RideNow Group Inc.
03/13/2026 | Press release | Distributed by Public on 03/13/2026 14:06
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Introduction
The following discussion should be read in conjunction with our audited consolidated financial statements and the related Notes that appear in Part IV of this 2025 10-K. References to "Note" or "Notes" pertains to the Notes to the Consolidated Financial Statements. Unless otherwise specified, the meanings of all defined terms in this MD&A are consistent with the meanings of such terms as defined in the Notes to Consolidated Financial Statements. Terms not defined in this MD&A have the meanings ascribed to them in the consolidated financial statements. Unless otherwise noted, comparisons are of results for the year ended December 31, 2025 ("this year") to those for the year ended December 31, 2024 ("last year").
Overview
RideNow Group, Inc., a Nevada corporation, was incorporated in 2013 and operates a powersports dealership group. We have primarily grown through acquisitions. Through December 31, 2025, we operated through two operating segments: our powersports dealership group and a vehicle transportation services provider. In December 2025, we ceased providing vehicle transportation services to third parties.
Powersports
We believe our powersports business is the largest powersports retail group in the United Statesoffering a wide selection of new and pre-owned motorcycles, all-terrain vehicles ("ATV"), utility terrain or side-by-side vehicles ("SXS"), personal watercraft ("PWC"), and other powersports products. Additionally, we source high quality pre-owned inventory directly from consumers via our proprietary RideNow Cash Offer tool.
We also offer parts, apparel, accessories, finance & insurance products and services, and aftermarket products from a wide range of manufacturers. Further, we offer a full suite of powersports repair and maintenance services. As of December 31, 2025, we operated 48 retail locations located predominantly in the Sunbelt region of the United States.
Vehicle Transportation Services
During the years ended December 31, 2024 and 2025, we provided transportation brokerage services facilitating automobile transportation primarily between and among automotive dealerships and auctions through an asset-light business model. In the first quarter of 2025, several employees, including almost all brokers, exited the Company, which resulted in a significant decline in shipping volume. Ultimately, the Company ceased the operations of this segment in December 2025.
Prior to acquisitions of dealerships beginning in 2021, we operated primarily using an online model to buy and sell pre-owned powersports. Since that time, we have shifted to focus on owning and operating powersports retail stores. Part of this strategy shift consists of evaluating our current operations to identify cost savings and gross margin improvement opportunities by reviewing current store operations. During 2025, we implemented the following cost savings and gross margin improvement initiatives and debt management actions:
•Consolidated two smaller DFW area stores into a new, larger Fort Worth location
•Closed underperforming stores in Sturgis, South Dakota; Houston, Texas; and Cincinnati, Ohio
•Sold underperforming stores in Vista, California and El Cajon, California
•Amended and extended the term loan facility to September 30, 2027 with a lower interest rate
•Repaid $61.1 million of debt principal, including the full repayment of the $38.8 million 6.75% convertible senior notes.
We continue to evaluate those areas of our business that we can control in order to improve the Company's results.
KEY MEASURES OF OUR PERFORMANCE
We regularly review a number of key metrics, including revenue, sales volume and gross profit in order to manage the business and evaluate financial and operating performance, such as revenue, volume and gross profit measures. Key factors impacting our operating results include increasing brand awareness; maximizing the opportunity to source pre-owned vehicles from consumers, dealers and auctions; and enhancing the selection and timing of vehicles we make available for sale to our customers. We review the Powersports segment metrics in total. As previously disclosed, we sold or closed five underperforming stores during 2025. As a result, management has now begun reviewing Powersports segment metrics on a same store basis as well. Same store measures reflect results for stores that were operating as of December 31, 2025 and exclude fleet sales. We believe same store metrics assist in providing insight on operating trends within our core business.
