Camping World Holdings Inc. on Wednesday reported a net loss for the first quarter ended March 31 of $26.8 million and earnings per share of (52) cents, missing consensus estimates by 64 cents. Non-GAAP earnings per share of (67) missed by 83 cents.
Revenue of $1.1 billion was up 0.6 percent from the same quarter a year ago, in line with Wall Street’s consensus estimate.
First quarter highlights and year-over-year financial comparisons:
- Revenue increased 0.6 percent to $1.065 billion;
- Gross profit decreased 1.2 percent to $298.3 million;
- Income from operations, net loss and diluted loss per share of Class A common stock were $16.9 million, $26.8 million, and $0.52, respectively;
- Adjusted EBITDA was $21.4 million; and
- The number of Active Customers increased 31.4 percent to 5.1 million and the number of Good Sam Club memberships increased 17.1 percent to approximately 2.15 million.
Marcus A. Lemonis, Chairman and Chief Executive Officer, stated, “We are excited about the progress we have made in our business. Our financial results for the quarter and the directional trends in our business were essentially in line with our full year guidance expectations. Consistent with our forecast, we have seen an improvement in sales trends since mid-March that has continued into April and early May, and our outlook for the full year remains unchanged.”
Change in Segment Reporting
Following the resignation of Roger Nuttall from his position as President of Camping World on December 21, 2018, the company took steps during the quarter ended March 31, 2019 to realign the reporting structure of the company including management and internal reporting. As a result of these changes, the company has determined that its reportable segments have changed. The company’s new reportable segments have been identified based on various commonalities amongst the company’s individual product lines, which is consistent with the company’s operating structure and associated management structure and management evaluates the performance of and allocates resources to these segments based on segment revenues and segment profit. The segment reporting for prior comparative periods have been recast to conform to the current period presentation.
The company previously had three reportable segments: (i) Consumer Services and Plans; (ii) Dealership, and (iii) Retail. Following the realignment, the company now has the following two reportable segments: (i) Good Sam Services and Plans and (ii) RV and Outdoor Retail. In conjunction with the first quarter 2019 realignment of our reporting structure, the company combined our prior Dealership and Retail segments into the RV and Outdoor Retail segment. The company has also reclassified a portion of the former Consumer Services and Plans segment, the Good Sam Club and co-branded credit card operations, to the RV and Outdoor Retail segment, which reflects the synergies of those two programs with the RV and Outdoor Retail locations. Within the Good Sam Services and Plans segment, the company primarily derives revenue from the sale of the following offerings: emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; vehicle financing and refinancing; shows and events; and publications and directories. Within the RV and Outdoor Retail segment, the company primarily derives revenue from the sale of new and used recreational vehicles (“RVs”); sales of RV products and services, including the sale of parts, accessories, supplies and services for RVs, and equipment, gear and supplies for camping, hunting, fishing, skiing, snowboarding, bicycling, skateboarding, marine and watersport and other outdoor activities; commissions on the finance and insurance contracts related to the sale of RVs; and Good Sam Club memberships and co-branded credit cards.
The reportable segments identified above are the business activities of the company for which discrete financial information is available and for which operating results are regularly reviewed by the company’s chief operating decision maker to allocate resources and assess performance. The company’s chief operating decision maker is a group comprised of the Chief Executive Officer and the President.
First Quarter 2019 Results
Good Sam Services and Plans Segment
- Segment revenue increased 4.8 percent to $47.0 million;
- Segment gross profit increased 7.7 percent to $26.2 million and segment gross margin increased 150 basis points to 55.9 percent; and
- Segment income increased 3.1 percent to $22.4 million.
RV and Outdoor Retail Segment
- Segment revenue increased 0.4 percent to $1,017.8 million;
- Same store revenue decreased 11.0 percent to $847.9 million across the same store base of 139 locations, of which 121 sold new and/or used RV vehicles
- Segment gross profit decreased 2.0 percent to $272.1 million and segment gross margin decreased 64 basis points to 26.7 percent;
- Segment income decreased 101.5 percent to a segment loss of$0.4 million;
- Vehicle units sold decreased 5.5 percent to 23,193 units;
- New vehicle units sold decreased 7.9 percent to 15,016 units
- Used vehicle units sold decreased 0.9 percent to 8,177 units
- Average selling price per vehicle unit sold decreased 0.1 percent to $30,595;
- New vehicles decreased 0.8 percent to $35,268 per unit
- Used vehicles increased 5.5 percent to $22,014 per unit
- Same store vehicle units sold decreased 12.1 percent to 21,112 units;
- New vehicle same store units sold decreased 15.6 percent to 13,497 units
- Used vehicle same store units sold decreased 5.2 percent to 7,615 units
- Gross profit per vehicle sold including finance and insurance increased 2.2 percent to $8,433;
- Finance and insurance revenue as a percentage of total vehicle revenue increased 110 basis points to 12.9 percent;
- New vehicle inventory per dealership location increased 0.1 percent to $7.2 million from December 31, 2018;
- Products, service and other revenue increased 24.8 percent to $204.9 million and gross profit increased 0.6 percent to $68.8 million;
- Same store products, service and other revenue decreased 9.6 percent to $113.0 million
- Good Sam Club revenue increased 27.5 percent to $11.5 million and gross profit increased 16.2 percent to $7.7 million; and
- Good Sam Club memberships increased 17.1 percent to approximately 2.15 million
- At March 31, 2019, the company operated a total of 226 RV and Outdoor Retail locations, with 147 of these selling new and/or used RV vehicles.
Select Balance Sheet and Cash Flow Items
The company’s working capital and cash and cash equivalents as of March 31, 2019 were $505.1 million and $70.0 million, respectively. Total inventories increased 4.1 percent to $1,623.0 million as compared to December 31, 2018, driven by a 5.7 percent increase in products, parts, accessories and miscellaneous inventory, and a 4.4 percent increase in new vehicle inventory, partially offset by a 3.3 percent decline in used inventory. At March 31, 2019, the company had $42.6 million of borrowings under its revolving line of credit as part of its Floor Plan Facility, $1,172.1 million of term loans outstanding under the Senior Secured Credit Facilities, $9.5 million outstanding under the Real Estate Facility, and $882.3 million of floor plan notes payable under the Floor Plan Facility.
Revisions for Correction of Immaterial 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 related primarily to i) the cancellation reserve for certain of its finance and insurance offerings within the former Dealership segment in other current liabilities and other long-term liabilities, ii) the calculation of the Tax Receivable Agreement liability that arose from transactions in 2017, iii) the classification in the condensed consolidated statements of cash flows of non-cash capital expenditures included in accounts payable and non-cash leasehold improvements paid by lessor in other, net, and iv) the adoption of Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018. The amounts in the previous period have been revised to reflect the correction of these errors.