Greetings, and welcome to the RumbleOn’s Third Quarter 2021 Earnings Conference Call. At this time, all lines are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Will. Thank you, Will. You may begin.

Thank you, Operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleON's third quarter 2021 financial results. Joining me on the call today are Marshall Chesrown, RumbleON's Chairman and Chief Executive Officer; and Peter Levy, RumbleON's President. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at investors.rumbleon.com. Before we start, I would like to remind you that the following discussion contains forward-looking statements including but not limited to RumbleON's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in RumbleON’s periodic and other SEC filings. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and RumbleON assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Also, the following discussion may contain non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, please see our earnings release issued earlier this morning. Our earnings release and supplemental financial results highlight our financial results on an as reported or GAAP basis and on a combined or pro forma basis. In our comments today we will discuss certain pro forma results and all comparisons will be on a year-over-year basis assuming the business combination as of January 01, 2020. Now, I will turn the call over to Marshall. Marshall?

Thank you Will, and thank you everyone for joining us this morning. RumbleON is the nation's first technology based omni-channel marketplace and power sports, transforming the power sports industry. Our vision is to use technology to drive lifetime engagement by offering a best-in-class customer experience, with unmatched omni-channel capabilities, giving consumers a destination for all things power sports. In the third quarter, we closed our business combination with RideNow and delivered strong results demonstrating broad base strength across our business. In addition to delivering $392 million in revenue, record GPU and adjusted EBITDA of $23.6 million; we are increasing our prior guidance ranges. We are pleased with our strong third quarter results and the progress we have made. But this is just the beginning. Our aggressive approach to strategic acquisitions translates to long term market share, as we march towards the objective of transforming and dominating the industry over time. Our full results can be found in the press release and supplemental tables we issued today. So instead of walking through the P&L, I'd like to focus on the drivers and trends we're seeing. Then Peter will come on to talk about our operational progress. And I will walk through our outlook before we take questions. You've heard everyone talking about the supply and demand imbalances in the market for several quarters now. And it's our view that this is not going to correct itself in the next 12 or likely even 24 months. We've said all along that the key to our omni-channel growth strategy is used unit sales. And that insulates us in this environment and it's evident in our results. New vehicle sales were down 7% year-over-year in Q3. But used retail unit sales were up 53%. In September alone, we drove a 65% increase in used…

Thank you, Marshall and good morning, everyone. This has been a transformational year for RumbleON underpinned with our long term commitment in leveraging best-in-class technology. You've seen a lot of announcement recently, including acquiring dealership groups, adding physical locations to our portfolio, and launching our newest fulfillment center concept. We recently announced that we signed a definitive agreement to acquire dealership groups in our existing Florida and Texas markets. Our most recent acquisition announcement Freedom Powersports; includes 13 locations, including in Georgia and Alabama adding Freedom’s founder Kevin Lackey, and his team brings further professionalism, energy and excitement to our entire effort. Kevin is a self-made entrepreneur who sees joining RumbleON at this point of time as an opportunity for him and his team to accelerate their already impressive success and reputation in power sports. Our mission is to provide the best omni-channel customer experience, no matter what portion of the transaction is online or in store. Recently, we opened our first fulfillment center in Orlando, focused on used inventory processing. In doing so, we unveiled proprietary technology, recreating how we inspect, recondition and process used inventory. From cataloguing inventory with detailed descriptions to capturing high definition photos and video via our state of the art and fully automated media capture system. This allows us to effectively standardize the online presentation of inventory for risk free transactions. Since our closing of the combination with RideNow, we've already more than doubled, used showroom inventory available at the stores. And now we will deploy inventory management systems to accurately utilize our data for future stocking and distribution, making sure our vehicles are in the right location at the right time is a clear opportunity for us to grow and maximize market share across the country. Leveraging multiple platforms and associated sales channels…

