (1.9) % Gross Profit per vehicle New vehicles $ 1,705 $ 2,080 $ (375) (18.0) % Pre-owned vehicles 1,407 883 524 59.3 % Finance and insurance, net 1,686 1,733 (47) (2.7) % Parts, service and accessories 1,556 1,633 (77) (4.7) % Total gross profit per vehicle (2) 4,956 5,125 (169) (3.3) % ____________________ (1) Calculated as total powersports segment revenue excluding wholesale revenue divided by new and pre-owned retail units sold.
Revenue excludes any sales taxes, title and registration fees, and other government fees that are collected from customers. Vehicle transportation services revenue is generated primarily by entering into freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination.
Vehicle Transportation Services Segment Revenue Revenue is derived from freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination. The freight brokerage agreements are fulfilled by independent third-party transporters who must meet our performance obligations and standards.
The freight brokerage agreements are fulfilled by independent third-party transporters who must meet our performance obligations and standards. Express is considered the principal in the delivery transactions since it is primarily responsible for fulfilling the service. Express provided transportation services to Wholesale, Inc. prior to the wind down of Wholesale, Inc.
Express is considered the principal in the delivery transactions since it is primarily responsible for fulfilling the service. Express provided transportation services to the discontinued automotive segment, prior to its wind down.
Sales prices and the quantity of vehicles sold were more consistent with pre-pandemic levels as compared to last year’s pandemic-driven sales levels. Gross Profit Gross profit decreased in total by $81.8 million in 2023 compared to the prior year, driven by the lower level of revenue from powersports vehicles, partially offset by higher gross profit from vehicle transportation services.
Revenue Total revenue declined $157.2 million, primarily due to declines in revenue from powersports vehicles sold and ancillary powersports products and services, partially offset by higher revenue from vehicle transportation services. Gross Profit Gross profit decreased in total by $45.6 million, primarily driven by the lower level of revenue from powersports vehicles and ancillary powersports products and services.
As a result, revenue is recorded gross. 30 Inventory Inventory is stated at the lower of cost or net realizable value. The cost of new and pre-owned powersports vehicles is determined using the specific identification method. Inventory of a pre-owned vehicle includes the cost to acquire and recondition the vehicle.
In both years, the Company determined that the fair value of the vehicle transportation services reporting unit exceeded its carrying value, and no impairment was indicated. Inventory Inventory is stated at the lower of cost or net realizable value. The cost of new and pre-owned powersports vehicles is determined using the specific identification method.
Unless differences among reportable segments are material to an understanding of our business taken as a whole, we present the discussion in this MD&A on a consolidated basis. Terms not defined in this MD&A have the meanings ascribed to them in the Consolidated Financial Statements.
Terms not defined in this MD&A have the meanings ascribed to them in the consolidated financial statements.
See Note 9-Debt to our consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data of this 2023 Form 10-K for further information on our debt. 28 December 31, ($ in millions) 2023 2022 Asset-based financing: Floor lines for inventory (1) $ 291.3 $ 225.4 Total asset-based financing 291.3 225.4 Term loan facility 248.7 346.1 Unsecured senior convertible notes 38.8 38.8 Finance lease obligation 49.8 — Notes payable 2.1 — RumbleOn Finance secured loan facility (2) 12.2 25.0 Total debt 642.9 635.3 Less: unamortized debt discount and issuance costs (29.3) (31.8) Total debt, net $ 613.6 $ 603.5 (1) The 2022 amount shown includes $5.3 million of floor line debt for the discontinued automotive segment that was repaid during 2023.
December 31, ($ in millions) 2024 2023 Change Asset-based financing: Floor lines for inventory $ 209.9 $ 291.3 $ (81.4) Total asset-based financing 209.9 291.3 (81.4) Term loan facility 227.1 248.7 (21.6) 6.75% convertible senior notes (1) 38.8 38.8 — Notes payable 1.5 2.1 (0.6) RumbleOn Finance secured loan facility (2) — 12.2 (12.2) Total principal of long-term debt and floor lines payable 477.3 593.1 (115.8) Less: unamortized debt discount and issuance costs (16.3) (29.3) 13.0 Total debt, net $ 461.0 $ 563.8 $ (102.8) (1) Repaid on January 2, 2025.
