ACQUISITION

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

ACQUISITION

ACQUISITION

On February 18, 2022, we acquired 100% of the equity interests of the Freedom Entities, as defined in Note 1, which operated powersports dealerships, including associated real estate (the “Freedom Transaction”). We accounted for the Freedom Transaction as a business combination. All outstanding equity interests of the Freedom Entities were acquired for total consideration of $97.2 million, consisting of $70.6 million paid in cash, including certain transaction expenses paid on behalf of the Freedom Entities' equity holders, and issuance of 1,048,718 shares of Class B common stock with a value of $26.5 million

on the closing date. On June 22, 2022, as part of the final purchase price adjustment, 2,446 shares of Class B common stock held in escrow were cancelled.

The following table ($ in millions) summarizes the consideration transferred by the Company for the Freedom Transaction:

Cash	$	70.6
Class B common stock	26.5
Acquiree transaction expenses paid by the Company at closing	0.1
Total purchase price consideration	$	97.2

The table below ($ in millions) represents the final determination of the fair value of the identifiable assets acquired and liabilities assumed from the Freedom Entities. All acquired assets and liabilities, including goodwill, recognized as a result of the Freedom Transaction have been included in the Company’s powersports reporting segment.

Estimated fair value of assets:
Cash	$	6.4
Contracts in transit	1.2
Accounts receivable	1.1
Inventory	24.8
Prepaid expenses	0.2
Property & equipment	50.2
Right-of-use assets	2.9
Other intangible assets	2.1
Franchise rights	39.7
Total assets acquired	$	128.6
Estimated fair value of liabilities assumed:
Accounts payable, accrued expenses and other current liabilities	$	5.4
Notes payable - floor plan	18.3
Lease liabilities	2.0
Deferred revenues	3.5
Mortgage notes	26.8
Notes payable	4.7
Total liabilities assumed	60.7
Total net assets acquired	67.9
Goodwill	29.3
Total purchase price consideration	$	97.2

The Company assumed notes payable and mortgage notes liabilities of $31.5 million on the Freedom Transaction closing date. The outstanding balance of these liabilities were repaid in the first quarter of 2022 and are reflected as cash outflows from financing activities in the Consolidated Statements of Cash Flows. The Company funded the cash portion of the Freedom Transaction, transaction expenses, notes payable, and mortgage note repayments through available cash resources of $11.3 million and an $84.5 million draw on the Oaktree Credit Agreement (as defined in Note 9).

The Company expects it will be able to amortize, for tax purposes, $30.0 million of goodwill.

The results of operations of the Freedom Entities from the Freedom Transaction closing date forward are included in the accompanying Consolidated Financial Statements and include revenues of $204.0 million and pre-tax earnings of $23.0 million for 2022. Acquisition related costs of $1.3 million were incurred in 2022 and were included in selling, general and administrative expenses in the Consolidated Statement of Operations.

Supplemental pro forma information (Unaudited)

The following unaudited pro forma financial information presents Company consolidated information for 2022 as if the Freedom Transaction were completed as of January 1, 2021:

	2022
Pro forma revenue ($ in millions)	$	1,482.6
Pro forma net loss from continuing operations ($ in millions)	$	(233.3)
Pro forma loss per share from continuing operations-basic	$	(14.59)
Pro forma loss per share from continuing operations-diluted	$	(14.59)