The downturn crippling the auto industry has come home to the sprawling Lazydays RV SuperCenter in Seffner, the world's largest single-site RV dealer.
Lazy Days RV Center Inc., the company's parent, missed a long-term debt payment of $8.1-million due Monday and is trying to renegotiate terms with holders. Missing the interest payment triggered a 30-day grace period before the company is considered in default.
Lazydays said modifying debt terms is the best way to ensure the company's viability "through what is anticipated to be a protracted downturn in the market for recreation vehicles.''
Between July and September, Lazydays laid off 200 people, about 30 percent of its workforce. It currently employs about 500 in Seffner.
Will the company avoid additional layoffs? "We sure hope so,'' chief financial officer Randy Lay said Monday. "It depends on the market.''
"The RV industry really peaked in 2004,'' Lay said. "It typically leads the economy into a recession and then it's an early indicator of recovery. This downturn is going on four years and I would say it is probably due to recover.''
Amid the economic slump, Lazydays picked up market share from other ailing or failed dealerships across the country. It now sells one out of every nine high-end recreational vehicles, or about 12 percent of the market, up from about 8 percent a year ago.
But the pace of both visitors and, more importantly, sales has fallen dramatically. In the first nine months of 2008, sales totaled $450.9-million, down from $594.6-million in the first nine months of 2007, Lay said.
Cost-cutting has improved cash flow, but fixed interest costs are troubling. The biggest burden for the majority owner, the private equity firm of Bruckmann, Rosser, Sherrill & Co., is paying off debt related to its $206-million acquisition of Lazydays in 2004 from company founder Don Wallace.
To help finance that acquisition, Lazydays sold $152-million in eight-year senior notes in a private placement. At the time, Moody's Investors Service and Standard & Poor's Rating Services assigned subinvestment-grade ratings to the notes, citing the company's high debt levels relative to earnings.
Jeff Harrington can be reached at (727) 893-8242 or firstname.lastname@example.org.