U.S. markets closed

Camping World Holdings, Inc. Reports Fourth Quarter and Full Year 2019 Results

Camping World Holdings, Inc. (NYSE: CWH)(the "Company"), America’s largest retailer of recreational vehicles ("RVs") and related services and products, today reported results for the fourth quarter and full year ended December 31, 2019.

"We are very excited about the current direction of our business," said Marcus Lemonis, Chairman and CEO of Camping World Holdings, Inc. "Our 2019 results include the impact of our decision last September to strategically shift away from locations where we did not have the ability or where it was not feasible to sell and/or service RVs, and we took aggressive actions to consolidate our retail operations, reduce product inventory levels and reduce overhead. We are pleased that RV sales thus far in 2020 are encouraging, and when coupled with the expected benefits arising out of the 2019 strategic shift, we believe we are well-positioned to generate improved financial performance in 2020 and beyond."

Full Year-over-Year Operating Highlights:

  • Revenue increased 2.1% to $4.9 billion
  • Gross profit decreased 5.5% to $1.3 billion
  • Income from operations, net loss and diluted loss per share of Class A common stock were $8.7 million, $120.3 million, and $1.62, respectively, and included long-lived asset impairment and restructuring costs of $113.5 million primarily related to the 2019 Strategic Shift away from locations that do not sell and/or service RVs
  • Adjusted EBITDA(1) decreased 46.9% to $166.0 million, and was negatively impacted by the heavy discounting and liquidation of products, parts and accessories related to our plan announced in September 2019 to strategically shift our business away from locations where we do not have the ability or where it is not feasible to sell and/or service RVs (the "2019 Strategic Shift")
  • Vehicle inventories decreased $10.4 million: new down $51.8 million; used up $41.4 million
  • Products, parts, accessories and miscellaneous inventories decreased $190.2 million to $225.9 million
  • The number of Active Customers(2) increased 1.3% to approximately 5.12 million and the number of Good Sam Club members increased 1.4% to approximately 2.12 million

Fourth Quarter-over-Quarter Operating Highlights:

  • Revenue decreased 1.8% to $964.9 million
  • Gross profit decreased 12.7% to $240.6 million
  • Loss from operations, net loss and diluted loss per share of Class A common stock were $66.1 million, $80.9 million, and $0.89, respectively, and included long-lived asset impairment and restructuring costs of $35.7 million related to the 2019 Strategic Shift
  • Adjusted EBITDA(1) loss was $15.1 million, and was negatively impacted by heavy discounting and liquidation of products and accessories related to the 2019 Strategic Shift

________________

(1)

Adjusted EBITDA is a non-GAAP measure. For a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure, see the "Non-GAAP Financial Measures" section later in this press release.

(2)

An Active Customer is a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement.

2019 Strategic Shift and Long-lived Asset Impairment

In 2019, we made a strategic decision to refocus our business around our core RV competencies and consolidated our non-RV retail business through the closure of a number of stores and liquidation of select products and merchandise categories. In total, we expect the costs related to the 2019 Strategic Shift to be in the approximate range of $78 million to $88 million, including one-time employee termination benefits of $1.0 million to $1.5 million, lease termination costs of between $15.0 million and $20.0 million, incremental inventory reserve charges of $41.9 million, and other associated costs of between $20.0 million and $25.0 million. Through December 31, 2019, the Company has incurred $4.3 million of such other associated costs primarily representing labor, lease, and other operating expenses incurred during the post-close wind-down period for the locations related to the 2019 Strategic Shift. The additional amount of $15.7 million to $20.7 million represents similar costs that may be incurred in the year ending December 31, 2020 for locations that continue in a wind-down period prior to lease termination. The Company intends to negotiate terminations of these leases where prudent and pursue sublease arrangements for the remaining leases. Lease costs may continue to be incurred after December 31, 2020 on these leases if the Company is unable to terminate the leases under acceptable terms or offset the lease costs through sublease arrangements. The foregoing lease termination cost estimate represents the expected cash payments to terminate certain leases, but does not include the gain or loss from derecognition of the related operating lease assets and liabilities, which is dependent on the particular leases that will be terminated. In 2019, we recorded restructuring costs of $47.2 million related to the 2019 Strategic Shift.

