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8-K - CURRENT REPORT - RumbleOn, Inc. | rmbl_8k.htm |
EX-99.3 - COMPANY PRESENTATION - RumbleOn, Inc. | rmbl_ex993.htm |
EX-99.1 - SHAREHOLDER LETTER - RumbleOn, Inc. | rmbl_ex991.htm |
Exhibit 99.2
RumbleOn Enters into Definitive Agreements to Acquire Wholesale
Inc. and Wholesale Express LLC
Announces pricing of approximately $21.5 million Private Placement
of Class B shares
Releases Preliminary Third Quarter 2018 Financial
Results
Hosts a Conference Call Today at 10:00 a.m. ET
CHARLOTTE, N.C. — October XX,
2018 — RumbleOn
(NASDAQ: RMBL)
today announced that it has entered into definitive agreements to
acquire Wholesale, Inc. and Wholesale Express, LLC (together
“Wholesale”), for total consideration of approximately
$23.0 million consisting of $16 million of cash and the remaining
balance in RumbleOn Class B shares, with the aggregate
consideration subject to adjustment based on the stock price of the
RumbleOn Class B Common Stock at closing. RumbleOn also announced
the pricing of a $21.5 million private placement of Class B shares,
expanded its existing credit facility by $5.0 million and reported
preliminary third quarter financial results. RumbleOn will host a
conference call to discuss the transaction and preliminary results
today, October 26, 2018 at 10:00 a.m. ET. RumbleOn issued a shareholder letter and
supplemental investor presentation with further discussion of the
acquisition, financing and preliminary third quarter results for
the period ended September 30, 2018, which may be accessed on
the Investor
Relations section of the
Company’s website.
Management Commentary:
“Our plan has always been to expand into adjacent
markets and the acquisition of Wholesale provides rapid and
profitable entrance into the 44 million annual sales automobile
market. We will enter this new market with meaningful size and
scale, and without the significant start-up costs typically
associated with new market entries,” commented Marshall Chesrown, Founder, Chairman and
CEO of RumbleOn. “RumbleOn and Wholesale have strong synergies
across our business models and solutions. The combination of
the current visitors already familiar with our powersports programs
and Wholesale’s prominent brand and reputation creates an
incredible opportunity.”
“We look forward to
welcoming the Wholesale employees to the RumbleOn team and
leveraging the company’s powerful brand and prominent market
position as we execute on our mission to transform the way
any pre-owned vehicle with a
VIN number can be bought and sold.
Our business combination will be a
powerful force to deliver value to our customers, partners and
shareholders,” concluded
Chesrown.
“It’s
clear that consumers are more comfortable buying and selling
vehicles sight-unseen than ever before. RumbleOn’s rapid
growth over the past year demonstrates the strength of the
technology platform, the efficiency of the business model and the
consumer appeal of its offering. We are excited to join RumbleOn
and integrate their technology and online presence as we endeavor
to expand the Wholesale Inc. brand across America,” commented
Steve Brewster, owner of Wholesale Inc.
Brief Deal Summary:
Wholesale Inc. has been in
business for over 27 years and is one of the largest independent
distributors of pre-owned vehicles in the United States and
Wholesale Express, LLC is its related logistics company. Wholesale
buys and sells approximately 2,000 vehicles per month to dealers
and consumers nationwide, with a historical five-year compounded
growth in unit sales is in excess of 15%. Consistent with
RumbleOn’s strategy, Wholesale offers these vehicles to
consumers for a limited time, while making them available to
dealers. The company has grown into a well-respected brand and has
an outstanding regional distribution platform that can be
replicated to a national footprint. In 2018, Wholesale Inc. is
expected to sell more than 21,000 vehicles and Wholesale Express,
LLC is expected to transport more than 70,000
vehicles.
For the
six months ended June 30, 2018, Wholesale Inc. and Wholesale
Express, LLC generated $328.6 million in revenue and $2.0 million
in Net Income. On a pro-forma basis, the combined company would
have generated revenue of $350.6 million and a net loss of $6.3
million for the same period. RumbleOn has included historical
results on a pro-forma basis in the supplemental slide presentation
that can be found on the investor relations section of our
website.