Powersports
Revenue
Revenue is comprised of powersports vehicle sales, finance and insurance products bundled with retail vehicle sales ("F&I"), and parts, service and accessories/merchandise ("PSA"). We sell both new and pre-owned powersports vehicles through retail and wholesale channels. F&I and PSA revenue is earned through retail channels. Retail channels provide the opportunity to maximize profitability by increased sales volume and lower average days to sale and are impacted by customer demand, market conditions and inventory availability. The wholesale channel provides the opportunity to move excess inventory or inventory that does not meet our needs for retail. The number of vehicles sold varies from period to period due to these factors. Factors primarily affecting pre-owned vehicle sales include inventory levels and the availability of inventory, as well as the number of retail pre-owned vehicles sold and the average selling price of these vehicles.
Gross Profit
Gross profit generated on vehicle sales reflects the difference between the vehicle selling price and the cost of revenue associated with acquiring the vehicle and preparing it for sale. Cost of revenue includes the vehicle acquisition cost, inbound transportation cost, and particularly for pre-owned vehicles, reconditioning costs. The aggregate gross profit and gross profit per vehicle vary across vehicle type, make, model, etc. as well as through retail and wholesale channels, and with regard to gross profit per vehicle, are not necessarily correlated with the sale price. Vehicles sold through retail channels generally have a higher gross profit per vehicle given the vehicle is sold directly to the consumer. Pre-owned vehicles sold through wholesale channels, including directly to other dealers or through auction channels, including the dealer-to-dealer auction market, generally have lower margins and do not enable any other ancillary gross profit attributable to F&I and PSA. Factors affecting gross profit from period to period include the mix of new versus pre-owned vehicles sold, the distribution channel through which they are sold, the sources from which we acquired such inventory, retail market prices, our average days to sale, and our pricing strategy. We may opportunistically choose to shift our inventory mix to higher or lower cost vehicles, or to opportunistically raise or lower our prices relative to market to take advantage of demand/supply imbalances in our sales channels, which could temporarily lead to gross profits increasing or decreasing in any given channel.
Vehicles Sold
We define vehicles sold as the number of vehicles sold through retail and wholesale channels in each period. This metric is the primary driver of our revenue and gross profit and also impacts complementary revenue streams, such as F&I and PSA. Additionally, vehicles sold increases our base of customers and improves brand awareness and repeat sales.
Total Gross Profit per Unit
Total gross profit per unit is the aggregate gross profit of the powersports segment in a given period, divided by retail powersports units sold in that period. The aggregate gross profit of the powersports segment includes gross profit generated from the sale of new and pre-owned vehicles, any income related to loans originated to finance the vehicle, revenue earned from the sale of F&I products including extended service contracts, maintenance programs, guaranteed auto protection, tire and wheel protection, and theft protection products, gross profit on the sale of PSA products, and gross profit generated from sales of vehicles in the wholesale market.
Vehicle Transportation Services
Revenue
Revenue was derived from freight brokerage agreements with dealers, distributors, or private party individuals to transport vehicles from a point of origin to a designated destination. The freight brokerage agreements were fulfilled by independent third-party transporters who met our performance obligations and standards. We were considered the principal in the delivery transactions since we were primarily responsible for fulfilling the service.
Vehicles Delivered
We define vehicles delivered as the number of vehicles delivered from a point of origin to a designated destination under freight brokerage agreements with dealers, distributors, or individuals. Vehicles delivered were the primary driver of revenue and, in turn, profitability in the vehicle transportation services segment.
Total Gross Profit Per Unit
Total gross profit per vehicle transported represented the difference between the price received from customers and our cost to contract an independent third-party transporter divided by the number of vehicles transported.