Thanks Peter. As you can see, we're moving fast, but we're moving with well guided discipline. We are confident in our ability to exceed the milestones and financial targets we set for the year and are increasing our prior full year 2021 revenue and adjusted EBITDA guidance ranges by approximately 5%. We now expect pro forma combined company revenue to be in the range of $1.55 billion to $1.6 billion and adjusted EBITDA in the range of $115 million to $120 million. We are well positioned heading into the final days of 2021. But as a reminder, the fourth quarter is typically the tightest quarter in regards to new inventory industry wide due to manufacturer shutdowns during the holidays. This dynamic is assumed in our guidance. We are executing on our strategic objectives and are excited to share our preliminary expectations for 2022. For full year 2022, we expect to deliver year-over-year revenue and adjusted EBITDA growth in the range of 10% to 15% on an organic basis, driven largely by an increase in used powersport unit sales supported by RumbleON finance. RumbleON has revenue and gross profit opportunities that our competitors in other vehicle segments simply do not. For example, as we expand our physical footprint, we can gain meaningful market share nationwide in used sale, parts, service, accessories, apparel and powersport consumer financing. These high margin services offer significant upside to our long term GPU targets overtime as we gain more market share. As Peter mentioned, we are making strategic yet prudent investments in our growth. We will be investing in technology development, marketing, logistics and facilities in the coming quarters as we integrate the businesses but are confident in our expectation that any SG&A increases will be outpaced by increases in revenue and total gross profit. Beyond our organic growth drivers, we anticipate incremental upside from both our pending and future acquisitions. With over $100 million of cash and cash equivalents on our balance sheet as of September 30, strong free cash flow generation and the $120 million term loan facility we have available for future acquisitions, we believe at this time that we have an appropriate capital structure in place and do not anticipate the need to raise equity capital to fund the cash consideration of our pending acquisitions. We are focused on delivering on our strategic priorities and are committed to delivering sustainable long term value for our shareholders. And with that operator, we're ready for questions.

[Operator Instructions] Our first question comes from Eric Wold with B. Riley Securities. Please proceed with your question.

Thank you. Good morning. Congratulations, all of you guys on the great progress so far with the combination. Couple of questions. I guess one, Marshall we all know about the supply chain issues that have been impacting the availability of new vehicles in the market, but can you give us a sense of the level of used vehicles as your storage versus where you believe they need to be and how easy it's been or impossibly difficult is to bring those vehicles into the next?

Sure. I think obviously there are some offsets with regards to supply chain issues on the new side with the pre-owned. The stores presently are, as Peter mentioned significantly up in inventory. Some stores due to facility constraints are probably at about where they need to be. However, some of the larger stores still have still have room and we're still shipping significant amount. I think that the important part is, as we evolved here is to get shared inventory on all the websites, get consistency and photos, pricing, descriptions, and so forth, will really be a driver of our of our future performance on a pre-owned site.

Got it. And then -- updates in the a few months back. How many dealers are on the platform right now, from the 530, you had a few months back, we often see a significant increase in the number of used vehicles on the website. In recent months, you say get a sense of how much of that is driven by more dealers from a platform versus, more efficient vehicle flow; the deals are already on the platform.

Well, there's well over 500 dealers on the platform presently. The new vehicle inventories, as I mentioned, are flat at best. The used vehicles primarily because of the increase on the RideNow websites, keep in mind each of the stores now is ridenow.com, but there's also individual stores, with their inventories being higher, that makes up a lot of the delta. I believe, at the end of last quarter, we were in the 60,000 range as far as listings. And we're north of 80,000 today, and we see that continue to grow, especially as new inventories start to come but more back into balance. But as we said, we're from what we're hearing and speaking to our manufacturing partners, it doesn't look like there's a lot of light at the end of the tunnel anytime soon. And we certainly don't expect any normalization. But with regards to that, I would say that, really the processes have changed. I think you are reading about it in the automobile space. I think you're seeing it in powersports as well, well, where the stores are getting significantly more efficient at pre selling inbound inventory. So I think what we’ll first have to shake out is we’ll have to fill all of the current needs of pre-sold inventory, then we can obviously start talking about the potential of feeding some type of pent up demand. And we certainly don't have a crystal ball on what that pent up demand is, but as long as this supply imbalance has been in place, I think it's reasonable to expect there's a there's a fairly sizable pent up demand.

