Camping World Holdings, Inc. Reports Second Quarter Results
Aug. 07, 2018
LINCOLNSHIRE, IL--(BUSINESS WIRE)--Aug 7, 2018--Camping World Holdings, Inc. (NYSE:CWH) (“Camping World,” “CWH,” “Company,” “we,” “us” or “our”) today reported results for the second quarter ended June 30, 2018.
Second quarter highlights and year-over-year financial comparisons include:Total revenue of $1.445 billion, an increase of 13.0%, and an all-time Company high Record total gross profit of $416.2 million, an increase of 11.7% Sales of new and used recreational vehicles (“RVs”) were over $1.0 billion, an increase of 6.5% A record 33,637 new and used RVs sold, an increase of 8.5% A record 21,745 new towable units sold, an increase of 14.1% in total and 5.1% on a same store basis, with travel trailer same store units increasing 6.7% Finance and insurance revenue and gross profit of $124.1 million, an increase of 23.7%, and an all-time high Good Sam Club file size of over 1.92 million members, an increase of 9.2% over the prior year, and the highest since inception Income from operations, net income and diluted earnings per share of Class A common stock decreased to $120.2 million, $81.8 million, and $0.72, respectively, and included $15.4 million of pre-opening expenses related to the Gander Outdoors store openings Adjusted pro forma net income (1) increased 10.6% to $85.6 million, and adjusted pro forma earnings per fully exchanged and diluted share (1) increased 6.8% to $0.96 Adjusted EBITDA (1) decreased 1.2% to $140.2 million
Marcus A. Lemonis, Chairman and Chief Executive Officer, stated, “Our RV business is on pace for another record year. While the early part of the RV selling season was impacted by unseasonal weather, we saw nice improvements as the second quarter progressed and our team did an excellent job of balancing our promotional activity to maintain strong profitability while driving sales growth and dramatically lowering our inventory levels of new RVs. We continue to invest in the growth of RV dealerships through traditional RV acquisitions, new store openings, and the launch of Gander RV Sales which will transform our recently acquired Gander Outdoors’ locations through the integration of RV sales and service. The launch of Gander RV Sales has provided the opportunity to rapidly expand our RV business in key states like Wisconsin, Minnesota, Texas, Michigan, Ohio, Pennsylvania, New York, North Carolina, and Illinois, which represent nine of the top 16 RV states, according to Statistical Survey, Inc.’s new RV registration data, and accounted for nearly 35% of all RV registrations over the past twelve months.”
Strategic Growth Initiatives
The Company continues to pursue opportunities to expand its customer base and grow its market share in the RV, outdoor and active lifestyle categories. Recent strategic highlights include:Completed six dealership acquisitions and added new RV dealerships in Sioux City, SD; Sherwood, AR; Nashville, TN; Redding, CA; Oklahoma City, OK and Newport News, VA in the second quarter 2018 Opened 52 Gander Outdoors stores in key markets with very strong RV registrations in the first half of 2018 Added RV sales to the Gander Outdoors stores in Kenosha, WI and Fayetteville, NC in the second quarter 2018 Signed agreement to purchase Russ Dean RV in the Pasco, Washington market On track to add RV parts, accessories and services to all Gander Outdoors locations and operate co-branded Camping World and Gander Outdoors stores by the end of 2018 Announced plans to expand the number of RV sales locations by more than 30% through next year with the launch of Gander RV Sales in up to 40 locations, new store openings and continued acquisitions
Second Quarter 2018 Segment Results
The Company has two reportable segments: (1) Consumer Services and Plans, and (2) Retail. The Consumer Services and Plans segment is comprised of emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; co-branded credit cards; vehicle financing and refinancing; membership clubs; and publications and directories. The Company’s Retail segment is comprised of new and used RVs; parts and service; finance and insurance, camping, fishing, hunting, hiking, rock climbing, marine and other active sports products.
Revenue, income and other operating highlights for the two segments in the second quarter were as follows:
Consumer Services and PlansConsumer Services and Plans revenue increased 9.7% to $52.7 million Consumer Services and Plans segment income (2) increased 15.2% to $27.6 million Other highlights: The number of RV-related active customers increased 4.6% to 3.714 million over the prior yearThe number of members in Good Sam Club increased 4.6%, or 85,000, from March 31, 2018 and membership reached an all-time-high of more than 1.92 million members
RetailRetail revenue increased 13.1% to $1.392 billion Retail segment income (2) decreased 18.4% to $95.5 million Other highlights: Vehicles sold increased 8.5% to 33,637 units New vehicles increased 11.5% to 24,442 unitsUsed vehicles increased 1.3% to 9,195 unitsAverage selling price per unit sold decreased 1.9% to $30,269 New vehicles decreased 4.8% to $33,038 per unitUsed vehicles increased 6.3% to $22,909 per unitSame store unit volume of new vehicles increased 2.4%, with travel trailers increasing 6.7%New travel trailer unit sales to total new unit sales increased 259 basis points to 72.2%, contributing to the decrease in average selling price per vehicleGross profit per vehicle sold including finance and insurance decreased 2.2% to $8,384Finance and insurance revenue as a percentage of total vehicle revenue increased 170 basis points to 12.2%Inventory of new vehicles decreased 14.2% in total and 17.5% on a per dealership basis from March 31, 2018There were 223 retail locations as of June 30, 2018, including: 147 Camping World retail locations, 54 Gander Outdoors locations, two Overton’s locations, two TheHouse.com locations, two W82 locations, five Uncle Dan’s locations, four Erehwon locations and seven Rock Creek locationsOf the 223 locations, 132 sold recreational vehicles
Select Balance Sheet and Cash Flow Items
The Company's working capital and cash and cash equivalents on June 30, 2018 were $593.2 million and $212.4 million, respectively, compared to $478.7 million and $224.2 million, respectively, at December 31, 2017. Total inventories increased 5.0% to $1.49 billion on June 30, 2018 from $1.42 billion on December 31, 2017, primarily from the new stores acquired or opened. New vehicle inventory decreased 12.7% to $971.6 million and new vehicle inventory per dealership decreased 18.0% to $7.4 million on June 30, 2018 from $1,113.2 million and $9.0 million, respectively, on December 31, 2017. Parts, accessories, and miscellaneous inventory increased $212.8 million to $409.4 million on June 30, 2018 from $196.5 million on December 31, 2017, primarily attributable to the growth in the Outdoor and Active Sports businesses. At June 30, 2018, the Company had $24.4 million of borrowings under its revolving line of credit as part of its Floor Plan Facility, $1.16 billion of term loans outstanding under the Senior Secured Credit Facilities, and $854.6 million of floor plan notes payable under the Floor Plan Facility.
