By Greg Gerber
Editor, RV Daily Report
There is a huge difference between live television interviews and “reality” television, where scenes are carefully written, scripted and even rehearsed before the final images are shown on TV.
As a reality show, The Profit is highly scripted.
In an interview setting, “The Profit,” RV industry Emperor Marcus Eralius Augustus Tiberious Lemonis, has the ability to give people a glimpse into what he really thinks. Such an occurrence took place Friday during an interview with CNBC, the station that airs Lemonis’ reality show.
Trading of the new Camping World stock was underway, and the CNBC hosts were questioning Lemonis about the historic day and what it meant for him and the company.
Emperor Lemonis conveyed that the initial public offering was done at the right time and was an important step in the evolution of Camping World as a company. But, he also offered insight into what he truly thinks of the company he heads as the part-time chief executive officer, and its customers.
“I’m a big believer in three things. I hate revenue, I hate motorhomes and I hate debt,” he told the awe-struck anchors.
He went on to note that 100 percent of the revenue raised in the initial stock offering would be used to retire the firm’s massive debt, which he said has historically been at “three times leverage.” That means every dollar of equity is supplemented with two dollars of borrowed capital.
“We don’t want to add stores or open stores or anything that effects our EBIDA (earnings before interest, depreciation and amortization) or EBIDA margin,” he explained.
“I don’t like motorhomes because they don’t turn as fast and they aren’t as high margin. We sell them, but we don’t focus on them,” said Lemonis. “For us, it is really about selling warranties, insurance, roadside assistance, service and parts.”
So there you have it, independent dealers, who often wonder how Camping World can sell products for less money than you’re invoiced at wholesale. The company makes more money selling warranties, insurance, roadside assistance, service and parts, than it does on the sale of RVs, especially motorized units.
Lemonis claimed that 3.3 million of the estimated 9 million historic RV owners have given his company money in the past 24 months. However, he told the CNBC hosts that the number of RVs in circulation will continue to grow.
Yet, as RV Daily Report pointed out several months ago, the number of RVs in circulation has remained unchanged at 9 million since 1997, despite 5.7 million new RVs being build between 1997 and 2015.
So, how will Camping World continue to grow going forward if Lemonis doesn’t want to open new stores and he hates motorhomes and debt?
That’s easy. He’ll do so by using debt to build new stores and through acquisitions of existing dealers.
“That’s really our pipeline. We open an average six to 10 stores a year, but if the market slows down a bit, we can do as many as 25 in a year,” Lemonis said.
So, with less money in an economic downturn to provide capital for acquisitions, where does Camping World get its money to pick up more stores? Well, only The Profit knows for sure.
“You know what we do on the show, right? We look for businesses that need help,” he told CNBC. “That model doesn’t just live on TV, that lives in my real life.”
Surprisingly, one of the CNBC hosts pointedly asked Lemonis if he is focused on Camping World instead of The Profit. He asked how a shareholder knows for sure if he’s really committed to the Camping World brand.
“I have 33 million reasons to care. I own 33 million shares and 43 percent of beneficial ownership is mine,” he explained.
“The performance of company has actually been better while I have been making the show, so employees might prefer I make more episodes,” he added. “When you think about priorities, the bulk of my net worth is in the company, so there should be no confusion where my focus is.”
Perhaps the most revealing statement he uttered described how he really sees Camping World customers — as names and addresses.
“When I say I hate revenue, what I am essentially saying is that we don’t do deals, we don’t open stores, we don’t buy businesses for revenue. We buy them for accretive earnings and to grow the database.”
For someone who hates revenue, hates motorhomes, doesn’t do deals, hates debt, doesn’t want to add stores or open stores or anything that effects Camping World’s EBIDA, Lemonis’ plan for the company’s long-term success is to take over 10 dealerships a year, and as many as 25 in a downturn, but not to sell motorhomes, rather to make money selling warranties, insurance, roadside assistance, service and parts to the ever-growing database of Camping World customers. Got that?
Good Sam Club members already suspect Camping World makes more money spamming them with offers by outside firms than it does selling core RV products. Lemonis seemed to confirm that Friday.
Incidentally, in trading today, Camping World stock (CWH) was down 24 cents and closed at just 26 cents above its IPO price of $22.
To watch the CNBC interview with Lemonis, click here.