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Camping World reports first quarter results

Camping World reports first quarter results

LINCOLNSHIRE, Ill. — Camping World Holdings reported results for the first quarter ended March 31.

First Quarter Highlights:

  • Total revenue increased 20.4% to a first quarter record of $1.1 billion;
  • Total number of recreational vehicles sold increased 21.0% to a first quarter record of 24,547 units;
  • Total same store sales increased 3.9% to a first quarter record of $838.6 million;
  • Finance & insurance revenue as a percentage of total vehicle revenue increased 205 basis points to an all-time high of 12.2%;
  • Gross profit increased 21.0% to a first quarter record of $304.8 million and gross margin increased 13 basis points to a first quarter record of 28.7%;
  • Income from operations, net income and diluted earnings per share decreased to $49.8 million, $17.3 million, and $0.08, respectively, and reflected $19.7 million of pre-opening expenses related to the Gander Outdoors store openings;
  • Adjusted Pro Forma Net Income(1) increased 16.5% to $36.9 million, and Adjusted Pro Forma Earnings per Fully Exchanged and Diluted Share(1) increased 9.7% to $0.41 and Adjusted EBITDA(1) decreased 0.1% to $71.8 million.

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(1) Adjusted Pro Forma Net Income, Adjusted Pro Forma Earnings per Fully Exchanged and Diluted Share, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. For reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see the “Non-GAAP Financial Measures” section later in this press release.

Marcus A. Lemonis, chairman and chief executive officer, stated, “We had a very strong first quarter and are pleased with the continued performance of our business. For the quarter, total revenue increased 20.4% to a first quarter record $1.1 billion, total gross profit increased 21.0% to a first quarter record $304.8 million, Adjusted Pro Forma Net Income increased 16.5% to $36.9 million and Adjusted EBITDA of $71.8 million was right in line with our expectation. While the unseasonably cold weather throughout a good portion of the country has likely impacted the early part of the peak selling season, we believe the backdrop across the RV industry remains strong and we continue to plan our business around a mid-single digit increase in same store sales in 2018.”

Mr. Lemonis continued, “We remain committed to profitable growth and have not seen any changes in the overall acquisition environment. In the first quarter, we announced five new acquisitions with six locations across five different states and plans to open eight new Supercenters late this year and early next year that we anticipate will begin to combine all of our brands in one location and serve a broad range of RV, outdoor and active lifestyle customers.”

Presentation

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, 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, with sole voting power in and control of the management of CWGS. Despite its position as sole managing member of CWGS, the company has a minority economic interest in CWGS. As of March 31, the company owned 41.7% of CWGS. 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 first quarter of 2018 to the first quarter of 2017.

First Quarter Review

Units and Average Selling Prices

The total number of recreational vehicle units sold increased 21.0% to 24,547 units from 20,279 units and the average selling price of a unit sold decreased 4.3% to $30,619 from $32,010 in the first quarter of 2017. New vehicle units sold increased 18.4% to 16,296 units and the average selling price of a new vehicle decreased 2.8% to $35,561. Used vehicle units sold increased 26.6% to 8,251 units and the average selling price of a used vehicle decreased 6.8% to $20,857 per unit.

Revenue

Total revenue increased 20.4% to $1.1 billion in the first quarter of 2018 from $881.6 million in the first quarter of 2017. Consumer Services and Plans revenue increased 7.1% to $53.8 million and Retail revenue increased 21.2% to $1.0 billion. In the Retail segment, new vehicle revenue increased 15.1% to $579.5 million, used vehicle revenue increased 18.0% to $172.1 million, parts, services and other revenue increased 41.4% to $164.3 million and finance and insurance revenue increased 39.1% to $91.8 million. Included in the parts, services and other revenue was $39.3 million in sales from the outdoor and active sports retail businesses, including Gander Outdoors, Overton’s, TheHouse.com, Uncle Dan’s, W82 and Erehwon Mountain Outfitters. Finance and insurance net revenue as a percentage of total new and used vehicle revenue increased 205 basis points to 12.2% for the first quarter of 2018 from 10.2% in the first quarter of 2017.

Same store sales for the base of 120 retail locations that were open on March 31 and January 1, 2017 increased 3.9% to $838.6 million for the quarter ended March 31. The increase in same store sales was primarily driven by a 22.0% increase in finance and insurance same store sales, a 1.6% increase in new vehicle same store sales, a 5.4% increase in used vehicle same store sales, and a 1.0% increase in parts, services and other same store sales.

The company operated a total of 141 Camping World retail locations, one Overton’s location, two TheHouse.com locations, 28 Gander Outdoors locations, two W82 locations, five Uncle Dan’s locations, and four Erehwon Mountain Outfitter locations as of March 31, compared to 126 Camping World retail locations at March 31, 2017.

