Greetings, and welcome to the RumbleON Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this call is being recorded. Now, I would like to turn the call over to Dylan Solomon, Investor Relations. Mr. Solomon, you may begin.

Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining us on this conference call to discuss RumbleON's third quarter 2020 financial results. Joining me on the call today are Marshall Chesrown, Chairman and Chief Executive Officer; and Steve Berrard, Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at investors.rumbleon.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company’s corporate website. This conference call is the property of RumbleON and any taping or other reproduction is expressly prohibited without prior written consent. Before we start, I would like to remind you that the following discussion contains forward-looking statements, including, but not limited to RumbleON's market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in RumbleON’s periodic SEC filings. The forward-looking statements and risks in this conference call, including responses to your questions are based on current expectations as of today, and RumbleON assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Also the following discussion may contain non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, please see our earnings release. Now, I will turn the call over to Marshall. Marshall?

Good morning, everyone. Thank you for joining our call today. Q3 was a record breaking quarter for RumbleON. Gross margin reached 14.3% and gross profit per vehicle sold grew to over 3,400, up 255% year-over-year. In Q3 of last year we set the objective of achieving an EBITDA positive quarter in 2020, and one year later we generated $4.7 million in adjusted EBITDA. The sharp resurgence in consumer demand combined with limited new vehicles and showrooms continued to cause supply chain imbalances in all pre-owned vehicle segment. We are still below the monthly unit volumes experience before the COVID pandemic. However, this pricing and demand environment contributed to the acceleration of gross profits improvement. RumbleON has had an incredible year thus far operationally and financially. And I'm very pleased to report that given the unique challenges presented to the company and the economy during 2020, our strategy is working. In 2019, we demonstrated our ability to scale revenue. In 2020, we are demonstrating we can achieve profitability, and we look forward to demonstrating our ability to scale profitably in 2021 and beyond. Another objective outlined in 2019 was to reach adjusted EBITDA profitability on a full year basis in 2021. And we believe we have the right strategy in place to reach that goal. In August, we released the newest generation of RumbleON, RumbleON 3.0, with over 18,000 powersports listings available at launch. Since then, we have gained incredible ground. Today, less than three months later, we have more than doubled that with more than 37,000 total listings available on rumbleon.com. We believe we have only scratched the surface of opportunity and see a potential of more than 10 times that number at scale. As of today, we work with powersports dealers in over 200 locations across 36 states and…

Thank you, Marshall. Our results are detailed in the press release we issued this morning. So, I'll address some of the key metrics and the progress we've made towards achieving our profitability targets. Additional supplemental information is available in our third quarter Form 10 Q. While we are experiencing the same COVID-19 related headwind experienced across the broader industry, we have been quick to adapt and have used the market trends to our advantage. Well before the onset of the pandemic, we made the decision to rationalize expenses, as we accelerated towards profitability. We've taken a disciplined approach to vehicle acquisition and related sales volume, while adding supplemental revenue streams. As a result of these factors, we have achieved our first net income and adjusted EBITDA positive quarter in Q3 of 2020, which was an objective we set forth in 2019. In the third quarter, we sold 4,263 vehicles, generating revenue of $117.3 million as compared to 10,894 vehicles that generated revenue of $220.3 million for Q3 of 2019. We sold 747 powersport units in Q3, generating $7.3 million of revenue as compared to 3,623 units for $27.1 million of revenue in Q3 of 2019. We sold 3,516 automotive units, generating $99.3 million of revenue compared to 7,271 units for revenue of $187.1 million in Q3 of 2019. Transportation and vehicle logistics revenue for Q3 improved to $10.4 million on the delivery of 21,238 units compared to revenue of $6.1 million on the delivery of 20,008 units in the same period of 2019. The decrease in vehicle unit sales and revenue is compared to the same period in 2019 resulted from the adverse impact of COVID-19 pandemic on commercial activity, which resulted in lower levels of inventory available for purchase, causing lower unit sales, but higher average selling prices and…

Thank you. [Operator Instructions] Our first question comes from the line of Ron Josey from JMP Securities. Your line is now open.

