EDGAR 10-K Filing

Company CIK: 1721741
Filing Year: 2024
Filename: 1721741_10-K_2024_0001628280-24-010645.json

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ITEM 1. BUSINESS
Item 1. Business
Business Organization
Lazydays RV Center, Inc., the operating subsidiary of Lazydays Holdings, Inc., operates recreational vehicle (“RV”) dealerships in 24 locations as of December 31, 2023, with a 25th location opened in Arizona in March 2024:
Location Number of Dealerships
Arizona 3
Colorado 3
Florida 3
Tennessee 3
Minnesota 2
Indiana 1
Iowa 1
Nevada 1
Ohio 1
Oklahoma 1
Oregon 1
Texas 1
Utah 1
Washington 1
Wisconsin 1
Unless otherwise indicated or the context suggests otherwise, references to “the Company,” “our Company,” “Lazydays RV Center, Inc.,” “Lazydays RV,” “we,” “us,” or “our” refer to Lazydays Holdings, Inc. and its wholly-owned subsidiaries.
Overview
We have operated recreational vehicle (“RV”) dealerships that offer new and pre-owned recreational vehicles and sell related parts and accessories since 1976. We became a publicly traded company March 15, 2018 following a business combination with Andina Acquisition Corp. II.
We arrange financing and extended service contracts for vehicle sales through third-party financing sources and extended warranty providers.
We believe, based on industry research and management’s estimates, that we operate the world’s largest RV dealership, measured in terms of on-site inventory, located on approximately 126 acres outside Tampa, Florida.
Lazydays offers one of the largest selections of leading RV brands in the nation, featuring more than 6,000 new and pre-owned RVs. We have more than 400 service bays, and each location has an RV parts and accessories store. We employ approximately 1,300 people at our 24 dealership locations. Our locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. We believe our locations are strategically located in key RV markets which account for a significant portion of new RV units sold on an annual basis in the U.S. Our dealerships in these key markets attract customers from all states except Hawaii.
We attract new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once we acquire customers, those customers become part of our customer database where we leverage customer relationship management tools and analytics to actively engage, market and sell our products and services.
We strive to create diversification in our products, services, brands and geographic locations to reduce dependence on any one manufacturer, reduce susceptibility to changing consumer preferences, manage seasonality and market risk and maintain profitability. As of December 31, 2023, we operated 24 locations, representing more than 30 original equipment manufacturers (“OEM’s”) across 15 states.
Business Strategy
We have been a prominent player in the RV industry since 1976, earning a stellar reputation for delivering exceptional RV sales, service and ownership experiences. Our commitment to excellence has led to enduring relationships with RVers and their families who rely on Lazydays for all of their RV needs. Our wide selection of RV brands from top manufacturers, state-of-the-art service facilities and extensive range of parts and accessories ensure that we are the go-to destination for RV enthusiasts.
Our long-term strategy to create value for our customers, employees and shareholders includes the following:
Driving Operational Excellence Across Our Existing Stores
We are focused on improving performance through increasing market share and profitability at each of our locations. By promoting an entrepreneurial model, we are building strong businesses responsive to each of our local markets. Utilizing performance-based action plans, we strive to drive operational performance and develop high-performing teams. We believe our strong brands, market position, ongoing investment in our service platform, broad product portfolio and full array of RV offerings will continue to provide us with a competitive advantage in targeting and capturing a larger share of consumers, including the growing number of new RV enthusiasts that we believe are entering the market. We continuously work to attract new customers to our dealerships through targeted integrated digital and traditional marketing efforts, attractive offerings, and access to our wide array of resources for RV enthusiasts. We have focused specifically on marketing to the fast-growing RV demographics of Baby Boomers, Gen X and Millennials. We also market to these segments through RV lifestyle-focused partnership and sponsorship efforts.
Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our personnel. We develop pay plans that are measured upon various factors such as customer satisfaction, profitability and individual performance metrics. These plans serve to reward team members for creating exceptional customer experiences, customer loyalty and achieving store potential. This approach allows us to mitigate fluctuations in RV sales and general economic conditions.
Growth Through Acquisitions and Greenfields
The RV industry is highly fragmented with primarily independent dealers. We target increasing our physical network of stores through acquisitions to strategically grow our presence and create density in our network to provide convenience for our customers across the country. Our value-based acquisition strategy targets underperforming stores with strong brands in desirable markets. As we integrate these stores into our network, we focus on increasing profitability through gaining market share, elevating the customer experience and leveraging our cost structure.
In addition to acquisitions, we will, from time to time, open greenfield sites in new or existing markets. During 2023, we opened three greenfield sites located in the following markets: Council Bluffs, Iowa; Fort Pierce, Florida; Wilmington, Ohio. Additionally, we opened a new greenfield site located in Surprise, Arizona in March 2024.
Leveraging Our Scale and Cost Structure to Create Operational Efficiencies
As we grow, we are positioned to leverage our scale to improve operating margins. We have centralized many administrative functions to drive efficiencies and streamline store-level operations. The reduction of administrative functions at our stores allows our local teams to focus on customer-facing opportunities to increase revenues and gross profit. Our stores also receive supply chain management support, ensuring optimal levels of new and used RV inventory; and finance and insurance product and training support to provide a full array of offerings to our customers.
Community Involvement
We are committed to making an impact in our communities through the Lazydays Employee Foundation (the “Foundation”), a 501(c)(3) non-profit organization focused on making a positive impact in the lives of at-risk children. The
Foundation is run exclusively by employees as volunteers and members of the Foundation’s board of directors,and their mission is to measurably change the lives of children by instilling hope, inspiring dreams and empowering them with education. Since its inception, the Foundation has donated more than $2.5 million to help disadvantaged children in Florida, Arizona, Colorado, Minnesota and Tennessee. The Foundation sponsors two facilities in Florida that carry its name; The Lazydays House at a Kids Place, which houses foster children in a facility where siblings can remain together and the Lazydays House at Bridging Freedom, which houses and rehabilitates children rescued from human trafficking. The Foundation also provides financial contributions to other smaller community programs that benefit at-risk youth by providing educational tutoring, expression through the arts, and education scholarships. Lazydays employees also volunteer their time to many worthwhile charities and engage in life enriching activities with at-risk youth. The Foundation has received multiple awards for its philanthropic work, including the national Arthur J. Decio Humanitarian Award for outstanding civic and community outreach in the RV industry, as well as the Olin Mott Golden Heart Award and several WEDU Be More awards.
Customers and Markets
The RV industry is characterized by RV enthusiasts’ investment in, and steadfast commitment to, the RV lifestyle. Approximately 11.2 million U.S. households are estimated to own an RV.
Owners invest in insurance, extended service contracts, parts and accessories, roadside assistance and regular maintenance to protect and maintain their RVs. They typically invest in new accessories and the necessary installation costs as they upgrade their RVs. They also spend on services and resources as they plan, engage in, and return from their road trips. Furthermore, based on industry research and management’s estimates, we believe that RV owners typically trade-in to buy another RV every four to five years.
Per the RV Industry Association’s (“RVIA”) December 2023 survey of manufacturers, total RV wholesale shipments ended 2023 at 313,174, down 36.5% compared to 493,268 units in 2022. Towable RVs were down 38.5% at 267,295 from 434,858 units and motorhome shipments were down 21.5% at 45,879 units from 58,410 units in 2022. Per the RVIA survey, RV shipments for the last two months of 2023 showed an increase over the previous year, and our projections indicate we should continue to see increased shipments and retail sales in 2024, particularly in the latter half of the year. Generally, pre-owned RVs are sold at a lower price point than comparable new RVs and the sale of pre-owned RVs has historically been more stable than the sale of new vehicles through business cycles.
We believe RV trips remain one of the least expensive types of vacation, allowing RV owners to travel more while spending less. RV trips offer savings on a variety of vacation costs, including, among others, airfare, lodging, pet boarding and dining. While fuel costs are a component of the overall vacation cost, we believe fluctuations in fuel prices are not a significant factor affecting a family’s decision to take RV trips. Based on RVIA information, the average annual mileage use of an RV is between 5,000 and 9,000 miles. In addition, our customer research indicates that customers are attracted to RV ownership based on the comfortable and convenient travel it provides.
Competition
We believe that the principal competitive factors in the RV industry are breadth and depth of product selection, pricing, convenient dealership locations, quality technical services, customer service, and overall experience. We compete directly and/or indirectly with other RV dealers, RV service providers, and RV parts and accessories retailers. One of our direct competitors, Camping World Holdings, Inc., is publicly listed on the New York Stock Exchange. Additional competitors may enter the businesses in which we currently operate.
Marketing and Advertising
We market our product offerings through integrated marketing campaigns across all digital and traditional marketing disciplines, with an emphasis on digital. Our marketing efforts include our website, paid and organic search efforts, email, social media, online blog and video content, television, radio, billboards, direct mail, and RV shows and rallies. We also have exclusive partnership and sponsorship relationships with various RV lifestyle properties. We currently have a segmented marketing database of over 1 million RV owners and prospects. Our principal marketing strategy is to leverage our unique brand positioning, extensive product selection, exclusive benefits, and high-quality customer experience among RV owners.
Our total website traffic for the year ended December 31, 2023 was approximately 16.7 million visits with approximately 10.8 million unique visitors. Our website features over 6,000 new and pre-owned RVs, as well as information regarding our RV financing and insurance products, service capabilities, parts and accessories offerings, and other RV lifestyle content.
We measure our marketing productivity and effectiveness with front end analytics integrated with 1st party data to optimize marketing efforts.
Trademarks and Other Intellectual Property
We own a variety of registered trademarks and service marks related to our brands and our services, protection plans, products and resources, including Lazydays, Lazydays The RV Authority®, Lazydays RV Accessories & More, Crown Club, and Exit 10, among others. We also own numerous domain names, including Lazydays.com, LazydaysRVSale.com, LazydaysEvents.com, and LazydaysService.com among many others. We believe that our trademarks and other intellectual property have significant value and are important to our marketing efforts.
Government Regulation
Our operations are subject to varying degrees of federal, state and local regulation, including our RV sales, vehicle financing, outbound telemarketing, email, direct mail, roadside assistance programs, extended vehicle service contracts and insurance activities. These laws and regulations include consumer protection laws, so-called “lemon laws,” privacy laws, escheatment laws, anti-money laundering laws, environmental laws and other extensive laws and regulations applicable to new and pre-owned vehicle dealers, as well as a variety of other laws and regulations. These laws also include federal and state wage and hour, anti-discrimination and other employment practices laws.
Motor Vehicle Laws and Regulations
Our operations are subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards promulgated by the United States Department of Transportation and the rules and regulations of various state motor vehicle regulatory agencies. We are also subject to federal and state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles. Federal, state and local laws and regulations also impose upon vehicle operators’ various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions. Federal and state authorities also have various environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal.
Our financing activities with customers are subject to federal truth-in-lending, consumer leasing and equal credit opportunity laws and regulations as well as state and local motor vehicle finance laws, leasing laws, installment finance laws, usury laws and other installment sales and leasing laws and regulations, some of which regulate finance and other fees and charges that may be imposed or received in connection with motor vehicle retail installment sales.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial Protection (“BCFP”), an independent federal agency funded by the United States Federal Reserve with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its regulation of automotive finance companies and other financial institutions.
Insurance Laws and Regulations
As a marketer of insurance programs, we are subject to state rules and regulations governing the business of insurance including, without limitation, laws governing the administration, underwriting, marketing, solicitation and/or sale of insurance programs. The insurance carriers that underwrite the programs that we sell are required to file their rates for approval by state regulators. Additionally, certain state laws and regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offering of any insurance program to a consumer. We are required to maintain certain licenses to market insurance programs.
Marketing Laws and Regulations
The Federal Trade Commission (the “FTC”) and each of the states have enacted consumer protection statutes designed to ensure that consumers are protected from unfair and deceptive marketing practices. We review all of our marketing materials for compliance with applicable FTC regulations and state marketing laws.
Environmental, Health and Safety Laws and Regulations
Our operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, our business is subject to a variety of federal, state and local requirements that regulate the environment and public health and safety.
Most of our dealership locations utilize above ground storage tanks, and to a lesser extent underground storage tanks, primarily for petroleum-based products. Storage tanks are subject to periodic testing, containment, upgrading and removal requirements under the Resource Conservation and Recovery Act and its state law counterparts. Clean-up or other remedial action may be necessary in the event of leaks or other discharges from storage tanks or other sources. In addition, water quality protection programs under the federal Water Pollution Control Act (commonly known as the Clean Water Act), the Safe Drinking Water Act and comparable state and local programs govern certain discharges from some of our operations. Similarly, air emissions from our operations, such as RV painting, are subject to the federal Clean Air Act and related state and local laws. Certain health and safety standards promulgated by the Occupational Safety and Health Administration of the United States Department of Labor and related state agencies also apply to certain of our operations.
Although we incur costs to comply with applicable environmental, health and safety laws and regulations in the ordinary course of our business, we do not presently anticipate that these costs will have a material adverse effect on our business, financial condition or results of operations. We do not have any material known environmental commitments or contingencies.
Insurance
We utilize insurance to provide for the potential liabilities for workers’ compensation, product liability, general liability, business interruption, property liability, director and officers’ liability, cyber, environmental issues, and vehicle liability. Beginning in 2020, we became self-insured for employee health-care benefits. Liabilities associated with the risks that are retained by us are estimated, in part, by considering actuarial reports, historical claims experience, demographic factors, severity factors, stop loss coverage and other assumptions. To protect itself against loss exposure associated with this policy, the Company has individual stop-loss insurance coverage that insures individual claims that exceed $500,000 for each member. Our results could be adversely affected by claims and other expenses related to such plans and policies if future occurrences and claims differ from these assumptions and historical trends.
Employees
As of December 31, 2023, we had over 1,300 employees, almost all of which are full-time employees. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have not had any labor-related work stoppages. We believe that our employee relations are in good standing.
Seasonality and Effects of Weather
Our operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in part to consumer buying trends and the hospitable warm climate during the winter months at our Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Washington and Wisconsin generally experience modestly higher vehicle sales during the spring months.
Our largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to property and inventory and decrease the traffic to our dealerships. Although we believe that we have adequate insurance coverage, if we were to experience a catastrophic loss, we may exceed our policy limits and/or may have difficulty obtaining similar insurance coverage in the future.
Principal Executive Offices
Our principal executive offices are located at 4042 Park Oaks Boulevard, Suite 350, Tampa, Florida 33610 and our telephone number is (813) 246-4999.
Available Information
Our Internet website is www.lazydays.com. Our reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, under the Investor Relations - Finance Information 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”). You may also read any materials we file with the SEC at the SEC’s Internet website located at www.sec.gov.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
The following are material risks to which our business operations are subject. Any of these risks could materially adversely affect our business, financial condition, or results of operations. These risks could also cause our actual results to differ materially from those indicated in the forward-looking statements contained herein and elsewhere. The risks described below are not the only risks we face. Additional risks not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations.
Risks Related to Lazydays Business
Failure to identify deficiencies in our internal control over financial reporting in a timely matter or to remediate any deficiencies, or the identification of material weaknesses or significant deficiencies in the future could prevent us from accurately and timely reporting our financial results. This could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.
As of December 31, 2023, management identified material weaknesses in our internal control related to the ineffective design and implementation of information technology general controls (“ITGCs”) in the areas of user access, program change management and security administration that are relevant to the preparation of our financial statements, and the turnover of certain accounting positions during the fourth quarter. Additionally, the Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the fourth quarter which impacted the operating effectiveness of controls during that period. Management has developed and implemented a remediation plan to address both material weaknesses. Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002 as amended (the “Sarbanes-Oxley Act”). There is no assurance that material weaknesses or significant deficiencies will not occur or that we will be successful in adequately remediating any such material weaknesses and significant deficiencies. We may in the future discover areas of our internal controls that need improvement. We cannot be certain that we will be successful in maintaining adequate internal control over our financial reporting and financial processes. Furthermore, as we grow our business, including through acquisition, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective. Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, subject us to investigations from regulatory authorities or cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us.
Natural disasters, whether or not caused by climate change, unusual weather conditions, epidemic and pandemic outbreaks, terrorist acts and political events could disrupt business and result in lower sales and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, floods, hail storms and earthquakes, unusual weather conditions, epidemic and pandemic outbreaks, or other global health emergencies, terrorist attacks or disruptive political events in certain regions where our stores are located could adversely affect our business and result in lower sales. Severe weather, such as heavy snowfall or extreme temperatures, may discourage or restrict customers in a
particular region from traveling to our dealerships or utilizing our products, thereby reducing our sales and profitability. Natural disasters including tornadoes, hurricanes, floods, hail storms and earthquakes may damage our stores or other operations, which may materially adversely affect our financial results. Any of these events could have a material adverse effect on our business, financial condition and results of operations.
Our business is affected by the availability of financing to us and our customers.
Our business is affected by the availability of financing to us and our customers. Generally, RV dealers finance their purchases of inventory with financing provided by lending institutions. On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank including increasing the committed floor plan financing to $525 million from $327 million and increasing the capacity under the Revolving Credit Facility to up to $50 million from $25 million. We were in breach of our covenant with M&T Bank as of December 31, 2023, but received a waiver through the second quarter of 2024, with modified covenant terms through the fourth quarter of 2024. Please see Item 9B for further information. As of December 31, 2023, substantially all of the invoice cost of new RV inventory was financed under the floor plan facility. A decrease in the availability of this type of wholesale financing or an increase in the cost of such wholesale financing could prevent us from carrying adequate levels of inventory, which may limit product offerings and could lead to reduced sales and revenues.
Furthermore, most of our customers finance their RV purchases. Consumer credit market conditions, including rising interest rates, sustained interest rates at current levels, continue to influence demand, especially for RVs, and may continue to do so. There continues to be fewer lenders, more stringent underwriting and loan approval criteria, and greater down payment requirements than in the past. If credit conditions or the credit worthiness of our customers worsen, and adversely affect the ability of consumers to finance potential purchases on acceptable terms and interest rates, it could result in a decrease in the sales of our products and have a material adverse effect on our business, financial condition and results of operations.
Additionally, on December 29, 2023, we entered into a loan agreement, as described below in "Our credit facility and loan agreement contain restrictive covenants that may impair our ability to access sufficient capital and operate our business."
Climate change legislation or regulations restricting emission of “greenhouse gases” could result in increased operating costs and reduced demand for the RVs we sell.
The United States Environmental Protection Agency has adopted rules under existing provisions of the federal Clean Air Act that require a reduction in emissions of greenhouse gases from motor vehicles. The Biden Administration has focused significant attention on greenhouse gases and climate change. In addition, the SEC has proposed climate-related disclosure, which may be adopted as soon as the first quarter of 2024. The adoption of any laws or regulations requiring significant increases in fuel economy requirements or new federal or state restrictions on vehicles and automotive fuels in the United States or internationally could adversely affect demand for those vehicles and could have a material adverse effect on our business, financial condition and results of operations.
Our success depends to a significant extent on the well-being, popularity, financial condition and reputation for quality, of our manufacturers, particularly Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc., as well as their respective supply chains.
Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc. supplied approximately 41%, 23%, and 32%, respectively, of our purchases of new RV inventory during the year ended December 31, 2023. We depend on our manufacturers to provide us with products that compare favorably with competing products in terms of quality, performance, safety and advanced features. Any adverse change in the production efficiency, product development efforts, technological advancement, marketplace acceptance, reputation, marketing capabilities or financial condition of our manufacturers or their respective supply chains could have a substantial adverse impact on our business. Any difficulties encountered by any of our manufacturers resulting from economic, financial, or other factors could adversely affect the quality and number of products that they are able to supply to us and the services and support they provide to us. The interruption or discontinuance of the operations of our manufacturers or their respective supply chains could cause us to experience shortfalls, disruptions, or delays with respect to needed inventory. Although we believe that adequate alternate sources would be available that could replace any manufacturer as a product source, those alternate sources may not be available at the time of any interruption, alternative products may not be available at comparable quality and prices and alternative products may not be equally appealing to our customers.
Any change, non-renewal, unfavorable renegotiation or termination of our supply arrangements for any reason could have a material adverse effect on product availability and cost and our financial performance.
Our supply arrangements with manufacturers are typically governed by dealer agreements, which are customary in the RV industry. Our dealer agreements with manufacturers are generally made on a location-by-location basis, and each retail location typically enters into multiple dealer agreements with multiple manufacturers. The terms of our dealer agreements are typically subject to us meeting program requirements and retail sales objectives, performing services and repairs for customers still under warranty (regardless from whom the RV was purchased), carrying the relevant manufacturer’s parts and accessories needed to service and repair its RVs, actively advertising and promoting the manufacturer’s RVs, and in some instances indemnifying the manufacturer.
