Camping World Holdings(US:CWH)2024-10-29 20:01Financial Data and Key Metrics Changes - The company recorded revenue of $1.7 billion for Q3 2024, roughly flat compared to the previous year, driven by a 31% increase in new unit sales offset by an 18% decline in used unit sales [28] - Adjusted EBITDA was $67.5 million, with year-over-year variance primarily stemming from actions around used inventory procurement [32] - New vehicle gross margin was 13.5%, primarily driven by strong performance in Class C RVs, while used vehicle margins were 18.2% [29][30] Business Line Data and Key Metrics Changes - New unit sales increased by nearly 30% in July and August, continuing strong performance into September and October [22] - The Good Sam services and plans saw solid top-line growth, although growth profit comparison was impacted by a $5.5 million exit arrangement benefit in the previous year's third quarter [31] - The service and parts business showed year-over-year improvements, with customer pay work up on a single-digit percentage basis [69] Market Data and Key Metrics Changes - The company achieved nearly 11% market share in the combined new and used RV markets, with a goal to exceed 15% [19] - The used marketplace is stabilizing, with nearly the same amount of used units compared to last year, and margins improving [24] - The company anticipates used unit volumes to improve next year by low double digits year-over-year [26] Company Strategy and Development Direction - The company aims to grow through dealership acquisitions, with a clear path to increase locations from over 200 to 320 [11] - Focus on product innovation, with 36% of new unit sales coming from contract manufactured RVs exclusive to the company [13] - The strategy includes creating liquidity in the RV market and identifying underserved markets to capitalize on shifting consumer preferences [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming competitors and achieving market share growth despite macroeconomic headwinds [33] - The company is taking a conservative approach to forecasting, expecting modest increases in new unit sales and improvements in used unit margins [50][51] - Management highlighted the importance of understanding consumer payment sensitivity and the impact of interest rates on demand [49] Other Important Information - The company ended the quarter with approximately $180 million in cash and $366 million in used inventory [33] - Management emphasized the need for improved customer retention strategies for those who purchase RVs [71] - The company is focused on maintaining a disciplined approach to inventory management and market positioning [64] Q&A Session Summary Question: Outlook for modest new unit growth next year - Management expects the new market to perform better than in 2024, with continued market share gains [35] Question: Used inventory trends and procurement - The company plans to follow a normal seasonal trend for used inventory procurement, targeting a three and a half turn on used [38] Question: New RV margins and fourth-quarter expectations - Margins in the core business of travel trailers and fifth wheels were solid, with expectations for Q4 margins to be similar to Q3 [42][43] Question: Impact of storms on demand - Management noted that while some locations were affected by storms, new and same-store sales remained robust in October [44] Question: Industry outlook and potential upside/downside - Management forecasts the industry retail range to be around 350,000 to 360,000 units, with a conservative approach to interest rate cuts [49] Question: Dealership count and M&A progress - The company aims for 12 to 15 acquisitions per year, with a focus on identifying white space in the market [56][59] Question: Inventory positioning and growth confidence - The company has maintained a similar mix of model year inventory compared to last year, with confidence in pricing stability [61] Question: Competitive environment and inventory management - Management sees a divide between disciplined dealers and those with aged inventory, with no significant pressure on demand or margins [64] Question: Impact of interest rate changes - A 1% rate cut could benefit the company by up to $30 million, improving consumer confidence and potentially increasing average selling prices [66][67] Question: Parts and service performance - Customer pay work in the service segment was up on a single-digit percentage basis year-over-year [69] Question: Private label strategy - The company plans to leverage contract manufacturing to differentiate its product offerings and expand market share [74][80]