In connection with our goodwill impairment tests performed in the fourth quarter of 2022, we recognized noncash goodwill impairment losses of $26.0 million in the Company’s automotive reporting unit, which is reported in discontinued operations, and $218.6 million to our powersports reporting unit.
In connection with our impairment test performed in the fourth quarter of 2023, we recognized non-cash impairment charges attributable to the powersports reporting unit of $23.1 million for goodwill and $37.0 million for franchise rights.
The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities at the date of our financial statements.
Both years included the sale of common stock in rights offerings. 27 Table of Contents Critical Accounting Estimates We prepare our consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”), which require us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities at the date of our financial statements.
Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition. Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses.
We base our estimates on historical experience and various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.
Income Tax Provision (Benefit) from Continuing Operations ($ in millions) 2023 2022 Change % Change Income tax provision (benefit) $ 59.3 $ (72.0) $ 131.3 (182.4) % Effective tax rate (38.3) % 23.6 % Income tax expense increased in 2023 primarily due to a $92.9 million increase in the valuation allowance and the improvement in the pre-tax loss from continuing operations, which resulted in a negative effective tax rate, as we recorded income tax expense on a loss from continuing operations before income taxes.
In 2023 we recorded a $92.9 million increase in the valuation allowance, which resulted in a negative effective tax rate, as we recorded income tax expense on a loss from continuing operations before income taxes. For further discussion, see Note 12. Seasonality Historically, the powersports industry has been seasonal with traffic and sales strongest in the spring and summer quarters.
These charges and the estimates involved are discussed further in Critical Accounting Policies and Note 7-Goodwill and Intangible Assets. Depreciation and Amortization ($ in millions) 2023 2022 Change % Change Depreciation and amortization $ 22.0 $ 23.0 $ (1.0) (4.3) % Depreciation and amortization was $1.0 million lower in 2023.
Impairment of Franchise Rights and Other Intangible Assets The non-cash impairment charge resulting from our annual impairment test was $39.3 million compared to $60.1 million in 2023. These charges and the estimates involved are discussed further in Critical Accounting Estimates and Note 1.
Compensation and related costs in 2023 includes some of the benefits from our identified cost savings initiatives that were offset partially by $5.3 million of personnel restructuring costs and $5.1 million of costs related to a proxy contest and reorganization of our board of directors.
SG&A expenses in 2023 included certain expenses that did not recur in 2024, such as $5.3 million of personnel restructuring costs, $5.1 million of charges related to a proxy contest and reorganization of the Board, and $2.7 million of integration costs and professional fees associated with acquisitions.
The significant accounting policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.
Set forth below are the accounting estimates that we have identified as critical to our business operations and understanding our reported financial results, based on the high degree of judgment or complexity in their application. See Note 1 of the consolidated financial statements for a discussion of our significant accounting policies.
Removed
We have grown primarily through acquisitions, the largest to date being our 2021 acquisition of the RideNow business followed by our 2022 acquisition of the Freedom Powersports, LLC (“Freedom Powersports”) and Freedom Powersports Real Estate, LLC (together with Freedom Powersports, the “Freedom Entities”). These acquisitions added 54 powersports dealerships to our Company.
Added
See Forward-Looking and Cautionary Statements and Risk Factors for a discussion of the uncertainties and risks associated with these statements. Unless otherwise specified, the meanings of all defined terms in this MD&A are consistent with the meanings of such terms as defined in the Notes to Consolidated Financial Statements.
Removed
As of December 31, 2023, w e operated 54 retail locations consisting of over 500 powersports franchises (representing 52 different brands of motorcycles, ATVs, SXSs, PWCs, snowmobiles, and other powersports products) in Alabama, Arizona, California, Florida, Georgia, Kansas, Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Texas, and Washington.
Added
We source high quality pre-owned inventory directly from consumers via our proprietary RideNow Cash Offer technology. Vehicle Transportation Services Segment Express provides transportation brokerage services facilitating automobile transportation primarily between and among dealerships and auctions through an asset-light business model.
Removed
We source high quality pre-owned inventory online via our proprietary Cash Offer technology, which allows us to purchase pre-owned units directly from consumers. Our powersports retail distribution locations represent all major manufacturers, or OEMs, and their representative brands, including those listed below.