Our dealer agreements designate a specific geographic territory, exclusive to us, provided that we are able to meet the material obligations of the applicable dealer agreement.
In addition, many of our dealer agreements contain contractual provisions concerning minimum advertised product pricing for current model year units. Wholesale pricing is generally established on a model year basis and is subject to change in the manufacturer’s sole discretion. Any change, non-renewal, unfavorable renegotiation or termination of these dealer agreements for any reason could have a material adverse effect on product availability and cost and our financial performance.
Our growth in existing markets or expansion into new, unfamiliar markets, whether through acquisitions or otherwise, presents risks that could materially affect profitability.
Our success will depend, in part, on our ability to make successful acquisitions and to integrate the operations of acquired retail locations, including centralizing certain functions to achieve cost savings and pursuing programs and processes that promote cooperation and the sharing of opportunities and resources among our retail locations and consumer services and plans. We may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions within the anticipated timing or at all. For as long as the first year after a substantial acquisition and possibly longer, the benefits from the acquisition may be offset by the costs incurred in integrating the business and operations.
We intend to continue to expand in part by acquiring or building new retail or service locations in new markets. As a result of this and any future expansion, we may have less familiarity with local consumer preferences and could encounter difficulties in attracting customers due to a reduced level of consumer familiarity with us and our brands.
Other factors, many of which are beyond our control, may impact our ability to acquire or open retail locations successfully, whether in existing or new markets, and operate them profitably. These factors include (a) the ability to (i) identify suitable acquisition opportunities at purchase prices likely to provide returns required by our acquisition criteria, (ii) control expenses associated with sourcing, evaluating and negotiating acquisitions (including those that are not completed), (iii) accurately assess the profitability of potential acquisitions or new locations, (iv) secure required third party or governmental permits and approvals, (v) negotiate favorable lease agreements, (vi) hire, train and retain skilled operating personnel, especially management personnel, (vii) provide a satisfactory product mix responsive to local market preferences where new retail locations are built or acquired, (viii) secure product lines, (ix) supply new retail locations with inventory in a timely manner; (b) the availability of construction materials and labor for new retail locations and the occurrence of significant construction delays or cost overruns; (c) competitors in the same geographic area and regional economic variants; (d) the absence of disagreements with potential acquisition targets that could lead to litigation; (e) successfully integrating the operations of acquired dealers with our own operations; (f) managing acquired dealers and stores profitably without substantial costs, delays, or other operational or financial problems; and (g) the ability of our information management systems to process increased information accurately and in a timely fashion. A negative outcome associated with any of these factors could have a material adverse effect on our business, financial condition and results of operations.
Once we decide on a new market and identify a suitable acquisition or location opportunity, any delays in acquiring or opening or developing new retail locations could impact our financial results. For example, delays in the acquisition process or construction delays caused by permitting or licensing issues, material shortages, labor issues, weather delays or other acts of God, discovery of contaminants, accidents, deaths or injuries, third parties attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions, and other factors could delay planned openings or force us to abandon planned openings altogether.
As we grow, we will face the risk that our existing resources and systems, including management resources, accounting and finance personnel and operating systems, may be inadequate to support our growth.
Finally, the size, timing, and integration of any future new retail location openings or acquisitions may cause substantial fluctuations in our results of operations from quarter to quarter. Consequently, our results of operations for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These fluctuations could have a material adverse effect on our business, financial condition and results of operations.
Failure to maintain the strength and value of our brands could have a material adverse effect on our business, financial condition and results of operations.
Our success depends on the value and strength of the Lazydays brands. The Lazydays name and Lazydays brands are integral to our business as well as to the implementation of our strategies for expanding our business. Maintaining, enhancing, promoting and positioning our brands, particularly in new markets where we have limited brand recognition, will depend largely on the success of our marketing efforts and our ability to provide high quality products, services, protection plans, and resources and a consistent, high quality customer experience. Our brands could be adversely affected if: (a) we fail to achieve these objectives or to comply with local laws and regulations; (b) we are subject to publicized litigation; or (c) our public image or reputation were to be tarnished by negative publicity. Some of these risks are not within our control, such as the effects of negative publicity regarding our manufacturers, suppliers or third party providers of services or negative publicity related to members of management. Any of these events could result in decreases in revenues. Further, maintaining, enhancing, promoting and positioning our brand image may require us to make substantial investments (as we incurred in 2023 as a result of our rebranding efforts) in areas such as marketing, dealership operations, community relations, store graphics and employee training, which could adversely affect our cash flow and profitability. Furthermore, efforts to maintain, enhance or promote our brand image may ultimately be unsuccessful. These factors could have a material adverse effect on our business, financial condition and results of operations.
Our failure to successfully procure and manage our inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends could have a material adverse effect on our business, financial condition and results of operations.
Our success depends upon our ability to successfully manage our inventory and to anticipate and respond to product trends and consumer demands in a timely manner. The preferences of our target consumers cannot be predicted with certainty and are subject to change. We may order products in advance of the following selling season. Extended lead times for our purchases may make it difficult for us to respond rapidly to new or changing product trends, increases or decreases in consumer demand or changes in prices. Additionally, adoption of new technological advances and changing governmental regulatory mandates could result in changes in consumer preferences for recreational vehicles or the types of recreational vehicles consumers prefer. These changes could include shifts to smaller recreational vehicles, electric recreational vehicles, autonomous recreational vehicles or other currently unanticipated changes. If we misjudge either the market for our products or our consumers’ purchasing habits in the future, our revenues may decline significantly, we may not have sufficient inventory to satisfy consumer demand or sales orders, or we may be required to discount excess inventory; all of which could have a material adverse effect on our business, financial condition and results of operations.
Our business is impacted by general economic conditions, ongoing economic and financial uncertainties, and changing consumer tastes, each of which may cause a decline in consumer spending that may adversely affect our business, financial condition and results of operations.
We depend on consumer discretionary spending and, accordingly, we may be adversely affected if our customers reduce, delay or forego their purchases of our products, services, and protection plans as a result of, including but not limited to, recessionary conditions, job loss, bankruptcy, higher consumer debt, rising interest rates, sustained interest rates at current levels, inflation, reduced access to credit, higher energy and fuel costs, relative or perceived cost, availability and comfort of RV use versus other modes of travel, such as air travel and rail (including as a result of consumer tastes in response to climate change), falling home prices, lower consumer confidence, uncertain or changes in tax policies, uncertainty due to national or international security or health concerns, volatility in the stock market, or epidemics.
Decreases in the number of customers, average spend per customer, or retention and renewal rates for our consumer services and plans would negatively affect our financial performance. A prolonged period of depressed consumer spending could have a material adverse effect on our business. In addition, adverse economic conditions may result in an increase in our operating expenses due to, among other things, higher costs of labor, energy, equipment and facilities. Our business
and financial performance may continue to be adversely affected by current and future economic conditions, including, without limitation, the level of consumer debt, high levels of unemployment, higher interest rates or sustained interest rates at current levels, and the ability of our customers to obtain credit, which has caused, and may cause a continued or further decline in consumer spending. Additionally, we are subject to economic fluctuations in local markets, most significantly Florida, that may not reflect the general economic conditions of the broader U.S. economy. Any of the foregoing factors could have a material adverse effect on our business, financial condition and results of operations.
Additionally, economic uncertainty and business downturns in the U.S. markets have adversely affected, and may in the future adversely affect, our financial condition and results of operations.
Competition in the market for products, services, and protection plans targeting the RV lifestyle or RV enthusiast could reduce our revenues and profitability.
Competition in the RV market is fragmented, driven by price, product and service features, technology, performance, reliability, quality, availability, variety, delivery and customer service. In addition to competing with other dealers of new and pre-owned RVs we compete directly or indirectly with major national insurance and warranty companies, providers of roadside assistance and providers of extended service contracts.
Additional competitors may enter the businesses in which we currently operate. Some of our competitors may build new stores in or near our existing locations and certain RV and accessory manufacturers may choose to expand their direct to consumer offerings. In addition, an increase in the number of aggregator and price comparison sites for insurance products may negatively impact our sales of these products. If any of our competitors successfully provides a broader, more efficient or attractive combination of products, services and protection plans to our target customers, our business results could be materially adversely affected. Our inability to compete effectively with existing or potential competitors, some of which may have greater resources or be better positioned to absorb economic downturns in local markets, could have a material adverse effect on our business, financial condition and results of operations.
The cyclical nature of our business has caused our sales and results of operations to fluctuate. These fluctuations may continue in the future, which could result in operating losses during downturns.
The RV industry is cyclical and is influenced by many national and regional economic and demographic factors, including: (a) the terms and availability of financing for retailers and consumers; (b) overall consumer confidence and the level of discretionary consumer spending; (c) population and employment trends; and (d) income levels and general economic conditions, such as inflation, including as a result of tariffs, deflation, increasing interest rates and recessions. As a result of these factors, our sales and results of operations have fluctuated, and we expect that they will continue to fluctuate in the future.
Our business is seasonal, and this leads to fluctuations in sales and revenues.
We have experienced, and expect to continue to experience, some variability in revenue, net income and cash flows as a result of seasonality in our business. Because our largest dealership is located in Florida, demand for services, protection plans, products and resources generally increases during the winter season when people move south for the winter or vacation in warmer climates, while sales and profits are generally lower during the summer months. In addition, unusually severe weather conditions in some geographic areas may impact demand. This includes the threat of hurricanes in Florida, which could substantially damage property and inventory in our Florida dealerships, and lead to a material disruption of operations at our Tampa, Florida headquarters and dealership.
For the years ended December 31, 2023 and 2022, we generated 56% and 58% (excluding the impact of acquisitions) of our annual revenue in the first and second quarters, respectively, which include the peak winter months. We incur additional expenses in the first and second quarters due to higher purchase volumes, increased staffing in our retail locations and program costs. If, for any reason, we miscalculate the demand for our products or our product mix during the first and second fiscal quarters, our sales in these quarters could decline, resulting in higher labor costs as a percentage of sales, lower margins and excess inventory, which could have a material adverse effect on our business, financial condition and results of operations.
Due to our seasonality, the possible adverse impact from other risks associated with our business, including extreme weather, consumer spending levels and general business conditions, is potentially greater if any such risks occur during our peak sales seasons, which are the first and second fiscal quarters.
We primarily lease our retail locations and if we are unable to maintain those leases or locate alternative sites for retail locations in our target markets and on terms that are acceptable to it, our revenues and profitability could be materially adversely affected.
We lease 16 of the 24 real properties where we have operations. At inception of the leases, they generally provide for fixed monthly rentals with escalation clauses and range from three to twenty years. There can be no assurance that we will be able to maintain our existing retail locations as leases expire, extend the leases or be able to locate alternative sites in our target markets and on favorable terms. Any failure to maintain our existing retail locations, extend the leases or locate alternative sites on favorable or acceptable terms could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to enforce our intellectual property rights and/or we may be accused of infringing the intellectual property rights of third parties which could have a material adverse effect on our business, financial condition and results of operations.
We own a variety of registered trademarks and service marks. We believe that our trademarks have significant value and are important to our marketing efforts. If we are unable to continue to protect the trademarks and service marks for our proprietary brands, if such marks become generic or if third parties adopt marks similar to our marks, our ability to differentiate our products and services may be diminished. In the event that our trademarks or service marks are successfully challenged by third parties, we could lose brand recognition and be forced to devote additional resources to advertising and marketing new brands for our products.
From time to time, we may be compelled to protect our intellectual property, which may involve litigation. Such litigation may be time-consuming, expensive and distract our management from running the day-to-day operations of our business, and could result in the impairment or loss of the involved intellectual property. There is no guarantee that the steps we take to protect our intellectual property, including litigation when necessary, will be successful. The loss or reduction of any of our significant intellectual property rights could diminish our ability to distinguish our products and services from competitors’ products and services and retain our market share for our products and services. Our inability to effectively protect our proprietary intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.
Other parties also may claim that we infringe on their proprietary rights. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us or the payment of damages. These claims could have a material adverse effect on our business, financial condition and results of operations.
Regulations applicable to the sale of extended service contracts could materially impact our business and results of operations.
We offer extended service contracts that may be purchased as a supplement to the original purchaser’s warranty as well as other optional products to protect the consumer’s investment. These products are subject to complex federal and state laws and regulations. There can be no assurance that regulatory authorities in the jurisdictions in which these products are offered will not seek to further regulate or restrict these products. Failure to comply with applicable laws and regulations could result in fines or other penalties including orders by state regulators to discontinue sales of the warranty products in one or more jurisdictions. Such a result could materially and adversely affect our business, results of operations and financial condition.
Third parties bear the majority of the administration and liability obligations associated with these extended service contracts upon purchase by the customer. State laws and regulations, however, may limit or condition our ability to transfer these administration and liability obligations to third parties, which could in turn impact the way revenue is recognized from these products. Failure to comply with these laws could result in fines or other penalties, including orders by state regulators to discontinue sales of these product offerings as currently structured. Such a result could materially and adversely affect our business, financial condition and results of operations.
If state dealer laws are repealed or weakened, our dealerships will be more susceptible to termination, non-renewal or renegotiation of dealer agreements.
State dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with written notice setting forth good cause and stating the grounds for termination or non-
renewal. Some state dealer laws allow dealers to file protests or petitions or attempt to comply with the manufacturer’s criteria within a specified notice period to avoid the termination or non-renewal. Manufacturers have been lobbying and continue to lobby for the repeal or revision of state dealer laws. If dealer laws are repealed in the states in which we operate, or manufacturers convince legislators to pass legislation in those states allowing termination or non-renewal of dealerships without cause, manufacturers may be able to terminate our dealer agreements without providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer laws, it may also be more difficult for us to renew our dealer agreements upon expiration.
The ability of a manufacturer to grant additional dealer agreements is based on a number of factors which we cannot control. If manufacturers grant new dealer agreements in areas near our existing markets, such new dealer agreements could have a material adverse effect on our business, financial condition and results of operations.
Risks Associated with Our Debt Obligations
We may not be able to satisfy our debt obligations upon the occurrence of a change in control under our credit facility or loan agreement.
A change in control is an event of default under the credit facility. Upon the occurrence of a change in control, M&T Bank will have the right to declare all outstanding obligations under the credit facility immediately due and payable and to terminate the availability of future advances to us. There can be no assurance that our lenders will agree to an amendment of the credit facility or a waiver of any such event of default. There can be no assurance that we will have sufficient resources available to satisfy all of our obligations under the credit facility if no waiver or amendment is obtained. The effect of this provision may be to make a change in control less likely, potentially decreasing the value of our shares of common stock. In the event we are unable to satisfy these obligations, it could have a material adverse impact on our business, financial condition and results of operations.
On December 29, 2023, we entered into a loan agreement, as described below in “Our credit facility and loan agreement
contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.” A change
in control is an event of default under the loan agreement. Upon the occurrence of a change in control, the lender is
permitted to take certain remedies, including declaring the debt to be immediately due and payable, partially foreclosing the mortgage and taking possession of the related property, any of which could have a material adverse impact on our business, financial condition and results of operations.
Our ability to operate and expand our business and to respond to changing business and economic conditions will depend on the availability of adequate capital.
The operation of our business, the rate of our expansion and our ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital. We also require sufficient cash flow to meet our obligations under our existing debt agreements.
We are dependent to a significant extent on our ability to finance our new and certain of our pre-owned RV inventory under the credit facility. Floor plan financing arrangements allow us to borrow money to purchase new RVs from the manufacturer or pre-owned RVs on trade-in or at auction and pay off the loan when we sell the financed RV. We may need to increase the capacity of our existing credit facility in connection with our acquisition of dealerships and overall growth. In the event that we are unable to obtain such incremental financing, our ability to complete acquisitions could be limited.
We cannot ensure that our cash flow from operations or cash available under our credit facility will be sufficient to meet our needs. If we are unable to generate sufficient cash flows from operations in the future, and if availability under our credit facility is not sufficient, we may have to obtain additional financing. Towards that end, on December 29, 2023, we entered into a loan agreement, as described below in “Our credit facility and loan agreement contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.” If we obtain additional capital through the issuance of equity, the interests of existing stockholders may be diluted. If we incur additional indebtedness, such indebtedness may contain significant financial covenants and other negative covenants that may significantly restrict our ability to operate. We cannot ensure that we could obtain additional financing on favorable terms or at all.
Our credit facility and loan agreement contain restrictive covenants that may impair our ability to access sufficient capital and operate our business.
Our credit facility contains various provisions that limit our ability to, among other things: (a) incur additional indebtedness or liens; (b) consolidate or merge; (c) alter the business conducted by the Company and our subsidiaries; (d) make investments, loans, advances, guarantees and acquisitions; (e) sell assets, including capital stock of our subsidiaries; (f) enter into certain sale and leaseback transactions; (g) pay dividends on capital stock or redeem, repurchase or retire capital stock or certain other indebtedness; (h) engage in transactions with affiliates; and (i) and enter into agreements restricting our subsidiaries’ ability to pay dividends.
In addition, the restrictive covenants contained in the documentation governing the credit facility require us to maintain specified financial ratios. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” below. Our ability to comply with those financial ratios may be affected by events beyond our control, and our failure to comply with these ratios could result in an event of default. The restrictive covenants may affect our ability to operate and finance our business as we deem appropriate. Our inability to meet obligations as they become due or to comply with various financial covenants contained in the instruments governing our current or future indebtedness could constitute an event of default under the instruments governing our indebtedness.
If there were an event of default under the instruments governing our indebtedness, the holders of the affected indebtedness could declare all of the affected indebtedness immediately due and payable, which, in turn, could cause the acceleration of the maturity of all of our other indebtedness. We may not have sufficient funds available, or we may not have access to sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additional financing, the terms of such financing may not be favorable to us. In addition, substantially all of our assets are subject to liens securing the obligations under the credit facility. If amounts outstanding under the credit facility were accelerated, our lenders could foreclose on these liens and we could lose substantially all of our assets. Any event of default under the instruments governing our indebtedness could have a material adverse effect on our business, financial condition and results of operations.
On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank including increasing the committed floor plan financing to $525 million from $327.0 million and increasing the capacity under the Revolving Credit Facility to up to $50.0 million from $25.0 million. We were in breach of our covenant with M&T Bank as of December 31, 2023, but received a waiver through the second quarter of 2024, with modified covenant terms through the fourth quarter of 2024. Please see Item 9B for further information.
Additionally, on December 29, 2023, we entered into a $35.0 million mortgage loan agreement (the “Loan Agreement”), with Coliseum Holdings I, LLC as lender (the “Lender”). The Lender is an affiliate of Coliseum Capital Management, LLC ("Coliseum") and, Christopher Shackelton, the chairman of our Board. Certain funds and accounts managed by Coliseum currently hold 57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock). Covenants under the Loan Agreement restrict our ability to, among other things, but subject to certain exceptions: (i) sell, mortgage, assign or transfer any interest in the mortgaged property, (ii) create, incur, assume or permit to exist any lien on any portion of the mortgaged property, (iii) create, incur or assume any indebtedness, (iv) enter into, amend, modify, supplement or terminate material agreements and (v) enter into, terminate or amend any lease.
If we breach certain of the covenants in the Loan Agreement or otherwise default on the loan, the Lender would have the right to accelerate the loan and foreclose on the collateral. If we do not have sufficient cash to repay the Loan at that time, we would be forced to refinance the loan. We cannot assure you that such refinancing would be available to us on favorable terms or at all.
We depend on our relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’ operations could have an adverse effect on our business and results of operations.
Our business depends in part on developing and maintaining productive relationships with third party providers of products, services, protection plans, and resources that we market to our customers. Additionally, we rely on certain third party providers to support our products, services, protection plans, and resources, including insurance carriers for our property and casualty insurance and extended service contracts, banks and captive financing companies for vehicle financing and refinancing. We cannot accurately predict whether, or the extent to which, we will experience any disruption in the supply of products from our vendors or services from our third party providers. Any such disruption could negatively
impact our ability to market and sell our products, services, protection plans, and resources, which could have a material adverse effect on our business, financial condition and results of operations.
With respect to the insurance programs that we offer, we are dependent on the insurance carriers that underwrite the insurance to obtain appropriate regulatory approvals and maintain compliance with insurance regulations. If such carriers do not obtain appropriate state regulatory approvals or comply with such changing regulations, we may be required to use an alternative carrier or change our insurance products or cease marketing certain insurance related products in certain states, which could have a material adverse effect on our business, financial condition and results of operations. If we are required to use an alternative insurance carrier or change our insurance related products, we may materially increase the time required to bring an insurance related product to market. Any disruption in our service offerings could harm our reputation and result in customer dissatisfaction.
