RideNow Group, Inc. Class B Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good afternoon, everyone, and thank you for joining us for RideNow's second quarter 2026 earnings conference call. Joining me on the call today are Michael Quartieri, RideNow's Chairman, Chief Executive Officer, and President, and Josh Barsetti, RideNow's Executive Vice President and Chief Financial Officer. Our second quarter results are detailed in the press release issued this afternoon, and supplemental information will be available in our Form 10-Q once filed. Before we begin, I would like to remind you that comments made by management during this conference call may contain forward-looking statements, including but not limited to RideNow's market opportunities and future financial results. All forward-looking statements involve risks and uncertainties, which could affect RideNow's actual results and cause actual results to differ materially from forward-looking statements made by or on behalf of RideNow.

A discussion of material risks and important factors that could affect our actual results can be found in our filings with the SEC, which are available on our investor relations website and at sec.gov. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Tuesday, August 11, 2026. RideNow assumes no obligation to revise or update any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Also, the following discussion contains non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, please refer to our earnings release published today and available on our investor relations website. Now I'll turn the call over to Michael Quartieri.

Thanks, Jerene. Good afternoon, everyone, and thank you for joining us for RideNow second quarter 2026 earnings call. The strong momentum we built during the second half of 2025 has continued through the first half of 2026. I am proud to report that our Q2 2026 same-store revenue reached $291.5 million, up 3% over the prior year period. Furthermore, adjusted EBITDA rose to $20.5 million, a 19.2% increase year-over-year. As we advance through our turnaround, we continue to capture incremental wins and absorb valuable lessons. We are still in the early innings. This makes it essential to keep a level head, maintain diligent effort, and stay laser focused on what we can control within the four walls of our business. By prioritizing strategic execution and continuous improvement, both in our stores and across our corporate support center, we are driving the positive momentum reflected in our results today.

Our balanced tactical plan combines near-term operational improvements with structural changes to advance our long-term strategic direction, ultimately creating sustained value for our shareholders. Our near-term initiatives, securing the right leadership, maintaining a disciplined focus on cost efficiency, and reinstating operational rigor across all stores continue to progress. With each step, we position the company for greater operating leverage. Our team is fully aligned around clear goals and a culture of accountability. Beyond our improved financial performance, we achieved several key milestones during the quarter. We were added to the Russell 2000 Index, secured a new $20 million used floor plan facility, and expanded our floor plan capacity for new products. We also completed the relocation of our Tallahassee and Gainesville, Florida stores into integrated and upgraded facilities.

Most importantly, we made substantial progress on our refinancing efforts, and I look forward to sharing more details on that front in the near future. Each of these achievements is a direct testament to our operational momentum. Looking ahead, we are well-positioned to build on this foundation. We expect to continue to deliver strong levels of adjusted EBITDA and free cash flow throughout the remainder of 2026. As always, we will deploy this capital with a strict discipline of an owner-oriented company. Moving forward, our financial strength positions us to return to growth through highly accretive acquisitions, which remain a key pillar of our long-term value strategy. With that, I will turn the call over to Josh for a more detailed review of the second quarter financial results.

Thanks, Mike, and good afternoon, everyone. I'll start by reviewing our financial results for the second quarter of 2026, followed by an overview of our balance sheet. During the quarter, we generated total revenue of $296.8 million, compared to $299.9 million in the prior year quarter. This decrease was predominantly driven by our store consolidation efforts, which resulted in operating five fewer stores during the current quarter as compared to the prior year quarter. Additionally, adjusted EBITDA increased 19.2% to $20.5 million, up from $17.2 million in the second quarter of 2025. Adjusted SG&A expenses were $62.8 million, or 74.1% of gross profit, down 3.3% compared to $64.9 million, or 77.4% of gross profit in the same quarter of last year. During the quarter, we sold 16,626 units, down 491 units or 2.9% from the same quarter last year.

Total new retail unit sales were 10,807, up 189 units or 1.8% compared to Q2 of last year, and pre-owned retail units totaled 4,924, down 359 units or 6.8%. Higher total unit volume led to a $1.1 million improvement in gross profit dollars, which totaled $84.8 million during the second quarter of 2026. New unit gross margins improved to 14.8% for the quarter compared to 13.2% for the same quarter last year, while pre-owned gross margins decreased from 18.8% in last year's second quarter to 18% in the second quarter of the current year. Our fixed operations business, consisting of parts, service, and accessories, delivered $50.1 million in revenue and $24.2 million in gross profit. Additionally, our finance and insurance teams delivered $27 million in revenue, down $200,000 compared to $27.2 million in the prior year's quarter.

For the six months ended June 30, revenue was up $12.6 million to $557.2 million as compared to $544.6 million for the prior year period. Gross profit was $156.4 million for the first half of the year compared to $151.1 million in the prior year period. Adjusted EBITDA was $29.8 million, up from $23.2 million, an increase of $6.6 million over the prior year period. On a same-store basis, which excludes the five stores permanently closed in the prior year and any fleet-related units, revenue was $291.5 million during the second quarter of 2026 as compared to $282.9 million in 2025, a 3% increase. Total same-store gross profit was $183 million this year compared to $81.4 million in the prior year period, a 2% increase. Q2 marks the fourth consecutive quarter of same-store growth in revenue and units sold and the fifth consecutive quarter of same-store growth in gross profit.

For the six months ended June 30, same-store revenue was up $37.9 million to $549.7 million as compared to $511.8 million in the prior year period. Gross profit was $154 million in the first half of the year compared to $145.2 million in the prior year period. Turning to the balance sheet, we ended the quarter with $63.1 million in total cash inclusive of restricted cash. As Mike mentioned earlier, we secured a $20 million used floorplan facility and added additional floorplan availability for new products. The used floorplan will replace our existing related party floorplan line, which will wind down this month. At the end of the quarter, our availability under short-term revolving floorplan credit facilities totaled approximately $95.1 million, and total available liquidity defined as total cash plus availability under floorplan credit facilities totaled $158.2 million at the end of the quarter.

Additionally, non-vehicle net debt was $174.4 million. Cash outflows from operating activities was $28.2 million for the six months ended June 30, 2026. Effective this quarter, we will now report adjusted free cash flow as a non-GAAP measure. Adjusted free cash flow is defined as cash flows used in or provided by operating activities, adjusted for net activity from our non-trade floorplan facilities and any cash flows associated with business acquisitions and dispositions, less purchases of CapEx. For the six months ended June 30, adjusted free cash flow was $20.8 million compared to $2.9 million for the same period in the prior year, as the company drew down on our floorplan facilities to fund additional inventory. With that, we'd like to begin the question and answer session. I'll turn the call back over to the operator now to open the lines.