During the year ended December 31, 2019, the Company had indicators of impairment of the long-lived assets for certain of its locations, primarily those locations related to the 2019 Strategic Shift. During the year ended December 31, 2019, the Company recorded long-lived asset impairment charges relating to leasehold improvements, furniture and equipment, and operating lease assets of $20.8 million, $28.6 million, and $16.9 million, respectively. Of the $66.3 million long-lived asset impairment charge during the year ended December 31, 2019, $57.4 million related to the 2019 Strategic Shift discussed above.

Earnings Conference Call and Webcast Information

A conference call to discuss the Company’s fourth quarter and fiscal year 2019 financial results is scheduled for today, February 27, 2020, at 3:30 p.m. Central Time. Investors and analysts can participate on the conference call by dialing (888) 394-8218 or (323) 701-0255 and using conference ID# 4750175. Interested parties can also listen to a live webcast or replay of the conference call by logging on to the Investor Relations section on the Company’s website at http://investor.campingworld.com. The replay of the conference call webcast will be available on the investor relations website for approximately 90 days.

Presentation

This press release presents historical results, for the periods presented, of the Company and its subsidiaries, that are presented in accordance with accounting principles generally accepted in the United States ("GAAP"), unless noted as a non-GAAP financial measure. The Company’s initial public offering ("IPO") and related reorganization transactions ("Reorganization Transactions") that occurred on October 6, 2016 resulted in the Company as the sole managing member of CWGS Enterprises, LLC ("CWGS, LLC"), with sole voting power in and control of the management of CWGS, LLC. Despite its position as sole managing member of CWGS, LLC, the Company has a minority economic interest in CWGS, LLC. As of December 31, 2019, the Company owned 42.0% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. Unless otherwise indicated, all financial comparisons in this press release compare our financial results of the fourth quarter and full year ended December 31, 2019 to our financial results from the fourth quarter and full year ended December 31, 2018.

About Camping World Holdings, Inc.

Camping World Holdings, Inc. (together with its subsidiaries) is America’s largest retailer of RVs and related products and services. Our vision is to build a long-term legacy business that makes RVing fun and easy, and our Camping World and Good Sam brands have been serving RV consumers since 1966. We strive to build long-term value for our customers, employees, and shareholders by combining a unique and comprehensive assortment of RV products and services with a national network of RV dealerships, service centers and customer support centers along with the industry’s most extensive online presence and a highly-trained and knowledgeable team of associates serving our customers, the RV lifestyle, and the communities in which we operate. We also believe that our Good Sam organization and family of programs and services uniquely enables us to connect with our customers as stewards of the RV enthusiast community and the RV lifestyle.

For more information, please visit www.CampingWorld.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements about our business plans and goals, including the ability of our model to deliver long-term growth and sustainability through industry cycles, and our beliefs regarding our competitive position. These forward-looking statements are based on management’s current expectations.

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: current softness in the RV industry, which has increased our costs and reduced our margins; uncertainty regarding how long the ongoing softness in the RV industry will last; our ability to execute and achieve the expected benefits of our 2019 Strategic Shift; the availability of financing to us and our customers; fuel shortages or high prices for fuel; the success of our manufacturers; general economic conditions in our markets; changes in consumer preferences; competition in our industry; risks related to acquisitions and expansion into new markets; our failure to maintain the strength and value of our brands; our ability to manage our inventory; fluctuations in our same store sales; the cyclical and seasonal nature of our business; our dependence on the availability of adequate capital and risks related to our debt; our reliance on five fulfillment and distribution centers; natural disasters, including epidemic outbreaks; risks associated with selling goods manufactured abroad; our dependence on our relationships with third party suppliers; our ability to retain senior executives and attract and retain other qualified employees; risks associated with leasing substantial amounts of space; regulatory risks; data privacy and cybersecurity risks; risks related to our intellectual property; the impact of ongoing or future lawsuits against us and certain of our officers and directors; and risks related to our organizational structure.