Additionally, we provide financing to qualified customers through a number of third party financing providers. If one or more of these third party providers ceases to provide financing to our customers, provides financing to fewer customers or no longer provides financing on competitive terms, or if we are unable to replace the current third party providers upon the occurrence of one or more of the foregoing events, it could have a material adverse effect on our business, financial condition and results of operations.
A portion of our revenue is from financing, insurance and extended service contracts, which depend on third party lenders and insurance companies. We cannot ensure these third parties will continue to provide RV financing and other products.
A portion of our revenue comes from the fees we receive from lending institutions and insurance companies for arranging financing and insurance coverage for our customers. The lending institution pays us a fee for each loan that it arranges. If these lenders were to lend to our customers directly rather than through us, we would not receive a fee. In addition, if customers prepay financing we arranged within a specified period (generally within six months of making the loan), we are required to rebate (or “chargeback”) all or a portion of the commissions paid to us by the lending institution. The same process applies to vehicle services contract fees, which are also subject to chargebacks if a customer chooses to terminate the contract early. We receive a chargeback for a portion of the initial fees received. Our revenues from financing fees and vehicle service contract fees are recorded net of a reserve for estimated future chargebacks based on historical operating results. Lending institutions may change the criteria or terms they use to make loan decisions, which could reduce the number of customers for whom we can arrange financing, or may elect to not continue to provide these products with respect to RVs. Our customers may also use the internet or other electronic methods to find financing alternatives. If any of these events occur on a large scale, we could lose a significant portion of our income and profit.
Furthermore, new and pre-owned vehicles may be sold and financed through retail installment sales contracts entered into between us and third-party purchasers. Prior to entering into a retail installment sales contract with a third-party purchaser, we typically have a commitment from a third-party lender for the assignment of such retail installment sales contract, subject to final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales contracts are typically assigned by us to third-party lenders simultaneously with the execution of the retail installment sales contracts. Contracts in transit represent amounts due from third-party lenders from whom prearranged assignment agreements have been determined, and to whom the retail installment sales contract have been assigned. We recognize revenue when the applicable new or pre-owned vehicle is delivered and we have assigned the retail installment sales contract to a third-party lender and collectability is reasonably assured. Funding from the third-party lender is provided upon receipt, final review, approval and verification of the retail installment sales contract, related documentation and the information contained therein. Retail installment sales contracts are typically funded within ten days of the initial approval of the retail installment sales contract by the third-party lender. Contracts in transit are included in current assets and totaled $14.8 million and $15.4 million as of December 31, 2023 and December 31, 2022, respectively. Any significant number of defaults on these retail installment sales contracts could have a material adverse effect on our business, financial condition and results of operations.
Our business is subject to numerous federal, state and local regulations.
Our operations are subject to varying degrees of federal, state and local regulation, including regulations with respect to our RV sales, RV financing, marketing, direct mail, roadside assistance programs and insurance activities. New regulatory efforts may be proposed from time to time that may affect the way we operate our businesses. For example, in the past a principal source of leads for our direct response marketing efforts was new vehicle registrations provided by motor vehicle departments in various states. Currently, all states restrict access to motor vehicle registration information.
We are also subject to federal and state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles. Federal, state and local laws and regulations also impose upon vehicle operators various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions.
Further, certain federal and state laws and regulations affect our activities. Areas of our business affected by such laws and regulations include, but are not limited to, labor, advertising, consumer protection, digital marketing, real estate, promotions, quality of services, intellectual property, tax, import and export, anti-corruption, anti-competition, environmental, health and safety. Compliance with these laws and others may be onerous and costly, at times, and may be inconsistent from jurisdiction to jurisdiction which further complicates compliance efforts.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which was signed into law on July 21, 2010, established the Bureau of Consumer Financial Protection (“BCFP”), an independent federal agency with broad regulatory powers and limited oversight from the United States Congress. Although automotive dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of automotive dealers, in particular, their sale and marketing of finance and insurance products, through its regulation of automotive finance companies and other financial institutions.
In addition, the Patient Protection and Affordable Care Act (the “Affordable Care Act”), which was signed into law on March 23, 2010, may increase our annual employee health care costs that we fund and has increased our cost of compliance and compliance risk related to offering health care benefits. Efforts to modify, repeal or otherwise invalidate all, or certain provisions of, the Affordable Care Act and/or adopt a replacement healthcare reform law may impact our employee healthcare costs. If healthcare costs rise, we may experience increased operating costs, which may adversely affect our business, financial condition and results of operations.
Furthermore, our property and casualty insurance programs that we offer through third party insurance carriers are subject to state laws and regulations governing the business of insurance, including, without limitation, laws and regulations governing the administration, underwriting, marketing, solicitation or sale of insurance products. Our third party insurance carriers are required to apply for, renew, and maintain licenses issued by state, federal or foreign regulatory authorities. Such regulatory authorities have relatively broad discretion to grant, renew and revoke such licenses. Accordingly, any failure by such parties to comply with the then current licensing requirements, which may include any determination of financial instability by such regulatory authorities, could result in such regulatory authorities denying third party insurance carriers’ initial or renewal applications for such licenses, modifying the terms of licenses or revoking licenses that they currently possess, which could severely inhibit our ability to market these insurance products. Additionally, certain state laws and regulations govern the form and content of certain disclosures that must be made in connection with the sale, advertising or offer of any insurance program to a consumer. We review all marketing materials we disseminate to the public for compliance with applicable insurance regulations. We are required to maintain certain licenses and approvals in order to market insurance products.
We have instituted various comprehensive policies and procedures to address compliance. However, there can be no assurance that employees, contractors, vendors or our agents will not violate such laws and regulations or our policies and procedures.
Our failure to comply with certain environmental regulations could adversely affect our business, financial condition and results of operations.
Our operations involve the use, handling, storage and contracting for recycling and/or disposal of materials such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and propane. Consequently, our business is subject to federal, state and local requirements that regulate the environment and public health and safety. We may incur significant costs to comply with such requirements. Our failure to comply with these regulations and requirements could cause us to become subject to fines and penalties or otherwise have an adverse impact on our business. In addition, we have indemnified certain of our landlords for any hazardous waste which may be found on or about property we lease. If any such hazardous waste were to be found on property that we occupy, a significant claim giving rise to our indemnity obligation could have a negative effect on our business, financial condition and results of operations.
Risks Related to Our Capital Stock
Our outstanding Series A convertible preferred stock, warrants, options and restricted stock units may have an adverse effect on the market price of our common stock.
As of December 31, 2023, we had outstanding (i) stock options issued to the board of directors and employees to purchase 376,940 shares of common stock at exercise prices ranging from $4.50 to $30.00 per share, (ii) 600,000 shares of Series A Preferred Stock which are convertible into up to 5,962,733 shares of common stock, taking into account any accrued dividends which we may elect to pay in cash or shares of common stock, and (iii) 238,275 restricted stock units. We may also issue additional equity awards under our Amended and Restated 2018 Long-Term Incentive Plan (the “Amended 2018 Plan”).
The sale, or even the possibility of sale, of the shares of common stock underlying the warrants, stock options, restricted stock units and Series A Preferred Stock and the shares issuable under the Amended 2018 Plan could have an adverse effect on the market price of the common stock or on our ability to obtain future financing. If and to the extent these warrants, stock options and restricted stock units are exercised or the Series A Preferred Stock is converted to common stock, you may experience substantial dilution to your holdings.
The conversion of the Series A Preferred Stock into our common stock may dilute the value for the other holders of our common stock.
The Series A Preferred Stock is convertible into 5,962,733 shares of our common stock (this excludes accrued dividends which we may elect to pay in cash or shares of common stock). As a result of the conversion of any issued and outstanding Series A Preferred Stock, the existing holders of our common stock will own a smaller percentage of the outstanding common stock. Further, additional shares of our common stock may be issuable pursuant to certain other features of the Series A Preferred Stock, with such issuances being further dilutive to existing holders of our common stock.
If the Series A Preferred Stock is converted into our common stock, holders of such common stock will be entitled to the same dividend and distribution rights as other holders of our common stock. As such, another dilutive effect which may result from the conversion of any shares of Series A Preferred Stock will be a dilution to dividends and distributions receivable on account of our common stock.
The holders of Series A Preferred Stock own a large portion of the voting power and have the right to designate two members to our board of directors. This significantly influences the composition of our board of directors and future actions taken by our board of directors.
Our board of directors currently has eight members. The holders of the Series A Preferred Stock are exclusively entitled to designate two members to our board of directors. In addition, the holders of the Series A Preferred Stock are entitled to vote upon all matters upon which holders of our common stock have the right to vote and are entitled to the number of votes equal to the number of full shares of our common stock into which such shares of Series A Preferred Stock could be converted at the then applicable conversion rate. These matters include the election of all director nominees not designated by the holders of the Series A Preferred Stock. As a result, the holders of the Series A Preferred Stock have significant influence on the composition of our board of directors.
As of December 31, 2023, the holders of the Series A Preferred Stock held approximately 63.1% of the voting power on an as-converted basis, taking into account the accrued dividends which we may elect to pay in cash or shares of common stock. As a result, the holders of the Series A Preferred Stock will have the ability to influence future actions requiring stockholder approval.
Pursuant to the Certificate of Designations governing the Series A Preferred Stock, the holders of the Series A Preferred Stock must consent to us taking certain actions, including among others, increasing the number of directors constituting our board of directors above eight members, incurring certain indebtedness and the sale of certain assets. The holders of the Series A Preferred Stock are not obligated to consent to any specific action and there can be no assurance that the holders will consent to any action our board of directors determines is in the best interests of our stockholders as a whole.
Additionally, the holders of the Series A Preferred Stock have been granted a right of first refusal on certain debt financings. Pursuant to this right, the holders of the Series A Preferred Stock have 15 business days to determine whether they want to undertake a covered debt financing. This may delay our ability to undertake a debt financing and may cause
certain third parties to be less willing to engage in any debt financing with us. As a common shareholder, Series A Preferred shareholders could negatively impact your investment and may not take actions that will be in your best interest.
Our board of directors approved a stock repurchase program, which could increase the volatility of the price of our common stock.
In September 2021, our board of directors approved a stock repurchase program authorizing us to repurchase up to a maximum of $25.0 million of our shares of common stock through December 31, 2022. On December 15, 2022, our board of directors approved the extension of the program for the remaining balance of $13.7 million and approved additional repurchases of $50.0 million, each through December 31, 2024 of which $63.4 million remains as of December 31, 2023. Repurchases may be made at management’s discretion from time to time in the open market, through privately negotiated transactions or pursuant to a trading plan subject to market conditions, applicable legal requirements and other factors. There can be no assurance that we would buy shares of our common stock or the timeframe for repurchases under our stock repurchase program or that any repurchases would have a positive impact on our stock price or earnings per share.
Additionally, the Inflation Reduction Act of 2022 was recently signed into law, which, among other things, imposed a new 1% excise tax on the fair market value of stock redeemed or repurchased by publicly traded corporations on or after January 1, 2023, subject to certain exceptions. If we redeem or repurchase shares of our stock in the future under our current stock repurchase program or otherwise, we could be subject to this excise tax, unless the redemptions or repurchases qualify for any of the exceptions that are provided in the Inflation Reduction Act or in future regulations or rules. Any such excise tax would be a liability and could increase the amount of tax that we are required to pay.
Our amended and restated certificate of incorporation provides to the fullest extent permitted by law that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between the us and our stockholders, which could increase the costs to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides to the fullest extent permitted by law that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company or our stockholders, any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), or any action asserting a claim governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us or our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in our amended and restated certificate of incorporation does not apply to actions arising under the federal securities laws and will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.
General Risk Factors
We depend on our ability to attract and retain customers.
Our future success depends upon our ability to attract and retain customers for our products, services, protection plans, and resources. The extent to which we achieve growth in our customer base materially influences our profitability. Any number of factors could affect our ability to grow our customer base. These factors include consumer preferences and general economic conditions, our ability to maintain our retail locations, weather conditions, the availability of alternative products, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of our brands. Any significant decline in our customer base, the rate of growth of our customer base or customer demand could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to protect, maintain or upgrade our information technology systems or if we are unable to convert to alternate systems in an efficient and timely manner, our operations may be disrupted or become less efficient.
We depend on a variety of information technology systems for the efficient operation of our business. We rely on hardware, telecommunications and software vendors to maintain and periodically upgrade many of these information technology systems so that we can continue to operate our business. Various components of our information technology systems, including hardware, networks, and software, are licensed to us by third party vendors. We rely extensively on our information technology systems to process transactions, summarize results and efficiently manage our business. Additionally, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (the “PCI Standard”), issued by the Payment Card Industry Security Standards Council. The PCI Standard contains various compliance guidelines with respect to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. We are currently in compliance with the PCI Standard, however, complying with the PCI Standard and implementing related procedures, technology and information security measures requires significant resources and ongoing attention to compliance. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to maintain compliance with the PCI Standard or with respect to maintenance or support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our payment-related systems could have a material adverse effect on our business, financial condition and results of operations.
While we have completed significant steps in our remediation, management will continue to implement its remediation plan, including its determination if additional updates are appropriate in the remediated actions noted above and through taking additional actions to remediate the material weaknesses in internal control over financial reporting, which include but are not limited to performing and implementing a user role redesign for certain systems, using third-party assistance to assess training needs, and expanding available resources at the Company with the appropriate experience. The material weaknesses will not be considered remediated until the remediation actions, including those noted above and any others determined appropriate have been completed and have operated effectively for a sufficient period of time. The Company is committed to validating that changes made are operating as intended within our remediation plan, and with the actions already taken and our planned remediation steps, when fully implemented and operated consistently, we believe we will remediate the material weaknesses.
Any disruptions to our information technology systems or breaches of our network security 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.
We rely on the integrity, security and successful functioning of our information technology systems and network infrastructure across our operations. We use information technology systems to, among other things, generate and manage sales leads, support our consumer services and plans, manage procurement, manage our supply chain, track inventory information at our retail locations, communicate customer information and aggregate daily sales, margin and promotional information. We also use information systems to report and audit our operational results.
In connection with sales, we transmit encrypted confidential credit and debit card information. Although we are currently in compliance with the PCI Standard, there can be no assurance that in the future we will be able to remain compliant with the PCI Standard or other industry recommended or contractually required practices. Even if we continue to be compliant with such standards, we still may not be able to prevent security breaches.
We also have access to, collect or maintain private or confidential information regarding our customers, associates and suppliers, as well as our business. The protection of our customer, associate, supplier and company data is critical to us. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across our business and operations. In addition, our customers have a high expectation that we will adequately protect their personal information from cyber-attacks and other security breaches. We have procedures in place to safeguard our customer’s data and information. However, a significant breach of customer, employee, supplier, or company data could attract a substantial amount of negative media attention, damage our relationships with our customers and suppliers, harm our reputation and result in lost sales, fines and/or lawsuits.
An increasingly significant portion of our sales depends on the continuing operation of our information technology and communications systems, including but not limited to our point-of-sale system and our credit card processing systems. Our information technology, communication systems and electronic data may be vulnerable to damage or interruption from earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, computer and telecommunications failures, computer viruses, loss of data, unauthorized data breaches, usage errors by our associates or
our contractors or other attempts to harm our systems, including cyber-security attacks, hacking by third parties, computer viruses or other breaches of cardholder data. Some of our information technology and communication systems are not fully redundant and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, intentional sabotage or other unanticipated problems could result in lengthy interruptions in our information technology and communications systems. Any errors or vulnerabilities in our information technology and communications systems, or damage to or failure of our information technology and communications systems, could result in interruptions services and non-compliance with certain regulations or expose us to risk of litigation and liability, which could have a material adverse effect on our business, financial condition and results of operations.
We may be subject to product liability claims if people or property are harmed by the products we sell and may be adversely impacted by manufacturer safety recalls.
Some of the products we sell may expose us to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions. Although we maintain liability insurance, we cannot be certain that our insurance coverage will be adequate for losses actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. In addition, some of our agreements with our vendors and sellers do not indemnify us from losses attributable to product liability. 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.
Our risk management policies and procedures may not be fully effective in achieving their purposes.
Our policies, procedures, controls and oversight to monitor and manage our enterprise risks may not be fully effective in achieving their purpose and may leave us exposed to identified or unidentified risks. Past or future misconduct by our employees or vendors could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm to us. We monitor our policies, procedures and controls; however, there can be no assurance that these will be sufficient to prevent all forms of misconduct. We review our compensation policies and practices as part of our overall enterprise risk management program, but it is possible that our compensation policies could incentivize inappropriate risk taking or misconduct. If such inappropriate risks or misconduct occurs, it is possible that it could have a material adverse effect on our business, financial condition and results of operations.
We have incurred impairment charges for goodwill, and could incur impairment charges for intangible assets or other long-lived assets.
At least annually, we review goodwill, trademarks and trade names for impairment. Long-lived assets, identifiable intangible assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Our determination of future cash flows, future recoverability and fair value of our long-lived assets includes significant estimates and assumptions. Changes in those estimates and/or assumptions or lower than anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect our financial position or results of operations.
Refer to Note 2 - Significant Accounting Policies and Note 7 - Goodwill and Intangible Assets of Notes to Consolidated Financial Statements for additional information.
We may be unable to retain senior executives and attract, develop, and retain other qualified employees.
Our success depends in part on our ability to attract, hire, develop and retain qualified personnel. Competition for the personnel required is high. We may be unsuccessful in attracting and retaining the personnel needed to conduct operations successfully. In this event, our business could be materially and adversely affected. In addition, the loss of members of our senior management team could impair our ability to execute our business plan and could have a material and adverse effect on our business, results of operations and financial condition.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2. Properties
We own the property at 8 of our locations and lease the remaining 16 properties. We also own the property for one additional location expected to open in March 2024. Our real property leases generally provide for fixed monthly rents with annual escalation clauses and multiple renewal terms of 3 to 20 years each. The leases are typically “triple net” requiring us to pay real estate taxes, insurance and maintenance costs. We believe that our properties are suitable and adequate for present purposes, and that the productive capacity in such properties is substantially being utilized.
Our largest leased dealership property is located in Tampa, Florida. The dealership is 384,000 square feet and sits on 126 acres. The lease term is 20 years with an initial expiration date in 2035.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
We are a party to multiple legal proceedings that arise in the ordinary course of our business. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these or other matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Currently, our shares of common stock are listed on the Nasdaq Capital Market under the symbol “GORV”.
As of March 8, 2024, there were 47 holders of record of our shares of common stock and 4 holders of record of our shares of Series A Preferred Stock.
We have not paid any cash dividends on our common stock and do not plan to pay any cash dividends on our common stock in the foreseeable future. Our board of directors will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business conditions, subject to any restrictions under our credit facility and the Certificate of Designations for the Series A Preferred Stock.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2023, there were no sales of unregistered securities.
Purchases of Equity Securities by the Issuer
As of December 31, 2023, we had $63.4 million of remaining availability to purchase our common stock pursuant to a plan that expires on December 31, 2024. No repurchases were made during the year ended December 31, 2023.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, including matters set forth in the “Risk Factors” section of this Form 10-K and our Consolidated Financial Statements and notes thereto, included in Part II, Item 8 of this Form 10-K.
Business Overview
We operate recreational vehicle dealerships and offer a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. We generate revenue by providing RV owners and outdoor enthusiasts a full spectrum of products: RV sales, RV repair and services, financing and insurance products, third-party protection plans, and after-market parts and accessories. During the second quarter of 2023 we closed the campground facilities at our Tampa, Florida location. In the third quarter of 2023, we closed our dealerships at the Maryville and Burns Harbor locations.
We operate 24 dealerships in 15 states and expect to open an additional dealership in March 2024. Based on industry research and management’s estimates, we believe we operate the world’s largest RV dealership, measured in terms of on-site inventory, located on approximately 126 acres outside Tampa, Florida. See Item 1. Business for additional details.
Lazydays offers one of the largest selections of leading RV brands in the nation, featuring more than 6,000 new and pre-owned RVs. We have more than 400 service bays, and each location has an RV parts and accessories store. We employ approximately 1,300 people at our 24 dealership locations. Our locations are staffed with knowledgeable local team members, providing customers access to extensive RV expertise. We believe our locations are strategically located and, based on information collected by us from reports prepared by Statistical Surveys, account for a significant portion of new RV units sold on an annual basis in the U.S. Our dealerships attract customers from all states, except Hawaii.
We attract new customers primarily through Lazydays dealership locations as well as digital and traditional marketing efforts. Once we acquire customers, those customers become part of our customer database where we use customer relationship management tools and analytics to actively engage, market and sell our products and services.
In January 2024, we launched a complete rebranding effort with new websites, logos, fonts and colors, as well as a new stock symbol ("GORV"). We belive these rebranding efforts will enhance our digital retail experience, particularly on mobile devices, which account for over 80% of our website traffic.
