Camping World says business is picking up—especially in used RVs—but the company still lost nearly $25 million last quarter, according to their financial report released on Tuesday. They’re selling more rigs, cutting prices, and trimming staff, all while claiming things are “improving.” Whether that means better deals or just better spin depends on how you read the fine print. Could Camping World’s financials suggest a slogan that mirrors that of the roadside garbage collector, “My business is picking up”?
Camping World’s financials couched in gobbledygook
Camping World Holding’s (CWH) financial report opened with comments from high-level company officials. Couched in terminology only a veteran stock trader could appreciate, our vision clouded as we tried to sort it out. But here it is:
Marcus Lemonis, Chairman and Chief Executive Officer of CWH stated, “We made the commitment at the beginning of the year to sell more units and make more money. Our results reflect a material year-over-year improvement in adjusted EBITDA, increasing nearly 4x vs. the prior year, with another period of record new and used combined unit market share. We have not seen any discernible impacts on consumer behavior from tariffs, with our April-to-date same-store unit sales tracking up mid-teens on used and up high-singles on new. Through recent actions to lower headcount and optimize our footprint, we expect SG&A reductions to further improve profitability in the months ahead.”
Our side comment: Let the first shots fired be ones that will tell. That great “4x” increase in EBITDA. EBITDA, is “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It comes from adding back non-cash expenses to operating income, providing a clearer picture of how much money a company is generating from its day-to-day operations. Sounds good, but there’s a lot more to a financial report than EBITDA.
And it gets as clear as mud
Next, Matthew Wagner, President of CWH, gets his chance to muddy the water. “Our business continues to exhibit consistent growth in real time. We remain confident in our guideposts to deliver growth in excess of low-double digits in used units and low single digits in new units, vehicle gross margins within our historical range and SG&A as a percentage of gross profit improving by 600-700 basis points. We continue to meet the customer where they want to be met in terms of price and payment, leading to slightly lower than anticipated ASPs to start the year. We are rigorously managing our SG&A as we aim to mitigate any ASP or macroeconomic variability that could persist in the near term.”
Ah, just love those terms. SG&A, or “Selling, General and Administrative expenses,” the day-to-day costs of running a business, including things like rent, utilities, salaries, advertising, and marketing. So Camping World is putting the squeeze on operating expenses. But to “meet the customer where they want to be met” means those pesky ASPs, or “average selling prices” are going down. Bottom line: To move those rigs off the lot, Camping World is having to chop prices.
We will leave the fine print of the financial report on Camping World’s website. If you’d like to read it for yourself, click here. But here’s our bottom-line takeaway from Camping World’s financial report.
The good news (for Camping World)
1. Profits (Adjusted EBITDA) are way up—about four times higher than last year.
CW made a lot more money before paying taxes, interest, and other big costs.
2. Used RV sales are booming—up 30% in units sold and 25% in revenue.
People are buying a lot more used RVs, which are usually more profitable for dealers. Keep that in mind when and if you try to negotiate on a used rig.
3. Gross profit (total money made after direct costs) grew by 6.8%—a solid gain.
“The Profit” Marcus is keeping more of each sale as profit.
4. Margins on used RVs and service work got better, meaning they’re making more per unit sold or per hour worked.
Now there’s a “good news, bad news” scenario if ever there was one. Prices on service work, as shoddy as many readers claim it is, are heading up. Great for Camping World, lousy for the customer.
5. Interest expenses dropped sharply—by $15 million total, thanks to lower debt and rates.
That’s money saved that goes straight to improving the bottom line.
The not-so-good news for Marcus
1. New RV sales slipped—down 5.3% in revenue, even though the number of units sold only dropped slightly.
Camping World is selling about the same number of new RVs, but for lower prices.
2. Average selling prices (ASPs) for both new and used vehicles went down around 4%.
They’re cutting prices to stay competitive or meet customer demand.
3. Net income is still a loss—they lost $24.7 million, though that’s much less than last year’s loss.
The company still isn’t profitable overall, but it’s heading in the right direction, if you’re a shareholder.
4. Service, parts, and other revenues dropped by 7.3%, partly because they sold off a furniture business.
That side of the business is shrinking—though it’s more profitable now.
5. They spent more on salaries and advertising, increasing expenses by more than $16 million.
So, even though they’re doing better, they still need to control costs more tightly.
How is Camping World really doing?
Camping World’s financial report showed it had a much better quarter than last year’s same quarter. It’s making more money on used RVs, cutting interest costs, and improving profit margins. But it’s still losing money overall and had to lower prices to attract buyers. New RV sales are slightly weak, and the business is still finding ways to trim expenses and optimize its footprint.
As to customers, the company is apparently willing—or needing—to cuts sales prices on new and used RVs. Perhaps they figure they’ll make up for any supposed “loss” here by getting the customer’s rig in the service bay and letting the cash register ring.
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I’d almost bet dollars to donuts (that’s the polite wording) that Marcus is leaving out a big expense, namely addressing the debt. Hence the word salad financial speak. We’ll no doubt see other familiar names close the door due to running on borrowed money for way too long, while trying to compete in a saturated market with a product known for shoddy quality. Look for ‘as is’ new RV’s at a Camping World near you soon.
Thank you, Russ and Tina, for the information. Echoing Dan’s comments, as I read through this story my mind began to wander and thought that this is beginning to remind me of Enron. Enron hid losses by moving costs and losses into off-book entities. Ultimately their house of cards collapsed, taking with it the savings of investors. I wonder if Camping World’s future will converge on the path that Enron followed into oblivion? I guess we’ll see. Have a great weekend and safe travels!
CWH buys from many different manufacturers. Wonder if some or all are sending hold-back money directly to Marcus instead of to Camping World, decreasing their bottom line—profit to the prophet.
Things are just rosy, but they’re losing money, closing stores, and laying off employees. Sure.
Perhaps if they didn’t have the well-deserved reputation for being the worst place to buy an RV in the US, they wouldn’t be in this situation. That falls squarely on Lemonis, as he sets the tone for the company culture. His shenanigans in NC tell you all you need to know about his attitude.
Wife and I have been looking for a newer RV. What we have found is prices are sky high on new RVs. They ALL seem to start out at $45k new TT and used are about $10 k lower. Add 10 k for Azdel instead of aluminum. 16 footers at $20 k. 5th wheels are another $15kish. Used are not that much lower. Check all the other RV sales companies and they all have the same prices. kinda like price fixing. Yes I believe price fixing. Then they will add $3k to the price after zero negotiations.