Results of Operations
Revenue and Gross Profit
| ($ in millions) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Powersports vehicles | $ | 778.8 | $ | 842.6 | $ | (63.8) | (7.6) | % | |||||||||||||||
| Parts, service, accessories | 197.8 | 206.2 | (8.4) | (4.1) | % | ||||||||||||||||||
| Finance and insurance, net | 97.3 | 102.4 | (5.1) | (5.0) | % | ||||||||||||||||||
| Vehicle transportation services | 8.6 | 58.0 | (49.4) | (85.2) | % | ||||||||||||||||||
| Total revenue | $ | 1,082.5 | $ | 1,209.2 | $ | (126.7) | (10.5) | % | |||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Powersports vehicles | $ | 106.6 | $ | 104.0 | $ | 2.6 | 2.5 | % | |||||||||||||||
| Parts, service, accessories | 92.3 | 94.5 | (2.2) | (2.3) | % | ||||||||||||||||||
| Finance and insurance | 97.3 | 102.4 | (5.1) | (5.0) | % | ||||||||||||||||||
| Vehicle transportation services | 1.8 | 13.4 | (11.6) | (86.6) | % | ||||||||||||||||||
|
Total gross profit
|
$ | 298.0 | $ | 314.3 | $ | (16.3) | (5.2) | % | |||||||||||||||
Total revenue declined $126.7 million, primarily due to a lower volume of powersports vehicles sold, fewer retail stores during the period, and the decline from the vehicle transportation services business, which ceased operations in 2025. Revenue from powersports vehicles sold decreased $63.8 million, with 3,094 fewer vehicles sold primarily during the first half of 2025. The lower volume also negatively impacted the auxiliary sales of parts, service, and accessories as well as F&I. Overall, the average total revenue per retail vehicle (which includes PSA and F&I) in 2025 decreased by $32, or 0.2%. Additional information on our revenue is depicted in the tables below.
Total Company gross profit decreased $16.3 million compared to last year, with the majority of that decrease coming from the vehicle transportation services business. While lower volume of powersports vehicles sold impacted total gross profit including that from PSA and F&I, gross profit per powersports vehicles sold increased 2.5%, or $2.6 million. Gross profit per retail unit sold improved 5.1%, as depicted below.
| Key Operating Metrics - Powersports | ||||||||||||||
| ($ in millions except per vehicle) | 2025 | 2024 | Change | % Change | ||||||||||
| Revenue | ||||||||||||||
| New retail vehicles | $ | 555.5 | $ | 616.4 | $ | (60.9) | (9.9) | % | ||||||
| Pre-owned retail vehicles | 206.6 | 202.1 | 4.5 | 2.2 | % | |||||||||
| Wholesale | 16.7 | 24.1 | (7.4) | (30.7) | % | |||||||||
| Finance and insurance, net | 97.3 | 102.4 | (5.1) | (5.0) | % | |||||||||
| Parts, service and accessories | 197.8 | 206.2 | (8.4) | (4.1) | % | |||||||||
| Total powersports revenue | $ | 1,073.9 | $ | 1,151.2 | $ | (77.3) | (6.7) | % | ||||||
| Gross Profit | ||||||||||||||
| New retail vehicles | $ | 72.9 | $ | 72.4 | $ | 0.5 | 0.7 | % | ||||||
| Pre-owned retail vehicles | 34.1 | 32.5 | 1.6 | 4.9 | % | |||||||||
| Wholesale | (0.4) | (0.9) | 0.5 | 55.6 | % | |||||||||
| Finance and insurance, net | 97.3 | 102.4 | (5.1) | (5.0) | % | |||||||||
| Parts, service and accessories | 92.3 | 94.5 | (2.2) | (2.3) | % | |||||||||
| Total powersports gross profit | $ | 296.2 | $ | 300.9 | $ | (4.7) | (1.6) | % | ||||||
| Vehicle Units Sold | ||||||||||||||
| New retail vehicles | 38,459 | 42,464 | (4,005) | (9.4) | % | |||||||||
| Pre-owned retail vehicles | 18,416 | 18,275 | 141 | 0.8 | % | |||||||||
| Total retail vehicles | 56,875 | 60,739 | (3,864) | (6.4) | % | |||||||||
| Wholesale | 5,019 | 4,249 | 770 | 18.1 | % | |||||||||
| Total vehicles sold | 61,894 | 64,988 | (3,094) | (4.8) | % | |||||||||
| Revenue per vehicle | ||||||||||||||
| New retail vehicles | $ | 14,444 | $ | 14,516 | $ | (72) | (0.5) | % | ||||||
| Pre-owned retail vehicles | 11,219 | 11,059 | 160 | 1.4 | % | |||||||||
| Wholesale | 3,327 | 5,672 | (2,345) | (41.3) | % | |||||||||
| Finance and insurance, net | 1,711 | 1,686 | 25 | 1.5 | % | |||||||||
| Parts, service and accessories | 3,478 | 3,395 | 83 | 2.4 | % | |||||||||
|
Total revenue per retail vehicle(1)
|
18,588 | 18,556 | 32 | 0.2 | % | |||||||||
| Gross Profit per retail vehicle | ||||||||||||||
| New vehicles | $ | 1,896 | $ | 1,705 | $ | 191 | 11.2 | % | ||||||
| Pre-owned vehicles | 1,852 | 1,778 | 74 | 4.2 | % | |||||||||
| Finance and insurance, net | 1,711 | 1,686 | 25 | 1.5 | % | |||||||||
| Parts, service and accessories | 1,623 | 1,556 | 67 | 4.3 | % | |||||||||
|
Total gross profit per vehicle(2)
|
5,208 | 4,954 | 254 | 5.1 | % | |||||||||
___________________
(1) Calculated as total powersports revenue excluding wholesale revenue divided by new and pre-owned retail units sold.
