Adjusted EBITDA of $0.6M and increase of $1.4M to $0.06 Per Share
Adjusted Net Income of $0.2M and increase of $1.3M to $0.02 Per Share
All financial comparisons stated below are versus Q1 2020, unless otherwise noted
PLANTATION, Fla., Aug. 14, 2020 (GLOBE NEWSWIRE) -- LMP Automotive Holdings, Inc. (NASDAQ:LMPX) (the "Company"), an e-commerce and facilities-based platform for consumers who desire to buy, sell, subscribe for or finance pre-owned and new automobiles, today announced its first quarter 2020 financial results for the period ended June 30, 2020. As previously announced, Management will hold a conference call at 5:30 p.m. ET to review and discuss the Company's business and results.
Summary of Q2 2020 Results All financial comparisons stated below are versus Q1 2020, unless otherwise noted
Revenue totaled $7.716 million, an increase of 44%;
Total gross profit was $1,521 million, an increase of 85%;
Gross profit margin was 19.7%, an increase of 85%;
Net income was $216 thousand, an increase of $1.936 million to .02 per share based on 9.92 million shares issued and outstanding;
Net Income margin was 2.8%, an increase from (32.2%);
Cash, shareholder equity, and current shares outstanding at the end of the quarter was $17,650,438, $32,203,868, and 9,924,506, respectively;
Adjusted EBITDA1 was $625 thousand, an increase of $1.396 million to $0.06 per share;
Adjusted EBITDA1 margin was 8.1%, an increase from (14.4) %;
Adjusted net income was $242 thousand, and $0.02 per share;
Adjusted net income margin was 3.1%;
Sam Tawfik, the Company's Chairman and Chief Executive Officer commented, "The strong sequential improvements throughout the quarter, coupled with our responsiveness to the current environment, led us to the highest quarterly revenue and earnings per share in our history. This record performance illustrates the immense opportunity that exists within our industry that we are exploiting through continued growth and the activation of our e-commerce sales, subscription, and dealership acquisition strategy. The way the team handled the dynamic and difficult environment is a testament to what the future can bring….we have only just begun and are extremely proud of our team," Mr. Tawfik added, "In July, we announced an agreement to purchase our first Franchise Dealership located in the Southeast region of the United States. We are seeing a robust acquisition market as we continue to build our pipeline of prospective dealership acquisitions and intend accelerating our acquisition strategy moving forward. Looking forward, we are as optimistic as ever and focused on our next-generation of innovation and growth as we roll-out e-commerce home delivery, site-to-store, and ship-from-store delivery strategies for our customers and demonstrate the value of our e-commerce hybrid model at the growing list of auto dealerships we intend to acquire".
Tawfik concluded, "At LMP, we intend to demonstrate rapid, efficient, and profitable expansion in the online-centric economy. LMP is focused on acquiring dealer groups to create concentrated clusters of dealerships to derive maximum SG&A efficiency while expanding consumer product and delivery optionality. At the same time, we plan on maintaining each dealership's local brand recognition and online presence while simultaneously aggregating the dealership's new and used inventory on lmpmotors.com. By leveraging our access to acquired dealership inventories we can create one of the largest and most diverse online stores, providing consumers multiple vehicle and ownership. We plan to grow revenues and earnings of dealerships that we acquire by adding e-commerce and subscription options for their customers as well as "tech" enabling them. We believe this combined approach will produce continued revenue and earnings growth for us and our shareholders."
Second Quarter 2020 Financial Results Discussion All financial comparisons stated below are versus Q1 2020, unless otherwise noted
Total revenue in the second quarter of 2020 increased 44% to $7.716 million, compared to $5.350 million in the first quarter of 2020. The growth in sequential revenue in the second quarter of 2020 was primarily driven by the increase in sales from 'sales-type' lease contracts, and increased vehicle sales revenues.
Gross profit in the second quarter of 2020 increased 85% to $1.521 million, compared to $820,428, in the first quarter of 2020. The growth in sequential gross profits was driven by the gross margins recognized on sales-type lease contracts and increased gross margins on vehicle sales revenues.
The Company's SG&A expenses were $675,135 during the three-month period ended June 30, 2020, a decrease of $1,025,481 versus $1,700,616 during the three-month period ended March 31, 2020. The decrease is mainly due to expenses related to payroll of approximately $596,000, travel costs of approximately $202,000, contingencies of approximately $111,000, outside services of approximately $81,000 and administrative expenses approximately $35,000 associated with the Company's follow-on public offering and asset purchase in February 2020.
Acquisition, consulting, and legal expenses were $280,650 during the three months ended June 30, 2020, as compared to $398,270 during the previous three-month period ended March 31, 2020. The decrease in expenses in the second quarter is mainly due to costs associated with prospective acquisition due diligence and the Company's follow on offering in February 2020.