1
Under
the terms of the agreement, which have been unanimously approved by
each company, RumbleOn will purchase Wholesale for $23.0 million, consisting of $16.0 million of cash
and the remaining balance in RumbleOn Class B shares, with the
aggregate consideration and number of shares issued subject to
adjustment based on the stock price of the RumbleOn Class B Common
Stock at closing. The
acquisitions of the Wholesale entities are subject to customary
closing conditions including the completion of the private
placement described further below, and are expected to close on
Monday, October 29, 2018.
Wholesale’s
management team and full staff will join RumbleOn and continue
operations under the Wholesale brand, which will be co-branded with
RumbleOn. RumbleOn intends to begin integrating the companies
immediately after the closing and will roll out processes and
integrations over the next several quarters.
Private Placement:
RumbleOn
announced the pricing of a private placement to certain
institutional and other accredited investors of its Class B Common
Stock at a purchase price of $7.10 per share. The gross proceeds to
the Company will be approximately $21.5 million. RumbleOn expects
to use the proceeds from the private placement to acquire the
Wholesale entities and for working capital. The private placement
is fully subscribed and is expected to close on Monday, October 29,
2018, subject to customary closing conditions.
In
addition to the private placement, RumbleOn expanded its existing
credit facility by $5.0 million.
The
securities offered in the private placement have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or applicable state securities laws, and
accordingly may not be offered or sold in the United
States except pursuant to an effective registration statement
or an applicable exemption from the
registration requirements of the Securities Act and such applicable
state securities laws. The Company has agreed to file a
registration statement with the Securities and Exchange
Commission registering the resale of the shares of Class B Common
Stock issued in the private placement.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the securities, by either the
Company or the investors in the private placement, nor shall there
be any sale of the securities in any state in which such offer,
solicitation or sale would be unlawful before the registration or
qualification under the securities laws of such state. Any offering
of the securities under the resale registration statement will only
be by means of a prospectus.
Preliminary Q3 2018
Results1
Summary:
These
preliminary, unaudited, operating results are not a comprehensive
statement of financial results for the three months ended September
30, 2018 and should not be viewed as a substitute for full
consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States.
Complete financial results will be provided in RumbleOn’s
Form 10Q which will be filed with the SEC on or before November 14,
2018.
All
comparisons stated below are versus Q2 2018, unless otherwise
noted.
●
Total
vehicle unit sales increased to 2,875, up from 2,013 representing a
43% increase. Unit sales grew more than 7x in the 9 months from
January to September 2018
●
Total
revenue was $19.3 million, up from $13.9 million representing a 38%
increase
●
Total
gross profit was $2.0 million up from $1.3 million, representing a
59% increase
●
Gross
margin per unit was 12.0%, up from 11.2%, an 80-basis point
improvement
●
Net
loss was $6.8 million, compared to a net loss of $4.7
million
●
$0.46
loss per share based on 14,920,693 basic and fully diluted Class B
shares, versus $0.36 loss per share based on 13,006,893 basic and
fully diluted Class B shares
●
Average
selling price was $6,788 down from $7,113
●
As
of September 30, 2018, we had $12.8 million in cash and
equivalents.
Full Year 2018 Outlook:
●
Revenue
in the range of approximately $70 to $85 million
●
Unit
sales in the range of 9,000 to 11,000
●
Gross
margin per unit in the range of 11% to 13%
Conference Call Details:
RumbleOn’s management will host a conference call today,
October 26, 2018 at 10:00 a.m. Eastern Time to discuss the pending
acquisition and preliminary third quarter results. A live and
archived webcast of the call can be accessed from the Events &
Presentations section of RumbleOn’s Investor Relations
website, or by following this
link. Investors and analysts
can participate on the conference call by dialing (877) 273-6127 or
(647) 689-5394 outside the U.S. An audio replay of the call will be
available via telephone for seven days, beginning two hours after
the call. To listen to the replay please dial (800) 585-8367, or
(416) 621-4642 for callers outside the U.S. (access code
2464199).
