RideNow Group (NASDAQ:RDNW) reported lower third-quarter sales and adjusted earnings as the powersports dealership group rolled out a new vehicle pricing strategy and faced weaker discretionary spending. Management said business has rebounded somewhat in the fourth quarter and expects adjusted EBITDA to exceed the third-quarter result.
Same-store revenue fell to $241.4 million from $262 million a year earlier, while consolidated adjusted EBITDA declined to $5.3 million from $12.3 million. Same-store retail unit sales fell 10.9% to 12,182 vehicles.
Chairman, Chief Executive Officer and President Michael Quartieri estimated that the August adoption of RideNow Clear Price accounted for about half of the unit sales decline and approximately $4 million of the $7 million drop in adjusted EBITDA. He also cited rising interest rates, high fuel prices and inflation as factors weighing on consumer spending.
Pricing change affected sales
RideNow introduced Clear Price across its 46 dealerships in early August to align with Federal Trade Commission guidance and enforcement priorities on pricing transparency, Quartieri said. Under the approach, advertised prices include mandatory fees but exclude tax, title and license costs.
Quartieri said the pricing change remained a starting point for negotiation rather than a no-haggle policy. He said some competitors still advertise prices that exclude charges such as freight, setup and documentation fees, making their initial prices appear lower.
In response to a question from Baird analyst Craig Kennison about whether RideNow had lost sales to competitors or customers had deferred purchases, Quartieri said August operating results were materially lower than a year earlier. He said July, September and October showed what management viewed as a more normalized environment, with year-over-year unit volume declines in the low- to mid-single digits.
Quartieri said pricing practices vary by region. Most direct competitors in the Phoenix market had adopted compliant pricing, he said, while relatively few dealerships in areas including Texas, Florida and the East Coast had done so.
Margins and inventory under pressure
RideNow sold 8,127 new retail units in the third quarter, down 11.3% from a year earlier, and 4,055 pre-owned units, down 10%, Chief Financial Officer Josh Barsetti said. New-unit gross margin declined to 13.1% from 13.8%, while pre-owned margin slipped to 15.4% from 15.7%, which Barsetti attributed to a shift toward lower-margin products.
Same-store gross profit fell 8.6% to $65.8 million. Adjusted selling, general and administrative expenses decreased by $3.8 million to $57.7 million, but rose as a share of gross profit to 88.1% from 80.9%, Barsetti said.
Quartieri said elevated inventory of 2026 models, promotional activity as dealers make room for 2027 models, and competitors’ advertised pricing were contributing to margin pressure. Barsetti said new-vehicle inventory stood at a little over five months of supply, partly because of the August sales decline. He expects it to return to the desired level by the end of the first quarter.
Barsetti said the company was comfortable with its current used inventory but wanted to increase it ahead of the spring selling season. Finding good-quality used vehicles is difficult across the industry, he said.
Cost cuts and refinancing
RideNow reduced costs by an annualized $4.6 million during the quarter and is accelerating back-office changes, including expanded use of artificial intelligence tools, Quartieri said. The company expects an additional $10 million in permanent run-rate savings as it exits 2027.
The company ended September with $47.6 million in cash, including restricted cash, and $149.4 million in total available liquidity, including availability under floor plan credit facilities. Non-vehicle net debt was $203.7 million, Barsetti said.
On September 25, RideNow refinanced its Oaktree term loan with a $220 million facility from Centerbridge affiliates that matures in September 2031. The company recorded a $5.7 million loss on extinguishment of debt. Barsetti said RideNow was also in advanced discussions with Wells Fargo about an asset-backed lending facility, although he cautioned that an agreement was not assured.
About RideNow Group (NASDAQ:RDNW)
RumbleOn, Inc. primarily operates as a powersports retailer in the United States. It operates in two segments, Powersports and Vehicle Transportation Services. The Powersports segment provides new and pre-owned motorcycles, all-terrain vehicles, utility terrain or side-by-side vehicles, personal watercraft, snowmobiles, and other powersports products. It also offers parts, apparel, accessories, finance and insurance products and services, and aftermarket products, as well as repair and maintenance services.
