Camping World Holdings, Inc. Q3 FY2026 earnings call

• Inventory Health: Entered Q4 with a largely rebuilt call space; mix of prior model year new RVs is at a five-year low, and aged used inventory (>180 days) is down ~25% on a cost basis.
• Cost Reductions: Reduced SG&A by $24M YoY in Q3 and ~$80M YTD. Implemented additional headcount reductions (~15%) and closed four dealerships to achieve an incremental $50M in annualized savings starting Q4. Total annualized cost program now exceeds $150M.
• Operational Efficiency: Launched an in-house CRM across all locations, improving initial outreach response times by >150% and reducing lead-to-interaction time by 70%. This has increased appointments per lead and show rates.
• Product Mix: Grew new vehicle average selling price (ASP) by nearly 12%, driven by share gains in fifth wheels and motorized segments. Exclusive brands accounted for ~47-48% of new sales.
• Good Sam Growth: Completed system overhaul, enabling scalable sales of extended service, roadside, and insurance products to external partners. Segment remains capital-light with >60% gross margins.
• Cash Flow: Generated $488M in operating cash flow YTD and reduced floor plan borrowing by $349M, ending Q3 with $263M in cash.

The company operates primarily in two segments: New and Used Vehicle Sales, and Good Sam Services. For the third quarter of 2026, new vehicle gross margins declined to 10.2% due to intensified promotional pressure from competitors moving aged inventory. However, used vehicle gross margins improved sequentially by 150 basis points to 18%, supported by leaner, fresher inventory that turned faster. The Good Sam segment expanded its services and plans gross margin by over 550 basis points to 62.3%. While total revenue for Good Sam decreased slightly, it maintained adjusted EBITDA flat at $21.4 million. Notably, more than 60% of the company's total gross profit now originates from Finance & Insurance (F&I), Service & Parts, and Good Sam, highlighting a strategic shift away from pure unit sales dependency.

• Full Year 2026 Adjusted EBITDA: Expected to be below the low end of previous guidance range; full-year outlook not provided due to variability in Q4 unit volume and margins.
• Fourth Quarter 2026: Expects total new and used unit volumes to decline at a similar pace to Q3 YoY. New retail expected to be roughly flat to down mid-single digits; used retail expected to be roughly flat. SG&A expected to be >$50M lower than last year.
• 2027 Outlook: Expects incremental $75M in SG&A savings and slight normalization of gross margins (100-150 bps improvement on new side, ~100 bps on used). Combined with ordinary inflation (2-3%), these dynamics are expected to yield $60-$70M in additional earnings benefit next year.
• Capital Allocation: Expects positive free cash flow in 2027, including after potential refinancing of senior secured credit facilities. Gross CapEx for 2027 expected to be <$80M.

• Market Demand: Weakening consumer sentiment due to inflation and energy prices may persist into early 2027, pressuring new retail sales.
• Competitive Pressure: Aggressive promotional activity by competitors with higher aged inventory levels continues to create pricing pressure, particularly in the new vehicle segment.
• Customer Balance Sheets: Consumers who purchased between 2020-2022 face higher negative equity positions, delaying trade-in cycles and impacting used inventory turnover and margins.
• Financing Risks: Potential need to refinance senior secured credit facilities and term loans creates uncertainty regarding cost of capital and financial flexibility.
• Operational Execution: Risk that cost-saving measures (headcount reductions, store closures) may not fully offset declines in gross profit if demand softens further than anticipated.

Q: Analyst asked about Q3 trend progression and Q4 visibility.

A: CEO noted new sales trends improved sequentially from -20s% in July to -low teens% in October, bucking industry degradation. Competitors engaged in heavy discounting (37-40% off MSRP) in summer, but Camping World held pricing discipline to protect margins, expecting 50-100 bps new margin improvement in Q4. Used market softened in Sept/Oct due to conservative replenishment amid new price volatility; clarity is emerging for more aggressive sourcing in Q1 2027.

Q: Analyst asked about 2027 earnings bridge and inflation impact.

A: CFO/CEO outlined a bridge starting from Q4 2026 results (units down mid-teens, SG&A down $50M). For 2027, add $75M SG&A savings and ~$60-70M gross margin/inflation net benefit. General cost inflation is assumed at 2-3% flowing through P&L. The framework suggests steady earnings power despite flat/down industry volumes.

Q: Analyst asked about long-term new vehicle gross margins and customer trade-in cycles.

A: CEO stated short-term margins should improve 100 bps as pricing pressures ease. Long-term, margins should return to 13-14% as household income grows and interest rate impacts absorb. Trade-in age is currently high (~7.5 years vs historical 4.5 years); focus is on re-engaging customers via service channels to restart the 3-4 year replacement cycle.

Q: Analyst asked about competitor promotion easing and inventory normalization.

A: CEO confirmed competition eased from peak summer promo levels. Industry wholesale shipments dropped significantly relative to retail, meaning competitors aren't aggressively replenishing. As they sell down old stock, margin normalization is expected. Camping World holds a healthier mix (61% MY27 vs peers' 40-45%), positioning them to capture margin upside.

Q: Analyst asked about F&I reserve risks and core growth trajectory.

A: CFO explained the Q3 actuarial adjustment was prudent due to uptick in product cancellations/refunds, a trend seen across recreation/auto sectors. Despite this, F&I revenue as a % of vehicle sales remains up for the full year. Core growth is expected to outpace vehicle sales as Good Sam products and finance penetration expand, though reserves require ongoing monitoring.