Added
In the first quarter of 2025, several employees, including almost all brokers, exited Express, which is expected to reduce the volume of business conducted by this segment in 2025. 19 Table of Contents While Express is in the process of hiring additional employees, including brokers, we expect 2025 volume to be substantially less than what was generated in 2024 as we rebuild the business.
Removed
Powersports’ Representative Brands Alumacraft Hurricane Boats Ski-Doo Argo Husqvarna Soul E Bikes Benelli Indian Motorcycles Specialized (bicycles) Blazer Boats Karavan Trailers Speed/UTV BMW Kawasaki SSR Can-Am Kayo STACYC (electric) CF Moto KTM Suzuki Club Car Lynx (Snowmobiles) Tidewater Boats Continental Trailers MAGICTILT Trailers Timbersled (snow bikes) Crevalle Boats Manitou Triton Trailers Cub Cadet Manitou (pontoon boats) Triumph Ducati Mercury (boat engines) Wellcraft (boats) Gas-Gas Polaris Yamaha Godfrey Pontoon Boats Royal Enfield Yamaha Marine Harley-Davidson Scarab Zero Motorcycles Hisun Sea-Doo Zieman Trailers Honda Segway Powersports Vehicle Transportation Services Segment Express provides asset-light transportation brokerage services facilitating automobile transportation primarily between and among dealers. 21 Discontinued Operations Through June 30, 2023, we participated in the automotive industry through our wholly owned wholesale distributor of pre-owned automotive inventory, Wholesale, Inc., and our exotics retailer AutoSport USA, Inc., which operated under the name Got Speed.
Added
Discontinued Operations Through June 30, 2023, we participated in the pre-owned automotive industry, the results of which are reported as discontinued operations. See Note 17 for more information. Recent Developments Effective January 13, 2025, our Board appointed our Chairman, Michael Quartieri, as CEO of the Company. Mr.
Removed
We began winding this business down in the third quarter of 2022. The results of this automotive segment are reported as discontinued operations. See Note 19-Discontinued Operations for more information. KEY OPERATING METRICS We regularly review a number of key operating metrics to evaluate our segments, measure our progress, and make operating decisions.
Added
Quartieri previously served as Chief Financial Officer of Dave and Buster’s Entertainment, Inc. and has other executive level corporate experience with other public companies. Mr. Quartieri replaced Michael Kennedy, whose employment as the Company’s CEO ended on January 13, 2025. The performance stock options previously granted to Mr.
Removed
Vehicles sold through retail channels generally have the highest dollar gross profit per vehicle given the vehicle is sold directly to the consumer.
Added
Kennedy were forfeited, but severance payments and COBRA benefits will be paid over 12 months to Mr. Kennedy in accordance with his Employment Agreement. In addition, Cameron Tkach, who previously served as the Company’s Vice President, Dealership Operations, was appointed Executive Vice President and Chief Operating Officer.
Removed
Vehicles delivered are the primary driver of revenue and, in turn, profitability in the vehicle transportation services segment. Total Gross Profit Per Unit Total gross profit per vehicle transported represents the difference between the price received from non-affiliated customers and our cost to contract an independent third-party transporter divided by the number of third-party vehicles transported.
Added
On January 2, 2025, we repaid principal of $38.8 million plus accrued interest due under our 6.75% convertible senior notes. KEY MEASURES OF OUR PERFORMANCE We regularly review a number of key metrics to manage our business and evaluate financial and operating performance, such as revenue, volume and gross profit measures.
Removed
During 2023, the Company earned, on average, $12,660 more in total revenue per vehicle from retail customers than wholesale customers. Overall, the average revenue per vehicle decreased by $900, much of which is attributable to price levels continuing to normalize to pre-pandemic levels as demand/supply imbalances softened in the overall market.
Added
(2) Calculated as total gross profit divided by new and pre-owned retail powersports units sold. 23 Table of Contents Total powersports revenue decreased $159.0 million, with 7,674 fewer vehicles sold. During 2024, the Company recorded, on average, $12,884 more in total revenue per vehicle sold via retail channels (which benefit from ancillary products) than those sold via wholesale channels.
Removed
The record levels of revenue in 2022 benefited from high demand and limited supply, which led to premium retail pricing, as was seen generally throughout the industry.