Results of Operations
For the year ended December 31, 2023, we reported a net loss of $110.3 million, or $8.45 per diluted share. For the year ended December 31, 2022, we reported net income of $66.4 million, or $2.42 per diluted share.
(In thousands, except vehicle and per vehicle data) Year Ended December 31, Change %
Change
2023 2022
Revenue
New vehicle retail $ 631,748 $ 777,807 $ (146,059) (18.8) %
Pre-owned vehicle retail 323,258 394,582 (71,324) (18.1) %
Vehicle wholesale 8,006 21,266 (13,260) (62.4) %
Finance and insurance 62,139 75,482 (13,343) (17.7) %
Service, body and parts and other 57,596 57,824 (228) (0.4) %
Total revenue $ 1,082,747 $ 1,326,961 $ (244,214) (18.4) %
Gross profit
New vehicle retail $ 79,437 $ 145,491 $ (66,054) (45.4) %
Pre-owned vehicle retail 63,764 93,017 (29,253) (31.4) %
Vehicle wholesale (172) (354) 182 (51.4) %
Finance and insurance 59,592 72,753 (13,161) (18.1) %
Service, body and parts and other 29,873 30,167 (294) (1.0) %
LIFO (3,752) (12,383) 8,631 (69.7) %
Total gross profit $ 228,742 $ 328,691 $ (99,949) (30.4) %
Gross profit margins
New vehicle retail 12.6 % 18.7 % (610) bps
Pre-owned vehicle retail 19.7 % 23.6 % (390) bps
Vehicle wholesale (2.2) % (1.7) % (50) bps
Finance and insurance 95.9 % 96.4 % (50) bps
Service, body and parts and other 51.9 % 52.2 % (30) bps
Total gross profit margin 21.1 % 24.8 % (370) bps
Total gross profit margin (excluding LIFO) 21.5 % 25.7 % (420) bps
Retail units sold
New vehicle retail 7,269 8,603 (1,334) (15.5) %
Pre-owned vehicle retail 5,018 5,409 (391) (7.2) %
Total retail units sold 12,287 14,012 (1,725) (12.3) %
Average selling price per retail unit
New vehicle retail $ 86,910 $ 90,411 $ (3,501) (3.9) %
Pre-owned vehicle retail 64,420 72,949 (8,529) (11.7) %
Average gross profit per retail unit (excluding LIFO)
New vehicle retail $ 10,928 $ 16,912 $ (5,984) (35.4) %
Pre-owned vehicle retail 12,707 17,197 (4,490) (26.1) %
Finance and insurance 4,850 5,192 (342) (6.6) %
NM - Not meaningful
Same Store Results of Operations
We believe that same store comparisons are an important indicator of our financial performance. Same store measures demonstrate our ability to grow operations in our existing locations.
Same store measures reflect results for stores that were operating in each comparison period, and only include the months when operations occurred in both periods. For example, a store acquired in November 2022 would be included in same store operating data beginning in December 2023, after its first complete comparable month of operations. The fourth quarter operating results for the same store comparisons would include results for that store for both comparable periods. We believe that this measure provides meaningful information on our performance and operating results. However, readers
should know that this financial metric has no standardized meaning and may not be comparable to similar measures presented by other companies.
(In thousands, except vehicle and per vehicle data) Year Ended December 31, Change %
Change
2023 2022
Revenues
New vehicle retail $ 557,176 $ 731,572 $ (174,397) (23.8) %
Pre-owned vehicle retail 290,242 378,117 (87,875) (23.2) %
Vehicle wholesale 7,567 21,167 (13,600) (64.2) %
Finance and insurance 54,395 71,899 (17,504) (24.3) %
Service, body and parts and other 51,392 55,603 (4,211) (7.6) %
Total revenues $ 960,772 $ 1,258,358 $ (297,586) (23.6) %
Gross profit
New vehicle retail $ 69,710 $ 137,016 $ (67,306) (49.1) %
Pre-owned vehicle retail 56,773 88,854 (32,081) (36.1) %
Vehicle wholesale (171) (354) 183 NM
Finance and insurance 52,132 69,285 (17,153) (24.8) %
Service, body and parts and other 26,593 29,109 (2,516) (8.6) %
LIFO (3,752) (12,383) 8,631 NM
Total gross profit $ 201,285 $ 311,527 $ (110,242) (35.4) %
Gross profit margins
New vehicle retail 12.5 % 18.7 % (620) bps
Pre-owned vehicle retail 19.6 % 23.5 % (390) bps
Vehicle wholesale (2.3) % (1.7) % (60) bps
Finance and insurance 95.8 % 96.4 % (60) bps
Service, body and parts and other 51.7 % 52.4 % (70) bps
Total gross profit margin 21.0 % 24.8 % (380) bps
Total gross profit margin (excluding LIFO) 21.3 % 25.7 % (440) bps
Retail units sold
New vehicle retail 6,142 7,867 (1,725) (21.9) %
Pre-owned vehicle retail 4,362 5,049 (687) (13.6) %
Total retail units sold 10,504 12,916 (2,412) (18.7) %
Average selling price per retail unit
New vehicle retail $ 90,716 $ 92,993 $ (2,277) (2.4) %
Pre-owned vehicle retail 66,539 74,889 (8,350) (11.1) %
Average gross profit per retail unit (excluding LIFO)
New vehicle retail $ 11,350 $ 17,417 $ (6,067) (34.8) %
Pre-owned vehicle retail 13,015 17,598 (4,583) (26.0) %
Finance and insurance 4,963 5,364 (401) (7.5) %
NM - Not meaningful
Revenue and Gross Margin Discussion
New Vehicles Retail
We offer a comprehensive selection of new RVs across a wide range of price points, classes and floor plans, from entry level travel trailers to Class A motorhomes, at our dealership locations and on our website. We have strong strategic alliances with leading RV manufacturers. The core brands that we sell, representing 96.0% of the new vehicles that we sold in 2023, are manufactured by Thor Industries, Inc., Winnebago Industries, Inc., and Forest River, Inc.
Under our business strategy, we believe that our new RV sales create incremental profit opportunities by providing used RV inventory through trade-ins, arranging of third-party financing, RV service and insurance contracts, future resale of trade-ins and parts and service work.
New vehicle revenue decreased $146.1 million, or 18.8%, in 2023 compared to 2022 due primarily to a 15.5% decrease in units sold and a decrease of 3.9% in the average selling price per retail unit. The decrease in units sold was primarily due to a contracting market coming off of a robust 2022.
New vehicle gross profit decreased $66.1 million, or 45.4%, in 2023 compared to 2022, primarily due to less units sold combined with a $5,984 decrease in gross profit per unit. As inventories continued to normalize and overall sales declined, we discounted towards the end of 2023 ahead of the new model year change to generate sales, which led to the decline in gross profit per unit.
On a same store basis, new vehicle revenue decreased $174.4 million, or 23.8%, in 2023 compared to 2022, due primarily to a 21.9% decrease in retail units sold and a 2.4% decrease in average selling prices.
On a same store basis, new vehicle gross profit decreased $67.3 million, or 49.1%, in 2023 compared to 2022, due primarily to less units sold and a 34.8% decrease in gross profit per unit, excluding LIFO.
Although supply chain and inventory continued to normalize in 2023, our stores focused on positioning themselves for 2024 and 2025 model year inventory by discounting 2022 and 2023 model year units. We ended the fourth quarter of 2023 with approximately 62% of our units being 2024 model year, 36% being 2023 model year and only 2%, or approximately 104 units being 2022 model year.
Pre-Owned Vehicles Retail
Pre-owned vehicle retail sales are currently a strategic focus for growth. Our pre-owned vehicle operations provide an opportunity to generate sales to customers unable or unwilling to purchase a new vehicle, to sell models other than the store’s new vehicle models, access additional used vehicle inventory through trade-ins and increase sales from finance and insurance products. We sell a comprehensive selection of pre-owned RVs at our dealership locations. We have established a goal to reach a used to new ratio of 1:1. Strategies to achieve this target include reducing wholesale sales, procuring additional used RV inventory direct from consumers and selling deeper into the pre-owned RV spectrum. We achieved a used to new ratio of 0.73:1 in 2023.
Pre-owned vehicle retail revenue decreased $71.3 million, or 18.1%, in 2023 compared to 2022 due primarily to a 7.2% decrease in retail units sold and a 11.7% decrease in average selling price per retail unit. The decrease in retail units sold was primarily due to a contracting market coming off of a robust 2022.
Pre-owned vehicle retail gross profit decreased $29.3 million, or 31.4%, in 2023 compared to 2022 due primarily to fewer units sold, combined with lower gross profit per unit. The decline in gross profit per unit was primarily due to supply normalizing after increased demand during 2022 saw inventories depleted, which led to higher margins in 2022.
On a same store basis, pre-owned vehicle retail revenue decreased $87.9 million, or 23.2% in 2023 compared to 2022 due primarily to a 11.1% decrease in average selling prices and a 13.6% decrease in retail units sold.
Pre-owned vehicle retail gross profits on a same store basis decreased $32.1 million, or 36.1% in 2023 compared to 2022. This decrease was a result of a 13.6% decrease in units sold, combined with a 26.0% decrease in gross profit per unit, excluding LIFO.
Finance and Insurance
We believe that arranging timely financing is an important part of providing access to the RV lifestyle and we attempt to arrange financing for every vehicle we sell. We also offer related products such as extended warranties, insurance contracts and other maintenance products.
Finance and insurance (“F&I”) revenues decreased 17.7% during 2023 compared to 2022, primarily due to a 12.3% decrease in total retail units sold and an 6.6% decrease in average F&I gross profit per unit. The decrease in average F&I gross profit per unit was primarily due to a higher volume of chargebacks during the year.
On a same store basis, F&I revenue decreased 24.3% primarily due to a decrease in total retail units sold of 18.7% and a 7.5% decrease in average F&I gross profit per unit, excluding LIFO.
Certain information regarding our F&I operations was as follows:
Year Ended December 31,
2023 2022 Change % Change
Overall
F&I per unit $ 4,850 $ 5,192 $ (342) (6.6) %
F&I penetration rate 61.1 % 64.3 % (320) bps
Same store
F&I per unit $ 4,963 $ 5,364 $ (401) (7.5) %
F&I penetration rate 61.1 % 65.0 % (390) bps
Service, Body and Parts and Other
With more than 400 service bays, we provide onsite general RV maintenance and repair services at all of our dealership locations. We employ over 300 highly skilled technicians, many of them certified by the Recreational Vehicle Industry Association (“RVIA”) or the National RV Dealers Association (“RVDA”) and we are equipped to offer comprehensive services and perform original equipment manufacturer (“OEM”) warranty repairs for most RV components. Earnings from service, body and parts and other have historically been more resilient during economic downturns, when owners have tended to hold and repair their existing RVs rather than buy a new one.
Service, body and parts and other is a strategic area of focus and an area of opportunity to grow additional earnings.
Our service, body and parts and other revenue and gross profit decreased 0.4% and 1.0%, respectively, in 2023 compared to 2022. The decreases in revenue and gross profit were primarily due to the closure of the campground in the second quarter of 2023, partially offset by acquisitions and greenfields, combined with more units in operation and increases in warranty rates.
Our same store service, body and parts and other revenue and gross profit decreased 7.6% and 8.6%, respectively, during 2023 compared to 2022.
Depreciation and Amortization
Depreciation and amortization was as follows:
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
Depreciation and amortization $ 18,512 $ 16,758 $ 1,754 10.5 %
The increase in depreciation and amortization in 2023 compared to 2022 was primarily related to the increase in Property and equipment as a result of acquisitions, the expansion of several dealerships and the opening of new stores.
Selling, General and Administrative
Selling, general, and administrative (“SG&A”) expenses consist primarily of wage-related expenses, selling expenses related to commissions and advertising, lease expenses, corporate overhead expenses, transaction costs, and stock-based compensation expense, and do not include depreciation and amortization expense.
SG&A expense was as follows:
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
SG&A expense $ 198,962 $ 222,218 $ (23,256) (10.5) %
SG&A as percentage of gross profit 87.0 % 67.6 % 1,940 bps
Stock-based compensation included in SG&A $ 2,249 $ 2,813 $ (564) (20.0) %
The decrease in SG&A in 2023 compared to 2022 was primarily related to decreased marketing expenses, reduced headcount and lower commissions paid due to fewer units sold. Offsetting the decrease was an impairment charge of $0.6 million in the first quarter of 2023 related to the write-off of capitalized software that we determined we would not utilize.
The increase in SG&A as a percentage of gross profit in 2023 compared to 2022 was primarily related to lower gross profit and the impairment charge mentioned above.
Goodwill Impairment
As discussed in Note 1 - Significant Accounting Policies to our Consolidated Financial Statements, we recognized a goodwill impairment charge of $118.0 million in 2023.
Floor Plan Interest Expense
Floor plan interest expense was as follows:
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
Floor plan interest expense $ 24,820 $ 8,596 $ 16,224 188.7 %
The increase in floor plan interest expense in 2023 compared to 2022 is due to increased interest rates and an increase in acquisition volume.
Other Interest Expense
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
Other interest expense $ 10,062 $ 7,996 $ 2,066 25.8 %
The increase in other interest expense in 2023 compared to 2022 was primarily due to higher revolver balances outstanding and mortgages obtained during the third quarter of 2023.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the outstanding PIPE warrants issued in connection with our SPAC merger in March 2018. The fair value of the warrants fluctuated with
changes in the value of our common stock. All of the warrants were exercised or expired during the first quarter of 2023 and, accordingly, as of December 31, 2023, no PIPE warrants remained outstanding.
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
Change in fair value of warrant liabilities $ 856 $ 12,453 $ (11,597) (93.1) %
Income Tax Expense
Income tax benefit (expense) was as follows:
Year Ended December 31,
2023 2022 Change % Change
($ in thousands)
Income tax benefit (expense) $ 30,462 $ (19,183) $ 49,645 258.8 %
Effective tax rate (21.6) % 22.4 %
The income tax benefit (expense) differs from the statutory rate primarily as a result of state income taxes and the impairment of Goodwill that took place in the fourth quarter of 2023. The effective tax rate was lower in 2023 compared to 2022 due to the effect of fair value adjustments related to Goodwill. Goodwill was fully impaired as of December 2023 and therefore will no longer have a meaningful impact on our effective tax rate.
Liquidity and Capital Resources
Our principal needs for liquidity and capital resources are for capital expenditures and working capital as well as for growth through acquisitions and greenfielding. We have historically satisfied our liquidity needs through cash flows from operations, borrowings under our credit facilities as well as occasional sale-leaseback arrangements. In addition to these sources of liquidity, potential sources to fund our business strategy include financing of owned real estate, construction loans, and proceeds from debt or equity offerings. We evaluate all of these options and may select one or more of them depending upon overall capital needs and the availability and cost of capital,although no assurances can be provided that these capital sources will be available in sufficient amounts or with terms acceptable to us.
As of December 31, 2023 we had cash of $58.1 million and our revolver was fully drawn. We hold approximately $109.9 million of real estate financed under our $35.0 million mortgage facility that we estimate could provide $47.5 million of additional liquidity at an estimated 75% loan to value as we refinance these properties. We also have other unencumbered real estate that we estimate can generate additional liquidity of approximately $18 million through financing transactions.
Cash Flow Summary
Year Ended December 31,
($ in thousands) 2023 2022
Net income (loss) $ (110,266) $ 66,393
Non cash adjustments, net 108,171 9,048
Changes in operating assets and liabilities (34,385) (147,401)
Net cash used in operating activities (36,480) (71,960)
Net cash used in investing activities (192,964) (54,542)
Net cash provided by financing activities 225,842 90,069
Net decrease in cash $ (3,602) $ (36,433)
Operating Activities
Inventories are the most significant component of our cash flow from operations. As of December 31, 2023, our new vehicle days’ supply was 380 days which was 130 days higher than our days’ supply as of December 31, 2022. As of December 31, 2023, our days’ supply of pre-owned vehicles was 132 days, which was 54 days higher than our days’ supply at December 31, 2022. We calculate days’ supply of inventory based on current inventory levels and a 90 day historical cost of sales level. We continue to focus on managing our unit mix and maintaining appropriate levels of new and used vehicle inventory.
Borrowings from and repayments to the M&T Floor Plan Line of Credit related to our new vehicle inventory floor plan financing are presented as financing activities. Additionally, the cash paid for inventory purchased as part of an acquisition is presented as an investing activity, while the subsequent flooring of the new inventory is included in our floor plan payable cash activities.
To better understand the impact of these items, a reconciliation of adjusted net cash provided by operating activities, a non-GAAP financial measure to net cash provided by operating activities, is presented below:
Year Ended December 31,
(In thousands) 2023 2022 Change
Net cash used in operating activities, as reported $ (36,480) $ (71,960) $ 35,480
Net borrowings on floor plan notes payable 98,530 148,180 (49,650)
Minus borrowings on floor plan notes payable associated with acquired new inventory (28,751) - (28,751)
Net cash provided by operating activities, as adjusted $ 33,299 $ 76,220 $ (42,921)
Investing Activities
During 2023, net cash used in investing activities of $193.0 million was primarily for $97.7 million spent on acquisitions of 5 dealerships in Nevada, Tennessee, Colorado, Utah and Arizona as disclosed in Note 3 to the consolidated financial statements, as well as $95.2 million for the purchase of property and equipment related to the construction of our greenfield locations in Iowa, Florida, Ohio and Arizona.
Financing Activities
During 2023, significant financing activities included $98.5 million of net borrowings under our M&T bank floor plan, $49.5 million of borrowings under M&T revolving credit facility, and $64.0 million of proceeds from the issuance of long-term debt, which included $35.0 million of proceeds is from the Coliseum Loan and $29 million of proceeds from the Murfreesboro and Knoxville mortgages. In addition, there was $30.5 million of proceeds from the exercise of warrants.
Short-Term Material Cash Requirements
For at least the next twelve months, our primary capital requirements are capital to maintain our current operations. We may also use our resources for the funding of potential acquisitions or development of bare land for future dealerhsip locations. Cash used for acquisitions will be dependent upon deal flow and individual targets. Inventory associated with acquisitions and stocking new greenfield location inventories will primarily be financed using the M&T floorplan facility. Cash used for capital expenditures and acquisitions will also be dependent upon operational cash flows.
Long-Term Material Cash Requirements
Beyond the next twelve months, our principal demands for funds will be for maintenance of our core business, and continued growth through acquisitions. Additional funds may be spent on technology and efficiency investments, at our discretion.
We expect to meet our long-term liquidity requirements primarily through current cash on hand and cash generated by operations. We may obtain lease or mortgage financing for land purchased and the additional costs of building out dealership on these properties. Additionally, we have approximately $109.9 million of property encumbered by our $35.0 million Coliseum Loan that we estimate we can refinance at higher loan-to-value ratios and lower interest rates, similar to other properties we financed in 2023. We also have other unencumbered real estate that we estimate can generate additional liquidity of approximately $18.0 million through financing transactions.
For short-term and long-term cash requirements, we believe that our cash flows from operations, combined with our current cash levels, will be adequate to support our ongoing operations and to fund our operating and growth requirements
for the next twelve months, as well as beyond the next twelve months. We believe that we have access to additional funds, if needed, through the capital markets under the current market conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all.
M&T Credit Facility
On February 21, 2023, we amended our Senior Secured Credit Facility with M&T Bank.
The material provisions of the amendment were to: (i) increase the capacity under the Floor Plan Line of Credit to up to $525.0 million from $327.0 million and increase the capacity under the M&T Revolving Credit Facility to up to $50.0 million from $25.0 million; (ii) remove the Mortgage Loan Facility and Term Loan Facility; (iii) extend the term of the Floor Plan Line of Credit and the Revolving Credit to February 21, 2027; (iv) lower interest rates on the Floor Plan Line of Credit and the M&T Revolving Credit Facility; and (v) remove certain guarantors.
At the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.
At December 31, 2023, there was $446.8 million outstanding on the Floor Plan Line of Credit at an interest rate of 7.48% and $49.5 million outstanding on the Revolving Credit Facility at an interest rate of 8.35%. We were not in compliance with our financial and restrictive covenants at December 31, 2023 as we exceeded our total leverage ratio of 3.00, but received a waiver from M&T Bank through the second quarter of 2024, and modified covenants through the fourth quarter of 2024.
The Floor Plan Line of Credit bears interest at: (a) 30-day SOFR plus an applicable margin of 1.90% to 2.05% based on the total net leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of 0.90% to 1.05% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points. The Floor Plan Line of Credit is also subject to an annual unused commitment fee at 0.15% of the average daily unused portion of the Floor Plan.
The M&T Revolving Credit Facility bears interest at: (a) 30-day SOFR plus an applicable margin of 2.15% to 2.90% based on the total net leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of 1.15% to 1.90% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points. The Revolving Credit Facility is also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the M&T Revolving Credit Facility.