Got it. And then final question for me. How should we reconcile the LTM, your pro forma adjusted EBITDA of $130 million at the end of June with the new guidance of $115 to $120. I'm assuming that the seasonality talked about in the fourth quarter was there last year as well. So maybe what's baked into that into the new vehicle supply chain concerns and conservatism on your part into kind of your annual, how do I think about those two numbers?

Well, I think clearly, we want to create a cadence of beat and raise if possible. But we do want to -- we are still in the midst of a very early on integration. And so there's always the potential of hiccups, I guess, in that we haven't determined any or seen any of any size at this time. But certainly is always possible. Second thing is the holidays are always kind of unknown. On the new vehicle side, as you as you're probably aware, new vehicle deliveries will slow the ability for truckers to pick up. Keep in mind, we buy the lion's share of our inventory direct from what we say mom and dad’s direct from consumers, and the ability to pick those up in a timely fashion and stuff could be constrained through Thanksgiving and Christmas. So that's part of the reason we gave some clear guidance for total years so that obviously you can have a good expectation of what fourth quarter would look like and then also talked about the growth for 2022. And everything that we've given you today is on an organic is on an organic basis and we do plan to stay that course. As we move forward we don't want to be in 2020 to be presenting pro forma numbers and those types of things. So we will disclose as the transactions are closed. We'll disclose obviously more detail and give you the net effects to the guidance.

Perfect. Thank you, Marshall.

Thank you. Our next question is from Mike Baker with D.A. Davidson. Please proceed with your question.

Excuse me, thanks. A couple of follow-ups. One, Marshall, you said that new vehicle inventories are trending positive at the stores, which seems favorable. So I'm saying they're still inventory issues. You said there's no really light at the end of the tunnel. But that feels like it's getting a little bit better. Is that fair to say? Or did I misinterpret that?

I think in some manufacturers, we've seen a little uptick in availability. But as I said earlier, I mean, it's everything right now is turning about as fast as they can unload it. There are some new products coming out that looked like some of the inventory levels might be constrained a bit. So I think if, I was to look at it through your lens, I would say probably anticipate fairly flat new vehicle sales. We don't, we don't see anything on the radar screen that would lead us to believe that we'll have any continued erosion and total volume. But and I don't believe that's consistent with what the large manufacturers are sharing as well. But they also haven't shared any information that they feel comfortable that those inventories will be, will be going up. So the thing about -- a couple, a couple of you have mentioned seasonality. And you've heard in my notes, I didn't mention a lot of seasonality. I know that its RumbleON, we talked about it a lot in our own past of four years. But right now we did a really strategic thing in focusing on the Sunbelt, as they built their company. And if you look back through the numbers, and a lot of those numbers we've provided you and obviously, there's a lot of stuff out there in the filings. But you will see that the seasonality effect for them has been really, really mitigated because of their focus on Sunbelt regions. So we'll share a little more of that as we as we continue to grow and give you a heads up on what we think might or might not be the effect of that. But we do think that an omni-channel really insulate you a little bit from that, because we'll be moving vehicles, depending on seasonality. From maybe the snow belt on two wheel vehicles. Those vehicles will be repositioned into the southern markets, and vice versa, as spring comes, maybe more moves north. That really comes down Mike to having a centralized inventory system and sharing all inventory. One expectation you should have is today, the individual dealerships, websites really just host their own inventory that they presently have. And as we move forward, you will see that all the inventory, I believe today between all entities, I think we're around 7000, pre-owned vehicles in stock. And those 7000 will be replicated across the entire group of websites as we move forward.

Yes. Sounds like it's going to be pretty powerful. Longer term question. Sorry for my voice here. But GPUs above 5000, I think some of that must be a function of the tight supply versus demand. So how sustainable is it and perhaps an offset? If supply and demand comes more in balance is you're improving efficiency and reconditioning can you talk about how that might impact that number? Thanks.