Net income in the second quarter of 2020 totaled $ 216,102, or a profit of $0.02 per share, compared to a net loss of $1,720,188, or a loss of $0.18 per share, in the first quarter of 2020. Total shares outstanding as of June 30, 2020 were 9,924,506, versus 9,326,054 on March 31, 2020.
Cash totaled $17,650,438 at June 30, 2020. This represented a decrease of $372,840 from $18,023,278 at March 31, 2020. The decrease was primarily the result of vehicle purchases.
Additional Second Quarter 2020 Highlights All financial comparisons stated below are versus Q1 2020, unless otherwise noted.
Q2 2020 GAAP Results
Revenue of $7,715,764, an increase of $2,366,051 as compared to Q1 2020;
Subscription fees revenue of $505,931, as compared to $573,722 in Q1 2020;
Total gross profit of $1,520,773, an improvement of $700,345 as compared to Q1 2020;
Net income of $216,102, an increase of $1,936,290 as compared to Q1 2020;
Net automotive inventory was $11,505,588 at the close of the second quarter of 2020;
Net income per share of $0.02, based on weighted average shares of common stock outstanding of 9.9 million shares;
Shares of common stock outstanding at the end of the quarter was 9,924,506 shares; and
Stockholder equity at the end of the year was $32.2 million, an increase of $182 thousand from Q1 2020.
Q2 2020 Non-GAAP Results All financial comparisons stated below are versus Q1 2020, unless otherwise noted.
Adjusted EBITDA2 was $625,117, an increase of $1,396,106 as compared to Q1 2020;
Adjusted Net Income was $241,695, an increase of $1,261,639 as compared to Q1 2020;
Subscription Leasing margin1 decreased from 91.9% to 82.5% as compared to Q1 2020; a decrease of 24.4%;
Vehicle Sales Margins1 increased from 5.2% to 13.8% as compared to Q1 2020, an increase of 301.4%.
2020 Outlook
Sales
LMP Management identified a sales rebound in April, which continued to improve throughout the quarter. Management also witnessed this sales strength continued in July through the first part of August.
LMP believes COVID-19 has caused a re-evaluation of shopping behavior. Many people who previously would not have considered buying a car online are giving it a second thought. In a recent CarGurus survey, 60% of respondents said they were open to buying a car online vs. 32% before. LMP believes this shift began a while ago and is here to stay.
E-commerce
We expect to launch our subscription e-commerce mobile app available at the Apple App Store and Google Play store, along with our next generation e-commerce website this quarter. We expect this to enhance our customer experience, as well as onboarding and processing customer orders quicker, which we hope will result in an increase in future sales.
We believe LMP's subscription and e-commerce technology overlaid at dealerships we intend to acquire will continue to demonstrate the value of our hybrid model of home delivery, site-to-store, and ship-from-store.
Acquisitions
We are seeing a robust acquisition market as we continue to build our pipeline of prospective dealership acquisitions and intend on accelerating our acquisition strategy moving forward, as well as integrating the inventory of our prospective acquisition targets to our main lmpmotors.com online store and mobile app.
Conference Call Management will host an investor conference call at 5:30 p.m. ET on Friday, August 14, 2020 to discuss the Company's Second Quarter 2020 Financial Results and conclude with Q&A from participants. All interested parties can join the call by dialing (855) 327-6837 or (631) 891-4304. A webcast of the call may be accessed at: http://public.viavid.com/index.php?id=141103.
An archived webcast of the conference call will be accessible from the Investor Relations section of the company's website, https://investors.lmpah.com/.
A telephonic replay of the conference call will be available through Friday, August 28, 2020 by dialing (844) 512-2921 or (412) 317-6671 and entering passcode 10010651.
Non-GAAP Financial Measures The Company has provided in this release certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Subscription Leasing Margin and Vehicle Sales Margin, to supplement its financial results that are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Management uses these financial metrics internally in analyzing the Company's financial results to assess operational performance and to determine the Company's future capital requirements. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. The Company believes that both management and investors benefit from referring to these financial metrics in assessing our performance and when planning, forecasting, and analyzing future periods. The Company believes these financial metrics are useful to investors and others to understand and evaluate the Company's operating results and it allows for a more meaningful comparison between the Company's performance and that of competitors. Our use of Adjusted EBITDA, Adjusted Net Income, Subscription Leasing Margin and Vehicle Sales Margin have limitations as analytical tools, and you should not consider these performance measures in isolation from or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider these financial metrics along with other financial performance measures, including total revenues, total gross profit and net loss presented in accordance with GAAP.
Adjusted EBITDA The Company defines Adjusted EBITDA as net income (loss) before interest expense, income tax expense, depreciation (including vehicle depreciation and impairment) and amortization, as well as one-time costs such as acquisition and financing related costs. The following table provides a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis and for each of the periods indicated.