On March 8, 2024, LDRV Holdings Corp, Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, together with certain other subsidiary entities entered into the First Amendment to Second Amended and Restated Credit Agreement and Consent with Manufacturers and Traders Trust Company as Administrative Agent and other financial institutions as loan parties (the "Amendment"), to waive and modify certain covenants. This includes waiving the net leverage ratio from the fourth quarter of 2023 through the second quarter of 2024, current ratio for the fourth quarter of 2023, and fixed charge coverage ratio for the first and second quarters of 2024. Additionally, an additional tier was added to the definition of applicable margin of the Credit Facilities, setting forth the applicable interest rates corresponding to a total net leverage ratio of 3.00 . This new tier is applicable to the Company as of March 8, 2024.
Long-Term Debt
Mortgages
In July 2023, we entered into two mortgages for total proceeds of $29.3 million secured by certain real estate assets at our Murfreesboro and Knoxville locations. The loans bear interest between 6.85% and 7.10% per annum and mature in July 2033.
Coliseum Term Loan
On December 29, 2023, we entered into a $35 million term loan (the "Loan") with the Lender, with a maturity date of December 29, 2026. Certain funds and accounts managed by Coliseum currently hold 57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock) as of December 31, 2023 and is therefore
considered a related party. The Loan bears interest at a rate of 12% per annum, payable monthly in cash on the outstanding loan balance. For any quarterly period during the Loan term, we have the option at the beginning of each quarter to make pay-in-kind elections, whereby the entire outstanding balance would be charged interest at 14% per annum and interest amounts will be added to the outstanding principal. The Loan is secured by certain of our assets. Issuance costs of $2.0 million were recorded as debt discount and are being amortized over the term of the Loan to interest expense using the effective interest method. The Loan is carried at the outstanding principal balance, less debt issuance costs.
Under the terms of the Loan, for any repayments and prepayments that occur prior to January 1, 2025, we will owe a prepayment penalty of 1% on the outstanding principal balance being repaid and a make whole premium equal to the remaining interest owed on such balance repaid from date of repayment through January 1, 2025. For repayments and prepayments that occur after January 1, 2025 through maturity, we will owe a prepayment penalty of 2% on the outstanding principal balance being repaid.
The Loan contains certain reporting and compliance-related covenants. The Loan contains negative covenants, among other things, related to borrowing and events of default. It also includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lender being able to declare amounts outstanding under the Loan due and payable or foreclose on the collateral, the lender can elect to increase the interest rate by 7% per annum during the period of default. In addition, the Loan contains a cross default with M&T Bank. As of December 31, 2023, we were not in compliance with all of the covenants with M&T Bank as we exceed our maximum leverage covenant, however the cross default was waived for the period ended December 31, 2023.
Summary
Long-term debt was as follows:
As of December 31, 2023 As of December 31, 2022
(In thousands) Gross
Principal
Amount Debt Discount Total Debt,
Net of Debt
Discount Gross
Principal
Amount Debt
Discount Total Debt,
Net of Debt
Discount
Total long-term debt $ 64,870 $ (2,300) $ 62,570 $ 13,787 $ (49) $ 13,738
Less: current portion 1,141 - 1,141 3,607 - 3,607
Long-term debt, non-current $ 63,729 $ (2,300) $ 61,429 $ 10,180 $ (49) $ 10,131
Inflation
We have experienced higher than normal RV retail and wholesale price increases as manufacturers have passed through increased supply chain costs in their pricing to dealers. We monitor the health of our inventory and focus on discounting prior model year units as needed. While we anticipate the pricing of many 2025 model year units to be lower than 2023 and 2024 model year units, we cannot accurately anticipate the effect of inflation on our operations from possible continued cost increases, the full impact of the introduction of 2025 model year units into inventory and the related pricing of those units, consumers’ willingness to accept higher prices and the potential impact on retail demand and margins.
Cyclicality
Unit sales of RV vehicles historically have been cyclical, fluctuating with general economic cycles. During economic downturns the RV retailing industry tends to experience similar periods of decline and recession as the general economy. We believe that the industry is influenced by general economic conditions and particularly by consumer confidence, the level of personal discretionary spending, fuel prices, interest rates and credit availability.
Seasonality and Effects of Weather
Our operations generally experience modestly higher volumes of vehicle sales in the first half of each year due in part to consumer buying trends and the hospitable warm climate during the winter months at our Florida and Arizona locations. In addition, the northern locations in Colorado, Tennessee, Minnesota, Indiana, Oregon, Washington and Wisconsin generally experience modestly higher vehicle sales during the spring months.
Our largest RV dealership is located near Tampa, Florida, which is in close proximity to the Gulf of Mexico. A severe weather event, such as a hurricane, could cause severe damage to property and inventory and decrease the traffic to our
dealerships. Although we believe that we have adequate insurance coverage, if we were to experience a catastrophic loss, we may exceed our policy limits and/or may have difficulty obtaining similar insurance coverage in the future.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with GAAP, and in doing so, we must make estimates, assumptions and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. We base our estimates, assumptions and judgments on historical experience and on various other factors we believe to be reasonable under the circumstances. Different assumptions and judgments would change estimates used in the preparation of the consolidated financial statements, which, in turn, could change the results from those reported. We evaluate our critical accounting estimates, assumptions and judgments on an ongoing basis.
We believe that, of our significant accounting policies (see Note 2 of the consolidated financial statements included in this Form 10-K), the following policies are the most critical:
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the net assets acquired in business combinations, goodwill and other intangible assets, provision for charge-backs, LIFO adjustments and the allowance for doubtful accounts.
Impairment of Goodwill and Intangible Assets
Goodwill and indefinite life intangible assets are not amortized but are tested annually as of our annual impairment assessment date, or more frequently if events or changes in circumstances indicate that the assets might be impaired. In assessing the recoverability of goodwill indefinite life intangible assets, we must make assumptions about the estimated future cash flows and other factors to determine the fair value of these assets. For goodwill, our assessment is performed at the reporting unit level, and we have determined that we operate as a single reporting unit. The goodwill impairment test compares the fair value of the reporting unit to the carrying amount, including goodwill. If the fair value of the reporting unit is less than the carrying amount, an impairment charge is recorded for the difference, limited to the total amount of goodwill allocated to that reporting unit.
Similarly, for the impairment evaluation for indefinite life intangible assets, which includes our trade names, we determine whether the estimated fair value of the indefinite-lived intangible asset is less than its carrying value. We calculate the estimated fair value of the indefinite-lived intangible asset and compare it to the carrying value. Fair value is estimated primarily using future discounted cash flow projections in conjunction with qualitative factors and future operating plans. When the carrying value exceeds fair value, an impairment charge is recorded for the amount of the difference. An intangible asset is determined to have an indefinite useful life when there are no legal, regulatory, contractual, competitive, economic or other factors that may limit the period over which the asset is expected to contribute directly or indirectly to our future cash flows. We also annually evaluate intangible assets that are not being amortized to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is determined to have a finite useful life, the asset will be amortized prospectively over the estimated remaining useful life and accounted for in the same manner as intangible assets subject to amortization.
Revenue Recognition
The core principle of revenue recognition is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply a five-step model for revenue measurement and recognition.
Revenues are recognized when control of the promised goods or services is transferred to the customers at the expected amount we are entitled to for such goods and services. Taxes collected on revenue producing transactions are excluded from revenue in the consolidated statements of operations.
Revenue from the sale of vehicles is recognized at a point in time on delivery, transfer of title and completion of financing arrangements.
Revenue from the sale of parts, accessories, and related service is recognized as services and parts are delivered or as a customer approves elements of the completion of service. Revenue from the sale of parts, accessories, and related service is recognized in other revenue in the accompanying consolidated statements of operations.
We receive commissions from the sale of insurance and vehicle service contracts to customers. In addition, we arrange financing for customers through various financial institutions and receive commissions. We may be charged back (“charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of the contracts by the customers. The revenues from financing fees and commissions are recorded at the time of the sale of the vehicles and an estimated allowance for future charge-backs is established based on historical operating results and the termination provision of the applicable contracts. The estimates for future chargebacks require judgment by management, and as a result, there may be an element of risk associated with these revenue streams.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information requested by this Item is not applicable as we have elected scaled disclosure requirements available to smaller reporting companies with respect to this Item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
Lazydays Holdings, Inc.
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 49)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years ended December 31, 2023 and December 31, 2022
Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2023 and December 31, 2022
Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and December 31, 2022
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Lazydays Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lazydays Holdings, Inc. and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated March 12, 2024 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Testing
As described in Notes 2 and 7 to the consolidated financial statements, goodwill is evaluated at least annually for impairment and more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable. The Company tests goodwill for impairment by comparing the estimated fair value of the Company’s single reporting unit to its carrying value. When the carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded, not to exceed the carrying amount of goodwill. The Company tested goodwill for impairment on its annual test date of September 30 and concluded that goodwill was not impaired as of that date. During the fourth quarter of 2023, the Company concluded changes in facts and circumstances indicated that the carrying value of goodwill may not be recoverable; consequently the Company performed an interim test of goodwill for impairment at December 31 and concluded that goodwill was fully impaired, resulting in an impairment charge of $118.0 million for the year ended December 31, 2023. The Company estimated the fair value of its single reporting unit at September 30 using an income approach with a reconciliation of the concluded fair value to the market capitalization of the Company with consideration of a reasonable control premium. The Company estimated the fair value of its single reporting unit at December 31 using an equity capitalization market approach with a reconciliation of the concluded fair value to the market capitalization of the Company with consideration of a reasonable control premium.
We identified the Company’s annual goodwill impairment test at September 30 and its interim impairment test at December 31 as a critical audit matter because of the significant estimates and assumptions management made in determining the fair value of the single reporting unit at each testing date, including the projected revenue, operating margins and discount rate used in the income approach in the September 30 impairment test and the selected control premium used in the reconciliation to the market capitalization of the Company in both impairment tests. Auditing
management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions have on the accounting estimate.
Our audit procedures related to the Company’s annual goodwill impairment test as of September 30, 2023 and the interim goodwill impairment test as of December 31, 2023 included the following, among others:
•We tested the mathematical accuracy of the models used by management to estimate the fair value of the Company’s single reporting unit at both the annual and interim test dates and tested the source data for accuracy and completeness by agreeing such information to the underlying support.
•We tested the reasonableness of management’s revenue and operating margin projections used in the income approach by comparing to management’s forecasts to historical results of the Company and external market and industry data.
•We utilized valuation specialists to assist in the following procedures, among others:
◦Evaluating the reasonableness of the discount rate used by management in the income approach by comparing the underlying source information to publicly available market data and verifying the accuracy of the calculations.
◦Calculating an average and median control premium based upon independently sourced market data and comparing the results to the control premium utilized by management.
/s/ RSM US LLP
We have served as the Company’s auditor since 2021.
Tampa, Florida
March 12, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Lazydays Holdings, Inc.
Opinion on the Internal Control Over Financial Reporting
We have audited Lazydays Holdings, Inc.’s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statement of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023 of the Company and our report dated March 12, 2024 expressed an unqualified opinion.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management’s assessment.
•There were deficiencies in the design and implementation of information technology general controls (ITGCs) in the areas of user access, program change management and security administration that are relevant to preparation of the financial statements. As a result, IT dependent manual and automated controls that rely on the affected ITGCs, or information from the IT systems with affected ITGCs were also ineffective.
•Resource turnover in the fourth quarter resulted in the lack of sufficient evidence to support the effective performance of the Company’s internal control over financial reporting across all transaction cycles of the financial statements.
These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated March 12, 2024 on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ RSM US LLP
Tampa, Florida
March 12, 2024
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
As of December 31,
2023 2022
ASSETS
Current assets
Cash $ 58,085 $ 61,687
Receivables, net of allowance for doubtful accounts of $479 and $476
22,694 25,053
Inventories 456,087 378,881
Income tax receivable 7,419 7,912
Prepaid expenses and other 2,614 3,316
Total current assets 546,899 476,849
Property and equipment, net of accumulated depreciation of $46,098 and $35,275
265,726 158,991
Operating lease right-of-use assets 26,377 26,984
Goodwill - 83,460
Intangible assets, net 80,546 81,665
Other assets 2,750 2,769
Deferred income tax asset 15,444 -
Total assets $ 937,742 $ 830,718
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 15,144 $ 10,843
Accrued expenses and other current liabilities 29,160 27,875
Dividends payable - 1,210
Income tax payable 3 -
Floor plan notes payable, net of debt discount 446,783 348,735
Financing liability, current portion 2,473 2,281
Long-term debt, current portion 1,141 3,607
Operating lease liability, current portion 5,276 5,074
Total current liabilities 499,980 399,625
Long-term liabilities
Financing liability, non-current portion, net of debt discount 91,401 89,770
Revolving line of credit 49,500 -
Long term debt, non-current portion, net of debt discount 61,429 10,131
Operating lease liability, non-current portion 22,242 22,755
Deferred income tax liability - 15,536
Warrant liabilities - 906
Total liabilities 724,552 538,723
Commitments and contingencies
Series A convertible preferred stock; 600,000 shares, designated, issued, and outstanding and liquidation preference of $60,000 as of December 31, 2023 and December 31, 2022.
56,193 54,983
Stockholders’ equity
Preferred stock, $0.0001 par value; 5,000,000 shares authorized;
- -
Common stock, $0.0001 par value; 100,000,000 shares authorized; 17,477,019 and 14,515,253 shares issued and 14,064,797 and 11,112,464 shares outstanding as of December 31, 2023 and December 31, 2022, respectively.
- -
Additional paid-in capital 165,988 130,828
Treasury stock, at cost, 3,412,222 and 3,402,789 shares as of December 31, 2023 and December 31, 2022, respectively.
(57,128) (57,019)
Retained earnings 48,137 163,203
Total stockholders’ equity 156,997 237,012
Total liabilities and stockholders’ equity $ 937,742 $ 830,718
See the accompanying notes to the consolidated financial statements.
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands except share and per share data)
Year Ended December 31,
2023 2022
Revenue
New vehicle retail $ 631,748 $ 777,807
Pre-owned vehicle retail 323,258 394,582
Vehicle wholesale 8,006 21,266
Finance and insurance 62,139 75,482
Service, body and parts and other 57,596 57,824
Total revenue 1,082,747 1,326,961
Cost applicable to revenue
New vehicle retail 552,311 632,316
Pre-owned vehicle retail 259,494 301,565
Vehicle wholesale 8,178 21,620
Finance and insurance 2,547 2,729
Service, body and parts, other 27,723 27,657
LIFO 3,752 12,383
Total cost applicable to revenue 854,005 998,270
Gross profit 228,742 328,691
Depreciation and amortization 18,512 16,758
Selling, general, and administrative expenses 198,962 222,218
Goodwill impairment 117,970 -
(Loss) income from operations (106,702) 89,715
Other income (expense)
Floor plan interest expense (24,820) (8,596)
Other interest expense (10,062) (7,996)
Change in fair value of warrant liabilities 856 12,453
Total other expense, net (34,026) (4,139)
(Loss) income before income tax expense (140,728) 85,576
Income tax benefit (expense) 30,462 (19,183)
Net (loss) income (110,266) 66,393
Dividends on Series A convertible preferred stock (4,800) (4,801)
Net (loss) income and comprehensive (loss) income attributable to common stock and participating securities $ (115,066) $ 61,592
EPS:
Basic $ (8.41) $ 3.47
Diluted $ (8.45) $ 2.42
Weighted average shares outstanding:
Basic 13,689,001 11,701,302
Diluted 13,689,001 12,797,796
See the accompanying notes to the consolidated financial statements.
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands except share data)
Common Stock Treasury Stock Additional
Paid-In
capital Retained
Earnings Total
Stockholders’
Equity
Shares Amount Shares Amount
Balance at December 31, 2021 13,694,417 $ - 707,312 $ (12,515) $ 121,831 $ 96,810 $ 206,126
Stock-based compensation - - - - 2,813 - 2,813
Repurchase of treasury stock - - 2,695,477 (44,504) - - (44,504)
Conversion of warrants and options 753,951 - - - 10,067 - 10,067
Shares issued pursuant to the Employee Stock Purchase Plan 66,885 - - - 918 - 918
Dividends on Series A preferred stock - - - - (4,801) - (4,801)
Net income - - - - - 66,393 66,393
Balance at December 31, 2022 14,515,253 - 3,402,789 (57,019) 130,828 163,203 237,012
Stock-based compensation - - - - 2,249 - 2,249
Repurchase of treasury stock - - 9,433 (109) - - (109)
Conversion of warrants, options and restricted stock units 2,911,803 - - - 31,876 - 31,876
Shares issued pursuant to the Employee Stock Purchase Plan 49,963 - - - 413 - 413
Disgorgement of short-swing profits - - - - 622 - 622
Dividends on Series A preferred stock - - - - - (4,800) (4,800)
Net loss - - - - - (110,266) (110,266)
Balance at December 31, 2023 17,477,019 $ - 3,412,222 $ (57,128) $ 165,988 $ 48,137 $ 156,997
See the accompanying notes to the consolidated financial statements.
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2023 2022
Cash Flows From Operating Activities
Net (loss) income $ (110,266) $ 66,393
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Stock-based compensation 2,249 2,813
Bad debt expense 12 (526)
Depreciation and amortization of property and equipment 10,954 9,480
Amortization of intangible assets 7,558 7,278
Amortization of debt discount 312 431
Non-cash lease expense 296 173
Loss (gain) on sale of property and equipment 28 (20)
Goodwill Impairment 117,970 -
Deferred income taxes (30,980) 1,872
Change in fair value of warrant liabilities (856) (12,453)
Impairment charges 629 -
Changes in operating assets and liabilities:
Receivables 2,347 6,512
Inventories (42,901) (127,594)
Prepaid expenses and other 450 (613)
Income tax receivable/payable 492 (6,725)
Other assets (199) (1,146)
Accounts payable and Accrued expenses and other current liabilities 5,425 (17,835)
Total Adjustments 73,786 (138,353)
Net Cash Used In Operating Activities (36,480) (71,960)
Cash Flows From Investing Activities
Cash paid for acquisitions, net of cash received (97,727) (14,694)
Proceeds from sales of property and equipment - 36
Purchases of property and equipment (95,237) (39,884)
Net Cash Used In Investing Activities (192,964) (54,542)
Cash Flows From Financing Activities
Net borrowings under M&T bank floor plan 98,530 148,180
Borrowings under revolving line of credit 49,500 -
Principal payments on long-term debt and finance liabilities (11,130) (29,657)
Proceeds from issuance of long-term debt and finance liabilities 64,005 11,686
Debt issuance costs (3,015) -
Payment of dividends on Series A preferred stock (4,800) (4,801)
Repurchase of Treasury Stock (109) (44,504)
Proceeds from shares issued pursuant to the Employee Stock Purchase Plan 413 918
Proceeds from exercise of warrants 30,543 5,714
Proceeds from exercise of stock options 1,283 2,418
Disgorgement of short-swing profits 622 -
Tax benefit related to stock-based awards - 115
Net Cash Provided By Financing Activities 225,842 90,069
Net Decrease In Cash (3,602) (36,433)
Cash - Beginning 61,687 98,120
Cash - Ending $ 58,085 $ 61,687
See the accompanying notes to the consolidated financial statements.
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(In thousands)
Year Ended December 31,
2023 2022
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 11,040 $ 15,558
Cash paid during the period for income taxes net of refunds received 620 23,920
Cash Paid for Amounts Included in the Measurement of Lease Liability:
Operating cash flows for operating leases $ 6,810 $ 6,556
ROU Assets Obtained in Exchange for Lease Liabilities:
Operating leases $ 4,826 $ 886
Finance lease - 24
$ 4,826 $ 910
Non-Cash Investing and Financing Activities:
Accrued dividends on Series A Preferred Stock $ - $ 1,210
See the accompanying notes to the consolidated financial statements.
LAZYDAYS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 1 - BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Lazydays RV Center, Inc., the operating subsidiary of Lazydays Holdings, Inc., operates recreational vehicle (“RV”) dealerships in 24 locations as follows:
Location Number of Dealerships
Arizona 3
Colorado 3
Florida 3
Tennessee 3
Minnesota 2
Indiana 1
Iowa 1
Nevada 1
Ohio 1
Oklahoma 1
Oregon 1
Texas 1
Utah 1
Washington 1
Wisconsin 1
Lazydays RV sells and services new and pre-owned recreational vehicles and sells related parts and accessories. We also arrange financing and extended service contracts for vehicle sales through third-party financing sources and extended warranty providers. We also offer our customers ancillary services such as overnight campground and restaurant facilities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Consolidated Financial Statements for the years ended December 31, 2023 and 2022 include the accounts of Lazydays Holdings, Inc. and Lazydays RV Center, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Segments
We operate one reportable segment, which includes all aspects of our RV dealership operations which include sales of new and pre-owned RVs, assisting customers with vehicle financing and protection plans, servicing and repairing new and pre-owned RVs, sales of RV parts and accessories and campground facilities. We identified our reporting segment by considering the level at which the operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of the net assets acquired in business combinations, goodwill and other intangible assets, provision for charge-backs, LIFO adjustments and the allowance for doubtful accounts.
