Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the LNP Automotive Holdings, Inc. 1st Quarter 2021 Financial Results Conference Call. All participants are in listen only mode and the conference is being recorded.
Presentation by management. There will be an opportunity to ask questions. Before we begin, I'd like to remind everyone that this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and or operating results, along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward looking 12 Risk and Uncertainties. I would now like to turn the call over to Mr.
Sam Toppik, L&P Automotive Holdings' Chairman and Chief Executive Officer. Mr. Toppik, please go ahead.
Thank you, operator, and good afternoon, all, and thank you for joining our call today. Today's call participants, I'm pleased to announce that our first quarter revenue and adjusted EBITDA was 33 $1,000,000 and $1,900,000 respectively or $0.19 a share. These results exceeded our outlook provided 2019 earnings press release and earnings call of $29,000,000 to $31,000,000 in revenue $1,000,000 in adjusted EBITDA. For the Q2, we expect revenue to be $147,000,000 with adjusted EBITDA of $10,300,000 or $1.03 per share, which also surpasses our internal outlook. 2019.
On an annualized basis, in the second half of this year, we're expecting revenues to be approximately 610,000,000 and adjusted EBITDA of $44,000,000 or $4.38 per share, which represents substantial increase of 14% in revenue and 83% in adjusted EBITDA, respectively. From our outlook provided in our March press release of $535,000,000 in revenue and $24,000,000 in adjusted EBITDA. We expect our New York contracted acquisitions 2019 Conference Call. Thank you, operator. Thank you, operator.
Thank you, adjusted EBITDA and adjusted EBITDA per share run rate to be approximately $910,000,000 $53,000,000 and $5.18 per share, respectively. We believe we are well on our way to achieving our 2022 run rate goals of $13 to $15 per share and adjusted EBITDA. Now I'll pass the call to Richard Aldahan, our Chief Operating Officer.
Thank you, Sam, and thanks to everyone for joining this call. Before I get into the details, I would like to welcome and thank our dealer partners as well as their respective team members now totaling over 4 50 associates. We are extremely pleased with the results of our unique partnership acquisition strategy. We are witnessing the enthusiasm, efforts and degree of care from our partners, which has translated into an impressive financial performance over the past several months. We look forward to achieving many more significant and transformative milestones in the future, And we believe that the best is yet to come.
I would also like to provide some notable run rate metrics. These metrics are in the upper 50 percentile rankings as compared to our public industry peers. Our e commerce has achieved an increase of 85% in unique organic users and page views. Gross Our adjusted EBITDA margin as a percentage of revenue is at 7.2 20%. And believe me, the best is yet to come.
Thanks again for joining the call. I will now open the call for questions and answer
remove your question from the queue. Securities. Please state your question.
Hi. This is actually Joe on for Stephanie. Good afternoon, Sam and Richard, and congratulations 2019. On a good 1Q and what's looking like a good 2Q and 2H. I guess I was going to keep my comments fairly high level, but looking at the M and A market, Obviously, there's been some interest across the stack of public dealers, so that we want to particularly be very active.
I was wondering if you guys could talk about what you guys are seeing in M and A Specifically, as you're going out and looking at building your portfolio, what brands and regions are what you're looking at 2019. Hi, Joe. This is Sam. Thank you very much for joining. We're seeing record amount of deal flow.
We believe that's from last year's pent up demand that didn't get to execute as well as the tax environment may be changing as well as the normal where you get several 100 transactions a year that just simply trade. 2019. LNP is focused in regions from Texas, Midwest, East to the East Coast, in the Northeast, Mid Atlantic and Southeast regions. We're focusing on the low multiple brands, the domestic brands and the economy imports that traditionally trade at lower multiples. We believe this is a solid strategy, Given we don't see any headwind in the next several years and typically those become more volatile than the luxury brands when you run into economic cyclicality.
Given the supply demand scenario in the industry right now, We don't see the demand being absorbed for the next several years. So we see stability in margins and demand as well as obviating the volatility of the, call it Tier 2 dealerships. So we're heavily focused on that. And adding to that, The domestic brands, you see their product line has Changed dramatically and then following the domestic brands from a Wall Street point of view for 3 decades and it's The first time you see them making highs where they are, and a lot of that has to do with their EV efforts as well as their cost reductions and supply chain management given current environment. So we're very comfortable Going forward that this equation remains and we're focused on the domestics and the lower cost inputs 2019 in those regions that I mentioned.