(2) Calculated as total powersports gross profit divided by new and pre-owned retail powersports units sold.
Same store revenue and gross profit for powersports is calculated on the same basis as total powersports, but excludes fleet sales and the effects in all periods presented of the five stores that permanently closed during 2025. These metrics follow:
| Same Store Key Operating Metrics | ||||||||||||||
| ($ in millions except units and per vehicle) | 2025 | 2024 | Change | % Change | ||||||||||
| Same Store Revenue | ||||||||||||||
| New retail vehicles | $ | 541.9 | $ | 590.6 | $ | (48.7) | (8.2) | % | ||||||
| Pre-owned retail vehicles | 199.4 | 187.5 | 11.9 | 6.3 | % | |||||||||
| Wholesale | 9.8 | 16.8 | (7.0) | (41.7) | % | |||||||||
| Finance and insurance, net | 87.4 | 88.5 | (1.1) | (1.2) | % | |||||||||
| Parts, service and accessories | 192.3 | 197.6 | (5.3) | (2.7) | % | |||||||||
| Same store total powersports revenue | $ | 1,030.8 | $ | 1,081.0 | $ | (50.2) | (4.6) | % | ||||||
| Same Store Gross Profit | ||||||||||||||
| New retail vehicles | $ | 74.2 | $ | 69.3 | $ | 4.9 | 7.1 | % | ||||||
| Pre-owned retail vehicles | 32.4 | 30.3 | 2.1 | 6.9 | % | |||||||||
| Wholesale | (0.7) | (1.9) | 1.2 | 63.2 | % | |||||||||
| Finance and insurance, net | 87.4 | 88.5 | (1.1) | (1.2) | % | |||||||||
| Parts, service and accessories | 90.6 | 90.0 | 0.6 | 0.7 | % | |||||||||
| Same store total powersports gross profit | $ | 283.9 | $ | 276.2 | $ | 7.7 | 2.8 | % | ||||||
| Same Store Vehicle Units Sold | ||||||||||||||
| New retail vehicles | 37,433 | 40,756 | (3,323) | (8.2) | % | |||||||||
| Pre-owned retail vehicles | 17,747 | 16,862 | 885 | 5.2 | % | |||||||||
| Total retail vehicles | 55,180 | 57,618 | (2,438) | (4.2) | % | |||||||||
| Wholesale | 3,212 | 1,795 | 1,417 | 78.9 | % | |||||||||
| Same store total vehicles sold | 58,392 | 59,413 | (1,021) | (1.7) | % | |||||||||
| Same Store Revenue per vehicle | ||||||||||||||
| New retail vehicles | $ | 14,477 | $ | 14,491 | $ | (14) | (0.1) | % | ||||||
| Pre-owned retail vehicles | 11,236 | 11,120 | 116 | 1.0 | % | |||||||||
| Wholesale | 3,051 | 9,359 | (6,308) | (67.4) | % | |||||||||
| Finance and insurance, net | 1,584 | 1,536 | 48 | 3.1 | % | |||||||||
| Parts, service and accessories | 3,485 | 3,429 | 56 | 1.6 | % | |||||||||
|
Total revenue per retail vehicle(1)
|
18,681 | 18,761 | (80) | (0.4) | % | |||||||||
| Same Store Gross Profit per retail vehicle | ||||||||||||||
| New vehicles | $ | 1,982 | $ | 1,700 | $ | 282 | 16.6 | % | ||||||
| Pre-owned vehicles | 1,826 | 1,797 | 29 | 1.6 | % | |||||||||
| Finance and insurance, net | 1,584 | 1,536 | 48 | 3.1 | % | |||||||||
| Parts, service and accessories | 1,642 | 1,562 | 80 | 5.1 | % | |||||||||
|
Total gross profit per vehicle(2)
|
5,145 | 4,794 | 351 | 7.3 | % | |||||||||
(1) Calculated as same store total powersports revenue excluding wholesale revenue divided by same store new and pre-owned retail units sold.
