Dealership chain Holiday RV Superstores Inc. has received a cash infusion from investor Steve Adams and has written off its unrealizable goodwill, according to Marcus Lemonis, chairman, president and CEO.
Adams is chairman of Affinity Group Inc. (AGI), parent of TL Enterprises Inc., which publishes RV Business and RVBUSINESS.COM.
Adams is investing in Holiday RV as an individual and he will not be involved in day-to-day management of the dealership chain, Lemonis said.
Adams loaned $4.6 million to Holiday RV earlier this year to help the company satisfy its inventory finance requirements. The loans can eventually be converted into 76% of Holiday RV’s outstanding common stock. Holiday RV currently is in the final stages of capital restructuring but there are no plans to take the company private, Lemonis said.
Meanwhile, Holiday RV reported a net loss of $9.6 million for the three months ended July 31, but that was largely because it wrote off $4.8 million worth of unamortized goodwill during the May-through-July period, Lemonis said.
Goodwill is the amount of a purchase price that is in excess of the book value of a business that is acquired. Holiday RV accumulated the goodwill from dealership acquisitions in the past three years, when the company was led by Mike Riley, its former chairman.
However, operating losses at those dealerships led to the decision to include as expenses the goodwill, Lemonis said. Some of the goodwill is unrealizable because certain locations were closed or consolidated, he added.
Otherwise, Holiday RV’s gross profit during the May-through-July period was $2.1 million on sales of $22.9 million.
For the May-through-July portion of 2001, Holiday reported a net loss of $653,000 on sales of $36.2 million. Its gross profit was $6.5 million and no goodwill was written off during that period.
For the nine months ended July 31, Holiday RV’s net loss totaled $13.9 million, compared with a $7.7 million net loss incurred during the same period a year earlier. Its gross profit for the nine months ended last July 31 was $9 million, compared with $18.7 million in the same period a year earlier. No goodwill was written off in the same period a year earlier.
Holiday RV’s sales for the nine months ended July 31 totaled $61.2 million, compared with $110.7 million a year earlier.
Holiday RV currently has six dealership locations in California, Florida, Kentucky, New Mexico, South Carolina and West Virginia.