Gross Profit

Total gross profit increased 21.0% to $304.8 million, or 28.7% of total revenue in the first quarter of 2018, from $251.9 million, or 28.6% of total revenue, in the first quarter of 2017. On a segment basis, Consumer Services and Plans gross profit increased 6.8% to $31.1 million, or 57.8% of segment revenue in the first quarter of 2018, from $29.1 million, or 57.9% of segment revenue in the first quarter of 2017. Retail gross profit increased 22.8% to $273.7 million, or 27.2% of segment revenue in the first quarter of 2018, from $222.8 million, or 26.8% of segment revenue, in the first quarter of 2017. The increase in Retail gross margin was driven by an increase in the finance and insurance net revenue as a percentage of total new and used vehicle revenue to 12.2% in the first quarter of 2018 from 10.2% in the first quarter of 2017.

Operating Expenses

Operating expenses increased 40.1% to $255.0 million in the first quarter of 2018 from $182.0 million in the first quarter of 2017. Selling, general and administrative expenses increased 39.7% to $245.1 million in the first quarter of 2018 from $175.5 million in the first quarter of 2017. The increase in SG&A expenses was primarily driven by the additional expenses associated with the 21 additional RV retail locations, 28 Gander Outdoors locations which included $19.7 million of pre-opening costs associated with the store openings, one Overton’s location, two TheHouse.com locations, two W82 locations, five Uncle Dan’s locations and four Erehwon Mountain Outfitter locations operated during the first quarter of 2018. As a percentage of total gross profit, SG&A expenses increased 1,077 basis points to 80.4% in the first quarter of 2018 from 69.7% in the first quarter of 2017. Depreciation and amortization expense increased 37.2% to $9.4 million primarily due to the addition of acquired and greenfield locations, and the acquired businesses.

Floor Plan Interest & Other Interest Expenses

Floor plan interest expense increased to $10.7 million in the first quarter of 2018 from $5.3 million in the first quarter of 2017. The increase was primarily attributable to higher inventory from new dealership locations and existing locations expecting higher unit sales, as well as a 100 basis point increase in the average floor plan borrowing rate. Other interest expense increased to $12.8 million in the first quarter of 2018 from $9.4 million in the first quarter of 2017. The increase was primarily attributable to an increase in average debt outstanding partially offset by an 8 basis point decrease in the average interest rate.

Net Income, Net Income Margin, Adjusted Pro Forma Net Income(1), Diluted Earnings Per Share, and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share(1)

Net income, net income margin and diluted earnings per share were $17.3 million, 1.6%, and $0.08, respectively, for the quarter ended March 31. Net income, net income margin and diluted earnings per share were $49.6 million, 5.6% and $0.38, respectively, for the quarter ended March 31, 2017.

Adjusted Pro Forma Net Income(1) increased 16.5% to $36.9 million in the first quarter of 2018 from $31.7 million in the first quarter of 2017. Adjusted Pro Forma Earnings per Fully Exchanged and Diluted Share(1) increased 9.7% to $0.41 in the first quarter of 2018 from $0.38 in the first quarter of 2017.

Adjusted EBITDA and Adjusted EBITDA Margin(1)

Adjusted EBITDA(1) decreased 0.1% to $71.8 million and Adjusted EBITDA Margin(1) decreased 139 basis points to 6.8% from 8.2% for the first quarter of 2018 versus the first quarter of 2017.

Select Balance Sheet and Cash Flow Items

The company’s working capital and cash and cash equivalents on March 31 were $680.9 million and $331.3 million, respectively, compared to $478.7 million and $224.2 million, respectively, at December 31, 2017. At the end of the first quarter 2018, the Company had $2.8 million of letters of credit outstanding under its $35.0 million revolving credit facility, and $1.2 billion of term loan principal outstanding under its Senior Secured Credit Facilities. In addition, the Company had $9.4 million of letters of credit outstanding within the Floor Plan Facility, borrowings of $24.4 million under its revolving line of credit and $939.8 million of floor plan notes payable outstanding under its floor plan financing facility. Inventory at the end of the first quarter of 2018 increased 11.2% to $1.6 billion compared to $1.4 billion at December 31, 2017.

Earnings Conference Call, Webcast, and Facebook Live Access Information

A conference call to discuss the company’s first quarter fiscal 2018 financial results is scheduled for today, May 8, at 8 a.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (800) 289-0438 or (323) 794-2423 and using conference ID # 2677874. 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 until August 8, 2018. In addition, a live stream of the company’s first quarter conference call will be broadcast by Marcus Lemonis using Lemonis’ Facebook account and the Facebook Live feature. Lemonis also uses his Facebook account as a means for personal communications and observations.

SOURCE: Camping World press release

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About Rebecca Smith

Rebecca Smith is a Wisconsin native currently living in Illinois with her husband, Eric, and two dogs, Maggie and Grace. She enjoys hiking, biking, kayaking and, of course, camping in cabins and park models.

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