Camping World Holdings Inc. on Thursday posted a net loss for the fourth quarter of $71.5 million due, in part, to a $40 million goodwill impairment charge and $2.4 million in Gander Outdoors pre-opening costs. Earnings per share of (83) cents missed Wall Street’s target by 95 cents.
The company’s fourth quarter revenue of $982.4 million did beat estimates by $17.5 million and was up from the prior-year quarter by 10.6 percent.
Full year highlights and year-over-year financial comparisons include:
- Revenue increased 12 percent to $4.8 billion;
- Gross profit increased 9.8 percent to $1.4 billion;
- Income from operations, net income and diluted earnings per share of Class A common stock were $201 million, $65.6 million, and $0.28, respectively, and included a $40 million goodwill impairment charge and $43.2 million of Gander Outdoors pre-opening costs;
- Adjusted EBITDA was $312.5 million; and
- Good Sam Club members increased by 16.7 percent, or more than 299,400 members.
Fourth Quarter 2018 Results
- Revenue increased 10.6 percent to $982.4 million;
- Gross profit increased 3.8 percent to $275.6 million and gross margin declined 186 basis points to 28.1 percent;
- Loss from operations, net loss and diluted loss per share of Class A common stock were $43 million, $71.5 million, and $0.83, respectively, and included a $40 million goodwill impairment charge and $2.4 million of Gander Outdoors pre-opening costs;
- Adjusted EBITDA was $10.3 million;
- The number of Active Customers and Good Sam Club members reached all-time high levels of 5.1 million and 2.1 million, respectively; and
- At December 31, 2018, the company operated a total of 227 unique locations, which included 126 co-habited Dealership and Retail locations, 15 stand-alone Dealership locations, and 86 stand-alone Retail locations.
Consumer Services and Plans
- Revenue increased 8.5 percent to $55.5 million;
- Gross profit increased 8.9 percent to $33.8 million and gross margin increased 19 basis points to 61 percent;
- The number of participants across our clubs, roadside assistance, property and casualty insurance, and extended vehicle service programs within Consumer Services and Plans increased 11.1 percent to 3.1 million; and
- The company added 78,189 Good Sam Club members in the fourth quarter 2018 and membership increased 16.7 percent year over year to an all-time-high of 2.1 million members.
- Revenue decreased 0.8 percent to $717.6 million;
- Same store revenue decreased 7.5 percent to $593.8 million across the same store base of 105 Dealership locations
- Gross profit decreased 1.6 percent to $185 million and gross margin decreased 21 basis points to 25.8 percent;
- Vehicle units sold decreased 1.6 percent to 17,824 units;
- New vehicle units sold decreased 6 percent to 11,295 units
- Used vehicles units sold increased 7 percent to 6,529 units
- Average selling price per unit sold decreased 1.5 percent to $32,542;
- New vehicles decreased 0.6 percent to $37,938 per unit
- Used vehicles increased 1.2 percent to $23,208 per unit
- Same store unit volume of new vehicles decreased 13.3 percent;
- Gross profit per vehicle sold including finance and insurance decreased 3.5 percent to $8,487;
- Finance and insurance revenue as a percentage of total vehicle revenue increased 109 basis points to 11.8 percent;
- New vehicle inventory per dealership decreased 19.6 percent to $7.2 million from December 31, 2017;
- At December 31, 2018, there were 141 Dealership locations; and
- The company closed three Dealership locations in the fourth quarter 2018.
- Revenue increased 84.7 percent to $209.3 million;
- Same store revenue decreased 3.9 percent to $50.7 million across the same store base of 119 Camping World RV product, parts and accessory locations
- Gross profit increased 22 percent to $56.8 million and gross margin decreased 1,395 basis points to 27.1 percent;
- Included in gross profit was a $4.7 million increase in inventory reserves related to Camping World parts and accessories
- At December 31, 2018, there were 212 Retail locations, including 128 Camping World RV product, parts and accessory stores, 60 Gander Outdoors stores, and 24 other specialty stores; and
- The company closed six Gander Outdoors locations and one Camping World RV location in the fourth quarter of 2018.
Select Balance Sheet and Cash Flow Items
The company’s working capital and cash and cash equivalents as of December 31, 2018 were $583 million and $138.6 million, respectively. On a year-over-year basis from December 31, 2017, total inventories increased 10.1 percent to $1,559 million, primarily due to the new Retail locations opened in 2018. New vehicle inventory decreased 8.6 percent to $1,017.9 million and new vehicle inventory per dealership decreased 19 percent to $7.3 million. Retail segment inventory increased to $409.5 million from $188.3 million primarily from the 58 net Gander Outdoors stores opened in 2018. At December 31, 2018, the company had $38.7 million of borrowings under its revolving line of credit as part of its Floor Plan Facility, $1,165.9 million of term loans outstanding under the Senior Secured Credit Facilities, $9.5 million outstanding under the Real Estate Facility, and $886 million of floor plan notes payable under the Floor Plan Facility.
Revision for Correction of Errors
The company corrected for errors that were immaterial to previously-reported consolidated financial statements. These errors were identified in connection with the preparation of the financial statements for the year ended December 31, 2018, and included i) the cancellation reserve for certain of its finance and insurance offerings within the Dealership segment and ii) the calculation of the Tax Receivable Agreement liability that arose from transactions in 2017. The company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,” and determined the effect of these corrections was not material to the previously issued financial statements as of and for the years ended December 31, 2017 and 2016. However, correcting the cumulative error during the year ended December 31, 2018 would have been material to the current period. Therefore, the amounts in the previous periods have been revised to reflect the correction of these errors. In part as a result of these revisions, the company expects to disclose in its Annual Report on Form 10-K that, as part of its evaluation of its internal control over financial reporting, the company identified a new material weakness in its internal controls that existed as of December 31, 2018, specifically related to the sufficiency of available technical resources at the company.
Photo courtesy Camping World Holdings Inc.