(2) Calculated as same store total powersports gross profit divided by same store new and pre-owned retail powersports units sold.
| Key Operating Metrics - Vehicle Transportation Services | |||||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Vehicles Transported (#) | 13,236 | 97,468 | (84,232) | (86.4) | % | ||||||||||||||||||
| Vehicle Transportation Services Revenue | $ | 8.6 | $ | 58.0 | $ | (49.4) | (85.2) | % | |||||||||||||||
| Vehicle Transportation Services Gross Profit | $ | 1.8 | $ | 13.4 | $ | (11.6) | (86.6) | % | |||||||||||||||
Selling, General and Administrative ("SG&A") Expenses
| ($ in millions) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Compensation and related costs | $ | 147.0 | $ | 159.4 | $ | (12.4) | (7.8) | % | |||||||||||||||
| Facilities | 45.7 | 45.2 | 0.5 | 1.1 | % | ||||||||||||||||||
| General and administrative | 30.1 | 32.3 | (2.2) | (6.8) | % | ||||||||||||||||||
| Advertising and marketing | 15.1 | 19.1 | (4.0) | (20.9) | % | ||||||||||||||||||
| Professional fees | 14.7 | 13.0 | 1.7 | 13.1 | % | ||||||||||||||||||
| Stock based compensation | 2.1 | 4.6 | (2.5) | (54.3) | % | ||||||||||||||||||
| Technology development and software | 1.6 | 1.8 | (0.2) | (11.1) | % | ||||||||||||||||||
| Total SG&A expenses | $ | 256.3 | $ | 275.4 | $ | (19.1) | (6.9) | % | |||||||||||||||
| Total SG&A as a % of gross profit | 86.0 | % | 87.6 | % | (160) bps | ||||||||||||||||||
"bps" = basis points (i.e., 1/100th of a percent = one basis point)
During 2025, the Company continued to manage costs, resulting in SG&A expenses being lower overall by $19.1 million. Both years contained certain expenses that we consider to be not associated with our ongoing operations, such as professional fees for services related to the legal matters discussed in Note 17, that totaled $9.5 million in 2025 and $4.2 million in 2024 and the costs associated with the termination of executives that totaled $1.1 million in 2025 and $0.1 million in 2024.
Impairment of Intangible Assets
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Impairment of intangible assets | $ | 34.8 | $ | 39.3 | $ | (4.5) | (11.5) | % | |||||||||||||||
Both years include intangible asset impairment charges that, along with the estimates involved, are discussed further in Critical Accounting Estimates and Note 1.
Depreciation and Amortization
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Depreciation and amortization | $ | 9.0 | $ | 14.3 | $ | (5.3) | (37.1) | % | |||||||||||||||
Depreciation and amortization was $5.3 million lower than last year.
Loss (Gain) on Sale of Assets
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Loss (gain) on sale of assets | $ | (1.9) | $ | 0.5 | $ | (2.4) | NM | ||||||||||||||||
NM = not meaningful.