These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K filed for the year ended December 31, 2019 and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required under applicable law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Camping World Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In Thousands Except Per Share Amounts)
 
Three Months Ended December 31,Years Ended December 31,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue:
Good Sam Services and Plans

$

45,643

 

$

44,186

 

$

179,538

 

$

172,660

 

RV and Outdoor Retail
New vehicles

 

381,158

 

 

428,508

 

 

2,370,321

 

 

2,512,854

 

Used vehicles

 

184,720

 

 

151,523

 

 

857,628

 

 

732,017

 

Products, service and other

 

274,504

 

 

278,722

 

 

1,034,577

 

 

949,383

 

Finance and insurance, net

 

66,720

 

 

68,188

 

 

401,302

 

 

383,711

 

Good Sam Club

 

12,186

 

 

11,266

 

 

48,653

 

 

41,392

 

Subtotal

 

919,288

 

 

938,207

 

 

4,712,481

 

 

4,619,357

 

Total revenue

 

964,931

 

 

982,393

 

 

4,892,019

 

 

4,792,017

 

 
Costs applicable to revenue (exclusive of depreciation
and amortization shown separately below):
Good Sam Services and Plans

 

19,176

 

 

19,391

 

 

78,054

 

 

76,041

 

RV and Outdoor Retail
New vehicles

 

331,109

 

 

377,913

 

 

2,074,270

 

 

2,188,735

 

Used vehicles

 

148,166

 

 

119,039

 

 

678,640

 

 

568,400

 

Products, service and other

 

225,034

 

 

188,228

 

 

762,919

 

 

585,263

 

Good Sam Club

 

838

 

 

2,240

 

 

10,738

 

 

10,646

 

Subtotal

 

705,147

 

 

687,420

 

 

3,526,567

 

 

3,353,044

 

Total costs applicable to revenue

 

724,323

 

 

706,811

 

 

3,604,621

 

 

3,429,085

 

 
Gross profit:
Good Sam Services and Plans

 

26,467

 

 

24,795

 

 

101,484

 

 

96,619

 

RV and Outdoor Retail
New vehicles

 

50,049

 

 

50,595

 

 

296,051

 

 

324,119

 

Used vehicles

 

36,554

 

 

32,484

 

 

178,988

 

 

163,617

 

Products, service and other

 

49,470

 

 

90,494

 

 

271,658

 

 

364,120

 

Finance and insurance, net

 

66,720

 

 

68,188

 

 

401,302

 

 

383,711

 

Good Sam Club

 

11,348

 

 

9,026

 

 

37,915

 

 

30,746

 

Subtotal

 

214,141

 

 

250,787

 

 

1,185,914

 

 

1,266,313

 

Total gross profit

 

240,608

 

 

275,582

 

 

1,287,398

 

 

1,362,932

 

 
Operating expenses:
Selling, general, and administrative

 

270,648

 

 

261,621

 

 

1,141,643

 

 

1,069,359

 

Debt restructure expense

380

Depreciation and amortization

 

18,288

 

 

15,115

 

 

59,932

 

 

49,322

 

Goodwill impairment

40,046

40,046

Long-lived asset impairment

16,245

66,270

Lease termination

(686

)

(686

)

Loss on disposal of assets

 

2,245

 

 

1,823

 

 

11,492

 

 

2,810

 

Total operating expenses

 

306,740

 

 

318,605

 

 

1,278,651

 

 

1,161,917

 

 
(Loss) Income from operations

 

(66,132

)

 

(43,023

)

 

8,747

 

 

201,015

 

 
Other income (expense):
Floor plan interest expense

 

(8,224

)

 

(9,555

)

 

(40,108

)

 

(38,315

)

Other interest expense, net

 

(15,941

)

 

(17,589

)

 

(69,363

)

 

(63,329

)

Loss on debt restructure

(1,676

)

Tax Receivable Agreement liability adjustment

 

1,528

 

 

(1,324

)

 

10,005

 

 

(1,324

)

Total other income (expense)

 

(22,637

)

 

(28,468

)

 

(99,466

)

 

(104,644

)

 
(Loss) income before income taxes

 

(88,769

)

 

(71,491

)

 

(90,719

)

 

96,371

 

Income tax benefit (expense)

 

7,915

 

 

237

 

 

(29,582

)

 

(30,790

)

Net (loss) income

 

(80,854

)

 

(71,254

)

 

(120,301

)

 

65,581

 

Less: net loss (income) attributable to non-controlling interests

 

52,333

 

 

40,926

 

 

59,710

 

 

(55,183

)

Net (loss) income attributable to Camping World Holdings, Inc.