Yes, like we haven't really developing those efficiencies yet. I mean, that's really the purpose of the fulfillment center is to get the stores on a, what I call a key pill inventory program. So in other words, once we determine based on the data, what a proper inventory should be in any individual store, and let's just say for ease, that it's 50 units, then the philosophy would be we would keep that store full of 50 of the right units at all times from the fulfillment center, but yet they would have access to the entire inventory. On the on the gross margin side, yes, the benefit on the new vehicle side has been, a fairly significant increase. I would tell you on a percentage basis it is nowhere near what they've experienced on the car side. The amount of uptick is fairly manageable. On the pre-owned side, I think it's really a point of merging a primarily dealer supply model be at RumbleON to a pure retail play, and obviously pushing significantly higher the dealerships. Our advantage is now we have a distribution of at retail and obviously retail gross margins are significantly higher. We post that by the way, in a way that you can do comparables to the other automotive companies out there, whether they be pure online plays offline plays or pure used vehicle plays. And I do think it's interesting that the ASP is significantly lower, and the actual dollar gross margin is significantly higher. I mentioned in my notes about, that gives us some flexibility. Please don't take that that we plan to lower gross margins. But I would tell you that anytime we have the ability, we have very high gross margins. And if we have the ability to give up a small amount of gross margin for significant gains in market share, in the early quarters and years of this company, we think it's very, very important to dominate market share and we'll do so. The nice part about that is we're not under margin pressure in the reverse, where we're also chasing to cover a, margin expectation. So, we're, we think it's really important that everybody looks at these gross margins on $1 basis, on a per unit basis, and compares it to what is out there because I believe that the powersports industry as a whole becomes very, very intriguing.

Yes, I agree with that. Thank you for the color. Appreciate that.

Thank you. Our next question comes from Seth Basham with Wedbush Securities. Please proceed with your question.

Thanks a lot. Good morning, and congrats on a great start to the integration of the acquisition and more to come. On as it relates to the new vehicle side of the business, can you give us some color as to what kind of allocations you're getting from the manufacturers given this tight supply environment with such a large market share? Are you getting disproportionate allocations?

Well, we didn't have any data to probably support that nor what I want to lead you to believe that we're going to get a special favors. I don't think that's the intention of the allocation system. But I would tell you that it varies dramatically from manufacturer to manufacturer. So when we look at it on a total availability basis, and a total average inflows, we are seeing them start to tick up. And there are some new products also coming to the marketplace. Like the new switch that is a BRP product and various others by other manufacturers. And we do see most of those type products as being additive to our total availability, and volumes. So I think your information, Seth, with regards to OEM inflows is probably as accurate as ours is by looking at what you know, the likes of Polaris and Harley Davidson and others are represented to the street.

Yes, what's remarkable is that Polaris and Harley are talking to 50% declines as much as that you guys are seeing much more limited declines. In fact, you're talking to flattish to slightly higher inventory. So it seems like you're significantly outperforming what those manufacturers are suggesting.

I think a big part of it Seth is the really, I mean, we've Peter, and I've been on the road visiting a lot of the stores as of late and the showroom inventories are really, really low. But they are very, very quick to show us all the presale that they have in the system. So I think it's about the turn, is giving us some level of normalcy. I would tell you that on the pre-owned side also, this is an inch, usually, one current year and one year old, pre-owned vehicles aren't exactly the sweet spot, whether you're talking about cars or powersports, because typically they're too close to the valuation of a new one. So they tend to trend low, they are trending a little higher, which obviously that's replacing the inability for us to acquire new vehicles from the OEM.

Got it. Okay. And then on the used side is specific to the finance platform. Could you give us an update there and maybe some data points as relates to increased conversion rates you're seeing because the rollout of the finance platform?

Yes, Seth I’d like to tell you that it's been dramatic, but we have been a little bit slow in the integration of that. It really is just in the early stages. But I would tell you in the stores that we have brought or the locations that we have brought online, we pretty much started in the east and are working west. The returns have been dramatic. I think that -- I think the way to look at it is it's what we're targeting is incremental sales. This isn't a replacement, by any means for any of the captive finance companies, say a Harley Davidson, Credit Corporation or any of those. They buy, they buy very, very aggressively, all applications still go to them as a first and top priority. But, for everybody's interest, I think, if we were if we step in, and we were able to fill a void, say in lower dollar financing, or non-brand financing in these stores, those are incremental sales. And so we do kind of see the finance company going forward as kind of our, our ace in the hole, if you will. Because if you look at the success of the Carvana, and CarMax over the world, I think you're well aware of that, I know your awareness. We talked about it, that, that ability to underwrite your own credit is very, very important to the creation of incremental sales. So summation is we have not seen a significant amount yet, but it is not because of demand. The demand where we have rolled it out has been high. And by the end of the year, we will be fully active in all 40 locations.