Cash
Cash consists of business checking accounts with our banks.
Revenue Recognition
The core principle of revenue recognition is that an entity recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We apply a five-step model for revenue measurement and recognition.
Revenues are recognized when control of the promised goods or services is transferred to customers at the expected amount we are entitled to for such goods and services. Taxes collected on revenue producing transactions are excluded from revenue in the consolidated statements of operations.
Revenue from the sale of vehicle contracts is recognized at a point in time on delivery, transfer of title and completion of financing arrangements.
Revenue from the sale of parts, accessories, and related service is recognized as services and parts are delivered or as a customer approves elements of the completion of service.
We receive commissions from the sale of insurance and vehicle service contracts to customers. In addition, we arrange financing for customers through various financial institutions and receive commissions. We may be charged back (“charge-backs”) for financing fees, insurance or vehicle service contract commissions in the event of early termination of the contracts by our customers. The revenues from financing fees and commissions are recorded at the time of the sale of the vehicle and an allowance for future charge-backs is established based on historical operating results and the termination provision of the applicable contracts. The estimates for future chargebacks require judgment by management, and as a result, there is an element of risk associated with these revenue streams. We recognized finance and insurance revenues, less the addition to the charge-back allowance as follows:
Year Ended December 31,
2023 2022
Gross finance and insurance revenues $ 69,811 $ 82,226
Less charge-back allowance (7,672) (6,744)
Net finance and insurance revenues $ 62,139 $ 75,482
We have an accrual for charge-backs which totaled $8.8 million and $8.2 million at December 31, 2023 and 2022, respectively, and is included in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets.
Receivables
We sell to customers and arrange third-party financing, as is customary in the industry. These financing arrangements result in receivables from financial institutions. Interest is not normally charged on receivables. Management establishes an allowance for doubtful accounts based on our historic loss experience and current economic conditions. Losses are charged to the allowance when management deems further collection efforts will not produce additional recoveries.
Inventories
Vehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out (“LIFO”) method. Cost includes purchase costs, reconditioning costs, dealer-installed accessories and freight. For vehicles accepted as trade-ins, the cost is the fair value of such pre-owned vehicles at the time of the trade-in. Other inventory includes parts and accessories, as well as retail travel and leisure specialty merchandise, and is recorded at the lower of cost or net realizable value with cost determined by LIFO method.
The current replacement costs of LIFO inventories exceeded their recorded values by $24.6 million and $20.8 million as of December 31, 2023 and 2022, respectively.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense in the period incurred. Improvements and additions are capitalized. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the lesser of the useful life of the asset or the term of the lease.
Useful lives range from 15 to 39 years for buildings and improvements and from 5 to 7 years for vehicles and equipment.
Goodwill and Indefinite-lived Intangible Assets
We perform an annual review for the potential impairment of the carrying value of goodwill as of September 30, or more frequently if events or circumstances indicate a possible impairment. In the third quarter of 2023, we changed the date of our annual review to October 1, 2023. This change in accounting principle was not considered to be material. For purposes of evaluating goodwill for impairment, we have one reporting unit. In evaluating goodwill for impairment, we may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of the reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of the reporting unit with its carrying amount. Qualitative factors that we consider include, for example, macroeconomic and industry conditions, overall financial performance, and other relevant entity-specific events. If the qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. We may also choose to perform this quantitative impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the fair value of the reporting unit, determined using the income, to its recorded amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference up to the recorded amount of goodwill.
Similarly, for the impairment evaluation for indefinite-lived intangible assets, which includes our trade names, we determine whether it is more likely than not that the fair value is less than the carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying value, then we perform a quantitative assessment by calculating the estimated fair value and comparing to the carrying value. Fair value is estimated primarily using the relief from royalty method, in conjunction with qualitative factors and future operating plans. When the carrying value exceeds fair value, an impairment charge is recorded for the amount of the difference. An intangible asset is determined to have an indefinite useful life when there are no legal, regulatory, contractual, competitive, economic or other factors that may limit the period over which the asset is expected to contribute directly or indirectly to our future cash flows. We also annually evaluate intangible assets that are not being amortized to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is determined to have a finite useful life, the asset will be amortized prospectively over the estimated remaining useful life and accounted for in the same manner as intangible assets subject to amortization.
Our manufacturer and customer relationships are amortized over their estimated useful lives on a straight-line basis. The estimated useful lives are 8 to 15 years for both the manufacturer and customer relationships.
Vendor Allowances
As a component of our consolidated procurement program, we frequently enter into contracts with vendors that provide for payments of rebates. These vendor payments are reflected as a reduction in the carrying value of Inventory when earned or as progress is made towards earning the rebates and as a component of Costs applicable to revenue as the inventory is sold.
Certain of these vendor contracts provide for rebates that are contingent upon us meeting specified performance measures such as a cumulative level of purchases over a specified period of time. Such contingent rebates are given accounting recognition at the point at which achievement of the specified performance measures is deemed to be probable and reasonably estimable.
Impairment of Long-Lived and Definite-Lived Intangible Assets
We evaluate the carrying value of long-lived and definite lived intangible assets whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset.
When such circumstances occur, we measure the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying amount of the asset being evaluated, an impairment loss would be recognized for the amount by which the carrying value of the asset exceeds its fair value. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.
In the first quarter of 2023, we recorded an asset impairment charge totaling $0.6 million as a component of Selling, general and administrative expenses related to capitalized software for an IT project that we decided not to utilize. $0.5 million had been recorded in Prepaid and other assets on our Consolidated Balance Sheets at December 31, 2022.
We have evaluated the impacts of the triggering event as well as other factors as discussed in Note 7- Goodwill and Intangible Assets, and completed a qualitative assessment of long-lived and intangible asset impairments. As a result of this assessment, we have concluded that long-lived and intangible assets were not impaired during the years ended December 31, 2023 or 2022.
Fair Value of Financial Instruments
We determined the carrying value of Cash, Receivables, Accounts payable and Accrued expenses and other current liabilities approximate their fair values due to the short-term nature of their terms.
The carrying amount of Floor plan notes payable and amounts outstanding under our Revolving Credit Facility approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
The carrying amount of other bank debt approximates fair value because the debt bears interest at a rate that approximates prevailing market rate at which we could borrow funds with similar maturities.
Cumulative Redeemable Convertible Preferred Stock
Our Series A Preferred Stock (See Note 15) is cumulative redeemable convertible preferred stock. Accordingly, it is classified as temporary equity and is shown net of issuance costs and the relative fair value of warrants issued in conjunction with the issuance of the Series A Preferred Stock.
Stock-Based Compensation
We account for stock-based compensation for employees and directors in accordance with Accounting Standards Codification (“ASC”) 718, Compensation. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite or derived service period. Forfeitures are recognized as they occur. In accordance with ASC 718, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from financing activities.
We record excess tax benefits and tax deficiencies resulting from the settlement of stock-based awards as a benefit or expense within Income taxes in the Consolidated Statements of Operations and Comprehensive Income (Loss) in the period in which they occur.
Earnings Per Share
We compute basic and diluted earnings per share (“EPS”) by dividing net earnings by the weighted average number of shares of common stock outstanding during the period.
We are required, in periods in which we have net income, to calculate EPS using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders but does not require the presentation of basic and diluted EPS for securities other than common stock. The two-class method is required because our Series A convertible preferred stock (“Preferred Stock”) has the right to receive dividends or dividend equivalents should we declare dividends on our common stock as if such holder of the Preferred Stock had been converted to common stock. Under the two-class method, earnings for the period are allocated to the common and preferred stockholders taking into consideration Series A preferred stockholders participation in dividends on an as converted basis. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. Diluted EPS is computed in the same manner as basic EPS except that the denominator is increased to include the number of contingently issuable share-based compensation awards that would have been outstanding unless those additional shares would have been anti-dilutive. For the diluted EPS computation, the if-converted method is applied and compared to the two-class method and whichever method results in a more dilutive impact is utilized to calculate diluted EPS.
In periods in which we have a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used because the Preferred Stock does not participate in losses. As such, the net loss was attributed entirely to common stockholders.
Advertising Costs
Advertising and promotion costs are charged to operations in the period incurred as a component of Selling, general and administrative expense. Advertising and promotion costs totaled $22.0 million and $30.6 million for the years ended December 31, 2023 and 2022, respectively.
Income Taxes
We account for income taxes under ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. We record a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Tax benefits claimed or expected to be claimed on a tax return are recorded in our financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on our financial condition, results of operations or cash flows. We do not expect any significant changes in our unrecognized tax benefits within twelve months of the reporting date.
Our policy is to classify assessments, if any, for tax related interest and penalties as a component of Income tax benefit (expense).
Vendor Concentrations
We purchase our new RVs and replacement parts from various manufacturers.
Significant manufacturers were as follows:
Year Ended December 31,
2023 2022
Thor Industries 41.0 % 49.1 %
Winnebago Industries 32.0 % 29.1 %
Forest River 23.0 % 18.3 %
We are subject to dealer agreements with each manufacturer. The manufacturer is entitled to terminate the dealer agreement if we are in material breach of the agreement terms.
Geographic Concentrations
Revenues by state that generated 10% or more of revenues were as follows:
Year Ended December 31,
2023 2022
Florida 41 % 44 %
Tennessee 14 % 14 %
These geographic concentrations increase the exposure to adverse developments related to competition, as well as economic, demographic, weather and other changes in these regions.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on the previously reported net income.
Lease Recognition
At inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we determine the classification as either operating or financing.
Operating lease assets represent our right to use an underlying asset for the lease term, and Operating lease liability represents our obligation to make lease payments under the lease. Lease recognition occurs at the commencement date and Operating lease liability amounts are based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Because most of our leases do not provide information to determine an implicit interest rate, we use our incremental borrowing rate in determining the present value of lease payments. Operating lease assets also include any lease payments made prior to the commencement date and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with both lease and non-lease components, which are generally accounted for together as a single lease component.
Leases with lease terms of 12 months or less are expensed on a straight-line basis over the lease term and are not recorded in the Consolidated Balance Sheets.
Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 50 years (some leases include multiple renewal periods). The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain any residual value guarantees nor impose any significant restrictions or covenants.
Assets under leases that are determined to be finance leases are recorded as Property and equipment with the corresponding liability recorded as Financing liability on on Consolidated Balance Sheets.
See Note 9 and Note 10 for additional information.
Recently Issued Accounting Standards
Adopted
ASU 2021-08
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This standard requires contract assets and contract liabilities, such as certain receivables and deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree instead of recording those balances at fair value. This standard should be applied prospectively to acquisitions occurring after the effective date. The adoption of ASU 2021-08 on January 1, 2023 did not have any effect on our Consolidated Financial Statements.
Not Yet Adopted
ASU 2020-06
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract. The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share. ASU 2020-06 is effective for fiscal
years beginning after December 15, 2023, including interim periods within those fiscal years. We are currently evaluating the impact that this new standard will have on our Consolidated Financial Statements.
ASU 2023-07
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements.
ASU 2023-09
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU requires enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. This ASU requires additional disclosures and, accordingly, we do not expect the adoption of ASU 2023-09 to have a material effect on our financial position, results of operations or cash flows.
NOTE 3 - BUSINESS COMBINATIONS
During the years ended December 31, 2023 (the “2023 Acquisitions”) and 2022 (the “2022 Acquisitions”) we acquired all of the outstanding equity interest in the following entities:
2023 Acquisitions
• February 15, 2023 Findlay RV in Las Vegas, Nevada (the “Findlay Acquisition”)
• July 24, 2023 Buddy Gregg RVs & Motor Homes in Knoxville, Tennessee (the “Buddy Gregg Acquisition”)
• August 7, 2023 Century RV in Longmont, Colorado (the “Century Acquisition”)
• November 6, 2023 RVZZ LLC in St. George, Utah (the "RVzz Acquisition")
• November 20, 2023 Orangewood RV in Surprise, Arizona (the "Orangewood Acquisition")
2022 Acquisition
• July 23, 2022 Dave’s Claremore RV in Tulsa, Oklahoma
We incurred $2.3 million of acquisition related expenses recorded as a component of Selling, general and administrative in the year ended December 31, 2023.
Revenue and Income from operations contributed by the 2023 Acquisitions subsequent to the date of acquisition were as follows:
(In thousands) Year ended December 31, 2023
Revenue $ 46,505
Loss from operations (651)
The following tables summarize the consideration paid and the preliminary purchase price allocation for identified assets acquired and liabilities assumed as of the acquisition dates:
Year Ended December 31,
(In thousands) 2023 2022
Consideration paid in cash $ 97,727 $ 14,694
Floor plan notes payable - 8,069
Total Consideration $ 97,727 $ 22,763
Year Ended December 31,
(In thousands) 2023 2022
Cash $ 2 $ 5
Inventories 34,305 9,504
Accounts receivable and prepaid expenses - 98
Prepaid expenses and other 372 -
Property and equipment 22,480 7,353
Goodwill 34,285 4,692
Intangible assets 6,449 1,140
Total assets acquired 97,893 22,792
Accounts payable 118 -
Accrued expenses and other current liabilities 49 29
Total liabilities assumed 167 29
Net assets acquired $ 97,726 $ 22,763
We accounted for the 2023 Acquisitions and the 2022 Acquisitions as business combinations, which requires us to record the assets acquired and liabilities assumed at fair value as of the acquisition date. The fair values of the assets acquired and liabilities assumed, which are presented in the table above, and the related acquisition accounting are based on management’s estimates and assumptions, as well as information compiled by management. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date.
Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed. The primary items that generated the goodwill are the value of the synergies between us and the acquired businesses and the growth and operational improvements that drive profitability growth, neither of which qualify for recognition as a separately identified intangible asset. We expect substantially all of the goodwill related to the 2023 Acquisitions to be deductible for federal income tax purposes.
See Note 2 - Significant Accounting Policies and Note 7 - Goodwill and Intangible Assets for additional information regarding Goodwill.
The following table summarizes our allocation of the purchase price to the identifiable intangible assets acquired. The allocations are final for the 2023 Acquisitions and the 2022 Acquisitions.
Gross Asset Amount at
Acquisition Date Weighted Average Amortization
Period
(Dollars in thousands) 2023 2022 2023 2022
Customer Lists $ - $ 240 - 15 years
Dealer Agreements 6,449 900 8 years 10 years
The following unaudited pro forma financial information presents consolidated information as though the 2023 Acquisitions and the 2022 Acquisitions had been consummated on January 1, 2023 and January 1, 2022, respectively.
Year Ended December 31,
(In thousands) 2023 2022
Revenue $ 112,056 $ 1,427,197
(Loss) income before income taxes 2,880 89,165
Net (loss) income 2,811 69,893
These amounts have been adjusted to eliminate business combination expenses, the incremental depreciation and amortization associated with the preliminary purchase price allocation as well as the income taxes for the previously un-taxed acquired entities to determine pro forma net (loss) income.
NOTE 4 - RECEIVABLES, NET
Receivables consisted of the following:
As of December 31,
(In thousands) 2023 2022
Contracts in transit and vehicle receivables $ 14,347 $ 15,442
Manufacturer receivables 8,750 8,760
Finance and other receivables 76 1,327
23,173 25,529
Less: Allowance for doubtful accounts (479) (476)
$ 22,694 $ 25,053
Contracts in transit represent receivables from financial institutions for the portion of the vehicle and other products sales price financed by our customers through financing sources arranged by us. Manufacturer receivables are due from the manufacturers for incentives, rebates, and other programs. These incentives and rebates are treated as a reduction of Cost of revenue.
NOTE 5 - INVENTORIES
Vehicle and parts inventories are recorded at the lower of cost or net realizable value, with cost determined by the last-in, first-out (“LIFO”) method. Cost includes purchase costs, reconditioning costs, dealer-installed accessories and freight. For vehicles accepted as trade-ins, the cost is the fair value of such pre-owned vehicles at the time of the trade-in. Other inventory includes parts and accessories, as well as retail travel and leisure specialty merchandise, and is recorded at the lower of cost or net realizable value with cost determined by LIFO method.
Inventories consisted of the following:
As of December 31,
(In thousands) 2023 2022
New recreational vehicles $ 385,001 $ 342,415
Pre-owned recreational vehicles 86,517 50,457
Parts, accessories and other 9,144 6,831
480,662 399,703
Less: excess of current cost over LIFO (24,575) (20,822)
Total $ 456,087 $ 378,881
NOTE 6 - PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
As of December 31,
(In thousands) 2023 2022
Land $ 76,291 $ 41,286
Building and improvements, including leasehold improvements 157,463 113,596
Furniture and equipment 20,364 17,503
Vehicles 2,322 1,691
Construction in progress 55,384 20,190
311,824 194,266
Less: Accumulated depreciation and amortization (46,098) (35,275)
Net PP&E $ 265,726 $ 158,991
Depreciation expense was as follows:
Year Ended December 31,
(In thousands) 2023 2022
Depreciation $ 10,954 $ 9,480
NOTE 7 - GOODWILL AND INTANGIBLE ASSETS
Commencing with the announcement of the Rights Offering, there was a prolonged decline in our share price which did not reverse in the fourth quarter upon cancellation of the Rights Offering. This resulted in a triggering event in December. As a result of this triggering event, we performed a quantitative assessment as of December 31, 2023.
We calculated the estimated fair value of the reporting unit using an equity market capitalization approach, leveraging our outstanding share price adjusted for preferred stock equity and applying a 30% control premium. We found this method to be preferable to the income approach used in the September 30, 2023 quantitative assessment, given that we operate in a single reporting unit, and the emphasis placed on our market capitalization as a result of the depressed share price. As a result of this test, we determined that the carrying value of the reporting unit exceeded its fair value, resulting in an impairment charge of $118.0 million, which represents the entirety of the goodwill balance previously recorded. The non-cash impairment charge is recognized in the Goodwill impairment expense line for 2023 in the accompanying Consolidated Statements of Operations.
The changes in the carrying amounts of goodwill were as follows (in thousands):
Balance as of December 31, 2021 $ 80,318
Acquisitions 4,692
Measurement period adjustments related to prior acquisitions (1,550)
Balance as of December 31, 2022 83,460
Acquisitions 40,735
Goodwill impairment (117,970)
Measurement period adjustments related to current year acquisitions (6,225)
Balance as of December 31, 2023 $ -
Accumulated goodwill impairment losses were $118.0 million and $0 as of December 31, 2023 and December 31, 2022, respectively.
Detail of Intangible assets was as follows:
As of December 31, 2023 As of December 31, 2022
(In thousands) Gross
Carrying
Amount Accumulated
Amortization Net
Asset
Value Gross
Carrying
Amount Accumulated
Amortization Net
Asset
Value
Amortizable intangible assets:
Manufacturer relationships $ 71,849 $ 26,968 $ 44,881 $ 65,400 $ 20,346 $ 45,054
Customer relationships 10,395 4,893 5,502 10,395 3,993 6,402
Non-compete agreements 230 167 63 230 121 109
82,474 32,028 50,446 76,025 24,460 51,565
Non-amortizable intangible assets:
Trade names and trademarks 30,100 - 30,100 30,100 - 30,100
$ 112,574 $ 32,028 $ 80,546 $ 106,125 $ 24,460 $ 81,665
Amortization expense related to Intangible assets was as follows:
Year Ended December 31,
(In thousands) 2023 2022
Amortization $ 7,558 $ 7,278
Future amortization of Intangible assets is as follows:
(In thousands)
2024 $ 8,138
2025 8,070
2026 7,391
2027 7,080
2028 7,004
Thereafter 12,763
$ 50,446
As of December 31, 2023, the weighted average remaining amortization period was 10.5.