Great. Thanks for taking the question. I have a few, so enable -- do one at a time if that's okay. Marshall and Steve, you had good commentary around inventory. And I think you said September had lower sales in July and August. Do basically the inventory availability and ASPs, and although demand was better. Can you just talk about how you view these 4Q quarterly trends going forward? Why do you think these trends can reverse? And when, I think you mentioned in 1Q 2021, but just want to understand a little bit more why these trends might reverse here in 1Q and what would lead them to reverse. And I have a few more.

Okay. In respect, Ron, to inventory going forward, we are seeing trends of more normalized availability. And as you and I talked about before, a lot of what we watch is, activity in auction lanes across the country to see what the dealer appetite is. I think a lot of dealers have ramped their inventory. I think, the biggest thing that has really affected the inventory availability really was the period of time it's taken for dealers to get back a new vehicle inventory. So, they were replacing those sales with a pre-owned and there was quite a feeding frenzy out there for quite some time. So, as those inventories normalized, some manufacturers have are a little more caught up than others. But as those normalized throughout the quarter, we start to see more trade-ins being available so on and so forth. So, again, I -- it seems like both from the consumer perspective, our cash offers continue to ramp through October. They basically kind of flattened through third quarter, but they're growing fairly rapidly on a daily basis now without any more marketing spend. So that tells you that it's just purely organic growth. So, we do see some -- we again -- as Steve mentioned, I mean, we are operating you can just tell from our margins, you take powersports as an example. I mean, we are operating more conservatively and we are working towards a better gross margin profile. I think by us selling a lot of the inventory pre-option direct to dealers has had a major effect on that gross margin as well. So, we're going to continue to march down that.

Got it. And to that end, with RumbleON 3.0, I think it was launching in August, and now there's 37,000, 38,000 units on the note on the -- on the site. Just can you talk, Marshall, just about how your relationship with dealers have evolved, early feedback from 3.0 and really what -- to your point, what the team is doing here to drive awareness of all this inventory, especially as you ramp, call it, the cash offers from a consumer perspective. So, just Rumble 3.0 update, dealer relationships and how it all -- how you able to sort of drive demand to the site.

Well, I think, dealers would, obviously, want to see more and more activity and more and more leads, obviously more and more inventory availability and more content on the site will help. We have not supported it with additional marketing at this point. And the reason for that is, we had gone through now short -- it's only been just shortly like over two months and some of the challenges I shared last quarter about the integration of these dealers, because there isn't like -- there isn't an AutoNation or a Sonic in the space where you're integrating a large group of dealers that are all on the same management systems and so forth. This is everything from integrating somebody that's on QuickBooks all the way through possibly a CDK or something such as that. So, the integration, it was expected. There's -- it hasn't been any surprises, but it is a little bit more time consuming on the powersports side than it certainly would be on the automotive side. So, I think that we're happy with the growth. We have a lot more in the Q that then have been adjusted. I mean, when you start talking about an API feed, as an example to some of these dealers, I mean, they really don't even know what an API feed is. They don't have anybody on their team that can help associate that. So, we're building all those APIs and all those types of things. So, we think that the appetite is huge. We've had nobody say I'm not interested. And I think as I mentioned in my remarks, this -- we just finished a third week. We have our fourth sale today. And the capture rates in our online auction platform have been really, really strong. And we already have a lot of the dealers asking, when are they going to be able to post their vehicles for sale on our site, which is coming very, very soon. So, those -- at presently the only thing that we're selling on that a B2B platform is our own because we want to make sure we could really control the customer experience. So, lots coming down the road. I think we will start to ramp. We kind of have some target numbers. We think we can get to 100,000 fairly quickly on the listing side. And once we have those revenues and gross margin coming in from the B2B and from some other opportunities, we'll start rolling that into marketing and start pushing major visitors to the website.

Got it. That's helpful. And lots to think about with CarGurus and daily auctions and boats. And maybe I'll just -- my last question to Steve on a profitability side. You talked about reaching full year EBITDA 2021, 3.0 is now alive. Just how do you get there with all these investments that are going on? And I get you have heightened ASPs and better gross profits. So, I think you said that likely doesn't last because demands applying balance. So, can you just talk about profitability in 2021, the confidence into -- in getting that EBITDA? And then on top of that just the cash balance, any update on the insurance settlement? Thanks, guys.

Steve? I think your mute is on.

No, I'm here. I'm on mute.

There you go. Thanks.