Great, good news. And then lastly, relate to your overall goal of three to one new to used going to one to one. Given the environment, you're talking on the new side, and then they used strength we’re seeing especially with the finance platform rollout, how quickly do you think you can achieve that goal? Is this a 2022 Roll?

I would say, yes. I might disappear [ph] for that. But because we have, we haven't, we didn't actually put that in, in our objectives. But we do think that it's very, very achievable, achievable. I mean, much like the car business there's probably five to one, pre-owned transactions taking place versus, versus new to use. And we see what the difference is on the on the car side. And the way we look at itself is it's the majority of these transactions are happening today for power -- for used powersports, through the likes of Craigslist, and, and other listing sites. But, if you just think about that piece of it, the fact that almost 70%, prior to us entering the space, were happening in those peer to peer transactions. It's a very, very inefficient redistribution funnel, because obviously, if I'm selling you my motorcycle across town on, say, Craigslist, I don't have any interest in financing you. I don't have any interest in taking in your trade. And not only that, it's a pretty friction laden transfer event. I don't think I don't think a lot of people are looking forward to the next transaction that they do with a total stranger to the likes of Craigslist. So that's really where we see the disruption and shifting that those sales. As far as the market makes over to the dealerships. The dealerships are significantly more efficient and being able to handle those in a meaningful way. So, and I will tell you one other thing, if if you were, if you were looking at all the individual stores, there, there are already locations that are exceeding the one to one ratio. So the fact that we use those as a cohort and we compare that on a going-forward basis, we are extremely confident on a one-to-one ratio over time. And that one-to-one is not a reduction of new, we’ll continue to build the new in a very meaningful way. This is all additive. And the thing that's important in that equation is we don't have to build another building. We don't have to hire another general manager. These are all very, very accretive to already very high margins in the powersports business

And Seth, this is Peter. I think, also to point out on the acquisition side we have had just I mean in just now the last 35 or 40 days of the integrations of our physical locations, the ability to do a warm handoff to the dealership and the acquisition side allowing for the dealerships to help the mom and dads of the world that might have some anxiety about doing things completely online and then getting them into the store where they think they're just going to trade or sell their vehicle, they actually asked to spend some time in the beautiful locations. They've actually converted these folks into retail sales. So we will forward to a closer percentage somewhere to the CarMax of what happens when folks walk in there to sell their vehicle and then actually convert to a retail sale.

That's great news. And one last question for you around the SG&A base. How should we think about the right G&A run rate going forward? And then as relates to advertising, are you expecting to amplify advertising exchange revenue or keep it flat issue?

Well, as I mentioned, in my notes, we certainly see top line and gross margin, exceeding whatever ramp in SG&A. But I think the only what would you what would I say, conservatism, conservatism on the marketing side would really revolve around making sure we understand the branding of this. We’re going to manage to what we call vertical brands. We're going to have multiple brands out there. We've got RumbleON, we've got RideNow. And then we got 40 individual store locations with their own websites, and hopefully adding Freedom and these others. And so we really have to before we start putting significant marketing dollars to really drive, drive the business, we want to make sure we have a clear understanding of what that vertical branding marketing looks like. So, we will be, I think, right now we're more on the blocking and tackling side stuff. As far as getting all of these websites, right, getting all these websites integrated, make sure inventories are integrated, make sure things are priced and photographed and described properly. And that's just, it's a fairly major undertaking, but we think that we'll be in pretty good shape with that by first quarter.

Wonderful, thank you guys very much.

Thanks Seth. Appreciate it.

Thank you. Our next question comes from Craig Kennison with Baird. Please proceed with your question.

Hey, good morning, thank you for taking my questions as well. Wanted to talk about inflation and maybe understand the type of inflation you are facing from your OEM suppliers and the extent to which you're able to pass that along to consumers.