NOTE 8 - EARNING PER SHARE
The following table summarizes net (loss) income attributable to common stockholders used in the calculation of basic and diluted (loss) income per common share:
Year Ended December 31,
2023 2022
(In thousands except share and per share amounts)
Distributed (loss) income allocated to common stock $ - $ -
Net (loss) income attributable to common stock and participating securities used to calculate basic (loss) earnings per share (110,266) 40,618
Net (loss) income allocated to Series A convertible preferred stock (4,800) 20,974
Net (loss) income allocated to common stock and participating securities $ (115,066) $ 61,592
Weighted average common shares outstanding 13,388,644 11,400,945
Dilutive effect of pre-funded warrants 300,357 300,357
Weighted average shares outstanding - basic 13,689,001 11,701,302
Weighted average common shares outstanding 13,388,644 11,400,945
Weighted average prefunded warrants 300,357 300,357
Weighted average warrants (equity) - 534,137
Weighted average warrants (liabilities) - 237,518
Weighted average options - 324,839
Weighted shares outstanding - diluted 13,689,001 12,797,796
Basic (loss) income per common share $ (8.41) $ 3.47
Diluted (loss) income per common share $ (8.45) $ 2.42
The following common stock equivalent shares were excluded from the computation of the diluted (loss) income per share, since their inclusion would have been anti-dilutive:
Year Ended December 31,
2023 2022
Stock options 139,650 245,032
Restricted stock units 238,275 72,459
Shares issuable under the Employee Stock Purchase Plan 27,266 4,517
Share equivalents excluded from EPS 405,191 322,008
NOTE 9 - FINANCING LIABILITY
We have operations at several properties that were previously sold and then leased back from the purchasers over a non-cancellable period of 20 years. The leases contain renewal options at lease termination, with three options to renew for 10 additional years each and contain a right of first offer in the event the property owner intends to sell any portion or all of the property to a third party. These rights and obligations constitute continuing involvement, which resulted in failed sale-leaseback (financing) accounting. The financing liabilities have implied interest rates ranging from 5.0% to 7.9% and have original expiration dates between September 1, 2024 and June 1, 2025. At the conclusion of the 20-year lease period, the financing liability residual will correspond to the carrying value of the land.
The Financing liability, net of debt discount, was follows:
As of December 31,
(In thousands) 2023 2022
Financing liability $ 93,978 $ 92,160
Debt discount (104) (109)
Financing liability, net of debt discount 93,874 92,051
Less: current portion 2,473 2,281
Financing liability, non-current portion $ 91,401 $ 89,770
Principal and interest payments made were as follows:
Year Ended December 31,
(In thousands) 2023 2022
Principal $ 2,177 $ 2,212
Interest 6,021 7,029
On December 29, 2022, we repurchased real estate in Nashville, Tennessee and Elkhart, Indiana that was previously leased through two finance leases for $24.5 million. Upon the repurchase, the finance leases were terminated. There were no repurchases of leased properties during the year ended December 31, 2023.
Future minimum payments required by the arrangements are as follows (in thousands):
(In thousands) Principal Interest Total
Payment
2024 $ 2,473 $ 6,410 $ 8,883
2025 2,826 6,231 9,057
2026 3,201 6,027 9,228
2027 3,616 5,797 9,413
2028 4,064 5,536 9,600
Thereafter 77,798 35,333 113,131
$ 93,978 $ 65,334 $ 159,312
NOTE 10 - LEASES
We lease property, equipment and billboards throughout the U.S. primarily under thirty-five operating leases. The related right-of-use (“ROU”) assets for these operating leases are included in operating lease right-of-use assets. Leases with lease terms of 12 months or less are expensed on a straight-line basis over the lease term and are not recorded in the Condensed Consolidated Balance Sheets.
Most leases include one or more options to renew, with renewal terms that can extend the lease term up to 50 years (some leases include multiple renewal periods). The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain any residual value guarantees nor impose any significant restrictions or covenants.
As of December 31, 2023, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 6.2 years and 5.3%, respectively.
Operating lease costs were $6.8 million and $6.6 million for the years ended December 31, 2023 and 2022, respectively, including variable lease costs.
Future maturities of our Operating lease liability as of December 31, 2023 are as follows:
(In thousands) Operating Leases
2024 $ 6,629
2025 5,618
2026 4,374
2027 4,335
2028 4,191
Thereafter 7,257
Total lease payments 32,404
Less: Imputed interest 4,886
Present value of lease liabilities $ 27,518
NOTE 11 - DEBT
M&T Financing Agreement
On February 21, 2023, we amended our $369 million Senior Secured Credit Facility with M&T Bank.
The material provisions of the amendment were to (i) increase the capacity under the Floor Plan Line of Credit to up to $525 million from $327 million and increase the capacity under the Revolving Credit Facility to up to $50 million from $25 million; (ii) remove the mortgage loan facility (“Mortgage Loan Facility”) and M&T term loan facility (the “M&T Term Loan Facility”); (iii) extend the term of the M&T floor plan line of credit (the “Floor Plan Line of Credit”) and the revolving credit facility (the “Revolving Credit Facility”) to February 21, 2027; (iv) lower interest rates on the Floor Plan Line of Credit and the Revolving Credit Facility; and (v) remove certain guarantors.
In the first quarter of 2023, at the time of the amendment, we paid off the $5.4 million outstanding on the Mortgage Loan Facility and the $6.7 million outstanding on the Term Loan Facility.
At December 31, 2023, there was $446.8 million outstanding on the Floor Plan Line of Credit at an interest rate of 7.5% and $49.5 million outstanding on the Revolving Credit Facility at an interest rate of 8.35%. We were not in compliance with our financial and restrictive covenants at December 31, 2023 as we exceed our maximum total leverage ratio of 3.00, but received a waiver from M&T bank through the second quarter of 2024, and received modified covenants through the fourth quarter of 2024.
The Floor Plan Line of Credit bears interest at: (a) 30-day SOFR plus an applicable margin of 1.90% to 2.05% based on the total net leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of 0.90% to 1.05% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points. The Floor Plan Line of Credit is also subject to an annual unused commitment fee at 0.15% of the average daily unused portion of the Floor Plan.
The M&T Revolving Credit facility bears interest at: (a) 30-day SOFR plus an applicable margin of 2.15% to 2.90% based on the total net leverage ratio (as defined in the new M&T Facility) or (b) the Base Rate plus a margin of 1.15% to 1.90% based on the total net leverage ratio (as defined in the new M&T Facility). Base Rate means, for any day, the fluctuating rate per annum equal to the highest of: (a) the Prime Rate for such day, (b) the Federal Funds Rate in effect on such day plus 50 Basis Points, and (c) the one-month Adjusted Term SOFR Rate, determined on a daily basis, plus 100 Basis Points.
The Revolving Credit facility is also subject to a quarterly unused commitment fee at 0.15% of the average daily unused portion of the Credit facility.
The M&T Floor Plan Line of Credit consisted of the following:
As of December 31,
(In thousands) 2023 2022
Floor plan notes payable, gross $ 447,647 $ 349,117
Debt discount (864) (382)
Floor plan notes payable, net of debt discount $ 446,783 $ 348,735
Borrowings under M&T Financing Agreement are secured by a first priority lien on substantially all of our assets.
On March 8, 2024, we entered into the First Amendment to the Second Amended and Restated Credit Agreement and Consent with M&T to waive and modify certain covenants. This included waiving the net leverage ratio from the fourth quarter of 2023 through the second quarter of 2024, the current ratio for the fourth quarter of 2023, and the fixed charge coverage ratio for the first and second quarters of 2024. Additionally, an additional tier was added to the definition of applicable margin of the M&T credit facilities, setting forth the applicable interest rates corresponding to a total net leverage ratio of 3.00 ≤ X. This new tier is applicable as of March 8, 2024.
Long-Term Debt
Mortgages
In July 2023, we entered into two mortgages for total proceeds of $29.3 million secured by certain real estate assets at our Murfreesboro and Knoxville locations. The loans bear interest between 6.85% and 7.10% per annum and mature in July 2033.
Coliseum Term Loan
On December 29, 2023, we entered into a $35 million term loan (the "Loan") with the Lender, with a maturity date of December 29, 2026. Certain funds and accounts managed by Coliseum currently hold 57% of LazyDays common stock (calculated as if the preferred stock has been converted into common stock) as of December 31, 2023 and is therefore considered a related party. The Loan bears interest at a rate of 12% per annum, payable monthly in cash on the outstanding loan balance. For any quarterly period during the Loan term, we have the option at the beginning of each quarter to make pay-in-kind elections, whereby the entire outstanding balance would be charged interest at 14% per annum and interest amounts will be added to the outstanding principal. The Loan is secured by certain of our assets. Issuance costs of $2.0 million were recorded as debt discount and are being amortized over the term of the Loan to interest expense using the effective interest method. The Loan is carried at the outstanding principal balance, less debt issuance costs.
Under the terms of the Loan, for any repayments and prepayments that occur prior to January 1, 2025, we will owe a prepayment penalty of 1% on the outstanding principal balance being repaid and a make whole premium equal to the remaining interest owed on such balance repaid from date of repayment through January 1, 2025. For repayments and prepayments that occur after January 1, 2025 through maturity, we will owe a prepayment penalty of 2% on the outstanding principal balance being repaid.
The Loan contains certain reporting and compliance-related covenants. The Loan contains negative covenants, among other things, related to borrowing and events of default. It also includes certain non-financial covenants and covenants limiting our ability to dispose of assets, undergo a change in control, merge with, acquire stock, or make investments in other companies, in each case subject to certain exceptions. Upon the occurrence of an event of default, in addition to the lender being able to declare amounts outstanding under the Loan due and payable or foreclose on the collateral, the lender can elect to increase the interest rate by 7% per annum during the period of default. In addition, the Loan contains a cross default with M&T Bank. As of December 31, 2023, we were not in compliance with all of the covenants with M&T Bank as we exceed our max leverage covenant, however the cross default was waived for the period ended December 31, 2023.
Summary
Long-term debt was as follows:
As of December 31, 2023 As of December 31, 2022
(In thousands) Gross
Principal
Amount Debt Discount Total Debt,
Net of Debt
Discount Gross
Principal
Amount Debt
Discount Total Debt,
Net of Debt
Discount
Total long-term debt $ 64,870 $ (2,300) $ 62,570 $ 13,787 $ (49) $ 13,738
Less: current portion 1,141 - 1,141 3,607 - 3,607
Long-term debt, non-current $ 63,729 $ (2,300) $ 61,429 $ 10,180 $ (49) $ 10,131
Future maturities of long-term debt are as follows:
(In thousands)
2024 $ 1,141
2025 1,205
2026 35,826
2027 886
2028 950
Thereafter 24,862
Total $ 64,870
NOTE 12 - INCOME TAXES
The components of our income tax (benefit) expense were as follows:
Year Ended December 31,
(In thousands) 2023 2022
Current:
Federal $ 539 $ 13,389
State (21) 3,922
518 17,311
Deferred:
Federal (24,307) 1,651
State (6,673) 221
(30,980) 1,872
Income tax (benefit) expense $ (30,462) $ 19,183
A reconciliation of income taxes calculated using the statutory federal income tax rate (21% in 2023 and 2022) to our income tax expense is as follows:
Year ended
December 31, 2023 Year ended
December 31, 2022
Amount % Amount %
Income taxes at statutory rate $ (29,543) 21.0 % $ 17,971 21.0 %
Non-deductible expense 66 - % 55 0.1 %
State income taxes, net of federal tax effect (4,826) 3.4 % 3,329 3.8 %
Stock-based compensation and officer compensation 49 - % 450 0.6 %
Change in fair value of warrant liabilities (180) 0.1 % (2,615) -3.0 %
Impairment of Goodwill 4,502 -3.2 % - - %
Other credits and changes in estimate (530) 0.4 % (7) -0.1 %
Income tax (benefit) expense $ (30,462) 21.7 % $ 19,183 22.4 %
Deferred tax assets and liabilities were as follows:
As of December 31,
(In thousands) 2023 2022
Deferred tax assets:
Accounts receivable $ 120 $ 167
Accrued charge-backs 2,199 2,093
Other accrued liabilities 372 639
Goodwill 22,677 -
Financing liability 15,682 16,448
Operating lease liability 6,912 8,039
Stock-based compensation 468 523
Net operating losses 2,432 -
Interest expense limitation 2,528 -
Other, net 219 139
53,609 28,048
Deferred tax liabilities:
Prepaid expenses (507) (649)
Goodwill - (1,908)
Inventories (6,035) (6,873)
Property and equipment (13,817) (14,747)
Right of use asset (6,626) (8,039)
Intangible assets (11,180) (11,368)
(38,165) (43,584)
Net deferred tax asset (liability) $ 15,444 $ (15,536)
No significant increases or decreases in the amounts of unrecognized tax benefits are expected in the next 12 months.
We are subject to U.S. federal income tax and income tax in the states of Florida, Arizona, Colorado, Minnesota, Tennessee, Texas, Indiana, Oregon, Wisconsin, Oklahoma and Iowa. We are no longer subject to the examination by Federal and state taxing authorities for years prior to 2020. We recognize interest and penalties related to income tax matters in Income tax expense. Interest and penalties were insignificant in the years ended December 31, 2023 and 2022.
NOTE 13 - EMPLOYEE BENEFIT PLANS
We have a 401(k) plan with profit sharing provisions (the “Plan”) that covers substantially all employees. The Plan allows employee contributions to be made on a salary reduction basis under Section 401(k) of the Internal Revenue Code. Under the 401(k) provisions, we make discretionary matching contributions to employees’ 401(k). We made contributions to the Plan of $1.2 million and $1.7 million for the years ended December 31, 2023 and 2022, respectively.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Lease Obligations
See Note 9 and Note 10 for information regarding leases
Legal Proceedings
We are a party to multiple legal proceedings that arise in the ordinary course of business. We have certain insurance coverage and rights of indemnification. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, results of operations, financial condition, or cash flows. However, the results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these or other matters could have a material adverse effect on our business, results of operations, financial condition, or cash flows.
We record legal expenses as incurred in our Consolidated Statements of Operations and Comprehensive Income (Loss).
NOTE 15 - PREFERRED STOCK
In March 2018, we consummated a private placement with institutional investors for the sale of convertible preferred stock, common stock, and warrants for an aggregate purchase price of $94.8 million (the “PIPE Investment”). At the closing, we issued an aggregate of 600,000 shares of Series A preferred stock for gross proceeds of $60.0 million. The investors in the PIPE Investment were granted certain registration rights as set forth in the securities purchase agreements. The holders of the Series A Preferred Stock include 500,000 shares owned by funds managed by a member of our Board of Directors.
The Series A preferred stock ranks senior to all of our other outstanding stock. Holders of the Series A preferred stock are entitled to vote on an as-converted basis together with the holders of our common stock, and not as a separate class, at any annual or special meeting of stockholders. Each share of Series A preferred stock is convertible at the holder’s election at any time, at an initial conversion price of $10.0625 per share, subject to adjustment (as applicable, the “Conversion Price”). Upon any conversion of the Series A preferred stock, we will be required to pay each holder converting shares all accrued and unpaid dividends, in either cash or shares of our common stock, at our option. The Conversion Price will be subject to adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain dilutive issuances.
Dividends on the Series A preferred stock accrue at an initial rate of 8% per annum (the “Dividend Rate”), compounded quarterly, on each $100 of Series A preferred stock (the “Issue Price”) and are payable quarterly in arrears. If there are accrued and unpaid dividends, future dividends will accrue at the then applicable Dividend Rate plus 2% until all accrued dividends are paid in full in cash. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event that our senior indebtedness less unrestricted cash during any trailing twelve-month period ending at the end of any fiscal quarter is greater than 2.25 times earnings before interest, taxes, depreciation and amortization (“EBITDA”). The Dividend Rate will be reset to 8% at the end of the first quarterly period when our senior indebtedness less unrestricted cash during the trailing twelve-month period ending at the end of such quarter is less than 2.25 times EBITDA.
If, at any time following the second anniversary of the issuance of the Series A preferred stock, the volume weighted average price of our common stock equals or exceeds $25.00 per share (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, we may elect to force the conversion of any or all of the outstanding Series A preferred stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, we may elect to redeem all, but not less than all, of the outstanding Series A preferred stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the Series A preferred stock, each holder of Series A preferred stock has the right to require us to redeem all of the holder’s outstanding shares of Series A preferred stock in cash at the Issue Price plus all accrued and unpaid dividends.
In the event of any liquidation, merger, sale, dissolution or winding up of our business, holders of the Series A preferred stock will have the right to (i) payment in cash of the Issue Price plus all accrued and unpaid dividends, or (ii) convert the shares of Series A preferred stock into common stock and participate on an as-converted basis with the holders of common stock.
So long as the Series A preferred stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the outstanding Series A preferred stock, shall have the right to designate two members to our Board of Directors.
In conjunction with the issuance of the Series A preferred stock, we issued five-year warrants to purchase 596,273 shares of our common stock at an exercise price of $11.50 per share. The warrants may be exercised for cash or, at the option of the holder, on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act. The warrants may be called for redemption in whole and not in part, at a price of $0.01 per share of common stock, if the last reported sales price of our common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, if there is a current registration statement in effect with respect to the shares underlying the warrants.
The Series A preferred stock, while convertible into common stock, is also redeemable at the holder’s option and, as a result, is classified as temporary equity in the Consolidated Balance Sheets. An analysis of its features determined that the Series A preferred stock was more akin to equity. While the embedded conversion option (“ECO”) was subject to an anti-dilution price adjustment, and since the ECO was clearly and closely related to the equity host, it was not required to be bifurcated and it was not accounted for as a derivative liability under ASC 815, Derivatives and Hedging.
After factoring in the fair value of the warrants issued in conjunction with the Series A preferred stock, the effective conversion price is $9.72 per share, compared to the market price of $10.29 per share on the date of issuance. As a result, a $3.4 million beneficial conversion feature was recorded as a deemed dividend in the Consolidated Statement of Operations at the time of issuance because the Series A preferred stock is immediately convertible, with a credit to Additional paid-in capital.
The fair value of the warrants issued with the Series A Preferred Stock of $2.0 million was recorded as a reduction to the carrying amount of the Series A preferred stock in the Consolidated Balance Sheets. In addition, aggregate offering costs of $3.0 million cash and the value of five-year warrants to purchase 178,882 shares of our common stock at an exercise price of $11.50 per share issued to the placement agent were recorded as a reduction to the carrying amount of the preferred stock. The $632,000 value of the warrants was determined utilizing the Black-Scholes option pricing model using a term of 5 years, a volatility of 39%, a risk-free interest rate of 2.61%, and a 0% rate of dividends.
The discount associated with the Series A preferred stock was not accreted during the year ended December 31, 2023 because redemption was not currently deemed to be probable.
We did not declare a dividend payment on the Series A preferred stock totaling $1.2 million for the quarter ended December 31, 2023. As a result, the amount was added to the carrying amount of the Series A Preferred Stock and the dividend rate is currently at 10% until such dividends are paid. All other dividends to date have been declared and paid.
NOTE 16 - STOCKHOLDERS’ EQUITY
Authorized Capital
We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred stock, $0.0001 par value. The holders of our common stock are entitled to one vote per share. The holders of Series A preferred stock are entitled to the number of votes equal to the number of shares of common stock into which the holder’s shares are convertible. Holders of Series A preferred stock also participate in dividends if they are declared by our Board of Directors. See Note 15 for additional information associated with the Series A preferred stock.
Stock Repurchase Program
On September 13, 2021, our Board of Directors authorized the repurchase of up to $25 million of our common stock through December 31, 2022, which was subsequently extended to December 31, 2024.
On December 15, 2022, our Board of Directors authorized the repurchase of up to an additional $50.0 million of our common stock through December 31, 2024.
Information about purchases was as follows:
Year Ended December 31,
2023 2022
Number of shares purchased 9,433 2,695,477
Weighted average per share purchase price $ 11.56 $ 16.51
Total purchase price (in thousands) $ 109 $ 44,504
All repurchased shares are included in treasury stock in the consolidated balance sheets. At December 31, 2023, $63.4 million remained available for repurchases. These shares may be purchased from time-to-time in the open market at prevailing prices, in privately negotiated transactions or through block trades.
2019 Employee Stock Purchase Plan
We reserved a total of 900,000 shares of our common stock for purchase by participants in our 2019 Employee Stock Purchase Plan (the “ESPP”). Participants in the ESPP may purchase shares of our common stock at a purchase price which will not be less than the lesser of 85% of the fair value per share of our common stock on the first day of the purchase period or the last day of the purchase period. As of December 31, 2023, 608,294 shares remained available for future issuance.
ESPP activity was as follows:
Year ended December 31, 2023
Shares purchased pursuant to the ESPP 49,963
Weighted average per share price of shares purchased $9.72
Weighted average per share discount from market value for shares purchased $1.46
Stock-based compensation related to ESPP $179,671
PIPE Warrants
PIPE warrant activity was as follows:
Shares Underlying Warrants Weighted
Average
Exercise Price
Outstanding at December 31, 2022 2,865,068 $ 11.50
Cancelled or Expired (208,912) 11.50
Exercised (2,656,156) 11.50
Outstanding at December 31, 2023 - -
Prefunded Warrants
As of December 31, 2023, there were 300,357 perpetual non-redeemable prefunded warrants outstanding with an exercise price of $0.01 per share. There was no activity related to these warrants during the year ended December 31, 2023.