In 2025, we recognized a gain on the sale of two California dealerships, and in 2024 we recognized a loss associated with a sale-leaseback transaction in 2024
Floor Plan Interest Expense
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Floor plan interest expense | $ | 11.0 | $ | 16.0 | $ | (5.0) | (31.3) | % | |||||||||||||||
We have floor plan agreements with both manufacturer-affiliated finance companies and with related and non-related third parties for most new and certain pre-owned vehicles. The interest rates on these floor plan notes payable commitments vary by lender and are variable rates. Floor plan interest expense also includes the amortization of the costs to obtain these credit lines as well as certain costs to modify these credit lines. Floor plan interest expense in 2025 was lower than 2024 primarily due to lower average inventory levels. See Notes 4, 14 and 15 for information on our Floor Plan Lines and related interest.
Other Interest Expense
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Term loan | $ | 36.8 | $ | 42.1 | $ | (5.3) | (12.6) | % | |||||||||||||||
| Subordinated loans | 0.5 | - | 0.5 | NM | |||||||||||||||||||
| Convertible debt | - | 2.6 | (2.6) | (100.0) | % | ||||||||||||||||||
| Finance lease obligation | 4.6 | 4.6 | - | - | % | ||||||||||||||||||
| Interest income | (0.7) | (1.5) | 0.8 | (53.3) | % | ||||||||||||||||||
| Other | 0.3 | 0.3 | - | - | % | ||||||||||||||||||
| Other interest expense, net | $ | 41.5 | $ | 48.1 | $ | (6.6) | (13.7) | % | |||||||||||||||
Other interest expense, net, includes interest on the term loan issued in conjunction with prior acquisitions, interest on convertible debt, which was paid off in January 2025, interest on subordinated loans entered into in August 2025, interest on a finance lease obligation due to the accounting treatment of a 2023 sale-leaseback transaction involving eight dealership properties, interest on notes for fleet used in our operations, and interest income on our cash balances. Our term loan, which is charged at variable rates, comprises the majority of other interest expense. Interest expense on the term loan was lower due to a $20.0 million paydown made in conjunction with the amendment discussed in Note 8, an additional $1.9 million of the term loan paid down in October 2025, and lower average interest rates. See Note 8 for details on our debt instruments and Note 14 for supplemental cash flow information.
Other Income
| ($ in millions) | 2025 | 2024 | Change | ||||||||||||||
| Other income | $ | 0.6 | $ | 0.5 | $ | 0.1 | |||||||||||
Other income consists of miscellaneous income.
Income Tax Provision (Benefit)
| ($ in millions) | 2025 | 2024 | Change | % Change | |||||||||||||||||||
| Income tax provision (benefit) | $ | 0.3 | $ | (0.2) | $ | 0.5 | (250.0) | % | |||||||||||||||
| Effective tax rate | (0.6) | % | 0.4 | % | |||||||||||||||||||
Our income taxes are impacted by our valuation allowance. For further discussion on income taxes, see Note 12.
Seasonality
The powersports industry is seasonal with the strongest traffic and sales generally occurring in the spring and summer quarters. Sales and traffic are typically slower in the winter quarter but increase moving into the spring season and coinciding with tax refunds and improved weather conditions. As a result of the above, weexpect our quarterly results of operations, including our revenue, gross profit, profit/loss, and cash flow, to vary accordingly.
Liquidity and Capital Resources
Our primary sources of liquidity are cash and amounts available under our floor plan lines of credit. As of December 31, 2025 and 2024, respectively, the following liquidity resources were available:
| ($ in millions) | 2025 | 2024 | |||||||||
| Cash | $ | 29.5 | $ | 85.3 | |||||||
|
Restricted cash(1)
|
13.4 | 11.4 | |||||||||
| Total cash and restricted cash | 42.9 | 96.7 | |||||||||
| Availability under powersports floor plan lines of credit | 123.1 | 146.2 | |||||||||
| Total available liquidity | $ | 166.0 | $ | 242.9 | |||||||
(1) Amounts included in restricted cash are primarily comprised of the deposits required under the Company's floor plan lines of credit.
