Camping World Holdings, Inc. Q2 FY2025 earnings call

• Team performance: 12,000 team members delivered, setting records in RV sales, F&I revenue, and Good Sam revenue. • Business overview: Despite macro challenges, execution led to market share gain. Focus on unit sales, transaction profitability, and customer ecosystem. • File size growth: 80,000 new customers added in the quarter. • Location consolidation: Consolidating 16 locations over 5-6 months led to higher unit count, profitability, and margin per store. • ASP rebound: Already seen a rebound in average selling price in July and expect it to continue accelerating. • Good Sam business: Positioned for margin stabilization with investments in roadside and lap claims cost increases. • Capital allocation: Looking at acquisitions and investments for Good Sam growth and existing business optimization.

For the second quarter, Camping World set a record selling 45,000 RVs, a record in finance and insurance with $200 million revenue, and a revenue record for Good Sam. Revenue was $2 billion, an increase of over 9% driven by unit volume increases in both new and used in excess of 20%. New and used gross margins performed in line with historical averages. Good Sam business posted positive top line growth. Within product services and other, core dealer service revenues on the accessory business showed improved gross profit dollars and margins. Adjusted EBITDA was $142.2 million compared to $105.6 million last year. SG&A as a percentage of gross profit improved 276 basis points year-over-year. The company ended the quarter with about $118 million of cash, paid down $75 million of long-term debt since October, had about $519 million of used inventory net of flooring and another $193 million of parts inventory, and owned about $247 million of real estate without an associated mortgage.

• Expect double-digit growth on the used side. • ASPs started to rebound in July and expect to continue accelerating. • Aim for adjusted EBITDA well over $500 million on the current store count. • Target to accelerate gross margin by 100 basis points over the next 18 months. • SG&A expected to improve by 600-700 basis points, with more fixed cost opportunity reductions through the year. • New business expected to grow in 2026, and used business to maintain double-digit growth.

• Macro environment uncertainty including tariffs, interest rates, and general economic conditions. • Pressure on average selling price which can impact gross profit per transaction. • Inventory management risks, such as potentially being slightly over-inventoried on the used side.

Q: About ASPs and competitors, are competitors getting more aggressive?

A: Marcus said they don't see ASPs as a problem, focused on growing margins and not paying much attention to competitors' pricing. Matthew added about competitive advantage with contract manufacturing.

Q: On used gross profit margin, is it sustainable?

A: Marcus said it's expected to maintain in the 18.5% - 19.5% range, testing different pricing strategies to improve turns. Matthew mentioned taking advantage of post-season opportunities to convert used assets.

Q: Embedded pricing expectations in the back half for new and used?

A: Marcus said on new side, ASPs started to tick up, with seasonal improvement expected. Matthew mentioned inventory mix and sales mix impact. On used, they're testing strategies to improve turns and margin.

Q: On M&A, what would it take to get more aggressive?

A: Marcus said they're not on pause for M&A, more thoughtful, looking for white space and better return on capital, and could announce a deal at any time.

Q: On parts and service, rebound in second half?

A: Marcus said growth in service and parts business by maximizing yields in facilities, with customer pay expected to inch up again in the back half.

Q: On used inventory, is it at a comfortable level?

A: Marcus said they're slightly over-inventoried on the used side but can toggle purchases up or down in real-time.