Reconciliation of Net Income (loss) to Adjusted EBITDA
Q2 2020
Q1 2020
Change
Net income (loss)
$
216,102
$
(1,720,188
)
Interest expense
$
71,583
$
42,791
Tax
-
$
-
Depreciation and amortization expense – Property, equipment, leasehold improvements, and intangibles
$
143,094
$
78,434
Depreciation expense – fleet vehicles
$
134,209
$
228,763
Inventory impairment
$
0
$
91,742
Acquisition and financing related costs
$
60,129
$
507,469
Adjusted EBITDA
$
625,117
$
(770,989
)
$
1,396,106
Adjusted EBITDA margin
8.1
%
(14.4
)%
181.1
%
Adjusted Net Income (Loss)
Reconciliation of Adjusted Net Income (Loss)
Q2 2020
Q1 2020
Change
Net income (loss)
$
216,102
$
(1,720,188
)
Acquisition and financing related costs
60,129
507,469
Stock Option Expense
(34,536
)
79,022
Contingency Accrual
-
113,753
Adjusted net income/(loss)
$
241,695
$
(1,019,944
)
1,261,639
Adjusted net income/(loss) margin
3.1
%
(20.0
%)
123.7
%
Subscription Leasing Margin The Company calculates Subscription Leasing Margin by deducting subscription and rental cost of revenues from subscription fee and rental revenues adjusted for non-recurring, material adjustments.
The following table provides a reconciliation of Subscription Leasing Margin to subscription fee and rental revenues, the most directly comparable GAAP financial measure, on a historical basis and for each of the periods indicated.
Reconciliation of Subscription Fees Revenues to Subscription Leasing Margin
Q2 2020
Q1 2020
Change from Q1 2020
Total subscription fees
$
503,782
$
590,463
Subscription and rental cost of revenues
$
(88,132
)
$
(47,704
)
Gross profit (loss)
$
415,650
$
542,759
$
(127,109
)
Subscription Leasing Margin
82.5
%
91.9
%
(23.4
)%
Vehicle Sales Margin The Company calculates Vehicle Sales Margin by deducting vehicle sales cost of revenues and from vehicle sales revenue.
The following table provides a reconciliation of Vehicle Sales Margin to Vehicle Sales Revenue, the most directly comparable GAAP financial measure, on a historical basis and for each of the periods indicated.
Reconciliation of Vehicle Sales Revenue to Vehicle Sales Margin
Q2 2020
Q1 2020
Change from Q1 2020
Vehicle sales revenue
$
7,083,217
$
4,724,842
Vehicle sales cost of revenues
$
(6,106,859
)
$
(4,481,581
)
Gross profit (loss)
$
976,358
$
243,261
$
733,097
Vehicle sales margin
13.8
%
5.2
%
301.4
%
ABOUT LMP AUTOMOTIVE HOLDINGS, INC. – "BUY, SUBSCRIBE, SELL AND REPEAT." LMP Automotive Holdings, Inc. (NASDAQ: LMPX) describes its business model as "Buy, Subscribe, Sell and Repeat." This means that we "Buy" pre-owned automobiles primarily through auctions or directly from other automobile dealers, and new automobiles from manufacturers and manufacturer distributors at fleet rates. We "Subscribe" the automobiles to our customers by allowing them to enter into our subscription plan for automobiles in which customers have use of an automobile for a minimum of thirty (30) days. LMP's all-inclusive vehicle subscription membership includes monthly swaps and covers insurance, maintenance and upkeep. It offers the flexibility to upgrade your vehicle to a more premium model or downgrade for a lesser cost model when you like. We "Sell" our inventory, including automobiles previously included in our subscription programs, to customers as well, and then we "Repeat" the whole process.
Media Contact: John Mattio President and Founder Lamnia International (203) 885-1058 jmattio@lamniacom.com
For more information visit: lmpmotors.com
FORWARD-LOOKING STATEMENTS: This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Such statements include, but are not limited to, any statements relating to our expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. These statements may be preceded by, followed by or include the words "aim," "anticipate," "believe," "estimate," "expect," "forecast," "intend," "likely," "outlook," "plan," "potential," "project," "projection," "seek," "can," "could," "may," "should," "would," will," the negatives thereof and other words and terms of similar meanings. Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock value. Factors that could cause actual results to differ materially from those currently anticipated include: our dependence upon external sources for the financing of our operations; our ability to effectively executive our business plan; our ability to maintain and grow our reputation and to achieve and maintain the market acceptance of our services and platform; our ability to manage the growth of our operations over time; our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; our ability to maintain relationships with existing customers and automobile suppliers, and develop relationships; and our ability to compete and succeed in a highly competitive and evolving industry; as well as other risks described in our SEC filings. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.
SOURCE: LMP Automotive Holdings, Inc.
1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Net Income margin are non-GAAP financial measures which are reconciled to the most directly comparable measures calculated in accordance with GAAP under the caption "Non-GAAP Financial Measures."
2 Adjusted EBITDA, Adjusted Net Income, Subscription Leasing Margin and Vehicle Sales Margin are non-GAAP financial measures which are reconciled to the most directly comparable measures calculated in accordance with GAAP under the caption "Non-GAAP Financial Measures."
