RELATED-PARTY TRANSACTIONS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Pre-Owned Inventory Floor Plan Line In December 2024, the Company entered into a floor plan facility agreement with related parties William Coulter (“Coulter”), Mark Tkach (“Tkach”), and Ridenow Management LLLP, an entity controlled by Coulter and/or Tkach that provides up to $16.0 million of revolving availability that bears interest based on SOFR plus 5.0%. Coulter and Tkach are holders of the Company’s Class B common stock, members of the Board, and former executive officers of the Company. In August 2025, as conditioned by Amendment No. 10, this floor plan facility agreement was extended to October 1, 2029. As of September 30, 2025, the amount owed by the Company to the related parties under this facility was $9.1 million. Leases As of September 30, 2025, the Company had 26 leases of properties consisting primarily of dealerships and offices with related parties. Each related-party lease is with a wholly owned subsidiary of the Company as the tenant and an entity controlled by Coulter and/or Tkach, as the landlord. The leases generally have 20-year terms, most of which commenced on September 1, 2021, with base rent increasing 2% annually. Two of the leases were entered into in 2024, one of which has a purchase option. Rent expense associated with the related-party operating leases was $4.8 million and $4.8 million for the three months ended September 30, 2025 and 2024, respectively, and $14.5 million and $14.3 million for the nine months ended September 30, 2025 and 2024, respectively, and is included in selling, general and administrative expenses on the consolidated statements of operations. The following table provides the amounts for related party leases that were included on the balance sheets:
(1) Included in accounts payable and other current liabilities. Termination Payment Associated with Related Party Lease In September 2025, the Company paid a $0.5 million fee that was associated with the termination of a lease for a property that was no longer being used in operations. The lease was with an entity controlled by Coulter and Tkach, as the landlord. Employment of Immediate Family Members Mr. Tkach has two immediate family members that are employed by the Company: one as an executive vice president and one as a commissioned sales representative. The executive vice president received aggregate gross pay, including grants of restricted stock, of $0.1 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2024, respectively. The commissioned sales representative received gross pay of $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively, while 2024 amounts for the three and nine months ended September 30, 2024 were below the $120,000 reporting threshold. All compensation-related decisions for the executive vice president are approved by the compensation committee of the Company’s board of directors. In addition, compensation-related decisions for the commissioned sales representative were made in a manner that is consistent with internal practices and policies. Subordinated Loans with Related Parties On August 25, 2025, the Company issued separate unsecured subordinated promissory notes (collectively, the “Subordinated Loans”) payable to each of Stone House Capital Management, LLC (an entity controlled by Mark Cohen who is a holder of the Company’s Class B common stock and a member of the Board), Face Canyon LLC (an entity controlled by William Coulter), and Mark Tkach (collectively, the “Lenders”) to evidence $3.3 million of unsecured subordinated loans made by each Lender to the Company. The Company used the aggregate gross proceeds of the Subordinated Loans, or $10.0 million, to prepay outstanding principal amounts owed under the Credit Agreement (as defined in Note 4), which was a requirement set forth in Amendment No. 10 (as defined in Note 4). The Subordinated Loans bear interest at a rate of 13.0% per annum, payable semi-annually in arrears on the last business day of each February and August, beginning February 27, 2026. Interest is in-kind and capitalized to the principal balance of the Subordinated Loans. Each Subordinated Loan matures on August 31, 2028, unless earlier repaid or accelerated in accordance with its terms. In the event a Lender participates in a Specified Equity Offering (as defined in the Subordinated Loan), the Company is required to use the net cash proceeds received from such Lender in such Specified Equity Offering to make a mandatory prepayment of such Lender’s Subordinated Loan. Each Subordinated Loan is guaranteed on a joint and several basis by the Company’s subsidiaries that are guarantors under the Credit Agreement (each, a “Subordinated Guaranty”). Subject to the terms of the corresponding Subordinated Loan, each Subordinated Guaranty is irrevocable and unconditional and will remain in effect until all obligations under such Subordinated Note are satisfied. The Subordinated Loans are contractually subordinated in right of payment to the loans outstanding under the Company’s Credit Agreement. As of September 30, 2025, the balance of the Subordinated Loans was $10.0 million. Interest expense on the Subordinated Loans was $0.1 million for the three and nine months ended September 30, 2025.
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