2018 Long-Term Incentive Equity Plan
Our 2018 Long-Term Incentive Equity Plan, as amended (the “2018 Plan”) reserves up to 18% of the shares of our common stock outstanding on a fully diluted basis. The 2018 Plan provides for awards of options, stock appreciation rights, restricted stock, restricted stock units, warrants or other securities which may be convertible, exercisable or exchangeable for or into our common stock. On May 20, 2019, our stockholders approved the adoption of the Lazydays Holdings, Inc. Amended and Restated 2018 Long Term Incentive Plan (the “Incentive Plan”). The Incentive Plan amends and restates the previously adopted 2018 Plan in order to replenish the pool of shares of common stock available under the Incentive Plan by adding an additional 600,000 shares of common stock and making certain changes in light of the Tax Cuts and Jobs Act and its impact on Section 162(m) of the Internal Revenue Code of 1986, as amended. Stock options are canceled upon termination of employment. On June 9, 2022, our stockholders approved the addition of 510,000 shares of our common stock to the 2018 Plan. Following this addition, a total of 4,934,566 shares had been authorized for issuance pursuant to the
2018 Plan. Stock options are canceled upon termination of employment. As of December 31, 2023, there were 1,091,427 shares of our common stock available to be issued under the 2018 Plan.
Stock Options
Stock option activity is summarized below:
Shares Underlying Options Weighted
Average
Exercise Price Weighted Average
Remaining Contractual
Life (in years) Aggregate
Intrinsic Value (in thousands)
Outstanding at December 31, 2022 1,052,093 $ 12.34 2.26 $ (427)
Granted 94,326 12.38
Cancelled or terminated (600,418) 14.06
Exercised (169,061) 8.07
Outstanding at December 31, 2023 376,940 11.21 1.91 (2)
Vested at December 31, 2023 302,585 10.73 0.94 (2)
Vested and expected to vest at December 31, 2023 376,940
Restricted Stock Units
Restricted stock unit ("RSU") activity was as follows:
Number of Restricted Stock Units Weighted
Average
Grant Date Fair Value
Outstanding at December 31, 2022 207,822 $ 14.98
Granted 323,679 12.44
Vested (110,661) 15.35
Forfeited (182,565) 12.32
Outstanding at December 31, 2023 238,275 $ 13.35
Stock-Based Compensation
Stock-based compensation was as follows:
Year Ended December 31,
(In thousands) 2023 2022
ESPP $ 180 $ 280
2018 Plan 2,069 1,697
$ 2,249 $ 1,977
The fair value of options was based on the following assumptions:
Year Ended December 31, 2023
ESPP 2018 Plan
Risk free interest rate 4.65%-4.65%
4 %
Expected term (years) 0.50-1.0
Expected volatility 50%-52%
70 %
Expected dividends 0.00 % 0.00 %
The expected life was determined using the simplified method as the awards were determined to be plain-vanilla options. Expected volatility was based on the historical volatility of our stock price over a period equal to the expected lives of the awards.
As of December 31, 2023, total unrecognized stock-based compensation was $0.1 million which is expected to be recognized over a weighted average service period of 2.13 years.
Certain other information regarding stock-based compensation was as follows:
Year Ended December 31,
2023 2022
Per share weighted average grant date fair value of awards issued $ 12.14 $ 4.28
Intrinsic value of stock options exercised (in millions) 0.6 1.6
Current tax benefit related to stock-based awards (in millions) 0.3 0.1
NOTE 17 - FAIR VALUE MEASUREMENTS
Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:
•Level 1 - quoted prices in active markets for identical securities;
•Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and
•Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.
There were no changes to our valuation techniques during the year ended December 31, 2023.
See Note 2 and Note 11 for additional information.
Goodwill and Asset Impairment
See Note 2 for discussion of an asset impairment charge recorded in the quarter ended March 31, 2023 and goodwill impairment recorded in the fourth quarter of 2023. There were no other impairment charges during the years ended December 31, 2023 or 2022.
PIPE Warrants
All of our remaining PIPE warrants were exercised or expired in the first quarter of 2023.
Our PIPE warrants were recorded at fair value at the end of each reporting period and transaction date with changes in fair value recorded in our Consolidated Statements of Operations and Comprehensive Income (Loss).
The public PIPE warrants traded in active markets with sufficient trading volume to qualify as Level 1 financial instruments as they had observable market prices which were used to estimate the fair value.
The private placement PIPE warrants were not traded in active markets, or were traded with insufficient volume and therefore represented Level 3 financial instruments that were valued using a Black-Scholes option-pricing model.
The fair value of the PIPE warrant liability was as follows:
December 31, 2022
(In thousands) Carrying
Amount Level 1 Level 2 Level 3
Public PIPE warrants $ 742 $ 742 $ - $ -
Private PIPE warrants 164 - - 164
Total $ 906 $ 742 $ - $ 164
Level 3 Disclosures
Changes in the Level 3 private PIPE warrant liability were as follows:
(In thousands)
Balance at December 31, 2021 $ 1,690
Measurement adjustment (1,526)
Balance at December 31, 2022 164
Measurement adjustment (164)
Balance at December 31, 2023 $ -
NOTE 18 - RELATED PARTY TRANSACTIONS
On December 29, 2023, we entered into a $35 million term loan with Coliseum, a significant shareholder, with a maturity date of December 29, 2026 that is included in the long-term debt, non-current portion, net of debt discount financial line item on the consolidated balance sheet. See Note 11 for additional information.
NOTE 19 - SUBSEQUENT EVENTS
On March 8, 2024, we entered into the First Amendment to the Second Amended and Restated Credit Agreement and Consent with M&T to waive and modify certain covenants. See Note 11 for additional information.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report. Our disclosure controls are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our Chief Executive Officer and Chief Financial Officer recognize that these controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of these controls will be met.
Based this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, the disclosure controls and procedures were not effective as of December 31, 2023 due to material weaknesses in internal control over financial reporting as described below.
In light of the material weaknesses in the Company’s internal control over financial reporting, we performed additional procedures to ensure that our consolidated financial statements included in Form 10-K were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Following such additional procedures, our management, including our principal executive officer and principal financial officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Form 10-K, in conformity with GAAP.
A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a framework designed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with US GAAP. Internal control over financial reporting, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even effective internal control over financial reporting can only provide reasonable assurance with respect to the financial statement preparation and presentation.
As of December 31, 2023, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established by the Committee of Sponsoring Organization of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this evaluation, due to the material weaknesses described below, we concluded that the system of internal control over financial reporting was not effective.
The material weaknesses in our internal control over financial reporting which existed as of December 31, 2023 related to the ineffective design and implementation of information technology general controls (“ITGCs”) in the areas of user access, program change management and security administration that are relevant to the preparation of our financial statements, and the turnover of certain accounting positions during the fourth quarter. The Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the fourth quarter which impacted the operating effectiveness of controls during that period. Notwithstanding the material weaknesses, we have concluded that the financial statements and other financial information included in this Annual Report fairly present in all material
respects our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
RSM U.S. LLP, an independently registered accounting firm, who audited the financial statements as of and for the year ended December 31, 2023 included in this Annual Report on Form 10-K issued an adverse report on the Company’s internal control over financial reporting reflecting these material weaknesses as of December 31, 2023, as stated in its report which is set forth herein.
Material Weaknesses
As disclosed in Part II, Item 9A on Form 10-K for the year ended December 31, 2022, we previously identified a material weakness related to ineffective design and implementation of ITGC in the area of user access, program change management and security administration that are relevant to the preparation of the financial statements. Primarily, we did not design and maintain controls to ensure (a) access provisioned matched the access requested, (b) user access reviews were performed with complete and accurate data, (c) changes to internally developed applications were approved prior to deployment to production and (d) security administration was appropriately maintained. As a result, the Company’s related process-level IT dependent manual and automated controls that rely on the affected ITGCs, or information from IT systems with affected ITGCs, were also deemed ineffective.
As of December 31, 2023, management identified an additional material weakness in our internal control over financial reporting that existed due to the resource turnover during the fourth quarter which resulted in the lack of sufficient documentation to support the effective performance of the Company’s internal control over financial reporting.
The Company has devoted, and will continue to devote significant time and resources to execute our plan to remediate the aforementioned material weaknesses and enable us to conclude full remediation once these steps have been completed and operating effectively. The following components of the remediation plan, among others have been implemented:
•Hired a new Chief Financial Officer and Chief Technology Officer with requisite accounting and internal controls knowledge and experience to complement the executive leadership team;
•Engaged third-party assistance to assess our methodologies, policies, and procedures to ensure adequate design and effectiveness of processes supporting internal control over financial reporting;
•Assessed the specific training needs or resource gaps and have begun steps to hire key personnel, including key personnel hired in 2024;
•Designed and implemented controls over change management and security administration for all key financial systems.
While we have completed significant steps in our remediation, management will continue to implement its remediation plan, including its determination if additional updates are appropriate in the enumerated points above and through taking additional actions to remediate the material weaknesses in internal control over financial reporting, which include but are not limited to the following:
•Perform and implement a user role redesign for certain systems, which includes rationalization of user roles and permissions and considers segregation of duties;
•Continue to use third-party assistance to assess the specific training needs for newly hired and existing personnel and develop and deliver training programs, designed to uphold our internal control;
•Continue to expand the available resources at the Company with experience in designing and implementing both ITGC and business process control activities.
With the actions already taken and our planned remediation steps in fiscal 2024, when fully implemented and operated consistently, we believe we will remediate the material weaknesses. The material weaknesses will not be considered remediated until the remediation actions, including those above and any other determined appropriate have been completed and have operated effectively for a sufficient period of time. The Company is committed to validating that changes made are operating as intended within our remediation plan.
Changes in Internal Control Over Financial Reporting
The Company is in the process of implementing certain changes in its internal controls to remediate the material weaknesses described above. Other than those described above, there were no changes in our internal control over financial
reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
During the fourth quarter of 2023, none of the Company’s officers or directors adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
On March 8, 2024, LDRV Holdings Corp, Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, together with certain other subsidiary entities entered into the First Amendment to Second Amended and Restated Credit Agreement and Consent with Manufacturers and Traders Trust Company as Administrative Agent and other financial institutions as loan parties (the "Amendment"), to waive and modify certain covenants. This includes waiving the net leverage ratio from the fourth quarter of 2023 through the second quarter of 2024, current ratio for the fourth quarter of 2023, and fixed charge coverage ratio for the first and second quarters of 2024. Additionally, an additional tier was added to the definition of applicable margin of the Credit Facilities, setting forth the applicable interest rates corresponding to a total net leverage ratio of 3.00 ≤ X. This new tier is applicable to the Company as of March 8, 2024. All of the lenders under the Amendment or their affiliates have various other relationships with the Company and its subsidiaries involving the provision of financial services, and some may serve as a source of retail financing for the Company’s customers. This description of the Amendment is qualified in its entirety by reference to the complete terms and conditions of the Amendment which is filed as exhibit 10.27 to this Annual Report on Form 10-K and is incorporated by reference in its entirety into this Item 9B.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
We have adopted a Code of Business Conduct applicable to all of our directors, officers and employees. A copy of the Code of Business Conduct is available on our corporate website at www.lazydays.com by clicking on the link “Investor Relations” on our homepage and then clicking on the link “Governance” and then clicking on the link “Code of Business Conduct” under “Governance Documents.” You also may obtain a printed copy of the Code of Business Conduct by sending a written request to: Investor Relations, Lazydays Holdings, Inc., 4042 Park Oaks Blvd, Suite 350, Tampa, FL 33610, or by contacting Investor Relations at investors@lazydays.com or 855-629-3995. In the event that we amend or waive any of the provisions of the Code of Business Conduct that relate to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, we intend to disclose the same on our Investor Relations website.
The other information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the year covered by this report.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The information required by this item will be contained in, and is incorporated by reference from, the proxy statement for our 2024 annual meeting of stockholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this Report:
1.Financial statements
Reference is made to the information set forth in Part II, Item 8 of this Report, which information is incorporated by reference.
2.Consolidated Financial Statement Schedules
All required Financial Statement Schedules are included in the Consolidated Financial Statements or the Notes to Consolidated Financial Statements.
3.Exhibits
The following exhibits are filed as a part of this Report:
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of October 27, 2017, by and among Andina Acquisition Corp. II, Andina II Holdco Corp., Andina II Merger Sub Inc., Lazy Days’ R.V. Center, Inc. and A. Lorne Weil (included as Annex A to the Proxy Statement/Prospectus/Information Statement filed on February 14, 2018 and incorporated herein by reference).
2.2 Asset Purchase Agreement among BYRV, Inc., BYRV Washington, Inc., Bruce Young, Mark Bretz, The Bruce A. Young Revocable Trust, The Bruce A. Young 2021 Gift Trust and Lazydays RV of Oregon, LLC, effective as of July 9, 2021 (filed as Exhibit 2.1 to the Quarterly Report on Form 10-Q filed on November 5, 2021 and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of Lazydays Holdings, Inc., including the Certificate of Designations of Series A Convertible Preferred Stock (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on June 3, 2022 and incorporated herein by reference).
3.2 Amended and Restated Bylaws of Lazydays Holdings, Inc., effective January 25, 2023 (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on January 27, 2023 and incorporated herein by reference).
4.1 Specimen Common Stock Certificate of Lazydays Holdings, Inc. (filed as Exhibit 4.5 to the Registration Statement on Form S-4 (SEC File No. 333-221723) filed on January 16, 2018 and incorporated herein by reference).
4.2 Form of Unit Purchase Option (filed as Exhibit 4.5 of Andina’s Form S-1/A filed on November 6, 2015 and incorporated herein by reference).
4.3 Warrant Agreement between Continental Stock Transfer & Trust Company and Andina (filed as Exhibit 4.7 of Andina’s Form S-1/A filed on November 6, 2015 and incorporated herein by reference).
4.4 Form of Specimen Series A Preferred Stock Certificate (filed as Exhibit 4.4 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
4.5 Form of Common Stock purchase warrant (filed as Exhibit 4.5 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
4.6 Form of Pre-Funded Common Stock Purchase warrant (filed as Exhibit 4.6 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
4.7 Description of Registrant's Securities.*
Exhibit
Number Description
10.1 Registration Rights Agreement between Andina and certain security holders of Andina (incorporated by reference to Exhibit 10.1 of Andina’s Current Report on Form 8-K filed on December 1, 2015 and incorporated herein by reference).
10.2 2018 Long-Term Incentive Plan+ (included as Annex C to the Proxy Statement/Prospectus/Information Statement filed on February 14, 2018 and incorporated herein by reference).
10.3 Employment Agreement between Lazydays Holdings, Inc. and William Murnane+ (filed as Exhibit 10.11 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.4 Employment Agreement, by and between the Company and Robert DeVincenzi, dated January 3, 2022 + (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and incorporated herein by reference).
10.5 Amended and Restated Employment Agreement, dated September 6, 2022, by and between the Company and John North+ (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and incorporated herein by reference).
10.6 Employment Agreement, by and between the Company and Kelly Porter, dated October 3, 2022. + (filed as Exhibit 10.6 to form 10-K filed March 1, 2023 and incorporated herein by reference).
10.7 Transition Agreement, dated October 19, 2022, by and between the Company and Nicholas Tomashot. + (filed as Exhibit 10.7 to Form 10-K filed March 1, 2023 and incorporated herein by reference).
10.8.1 Form of Securities Purchase Agreement (Preferred) (filed as Exhibit 10.13.1 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.8.2 Form of Securities Purchase Agreement (Unit) (filed as Exhibit 10.13.2 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.9 Lease Agreement by and between Cars MTI-4 L.P., as Landlord, and LDRV Holdings Corp., as Tenant (filed as Exhibit 10.14 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.10 Lease Agreement between Chambers 3640, LLC, as Landlord, and Lazydays Mile HI RV, LLC, as Tenant (filed as Exhibit 10.15 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.11 Lease Agreement between 6701 Marketplace Drive, LLC, as Landlord, and Lazydays RV America, LLC, as Tenant (filed as Exhibit 10.16 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.12 Lease Agreement between DS Real Estate, LLC, as Landlord, and Lazydays RV Discount, LLC, as Tenant (filed as Exhibit 10.17 to the Registration Statement on Form S-4 (SEC File No. 333-221723) and incorporated herein by reference).
10.13 Restated Credit Agreement, dated as of July 14, 2021, by and among LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, Manufacturers and Traders Trust Company, as Administrative Agent, Swingline Lender, Issuing Bank and a Lender, and other financial institutions as Lender parties thereto (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 5, 2021 and incorporated herein by reference).
10.14 First Amendment to Amended and Restated Credit Agreement, dated as of May 13, 2022, by and among LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC and Lazydays Mile HI RV, LLC, Manufacturers and Traders Trust Company, as Administrative Agent, Swingline Lender, Issuing Bank and a Lender, and other financial institutions as Lender parties (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on May 17, 2022 and incorporated herein by reference).
10.15 Second Amended and Restated Credit Agreement dated February 21, 2023 with Manufacturers and Traders Trust Company (“M&T”), as Administrative Agent, Swingline Lender, Issuing Bank and a Lender, and other financial institutions as Lender parties (filed as Exhibit 10.1 to the form 10-Q filed on April 28, 2023 and incorporated herein by reference).
Exhibit
Number Description
10.16 First Amendment, dated February 21, 2023, to Second Amended and Restated Credit Agreement and Consent between LDRV Holdings Corp. and Manufacturers and Traders Trust Company*.
10.17 Security Agreement, dated March 15, 2018, by and between LDRV Holdings Corp., Lazydays RV America, LLC, Lazydays RV Discount, LLC, and Lazydays Mile HI RV, LLC, as Borrowers, Lazydays Holdings Inc., Lazy Days’ R.V. Center, Inc., Lazydays RV America, LLC, and Lazydays Land Holdings, LLC, as Guarantors, and Manufacturers and Traders Trust Company, as administrative agent under the Credit Agreement of even date therewith (filed as Exhibit 10.11 to the Form 8-K filed on March 21, 2018 and incorporated herein by reference).
10.18 Guaranty Agreement, dated March 15, 2018, by certain parties named therein (filed as Exhibit 10.12 to the Form 8-K filed on March 21, 2018 and incorporated herein by reference).
10.19 Form of Registration Rights Agreement between Lazydays Holdings, Inc. and the PIPE investors (filed as Exhibit 10.13 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
10.20 Form of Registration Rights Agreement between Lazydays Holdings, Inc. and the PIPE investors (filed as Exhibit 10.14 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on March 30, 2018 and incorporated herein by reference).
10.21 Employment Offer Letter between Lazydays Holdings, Inc. and Nicholas Tomashot+ (filed as Exhibit 10.15 to Amendment No. 2 to the Registration Statement on Form S-1 (SEC File No. 333-224063) filed on May 22, 2018 and incorporated herein by reference).
10.22 Lazydays Holdings, Inc. 2019 Employee Stock Purchase Plan (filed as Exhibit 10.1 to the Form 8-K filed on May 23, 2019 and incorporated herein by reference).
10.23 Lazydays Holdings, Inc. Amended and Restated 2018 Long Term Incentive Plan.+ (filed as Exhibit 10.21 to Form 10-K filed March 1, 2023 and incorporated herein by reference).
10.24 Form of Term Note (U.S. Small Business Administration Paycheck Protection Program) in favor of M&T Bank (filed as Exhibit 10.1 to the Form 8-K filed on May 4, 2020 and incorporated herein by reference).
10.25 Waiver Agreement, dated September 12, 2023, by and between the Company and Park West (filed as Exhibit 10.1 to Form 8-K filed on September 12, 2023 and incorporated herein by reference).
10.26 Waiver Agreement, dated September 12, 2023, by and between the Company, Coliseum and Park West (filed as Exhibit 10.2 to Form 8-K filed on September 12, 2023 and incorporated herein by reference).
10.27 Loan Agreement, dated December 29, 2023, between LD Real Estate, LLC, Lazydays RV of Ohio, LLC, Airstream of Knoxville at Lazydays RV, LLC, Lone Star Acquisition LLC, Lazydays Land of Phoenix, LLC and Lazydays Land of Chicagoland, LLC, as Borrower and Coliseum Holdings I, LLC, as Lender (filed as Exhibit 10.1 to Form 8-K filed on January 2, 2024 and incorporated herein by reference).
21.1 Subsidiaries of the Company.*
23.1 Consent of RSM US LLP.*
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.*
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.*
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).**
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).**
97.0 Lazydays Holdings, Inc. Clawback Policy.*
Exhibit
Number Description
101 The following financial statements from the Company’s Annual Report on Form 10-K for the period ended December 31, 2023, formatted in inline XBRL, include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)*
* Filed herewith.
** Furnished herewith.
+ Management compensatory plan or arrangement.