$

(28,521

)

$

(30,328

)

$

(60,591

)

$

10,398

 

 
Income (loss) earnings per share of Class A common stock:
Basic

$

(0.76

)

$

(0.82

)

$

(1.62

)

$

0.28

 

Diluted

$

(0.89

)

$

(0.83

)

$

(1.62

)

$

0.28

 

Weighted average shares of Class A common stock outstanding:
Basic

 

37,443

 

$

37,137

 

 

37,310

 

$

36,985

 

Diluted

 

89,112

 

$

88,812

 

 

37,350

 

$

88,878

 

 
Camping World Holdings, Inc. and Subsidiaries
Supplemental Operating Data (unaudited)
 
Three Months Ended December 31,IncreasePercent

2019

2018

(decrease)Change
Unit sales
New vehicles

9,597

11,295

(1,698)

(15.0%)

Used vehicles

7,166

6,529

637

9.8%

Total

16,763

17,824

(1,061)

(6.0%)

 
Average selling price
New vehicle

$ 39,716

$ 37,938

$ 1,779

4.7%

Used vehicles

25,777

23,208

2,570

11.1%

 
Same store unit sales
New vehicles

7,961

10,153

(2,192)

(21.6%)

Used vehicles

6,153

6,031

122

2.0%

Total

14,114

16,184

(2,070)

(12.8%)

 
Same store revenue ($ in 000's)
New vehicles

$ 320,782

$ 386,932

$ (66,150)

(17.1%)

Used vehicles

163,923

139,621

24,302

17.4%

Products, service and other

108,672

119,364

(10,692)

(9.0%)

Finance and insurance

56,966

63,266

(6,300)

(10.0%)

Total

$ 650,343

$ 709,183

$ (58,839)

(8.3%)

 
Average gross profit per unit
New vehicle

$ 5,215

$ 4,479

$ 736

16.4%

Used vehicle

5,101

4,975

126

2.5%

Finance and insurance, net per vehicle

3,980

3,826

155

4.0%

Total vehicle front-end yield(1)

9,147

8,487

660

7.8%

 
Gross margin
Good Sam Services and Plans

58.0%

56.1%

187

bps
New vehicles

13.1%

11.8%

132

bps
Used vehicles

19.8%

21.4%

(165)

bps
Products, service and other

18.0%

32.5%

(1,445)

bps
Finance and insurance, net

100.0%

100.0%

unch.
Good Sam Club

93.1%

80.1%

1,301

bps
Subtotal RV and Outdoor Retail

23.3%

26.7%

(344)

bps
Total gross margin

24.9%

28.1%

(312)

bps
 
Inventories ($ in 000's)
New vehicles

$ 966,134

$ 1,017,910

$ (51,776)

(5.1%)

Used vehicles

165,927

124,527

41,400

33.2%

Products, parts, accessories and misc.

225,888

416,074

(190,186)

(45.7%)

Total RV and Outdoor inventory

$ 1,357,949

$ 1,558,511

$ (200,562)

(12.9%)

 
Vehicle inventory per location ($ in 000's)
New vehicle inventory per dealer location

$ 6,274

$ 7,219

$ (946)

(13.1%)

Used vehicle inventory per dealer location

1,077

883

194

22.0%

 
Vehicle inventory turnover(2)
New vehicle inventory turnover

2.1

2.2

(0.0)

(2.0%)

Used vehicle inventory turnover

4.8

5.1

(0.3)

(6.0%)

 
Retail locations
RV dealerships

154

141

13

9.2%

RV service & retail centers

11

14

(3)

(21.4%)

