Camping World Holdings(US:CWH)2019-03-08 12:16Financial Data and Key Metrics Changes - The company generated $4.8 billion in revenue for 2018, an increase of $512 million or 12% from the previous year [8][15] - Consolidated gross profit was $1.4 billion, up 9.8% from $1.2 billion last year, with a gross margin of 28.4% compared to 29% the previous year [15] - Adjusted EBITDA was $313 million, down 20.7% from the previous year [15][21] - For Q4 2018, total revenue was $982 million, up 10.6% from $888 million a year ago, with a gross profit of $276 million, up 3.8% [17] Business Line Data and Key Metrics Changes - Good Sam Consumer Services and Plans segment revenues were $214 million, up 9.4% from $196 million last year, with a gross profit margin of 59.5% [16] - RV dealership segment revenues grew 6.2% to $3.9 billion, with gross profit increasing 5.6% to $1 billion [16] - RV and outdoor retail segment revenue increased 65% to $670 million, driven by new Gander openings, with gross profit at $225 million [16] Market Data and Key Metrics Changes - The company ended the year with RV in-stock inventory down 19% on a per dealership basis and more than $120 million on a same-store basis [9][18] - Active RV and outdoor consumers increased to over 5.1 million, up from 3.6 million in 2017, with Good Sam Club membership rising to 2.1 million [10] Company Strategy and Development Direction - The company aims to expand its RV and outdoor footprint through dealership acquisitions and new locations, while enhancing product and service offerings [26] - The focus is on building Gander RV into a prominent brand and leveraging digital platforms to attract customers [26][27] - Management changes were made to streamline operations and enhance focus on strategic initiatives [27] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges in the industry, with expectations for total revenues in 2019 ranging from $4.9 billion to $5.1 billion and adjusted EBITDA between $320 million and $340 million [24] - There is a cautious outlook for the first quarter of 2019 due to uncertainties from the previous year [24] Other Important Information - The company identified a material weakness in internal controls related to technical resources and plans to add finance and accounting personnel [13][14] - The company closed several underperforming locations and consolidated distribution centers to improve efficiency [37] Q&A Session Summary Question: Sales trends during the quarter and expectations for 2019 - The fourth quarter saw a rough October, a mild bounce in November, and a significant decline in December, with softening trends continuing into 2019 [34] Question: Inventory levels and channel inventory cleanup - The company is comfortable with current inventory levels and is aggressively pursuing used inventory to mitigate softness in new sales [35] Question: Gander Outdoors performance and losses - Gander Outdoors had significant losses, but the company is optimistic about future performance as more locations begin selling RVs [38] Question: EBITDA guidance and costs related to Gander - The 2019 EBITDA guidance includes all operating expenses with no add-backs for Gander [43] Question: Expectations for gross margin and SG&A - The company expects margins to improve in 2019 due to better inventory management and seasonal preparations [44] Question: Capital allocation and potential buybacks - The focus for 2019 is on reducing debt and pursuing opportunistic acquisitions rather than stock buybacks [47] Question: Retail gross margin performance in Q4 - Retail margins were impacted by a higher percentage of outdoor products sold and aggressive inventory liquidation [60] Question: Factors driving lower retail demand for new RVs - The company noted that 2017 was a record year, and there is a need to attract new customers to the RV market [66] Question: Same-store unit sales expectations - The company anticipates a decline of 3% to 4% in same-store unit sales for 2019 [55]