Added
Overall, the average revenue per vehicle in 2024 decreased by $367. Powersports vehicle gross profit decreased by $45.2 million compared to last year, which included $12.6 million write-down of inventory to net realizable value. Macroeconomic conditions were the primary driver of the decrease in total gross profit.
Removed
As disclosed last year, average revenue per vehicle was a relatively high number in 2022 given historical trends for the business, which we attributed to a combination of product mix and elevated pricing of both new and pre-owned vehicles given the demand/supply imbalance.
Added
Gross profit for this segment decreased 2.2%, driven by a decrease in gross profit per vehicle that was partially offset by an increase in volume.
Removed
Powersports vehicle gross profit decreased by $83.6 million in 2023 compared to 2022, and was impacted by a $12.6 million write-down of inventory to net realizable value in the fourth quarter of 2023, as certain pre-owned inventory that was acquired at elevated prices and selling prices had returned to more normal, pre-pandemic levels.
Added
Our total employee count at the end of 2024 was down 18.2% from the end of 2023, which also included cost savings initiatives, some of which were implemented in the latter part of 2023.
Removed
Macroeconomic conditions were the primary driver of the decrease in gross profit per unit, as the demand/supply imbalance and impacts of the COVID-19 pandemic continued to soften throughout 2023, resulting in more competitive market pricing.
Added
Depreciation and Amortization ($ in millions) 2024 2023 Change % Change Depreciation and amortization $ 14.3 $ 22.0 $ (7.7) (35.0) % Depreciation and amortization was $7.7 million lower than last year, which included a $4.0 million write off of certain software due to changes in strategy and cost savings measures. 24 Table of Contents Floor Plan Interest Expense ($ in millions) 2024 2023 Change % Change Floor plan interest expense $ 16.0 $ 13.2 $ 2.8 21.2 % We have floor plan agreements with both manufacturer-affiliated finance companies and with related and non-related third parties for most new and certain pre-owned vehicles.
Removed
Gross profit for this segment in 2023 increased 15.1%, as compared to the prior year amounts, driven by the increase in vehicles transported and an increase in gross profit per vehicle.
Added
The interest rates on these floor plan notes payable commitments vary by lender and are variable rates. Floor plan interest expense also includes the amortization of the costs to obtain these credit lines as well as certain costs to modify these credit lines.
Removed
Selling, General and Administrative (“SG&A”) Expenses SG&A expenses include costs and expenses for compensation and benefits, advertising and marketing, developing and operating our product procurement and distribution system, leasing and operating our facilities, and other corporate overhead expenses, including expenses associated with technology development, legal, accounting, finance, and business development.
Added
Floor plan interest expense in 2024 was higher than 2023 primarily due to higher interest rates and the mix of floored inventory. See Notes 4, 14 and 15 for information on our Floor Plan Lines and related interest.
Removed
We expect to see the full effects of the SG&A expense reductions in 2024, driven by headcount reductions that occurred in 2023, subleases of unused facilities, and cost restructuring at our dealerships.
Added
Other Interest Expense ($ in millions) 2024 2023 Change % Change Term loan $ 42.1 $ 52.9 $ (10.8) (20.4) % Convertible debt 2.6 5.8 (3.2) (55.2) % Finance lease obligation (1) 4.6 1.1 3.5 318.2 % ROF line of credit — 2.7 (2.7) (100.0) % Interest income (1.5) — (1.5) NM Other 0.3 1.5 (1.2) (80.0) % Other interest expense, net $ 48.1 $ 64.0 $ (15.9) (24.8) % (1) See discussion of the September 2023 sale-leaseback transaction in Note 9.
Removed
We realized some of the expense reductions in 2023 that were partially offset by costs for other activities, resulting in SG&A expenses being lower overall by $7.2 million in 2023.
Added
Interest on our term loan, which is charged at variable rates, comprises the majority of other interest expense. Average borrowings under the term loan in 2024 were considerably lower than 2023 due to the significant amount of debt paid down in the latter part of 2023.
Removed
Included in 2022 SG&A expenses were professional fees and other costs incurred to close our acquisition of the Freedom Entities and integrate this business as well as the RideNow business, which was acquired in 2021.

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