Okay. Good morning. I think on the EBITDA side, I think you're going to watch a transition from where RumbleON is today, where we're taking risks, we're selling vehicles. We're now moving for 3.0 and becoming a fee for services, if you will. We're going to start to make a piece on a lot of transactions, you're going to watch. And it very big acceleration in margins, because basically 3.0 -- we've basically added nobody in our shop to handle the activity and the volume. The technology has been built and has been well-designed. And we're well into that. The fact that we can offer do boats and RVs and things like that. We're pretty far along with the technology curve. So, there isn't going to be a big need for capital in that respect. I think our money is going to be spent on basically marketing. But I think you're going to find that these transaction fees are going to create significant margin expansion. And I don't see there being a tremendous increase in our SG&A as a result of that. And I think what'll happen is after Q4, going into 2021, we'll give some guidance relative to how you should look at the fees and what we think the generally could relate to quarter by quarter. On the cash side, and let me do insurance real quick. We have -- still our claim out there, we are still pursuing about $13 million. And as we've disclosed in our SEC filings, we believe we're going to recover our losses. It's just a question of how much and when. But all the inventory that was damaged or totally destroyed is non-liquidated at all. So, we have nothing left. So, we've got that behind us. So, any proceeds that we would…

That's very helpful. Thank you, guys.

Our next question comes from the line of Rommel Dionisio from Aegis. Your line is now open.

Yeah. Thanks very much for taking my question. I'm not sure you talked about the boats a little bit. I'm looking at the listings here. I wonder if you could just give us a little more color in terms of your expansion plans with dealers. I see that you've got a lot of listings in Jacksonville, as well as places in Maryland. So what other reasons are you maybe having discussions with? Also, how should we think about that business over the next couple of quarters, both in terms of velocity of sales? I suppose your ability to expand relationships with additional dealers simply because I would imagine that's a pretty seasonal market, maybe not in Florida, but in other parts of the country. What if you could just give some more color on that? Thanks.

Well, I will start with the seasonality. Obviously, dealers out there, market their goods 24x7, 365. So that really doesn't affect as far as the listing of their inventory. On the boat side of it, we -- what happened and we accelerated kind of our entry into the boats, because what we found is a lot of our powersports dealers also carry a personal watercraft, wave runners, jet skis, and alike. And so we -- and we already had -- the technology was already baked into our system. So, we started populating those inventories as those fees -- inventory fees were coming in by our listing dealers and have decided that it's working well. And we're also going after boat dealers starting a couple of weeks ago, actually. So, we anticipate the same type of activity that we've had on the powersports side. And we also expect some of the same complications when it comes to actually bringing all these online. As I said earlier, I think that we've really streamlined this -- our integration. I think the fact that we've doubled it in about nine weeks is testament to the team. I think there's well over 50,000 units already in the queue, as we build these APIs, et cetera, to be able to push this inventory live in real time. One thing you don't want to do is you don't want to have listings on your site that aren't available for sale. So, there's live inventory feeds on a daily basis are really, really important. As far as the dealer participation in the off-road services, we -- some of the items that appear to be very attractive and are very -- and really interesting to dealers are things like RumbleON Finance. I mean, the ability to not only buy vehicles and sell vehicles through us, but also for financing on certain vehicles that have not been for a lot of these dealers, especially some of the smaller guys really didn't have access to consumer retail, consumer financing. And we're opening that door obviously with RumbleON Finance. So, I think the finance piece -- I think the early on, and as we said last quarter, we don't anticipate listing fees and all those kinds of things to be anything meaningful in 2020. We think that'll stuff will come online in 2021. But the one item that is clearly going to be a profit center in the near term is our B2B platform. And there seems to be a very, very large appetite in that regard. And we've been -- we've actually been very surprised with the response and also the sell-through rate of what we've been able to accomplish in just the first few weeks. So, hopefully that answers that question.

Yeah. Great. Thanks very much for the color.

Mr. Chesrown, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Great. Well, we sure appreciate everybody joining us this morning. And as everybody knows, you can reach out to Whitney and Dylan and team, Steve and I try to be available as much as possible for investors and investors' questions. So, again, we thank you. We look forward to Q4 and beyond, and we'll talk to you next quarter. Thank you.

That does conclude the conference call for today. We thank you for your participation, and ask that you please disconnect your lines.