I believe that's a solid strategy and we're just getting the best return on investment In that context. Hope that answers your question, Jeff. Yes. That was great And then maybe just quickly on following up on M and A, Richard, you made a comment about the dealer partners and liking the structure of the deal. I was wondering if you could maybe 2020.
Talk to that point, what kind of conversations are you having with these dealer partners, specifically as it relates to the sort of different mouse So we're seeing demand For several reasons, one being our dealer partner strategy. It's similar to the strategy of some very large Private operators. And similar to a fund strategy where you're investing in portfolio 20 companies. We see a lot of dealerships that want to stay in the game and remain partners. So they come to us to achieve that.
From an operational point of view, It is 100% better in our view because when you have a partner operator That has skin in the game. They operate like their company. They're watching costs. You get the efforts And you don't get the management turn that you typically see when businesses change hands. So, we're seeing a lot of flow because Our model and we believe our model is superior to our peers.
Got it. That's helpful color. And then maybe just last A high level question. I was wondering what you guys were thinking about the dealer space as it relates to the OEMs testing these direct to consumer model, at for some of their popular flagship products and maybe how you guys are thinking about the dealer network kind of in the long term? Well, when you talk about mass distribution and the dealer network in any industry, you're going to have Conflicting remarks based on the masses.
Our view is we support The manufacturers, because they need the distribution. And when they do go direct to consumer, I'm sure they're going to compensate the fulfillment center, for lack of a better term, the dealership operator, because you need fulfillment in order to sell products as well as service products. So we look We think it enhances dealership sales. Great. That's everything from me.
Thanks so much for the color. Thank you, Jeff, and have a great afternoon.
Our next question comes from DJ
Since the beginning, Sam and the entire LNP team, congratulations on these figures. What a performance. My question specifically is regarding e commerce presence. Are you and your team seeing any cross pollinization between the local websites of the dealers that you're acquiring and the lmpmotors.com site?
Great question, J. B, and thank you for joining the call. We absolutely do. It's part of our strategy That is very low hanging fruit. It's the fact that every dealer we acquire has their own Regional presence and website presence and does their own e commerce sales and fulfillment.
So what we do is we inter And then there's an automated process that then forwards the leads to the appropriate dealership. There's absolute cross pollinization, and what that means is it's organic net user additions without advertising simply because if you originate at the dealer's local site, You can then come to the main site if you don't see inventory you like and end up purchasing a car online That resides at another dealership and vice versa. So it's a very dynamic And organic users nearly doubled since January. So great question and that's that really matters 2019 and e commerce, the organic elements of that. I hope that answers your question, J.
B. Cohen.
It does. Thank you.
Thank you as well.
Our next question comes from Michael Annual Shareholder. Please state your question.
Yes. I was just wondering with the shortage of vehicles today,
how does this affect the service 2019. I'm going to pass the question to Richard Aleva Ham, Chief Operating Officer.
You broke up there, Michael. Could you please ask the question again?
Yes. My question was, Because of the shortage that we're seeing now with the chips in that and the cars in general, how does that affect service market for vehicles?
Actually improves the service market because as these vehicles age, there's more service work to be done and we're realizing that in every one of our dealerships, Our service revenue was up significantly due to this shortage. Now are the margins I'm sorry, say that again.
I said are your margins Good on the service side.
Absolutely. The margins are the highest they've been and so has our volume. We've had 2019.
Thank you very much.
My pleasure.
Our next question is from Pat Horne shareholder. Please state your
question. Hey, Sam. First of all, I just want to say, I've emailed you back and forth a couple of times Or I should say LMP and was surprised that you were actually the person I was getting answers from. Thank you for that because a lot, sometimes really, really, really early in the morning. So it shows that you work a lot and we appreciate that as shareholders.
My question for the first one is really about your subscription plan. I noticed that there's currently only 31 vehicles listed and that was kind of like one of the big Moving factors, last year when so many people got involved and thought this was a cool idea and with only 31 vehicles kind of make Scratch your head and go, what's going on? So I think, a lot of us are wondering, is that working out? And if so, When do you plan on rolling it out on a larger scale?
