Camping World Holdings(US:CWH)2019-08-08 02:46Financial Data and Key Metrics Changes - The company reported record revenue of approximately $1.5 billion for Q2 2019, up 2% from the previous year [27] - Adjusted EBITDA was nearly $100 million, down from $138 million a year ago [27] - Gross profit was $410 million, a decrease of 0.6% from $412 million in the previous year, with a gross margin of 27.8%, down from 28.6% [27][28] - SG&A expenses increased by 7.2%, primarily due to higher variable selling expenses and increased advertising costs [29] Business Line Data and Key Metrics Changes - The Good Sam services and plans segment revenue increased by 5.6% to $45 million, with gross profit of $26 million [30] - RV and Outdoor Retail segment revenue was $1.43 billion, up 2.2% from just under $1.4 billion last year, with gross profit of $384 million, down 1% [31][33] - The company ended the quarter with 5.25 million active customers, a 26% increase year-over-year [10] Market Data and Key Metrics Changes - The RV industry experienced a decline in manufacturer shipments and retail registrations, leading to increased promotional activity and margin compression [8][9] - Same-store sales for new and used RVs were down approximately 7% for the quarter [48] Company Strategy and Development Direction - The company aims to operate as an omni-channel RV and outdoor company, focusing on core RV products and services while expanding into curated outdoor products [14] - Plans to liquidate non-RV inventory and reinvest in higher-margin products, technology, and debt reduction [15][69] - The company is focused on improving customer service and addressing quality issues that arose during previous growth periods [21][22] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the current market conditions will continue, with a revenue projection of approximately $5 billion for 2019 and adjusted EBITDA guidance around the mid-to-low $200 million range [46] - The company believes that the softness in the RV market is typically short-term and is focused on maintaining strong transaction counts and inventory turns [41][44] Other Important Information - The company has reduced its inventory by $75 million, or 4.6%, during the quarter [34] - The company plans to continue investing in the used RV category, which has shown strong demand and better inventory turns compared to new RVs [19] Q&A Session Summary Question: Can you discuss the sales trends during the quarter and what you are seeing in July and August? - Overall sales remained decent, with same-store sales down just under 7% for the quarter, while new RV sales were down nearly 18% [48][49] Question: How long do you think the downturn might last? - Historically, downturns last 12 to 18 months, and the company is focused on right-sizing inventory and SG&A [51][53] Question: How are Gander Outdoors stores performing? - Locations selling RVs are performing well, and the company is analyzing which non-RV locations to consolidate or exit [57][59] Question: What is the plan for reducing non-RV inventory? - The company plans to liquidate $50 million to $60 million of non-RV inventory to reinvest in higher-margin categories [69][88] Question: How is the company addressing cost structure optimization? - The company has made progress in reducing SG&A and is focused on ensuring the right human capital is in place [76][78] Question: What is the outlook for free cash flow? - The company expects reasonably healthy pre-planned cash flow for the year despite margin compression [103] Question: How is the company accessing used RV inventory? - The company utilizes a proprietary system to aggregate trade values and has been successful in growing its consignment business [110][112]