Earnings Conference Call and Webcast Information
A conference call to discuss the Company’s second quarter fiscal 2018 financial results is scheduled for today, August 7, 2018, at 4:30 p.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (800) 263-0877 or (646) 828-8143 and using conference ID # 1927229. Interested parties can also listen to a live webcast or replay of the conference call by logging on to the Investor Relations section on the Company’s website at http://investor.campingworld.com. The replay of the conference call webcast will be available on the investor relations website for approximately 90 days.
This press release presents historical results, for the periods presented, of the Company and its subsidiaries, that are presented in accordance with accounting principles generally accepted in the United States (“GAAP”), unless noted as a non-GAAP financial measure. The Company’s initial public offering (“IPO”) and related reorganization transactions (“Reorganization Transactions”) that occurred on October 6, 2016 resulted in the Company as the sole managing member of CWGS Enterprises, LLC (“CWGS, LLC”), with sole voting power in and control of the management of CWGS, LLC. Despite its position as sole managing member of CWGS, LLC, the Company has a minority economic interest in CWGS, LLC. As of June 30, 2018, the Company owned 41.7% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. Unless otherwise indicated, all financial comparisons in this press release compare our financial results from the second quarter of 2018 to the second quarter of 2017.
About Camping World Holdings, Inc.
Camping World Holdings, headquartered in Lincolnshire, Illinois, is the leading outdoor and camping retailer, offering an extensive assortment of recreational vehicles for sale, RV and camping gear, RV maintenance and repair, other outdoor and active sports products, and the industry’s broadest and deepest range of services, protection plans, products and resources. Since the Company's founding in 1966, Camping World has grown to become one of the most well-known destinations for everything RV, with more than 145 RV centric locations in 36 states and a comprehensive e-commerce platform.
For more information, visit www.CampingWorld.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements about our business plans and goals, including our plans to expand the number of RV sales locations, including certain Gander Outdoors locations, add RV parts, accessories and services to Gander Outdoors locations, and operate co-branded Camping World and Gander Outdoors stores, and the timing related to the foregoing plans. These forward-looking statements are based on management’s current expectations.
These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: potential impact of the recently identified material weaknesses in our internal control over financial reporting; the availability of financing to us and our customers; fuel shortages, or high prices for fuel; the well-being, as well as the continued popularity and reputation for quality, of our manufacturers; general economic conditions in our markets and ongoing economic and financial uncertainties; our ability to attract and retain customers; competition in the market for services, protection plans, products and resources targeting the RV lifestyle or RV enthusiast; our expansion into new, unfamiliar markets, businesses, or product lines or categories, as well as delays in opening or acquiring new retail locations; unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions; our failure to maintain the strength and value of our brands; our ability to successfully order and manage our inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends; fluctuations in our same store sales and whether they will be a meaningful indicator of future performance; the cyclical and seasonal nature of our business; our ability to operate and expand our business and to respond to changing business and economic conditions, which depends on the availability of adequate capital; our reliance on seven fulfillment and distribution centers for our retail, e-commerce and catalog businesses; our dependence on our relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’ operations; whether third party lending institutions and insurance companies will continue to provide financing for RV purchases; our inability to retain senior executives and attract and retain other qualified employees; our ability to meet our labor needs; risks associated with leasing substantial amounts of space, including our inability to maintain the leases for our retail locations or locate alternative sites for our stores in our target markets and on terms that are acceptable to us; our dealerships’ susceptibility to termination, non-renewal or renegotiation of dealer agreements if state dealer laws are repealed or weakened; our failure to comply with certain environmental regulations; a failure in our e-commerce operations, security breaches and cybersecurity risks; our inability to enforce our intellectual property rights and accusations of our infringement on the intellectual property rights of third parties; disruptions to our information technology systems or breaches of our network security; feasibility, delays, and difficulties in opening of Gander Outdoors retail locations; realization of anticipated benefits and cost savings related to recent acquisitions; potential litigation relating to products we sell as a result of recent acquisitions, including firearms and ammunition; and whether we are able to realize any tax benefits that may arise from our organizational structure and any redemptions or exchanges of CWGS, LLC common units for cash or stock.
These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed for the year ended December 31, 2017, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required under applicable law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Results of Operations
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