Our financial statements reflect estimates and assumptions made by management that affect the carrying values of the Company's assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. The judgments, assumptions and estimates used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially, which could have a material impact on the carrying values of the Company's assets and liabilities and the results of operations.
Our consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which assumes the continuity of operations, the realization of assets and satisfaction of liabilities as they come due in the normal course of business. We believe that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least twelve months from the financial statement date. The Company may need to obtain additional financing to support its long range plans and to refinance its indebtedness on or prior to its maturity. See "Risk Factors--To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control."
The Company's outstanding principal amount of indebtedness, not including finance lease obligations, is summarized in the table below. See Notes 4, 8 and 9 to our consolidated financial statements for further information on our floor plan lines of credit, long-term debt, finance lease obligation and commitments under operating leases.
| December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | Change | ||||||||||||||
| Asset-based financing: | |||||||||||||||||
| Floor plan lines of credit for inventory | $ | 218.4 | $ | 209.9 | $ | 8.5 | |||||||||||
| Total asset-based financing | 218.4 | 209.9 | 8.5 | ||||||||||||||
| Term loan facility | 207.7 | 227.1 | (19.4) | ||||||||||||||
| Subordinated loans | 10.0 | - | 10.0 | ||||||||||||||
|
6.75% convertible senior notes(1)
|
- | 38.8 | (38.8) | ||||||||||||||
| Notes payable | 1.1 | 1.5 | (0.4) | ||||||||||||||
| Total principal of long-term debt and floor lines payable | 437.2 | 477.3 | (40.1) | ||||||||||||||
| Less: unamortized debt discount and issuance costs | (11.2) | (16.3) | 5.1 | ||||||||||||||
| Total debt, net | $ | 426.0 | $ | 461.0 | $ | (35.0) | |||||||||||
(1) Repaid on January 2, 2025.
The following table sets forth a summary of our cash flows for the years ended December 31, 2025 and 2024, respectively:
| ($ in millions) | 2025 | 2024 | Change | ||||||||||||||
| Net cash provided by operating activities | $ | 15.9 | $ | 99.4 | $ | (83.5) | |||||||||||
| Net cash provided by (used in) investing activities | (2.7) | 0.9 | (3.6) | ||||||||||||||
| Net cash used in financing activities | (67.0) | (80.6) | 13.6 | ||||||||||||||
| Net increase (decrease) in cash and restricted cash | $ | (53.8) | $ | 19.7 | $ | (73.5) | |||||||||||
Operating Activities
Our primary sources of operating cash flows are from the sales of new and pre-owned powersports vehicles and ancillary products. Our primary uses of cash from operating activities are for purchases of inventory, parts and merchandise; cash used to acquire customers; interest on long-term debt, trade floor plan borrowings, and the finance lease obligation; rent for facilities; and personnel-related expenses. Cash flows provided by operating activities declined $83.5 million in 2025. Cash provided by operations in 2024 was higher from our initiatives surrounding reducing excess inventory and the settlement of the $15.4 million receivable from the 2023 sale of a loan portfolio that was not repeated in the current year. Our working capital is subject to many variables, including seasonality, the timing of cash receipts and payments, and vendor payment terms.
Inventory is one of the most significant components of our cash flow from operations. We have continued to focus on managing our mix and maintaining an appropriate level of new and pre-owned powersports inventory. Our inventory levels declined throughout 2024, as we worked to reduce excess inventory. Inventory as of the end of 2025 was $16.8 million higher than inventory at the end of 2024.