###
2
About RumbleOn
RumbleOn operates a capital-light disruptive e-commerce
platform facilitating the ability of both consumers and dealers to
Buy-Sell-Trade-Finance pre-owned vehicles in one online location.
RumbleOn’s goal is to transform the way pre-owned vehicles
are bought and sold by providing users with the most efficient,
timely and transparent transaction experience. RumbleOn’s
initial focus is the market for VIN specific pre-owned powersport
vehicles with an emphasis on motorcycles and other powersports.
Serving both consumers and dealers, through its 100-percent-online
marketplace platform, RumbleOn makes cash offers for the purchase
of pre-owned vehicles. In addition, RumbleOn offers a large
inventory of pre-owned vehicles for sale along with third-party
financing and associated products.
Footnotes:
1 The preliminary financial data included herein has been
prepared by, and is the responsibility of, RumbleOn’s
management. RumbleOn’s independent auditors have not audited,
reviewed, compiled or performed any procedures with respect to such
preliminary financial data. These preliminary operating results are
not a comprehensive statement of financial results for the three
months ended September 30, 2018 and should not be viewed as a
substitute for full consolidated financial statements prepared in
accordance with accounting principles generally accepted in the
United States. Complete financial results will be provided in
RumbleOn’s Form 10Q which will be filed with the SEC on or
before November 14, 2018.
Forward Looking Statements:
This
letter contains “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward looking
statements include statements related to the closings of the
Wholesale acquisitions and the closing of the private placement.
Also, these forward-looking statements reflect RumbleOn’s
current expectations, projections and guidance with respect to its
financial condition, results of operations, plans, and objectives.
The inclusion of projections and guidance in this press release
should not be regarded as an indication that RumbleOn considered,
or now considers, them to be a reliable prediction of future
results. RumbleOn cautions that these statements, projections and
guidance are qualified by important factors that could cause actual
results to differ materially from those reflected by the
forward-looking statements contained in this press release. Such
factors include the “Risk Factors” set forth in
RumbleOn’s most recent Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. All
forward-looking statements are based on information available to
RumbleOn on the date of this press release and RumbleOn assumes no
obligation to update such statements, except as required by
law.
Investor Contact:
Whitney Kukulka
investors@rumbleon.com
Media Contact
RumbleOn@blastmedia.com
3
RumbleOn, Inc.
Preliminary
Condensed Consolidated Statements of Operations
(Unaudited)
|
Three-months
Ended
September
30,
|
Nine-months
Ended
September
30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Revenue:
|
|
|
|
|
Pre-owned vehicle
sales
|
$18,975,968
|
$3,544,372
|
$40,821,764
|
$3,626,312
|
Other sales and
revenue
|
279,054
|
161,770
|
427,997
|
235,241
|
Total
Revenue
|
19,255,022
|
3,706,142
|
41,249,761
|
3,861,553
|
|
|
|
|
|
Cost of
revenue
|
17,248,594
|
3,478,124
|
37,419,598
|
3,627,455
|
|
|
|
|
|
Gross
profit
|
2,006,428
|
228,018
|
3,830,163
|
(234,098)
|
|
|
|
|
|
Selling, general
and administrative
|
8,262,381
|
2,326,043
|
17,688,382
|
4,690,216
|
|
|
|
|
|
Depreciation and
amortization
|
247,667
|
129,277
|
671,264
|
302,697
|
|
|
|
|
|
Operating
loss
|
(6,503,620)
|
(2,227,302)
|
(14,529,483)
|
(4,758,815)
|
|
|
|
|
|
Interest
expense
|
333,448
|
90,201
|
657,789
|
373,808
|
|
|
|
|
|
Net loss before
provision for income taxes
|
(6,837,068)
|
(2,317,503)
|
(15,187,272)
|
(5,132,623)
|
|
|
|
|
|
Benefit for income
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
loss
|
$(6,837,068)
|
$(2,317,503)
|
$(15,187,272)
|
$(5,132,623)
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic and fully
diluted
|
14,920,693
|
10,018,541
|
13,626,006
|
9,105,429
|
|
|
|
|
|
Net loss per share
- basic and fully diluted
|
$(0.46)
|
$(0.23)
|
$(1.11)
|
$(0.56)
|
4