• Revenue: $1.4 billion, down 8% year-over-year.

• New Vehicle Revenue: $656 million, marking the first increase in six quarters.

• Good Sam Services and Plans Gross Profit: Record quarterly gross profit of $30.5 million.

• Adjusted EBITDA: $8.2 million, with a decline primarily due to used vehicle gross profit pressure.

• Same-Store Sales: New units increased 16% year-over-year.

• Store Locations: Opened 13 net new dealership locations in the quarter.

• Cash Position: Ended the quarter with about $177 million in cash.

• Inventory Levels: $220 million in used inventory and $219 million in parts inventory.

• Real Estate Assets: Own approximately $116 million of real estate without associated mortgage.

• Warning! GuruFocus has detected 12 Warning Signs with CWH.

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Camping World Holdings Inc (NYSE:CWH) reported a significant increase in new unit sales, with same-store new units increasing by 16% at the start of the year, continuing strong momentum through April.

• The company successfully opened 14 new locations, contributing to its expansion strategy and market presence.

• CWH has effectively managed its inventory, maintaining a disciplined approach that supports its market share growth and financial stability.

• The company has entered into a new parts and aftermarket supplier agreement expected to positively impact financial results going forward.

• CWH's Good Sam and parts and service business segments continue to perform solidly, providing stable and predictable revenue streams.

Negative Points

• CWH recorded a revenue decline of approximately 8% from the previous year, primarily driven by lower used unit volumes.

• The company experienced pressure on used vehicle gross profit, contributing to a decline in adjusted EBITDA for the quarter.

• CWH faced challenges with SG&A expenses, particularly in January and February, due to temporary compression on RV margins from inventory management strategies.

• The company has had to make tough cuts around SG&A to align with its financial targets, indicating potential challenges in operational efficiency.

• CWH is navigating a higher interest rate environment, which has necessitated more intensive negotiations and adaptations with retail lending partners to maintain customer affordability.

Q & A Highlights

Q: Have you seen any improvement in demand as spring progressed, and how did new unit sales look in April on a same-store basis? A: Marcus A. Lemonis - Chairman & CEO, Camping World Holdings, Inc.: Demand has been consistent, and the main issue has been affordability rather than demand itself. The company has focused on driving down average selling prices (ASPs) to make units more affordable, which has helped maintain strong demand. April continued to show double-digit performance on a same-store basis for new units.

Q: Regarding the affordability issue and pricing, do you anticipate needing further declines in new RV prices next year? A: Marcus A. Lemonis - Chairman & CEO, Camping World Holdings, Inc.: There is no expectation for significant changes in pricing soon. The focus remains on managing inventory effectively and maintaining affordability through strategic pricing and financing solutions.

Q: Can you discuss the broader landscape surrounding the model year changeover for RVs? A: Marcus A. Lemonis - Chairman & CEO, Camping World Holdings, Inc.: The company is prepared for the model year changeover, with a strategic focus on inventory management. There is an expectation for a normal rollout of 2025 models without disruptions, ensuring a healthy inventory level that matches market demand.

Q: How has the financial market's anticipation of higher rates for longer impacted the RV ecosystem, particularly lenders and customers? A: Marcus A. Lemonis - Chairman & CEO, Camping World Holdings, Inc.: Higher rates impact affordability, which requires more negotiation with lenders to maintain affordability for customers. The company has adjusted its product mix to manage affordability effectively, which has also positively impacted finance and insurance performance.

Q: Could you provide insights into the performance and expectations for the new CW Auction business? A: Matthew D. Wagner - COO, Camping World Holdings, Inc.: The CW Auction initiative is designed to improve used RV procurement and create a more efficient marketplace. Early auctions have shown strong interest and participation, indicating potential for this to become a significant part of the business with beneficial economic impacts.

Q: What are the expectations for new dealership openings this year, and how does this align with overall business strategy? A: Marcus A. Lemonis - Chairman & CEO, Camping World Holdings, Inc.: The company plans to open additional dealerships by year-end but remains focused on ensuring each new location is accretive and strategically beneficial. The pace of openings may vary based on market conditions and acquisition opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.