Investing Activities
| Year ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | Change | ||||||||||||||
| Payments for acquisitions, net of cash acquired | $ | - | $ | (0.7) | $ | 0.7 | |||||||||||
| Proceeds from sale of assets | 3.1 | 4.0 | (0.9) | ||||||||||||||
| Purchase of property and equipment | (5.6) | (2.0) | (3.6) | ||||||||||||||
| Technology development | (0.2) | (0.4) | 0.2 | ||||||||||||||
| Net cash provided by (used in) investing activities | $ | (2.7) | $ | 0.9 | $ | (3.6) | |||||||||||
The primary use of cash associated with investing activities is related to acquisitions and investments in technology and property and equipment to support our operations. Additions of property and equipment in 2025 were made primarily to support the relocation of two smaller dealerships in the Dallas Fort-Worth area into one larger store in Fort Worth, Texas. In 2025, we realized proceeds from the sale of two dealerships in California. In 2024, cash flows from investing activities benefited from the December 2024 sale-leaseback of a certain dealership location consummated with a related party (see Notes 9 and 15).
Financing Activities
| Year ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | Change | ||||||||||||||
| Repayment of debt | $ | (61.1) | $ | (36.0) | $ | (25.1) | |||||||||||
| Decrease in non-trade floor plan borrowings, net | (15.0) | (53.0) | 38.0 | ||||||||||||||
| Proceeds from issuance of subordinated debt | 10.0 | - | 10.0 | ||||||||||||||
|
Net proceeds from sale of Class B common stock in rights offering(1)
|
- | 9.8 | (9.8) | ||||||||||||||
| Other | (0.9) | (1.4) | 0.5 | ||||||||||||||
| Net cash used in financing activities | $ | (67.0) | $ | (80.6) | $ | 13.6 | |||||||||||
(1) As of December 31, 2024, the Company had accrued $0.7 million for costs incurred to effect the 2024 rights offering that had not yet been paid. These costs were not reflected in the net proceeds in 2024. The cash payments are included in the "other" line in 2025.
Cash flows from financing activities are primarily related to our short and long-term debt activity and proceeds from equity issuances, both of which have been used to provide working capital and fund general corporate activities, including debt repayments. Non-trade floor plan borrowings are amounts outstanding under floor plan credit lines that are owed to third parties other than the powersports vehicle manufacturers' captive finance subsidiaries. We raised $10.0 million from the issuance of subordinated promissory notes to related parties in 2025, which is discussed further in Note 15. In 2024, we received proceeds from the sale of Class B common stock in a rights offering, which partially offset debt and non-trade floor plan repayments.
Critical Accounting Estimates
Our discussion and analysis of the Company's financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base these estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. See "Forward-Looking Statements" above.
We believe the following estimates are critical to our operating results or may affect significant judgments and estimates used in the preparation of the consolidated financial statements and should be read in conjunction with the notes to the consolidated financial statements.
Franchise Rights
Franchise rights are indefinite-lived intangible assets acquired in business combinations. Franchise rights represent the fair value at acquisition that is attributed to the right to operate various franchises in a dealership or group of dealerships and are tested for impairment annually as of October 1, or whenever events or changes in circumstances indicate that an impairment may exist.
As part of our impairment analysis, we first review qualitative factors to determine whether it is more likely than not that the fair value of franchise rights is less than the carrying amount. If we determine that it is not more likely than not that the fair value of franchise rights exceeds its carrying amount, our franchise rights are not considered to be impaired. However, if based on the qualitative assessment we conclude that it is more likely than not that the fair value is less than its carrying amount, or if we elect to bypass the optional qualitative assessment as provided for under GAAP, we proceed with performing a quantitative impairment test.
Fair value estimates used in the quantitative impairment test are calculated using a combination of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions. The approaches incorporate a number of market participant assumptions, including future revenue growth rates and corresponding gross margins, the discount rate, income tax rates, implied control premium and market activity, and are reporting-unit specific. If the carrying amount exceeds the reporting unit's fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. We recognize any impairment loss in operating income.
The fair value measurement associated with the quantitative franchise rights test is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Changes in the underlying assumptions used to value franchise rights could significantly increase or decrease the fair value estimates used in our impairment assessment.
As disclosed in Note 1, the Company recorded impairment charges to its indefinite-lived intangible assets in 2025 and 2024.
Newly Issued Accounting Pronouncements
See Note 1 to the consolidated financial statements for a discussion of recently issued and adopted accounting pronouncements.
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