Well, as far as the market is, Craig, it has been passed on, obviously. The suggested retail prices are published by the manufacturers and as you can probably read they aren't, haven't been excessive by any stretch. I think that we'll obviously, if the market stays as it looks today, and we don't see any turnaround, as I mentioned in my comments, anytime soon, I think we will be able to pass whatever that is along just because the demand is so high in comparison to the supply. But to date, it's been fairly limited. I think we're probably seen more probably we don't talk a lot about parts and service. But we're probably seeing it more on the availability of parts from the manufacturers then we are on the actual units. The units have already been published. We can see inbound flows, but we are seeing average days to fill on parts orders a little behind the curve. And so it'll probably take some time for that to get back up.

Thanks. And then maybe an operational question here. Could you just help us understand how you handle reconditioning operationally where you handle that actual process? And how much you might spend on a per unit basis to prepare these units for resale?

Yes, I think that it's fairly deminimus compared to automotive, for sure, where we would be looking at maybe a $1200 or $1500 average cost for reconditioning and this is probably in the south of 300 range, even that on the retail side. As far as the process, it is, a lot of it today is being done internally in the stores. However, we see a huge opportunity and taking that process out of the stores, other than maybe the trading that they traded for yesterday, probably doesn't make sense to ship it to a fulfillment center and process it at this time and then ship it back. So they will always do some level of reconditioning at the store level. But the vision is to utilize the fulfillment centers for all these vehicles to go in, be processed. And again, I think if you were, if you were to look at our cost of sales, I want to say it's less than 300 total reconditioning, I don't have it right in front of me. So only that, I'll get it for you. But it's, it's fairly small. I think the issue with powersports really revolves around safety. Because you don't have all of the all of the things that go wrong with cars, it's typically safety. So it's tires and brakes, and those kinds of things that has to start and stop. So it's not a big driver of our plus or minus with regards to retail pricing, and gross margin.

Got it. Thanks. And then just another, I guess, operational or technology related question on the cash offer tool. Is there a way to frame the number of offers that you made in the quarter or in a certain period? And what your conversion rate looks like? That feels like a game changing tool as there's a lot of churn in the marketplace today?

Yes, fair question, Craig. I think we used to really tout that as a standalone RumbleON. I think we're trying to get our arms around these conversion rates at the stores, because it's looking very, very positive. So I would be hesitant to give you those numbers today. But I think on a going forward basis, obviously we’ll want you to understand what that flow is. I would say that as far as the pure 100% online transaction, they are trending upwards. And I think the last time we reported we were in the 10% range. I do believe that between what we're now pushing to the store level, and to and what we're doing 100% online, I think the CarMax levels, and I believe they report around 30% conversion is seriously it serves potential, obviously for us going forward. So again, long, long answer, but I think that it is a number that we should be able to share going forward. But we really want to get our arms around it, get it get it moved out to all the stores. Last piece with regards to cash offer, though that I think is it might be interesting is we now have retail data. And it's actual retail data. This is a 31-year company that has sold hundreds and hundreds of 1000s of dollars, I mean of units over their lifetime. We're just in the process of integrating all that data. And why that's important is because we will have retail data to say this vehicle in this location, at this time of year will turn at this level at x margin. And those are benefits that we didn't have before. And we think it's going to be really, really compelling when it comes to inventory management. Because we can dial up if we know we have a high margin vehicle and low day supply, we can dial up the algorithm within cash offer tool to be able to get a much higher capture rate on the fastest turning product. So everything we do is database. And, we just think the more and more data we acquire, the more efficient we're going to get and that should reflect directly into our capture rates.

That's great. Thank you, Marshall.

Thanks, Craig. Appreciate it.

Thank you for your questions at this time. I would like to turn the floor back over to Marshall Chesrown for your closing comments.

Great. Yes, I won't take up any more of your time. You guys been on here for quite a while. But I do want to thank everybody for joining us today. Obviously these are really exciting times for RumbleON and right now and all of our teams. We're looking forward to speaking to you for Q4 and we certainly wish everybody a very, very happy holiday season. We'll talk soon. Thanks again.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.