Hi, Matt, and thank you for the question. And you are correct, we worked long hours subscriptions. We've transformed the industry our business, I'm sorry, significantly. And subscriptions, So we're actually pausing that at the moment for good reason. There's no real choice because the manufacturers are not supplying the fleet Because of the shortages in any material way, they've cut the percentages down even to the Top 5 operators in the industry, the rental companies as well.
And secondly, it's actually a better Franchise dealership operations where the margins are better given the recent events A great trade to pause subscriptions and invest those dollars into buying additional dealerships. The returns are significantly greater. And When inventory normalizes, and we believe that's not going to be any time this year and potentially not next, Right now, it's just there's no real choice because of supply constraints, and it's a better investment all around. We intend on frame up about $15,000,000 just by not reissuing the subscription when we get a subscription return Over the next 12 months, those dollars invested in dealership So I hope that answers your question.
Yes, it does. I guess
as long as we're not losing revenue And we've kind of switched gears away from that. We're still making revenue. That makes sense. I appreciate that. Another question real quick, if you don't 12.
When you're doing these acquisitions, I understand the way that I see it, they're carrying the same name they already had. Do you ever have a plan to rebrand those locations to where they're all in L&P Motors?
Not in the near future, Matt. Right now, the demand exceeds the supply 2020 as you can see by our Q2 2021 outlook. And secondly, Most of our peer group does not do that. There's only And it doesn't make sense. I understand now why they don't do that because some of the dealerships that We're acquiring are rooted in the community for generations And they buy cars from that name, to put it simply.
So it really does not it's not It may very well be diluted to change the name. But given the same name and the same website, it cross pollinates with our main website. So we get an upside effect, but I don't believe it makes any sense having Brand consistency, call it, because some of these dealerships are there for 15, 75 years. And then driving through the neighborhoods when we do due diligence And sitting in the showrooms, generations buy from that name. They don't
Fair enough. I appreciate that. And I do have one last question for you. And this is really coming I guess it's kind of more of statement. And I'm in a lot of groups online and we converse about what's going on.
And I tell you, a lot of us are very in the dark and I know that you have to be careful, what you share and what you don't share. We understand that. The one thing that I think we would probably appreciate a little bit more, If you could, is to give us just a little bit more idea of what's going on with the company, maybe suggesting a brand ambassador. I'm sure you have big plans. I know there's a lot of moving parts, but it would really make private investors feel a lot more comfortable to invest when they kind of know a little bit about more what's going on.
I think
We believe we inform the public of what's going on. You see the press clips. Unfortunately, we can't 2020. It's just the nature of investing in public companies. We are bound by guidelines and we don't believe in Presenting news that's immaterial or Just because someone wants news at the moment, it just simply doesn't work like And if you follow other stuff, the Fortune 100, Fortune 1,000, 2020.
They do the same thing. So no brand in that format and we release news when 2019.
Well, I appreciate your response, Sam. It's not really what I wanted to hear, but I do appreciate it. Thank you so much. I don't have any further questions. I do look forward to going with the company with you folks.
Thank you.
Thank you very much, Matt.
2019. Our next question is from Brett Rosen, shareholder. Please state your question.
Hi, Ken. Congratulations on a great quarter. And the original private investors, you actually answered a few of the questions I had of the shareholders. So keep up the good work. 2020.
It just seems like obviously the supply chain pressures are going to last for some time. Do you see it in the next year or 2 with the manufacturers Overcoming the COVID manufacturing structure.
Thank you, Brett. Good question. We believe it's a mathematical fact that this should remain these dynamics should remain in place for the next several years. For the simple reason, if you use an equation, That would be this year. So you have a 50% increase in demand In the largest consumer segment in the country, the automotive is over 20% of the nation's GDP.
The manufacturing infrastructure does not, will Just going to have to naturally dissipate and that could take several years. And if you use any equation, if that's not 50%, even if it's 30%, Brett, that deferred their purchases. There's that many more Users looking for vehicles and the infrastructure just can't support it and won't support it. It's not worth building a manufacturing plant just to have pent up demand absorption,
I'll now turn the call back over to Sam Toffik for closing remarks.
Thank you, operator, and thank you everybody for joining the call.
20. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening.