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News for January 20, 2022

Kanen Wealth Management Urges Lazydays Board to Look for New CEO

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Kanen Wealth Management on November 30 released an announcement, saying it has delivered a letter to the board of Lazydays Holdings, asking the company to “evaluate the best candidate” it can obtain to run the company as CEO.

As per the letter in the release, Dave Kanen, president and portfolio manager of Kanen Wealth Management, LLC, addressed Lazydays to replace its current CEO Bill Murnane who has been the chair of Lazydays since 2009. Kanen Wealth Management is a firm that provides portfolio construction and market-responsive investment management strategies.

“We are calling on LAZY’s board of directors to continually evaluate the best candidate Lazydays Holdings, Inc. can obtain to run the Company as CEO. As you all know, current CEO Bill Murnane has been chair of LAZY since 2009 – which coincided with Murnane’s predecessor firm Wayzata Investment Partners LLC gaining a substantial stake. Over the last dozen years, Murnane has stabilized the business,” the letter reads.

“We believe LAZY must initiate a search for an auto industry executive with a track record of significant growth and outperformance,” the statement added.

The letter furthermore discussed how Lazydays has “significantly lagged” behind Camping World Holdings and RV Retailer LLC as Murnane has only “roughly added a dozen new dealerships” over the last 12 years he has presided.

RV Retailer was formed in July 2018 by owner-operator Jon Ferrando, and starting from zero, RV Retailer has added over 80 dealerships in less than 3.5 years. While Camping World has added 120+ dealerships over the last 12 years. Additionally, Camping World has grown its Good Sam membership club to 2.2M users – which built a competitive advantage in the RV space. 

Camping World has also built a peer-to-peer rental platform, a soon to be rolled out full service online buying operation (similar to Carvana), a soon to launch RVs.com, which will be a platform to transact peer-to-peer on used RVs, Electric World to be a big player in electrification, a 25M customer database, amongst other growth initiatives, as per the same release.

The letter furthermore reads: “Our CEO is a poor allocator of capital. In our opinion, he is a ‘NON-WINNER.’ Murnane has rejected each of our multiple requests to shrink the fully diluted share count when we had a long window of trading between $10-$14/share, or sub 1.5x forward EV/EBITDA on a fully diluted basis. When we first made our pleas, the Company’s warrants were $1.30.”

“Our CEO then turned around and tried to sell stock at ~$15, or ~1.5x forward EV/EBITDA on a fully diluted basis,” it added.

Something Kanan considered as two extremely poor capital allocation decisions.

Today, LAZY trades at 2x pro forma EV/EBITDA on a fully diluted basis, Kanan continued. LAZY is doing “almost nothing” to mitigate dilution and shrink the share count at large discounts to intrinsic value.

The firm added that LAZY must search for a CEO who believes in the value of their business and that the company “desperately” needs a CEO who can grow the business on par or better than peers and get M&A done. Additionally, LAZY needs a CEO that believes in appropriately allocating its large pro forma cash position.

“We believe other shareholders have similar frustrations. We will continue to challenge the board to correct LAZY’s significant underperformance versus peers, our CEO’s underperformance in capital allocation, and our CEO’s demonstration that he doesn’t believe in LAZY.”

“We are calling on the Board to fulfill its fiduciary duty to shareholders by: 1) immediately conducting a CEO search 2) doing a large buyback/ tender for Warrants and Common Stock for $100 million (70% of 2021 adj EBITDA),” the letter states.

“The status quo is no longer acceptable. LAZY BOARD DO YOUR JOB!!!” Kanan ended.

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Modern Campground

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