Camping World Holdings(CWH) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company recorded revenue of $1.2 billion for Q4 2024, an increase of 9% compared to the previous year, driven by an 8% increase in new unit sales and an 11% increase in used unit sales [20][21] - Adjusted EBITDA loss improved to$ 2.5 million from a loss of $8.9 million year-over-year, primarily due to accelerated used inventory procurement and new unit market share gains [23] - The company ended the quarter with approximately$ 288 million in cash, including $80 million in the floor plan offset account, and$ 339 million in used inventory net of flooring [24] Business Line Data and Key Metrics Changes - New vehicle gross margin was 15.2%, primarily due to lower promotional support compared to the prior year [21] - Used vehicle gross margin improved to 18.7% as fresh used inventory was brought back into the system [21] - Good Sam achieved revenue growth of 1% with nearly $95 million in EBITDA, indicating solid performance in product services and other areas despite pressures from the furniture business sale [22] Market Data and Key Metrics Changes - The company ended 2024 with a record combined new and used market share of 11.2%, with expectations to reach 12% in early 2025 [10][11] - Early 2025 results showed healthy mid-single-digit growth, with expectations for used same-store sales tracking positive double digits in February [15][16] - The company anticipates retail demand to remain relatively flat year-over-year, estimating around 350,000 retail sales for 2025 [98][102] Company Strategy and Development Direction - The company aims for 10% to 15% unit growth in used RVs and low single-digit growth in new RVs, with a focus on improving total gross profit and SG&A by 600 to 700 basis points [10][18] - The strategy includes expanding dealership acquisitions, with plans to close an additional four to six rooftops by the end of spring [17][90] - The company is focused on maintaining its dominance in the RV market while expanding its Good Sam and service metrics [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the broader RV industry, citing good foot traffic and lead volume in stores [42][46] - The company expects explosive EBITDA growth in Q1 2025 compared to the prior year, driven by gross margin improvements and significant SG&A reductions [13][117] - Management noted that the ten-year treasury yield's stabilization could lead to retail finance rate relief for customers, enhancing affordability [11][30] Other Important Information - The company raised$ 330 million in growth capital in October and amended its RV floor plan facility, adding $300 million of runway [9] - The company is committed to achieving a 600 to 700 basis point improvement in SG&A as a percentage of gross profit, with adjustments to the cost structure already in progress [23][152] Q&A Session Summary Question: On new ASPs, is the improvement due to rate reductions or other factors? - Management indicated that ASPs typically start lower in the year and rise as the season progresses, with rate reductions allowing customers to afford more expensive units [28][31] Question: How much of the SG&A improvement is volume-driven versus cost savings? - Management acknowledged that some improvement comes from increased gross profit, but difficult decisions regarding headcount were also made to achieve the targeted SG&A improvements [32][34] Question: What feedback has been received from the show season regarding retail demand? - Management noted positive feedback from show season, with good foot traffic and lead volume, indicating a healthy demand for RVs [42][46] Question: What is the expected retail demand for 2025? - Management anticipates retail demand to be relatively flat year-over-year, estimating around 350,000 retail sales [98][102] Question: Can you clarify the impact of insurance claims on SG&A? - Management quantified the impact of higher insurance claims at about$ 6 million for the quarter, which is expected to normalize [151] Question: What is the outlook for used RV opportunities in 2025? - Management expressed confidence in the used RV market, highlighting significant procurement efforts and a strong inventory position [155]