Camping World Holdings, Inc. Q3 FY2024 earnings call

• Distribution: Over 200 locations at quarter end, with a goal to reach 320. Growth through traditional dealerships, manufacturer exclusive locations, super centers, consignment locations, and auction platform.
• Product: Focus on contract manufacturing with OEM partners, involved in design and sourcing to find new consumers through innovative solutions, aiming to continue using data and trends to drive unit gains.
• Market maker: Utilizing proprietary data to initiate demand, improve lead generation, modernize pricing, and identify white space, particularly in the used RV market with Good Sam Valuator and National CW auction business.

For the third quarter, revenue was $1.7 billion, roughly flat with last year. New unit sales increased 31%, with nearly 36% of new unit sales coming from contract manufactured RVs exclusive to Camping World (manufactured by THOR and Forest River). Used unit sales declined 18%, with used vehicle margins at 18.2% in line with plan. Good Sam services and plans saw solid top line growth, though impacted by a $5.5 million exit arrangement benefit in last year's third quarter. Product services and other: core dealer service revenues continued to grow, while product sales declined primarily due to the sale of the furniture business during the second quarter.

• Expect modest new unit growth next year, aiming to continue gaining market share.
• Used unit volumes expected to improve in low double digits year-over-year.
• SG&A as a percentage of gross profit expected to improve by roughly 600 to 700 basis points.
• Average selling prices expected to modestly increase year-over-year.
• New unit sales to have a modest year-over-year increase based on model year 2025 inventory strategy.

• Macro factors such as interest rates, inflation, and market conditions.
• Competition with dealers having aged inventory or different approaches.
• Impact of storms on retail locations and potential disruption to demand.

Q: Joe Altobello asks about the outlook for modest new unit growth next year and if it assumes share gains or acquisitions.

A: Marcus Lemonis says they expect modest increases on top of a better-performing broader industry and aim to gain market share, with Tom Kern adding that acquisitions contribute to gaining market share.

Q: Joe Altobello asks about used inventory trending and procurement.

A: Matthew Wagner says they've been judicious in procuring used inventory, expecting a 3.5 turn on used, and Marcus Lemonis mentions expecting low double digit to mid double digit growth in used and returning to acceptable gross margins.

Q: Michael Swartz asks about new RV margins and impact of storms.

A: Tom Kern explains new margins were pressured by gaining market share in C-class with lower margins, expects Q4 margins to be similar to Q3, and Marcus Lemonis talks about storms affecting 25-30 locations and missing out on 300-400 new units.

Q: James Hardiman asks about M&A progress and store count for 2025.

A: Marcus Lemonis and Matthew Wagner discuss disciplined approach to operations, looking for white space, and expecting more than 12-15 store acquisitions in 2025 if accretive.

Q: Noah Zuckin asks about inventory positioning and margin improvement on new.

A: Tom Kern talks about inventory management and Marcus Lemonis mentions finance team partnering with inventory team to identify opportunities for modest growth in 2025.

Q: Scott Stember asks about competitive environment and Fed rate impact.

A: Marcus Lemonis talks about competitive dealers' approaches, Tom Kern mentions Fed rate cut could benefit up to $30 million, and Marcus Lemonis explains rate cut benefits cash flow and consumer confidence.

Q: John Kelley asks about private label and future use.

A: Marcus Lemonis and Matthew Wagner discuss contract manufacturing with OEM partners, using data to develop products, and expanding private label to enter different marketplaces.

Q: Tristan Thomas-Martin asks about new RV margins and Class C strategy.

A: Marcus Lemonis talks about historical new RV margin goals and focusing on white space in each segment, Matthew Wagner mentions working on Class C segment to replenish shelves.

Q: Brandon Rollé asks about SG&A and adjusted EBITDA expectations.

A: Marcus Lemonis says they expect SG&A as % of gross profit to come down to 77-78 range and aim for low 70s in normal mid-cycle.

Q: Bret Jordan asks about market making in used category and Good Sam update.

A: Matthew Wagner talks about being market maker in used with auction network, Marcus Lemonis says Good Sam is staying as it's a stable part of the business and management wants to explore other markets, but Good Sam is here to stay.

Q: Alice Wycklendt asks about F&I segment and used vs new.

A: Matthew Wagner says F&I percent may tweak down as used outgrows new, with Marcus Lemonis adding a slight increase in ASPs counterbalancing that