Camping World quarterly report reveals challenging times

Camping World’s first quarter 2024 financial report has been released. The quarter ended March 31, and the report was issued after the stock market’s closing bell yesterday. Camping World’s financials reflect much of the RV market’s rough seas facing the industry in general. Camping World CEO Marcus Lemonis focused on one bright spot, while stock market analysts’ projections on two key factors were worse than expected.

Rough seas reflected in share earnings, revenues, and more

Those projections included earnings-per-share. While analysts thought Camping World investors would see a loss of only 35 cents, reality checked in with an actual loss of 40 cents. The market had predicted CW’s revenue would clock in at $1.43 billion. Instead, the report showed revenues of $1.36 billion, “4.62% worse than the analyst estimate,” said one market-following group.

Bright spot? New RV sales

The bright spot in CW’s report? In a statement, Lemonis said, “Our intentional efforts to drive down invoice pricing and widen the consumer affordability funnel resulted in our new unit sales meaningfully outpacing broader RV industry trends. We drove record new unit market share for January and February. Our same store new vehicle unit volume increased double-digits in the quarter, with momentum continuing through April.”

The statistics for that statement are here. New vehicle revenue was $656.1 million for the first quarter, an increase of $9.3 million, or 1.4%, and new vehicle unit sales were 16,882 units, an increase of 2,970 units, or 21.3%.

At the same time, company revenues from new RV sales were tempered by lower selling prices. Average selling price of new vehicles declined 16.4% during the first quarter, driven primarily by the lower cost of 2024 model year travel trailers, discounting of pre-2024 model year new vehicles, and a mix shift towards more affordable travel trailers.

Used side—a blight

The used-RV side of CW’s business was certainly not a bright spot. As CW reports, used vehicle revenue was $337.7 million for the first quarter, a decrease of $107.1 million, or 24.1%, and used vehicle unit sales were 10,694 units, a decrease of 1,738 units, or 14.0%.

The explanation for this? “Average selling price of used vehicles declined 11.7% during the first quarter due to discounting of used vehicles in response to declines in new vehicle prices to maintain used vehicles as a lower cost alternative to new vehicles.”

Gross profit deflates

All of this affected Camping World’s gross profit. Gross profit was $402.4 million, a decrease of $38.6 million, or 8.8%. Total gross margin was 29.5%, a decrease of 16 basis points. These decreases were driven by lower average cost and average selling price of model year 2024 new vehicles, which impacted used vehicles by (i) requiring the reduction in the used vehicle average selling price, and (ii) lower used inventory levels from slowed procurement of used vehicles to allow RV owner pricing expectations to adjust as a result of model year 2024 pricing declines.

And the rest of the details

And the rest of the story? Here is the balance of the details provided in the Camping World report:

• Revenue was $1.4 billion for the first quarter, a decrease of $122.9 million, or 8.3%.
• Net loss was $50.8 million for the first quarter of 2024, a change of $55.7 million from net income of $4.9 million for the first quarter of 2023.
• Same store new vehicle unit sales increased 15.5% for the first quarter and same store used vehicle unit sales decreased 17.3%.
• Products, services and other revenue was $177.9 million, a decline of $29.8 million, or 14.3%, driven largely by a reduction in sales activity resulting from its Active Sports Restructuring and fewer used vehicles sold led to a decline in retail product attachment to vehicle sales.
• Selling, general and administrative expenses were $371.5 million, an increase of $5.7 million, or 1.6%, primarily as a result of additional advertising expenses and professional fees and services, partially offset by reduced employee compensation costs, which was accomplished despite the 10.3% increase in store locations [see below].
• Floor plan interest expense was $27.9 million, an increase of $7.1 million, or 34.0%, and other interest expense, net was $36.1 million, an increase of $5.0 million, or 16.0%. These increases were primarily as a result of the rise in interest rates and higher principal balances.
• Diluted loss per share of Class A common stock was ($0.51) for the first quarter of 2024 versus diluted earnings per share of Class A common stock of $0.05 for the first quarter of 2023. Adjusted loss per share – diluted (1) of Class A common stock was ($0.40) for the first quarter of 2024 versus adjusted earnings per share – diluted (1) of Class A common stock of $0.14 for the first quarter of 2023.
• The total number of CW’s locations was 215 as of March 31, 2024, an increase of 20 store locations from March 31, 2023, or 10.3%, with a net 13 store locations opened during the first quarter.
• Adjusted EBITDA(1) [Earnings before interest, taxes, depreciation, and amortization] was $8.2 million, a decrease of $52.6 million, or 86.5%, primarily due to $38.6 million decrease in gross profit, the $7.1 million increase in floor plan interest and the $5.7 million increase in selling, general and administrative expenses(2).

Notes for above: (1) Adjusted (loss) earnings per share – diluted and adjusted EBITDA are non-GAAP [generally accepted accounting principles] measures. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, see the “Non-GAAP Financial Measures” section later in this press release. (2) The $5.7 million increase in selling, general, and administrative expenses is inclusive of a $1.1 million decrease in equity-based compensation. Equity-based compensation is excluded from the calculation of Adjusted EBITDA.

And leaving with a positive spin

While Camping World sold a lot more new rigs than the RV retail sector in general, the company is still battling with the rough seas of the financial market. Still, Camping World is ready to put a positive spin on the report. Matt Wagner, Chief Operating Officer commented, “We have been successful in rebalancing our used inventory position and now that market pricing has stabilized, we intend to reinvest in building our stocking levels in a disciplined manner over the coming months. We continue to expect our used business to improve as we move through the balance of the year.”

To view RVtravel.com’s report on Camping World’s Q4-2023 financials, click here.

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