Subtotal

165

155

10

6.5%

Other retail stores

10

72

(62)

(86.1%)

Total

175

227

(52)

(22.9%)

 
Other data
Active customers(3)

5,118,413

5,051,439

66,974

1.3%

Good Sam Club members

2,124,724

2,094,413

30,311

1.4%

Finance and insurance gross profit as a % of total vehicle revenue

11.8%

11.8%

3

bps

NA

Same store locations

132

118

14

11.9%

Years Ended December 31,IncreasePercent

 

2019

 

 

2018

 

(decrease)Change
Unit sales
New vehicles

 

66,111

 

 

71,545

 

 

(5,434

)

(7.6

%)

Used vehicles

 

36,213

 

 

32,751

 

 

3,462

 

10.6

%

Total

 

102,324

 

 

104,296

 

 

(1,972

)

(1.9

%)

 
Average selling price
New vehicle

$

35,854

 

$

35,123

 

$

731

 

2.1

%

Used vehicles

 

23,683

 

 

22,351

 

 

1,332

 

6.0

%

 
Same store unit sales
New vehicles

 

56,381

 

 

67,150

 

 

(10,769

)

(16.0

%)

Used vehicles

 

31,987

 

 

30,672

 

 

1,315

 

4.3

%

Total

 

88,368

 

 

97,822

 

 

(9,454

)

(9.7

%)

 
Same store revenue ($ in 000's)
New vehicles

$

2,051,497

 

$

2,365,464

 

$

(313,967

)

(13.3

%)

Used vehicles

 

775,307

 

 

689,927

 

 

85,380

 

12.4

%

Products, services and other

 

491,482

 

 

518,414

 

 

(26,932

)

(5.2

%)

Finance and insurance

 

352,180

 

 

362,212

 

 

(10,032

)

(2.8

%)

Total

$

3,670,466

 

$

3,936,017

 

$

(265,551

)

(6.7

%)

 
Average gross profit per unit
New vehicle

$

4,478

 

$

4,530

 

$

(52

)

(1.2

%)

Used vehicle

 

4,943

 

 

4,996

 

 

(53

)

(1.1

%)

Finance and insurance, net per vehicle unit

 

3,922

 

 

3,679

 

 

243

 

6.6

%

Total vehicle front-end yield(1)

 

8,564

 

 

8,356

 

 

209

 

2.5

%

 
Gross margin
Good Sam Services and Plans

 

56.5

%

 

56.0

%

 

57

 

bps
New vehicles

 

12.5

%

 

12.9

%

 

(41

)

bps
Used vehicles

 

20.9

%

 

22.4

%

 

(148

)

bps
Products, services and other

 

26.3

%

 

38.4

%

 

(1,210

)

bps
Finance and insurance, net

100.0

%

100.0

%

unch.

Good Sam Club

 

77.9

%

 

74.3

%

 

365

 

bps
Subtotal RV and Outdoor Retail

 

25.2

%

 

27.4

%

 

(225

)

bps
Total gross margin

 

26.3

%

 

28.4

%

 

(213

)

bps
 
Inventories ($ in 000's)
New vehicles

$

966,134

 

$

1,017,910

 

$

(51,776

)

(5.1

%)

Used vehicles

 

165,927

 

 

124,527

 

 

41,400

 

33.2

%

Products, parts, accessories and misc.

 

225,888

 

 

416,074

 

 

(190,186

)

(45.7

%)

Total RV and Outdoor inventory

$

1,357,949

 

$

1,558,511

 

$

(200,562

)

(12.9

%)

 
 
Other data
Finance and insurance gross profit as a % of total vehicle revenue

 

12.4

%

 

11.8

%

 

61

 

bps

NA

(1) Front end yield is calculated as gross profit from new vehicles, used vehicles and finance and insurance (net), divided by combined new and used retail unit revenue.

(2) Inventory turnover calculated as vehicle costs applicable to revenue divided by average vehicle inventory.

(3) An Active Customer is a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement.

Camping World Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
($ in Thousands Except Per Share Amounts)
 
As of December 31,

2019

 

2018

 

Assets
Current assets:
Cash and cash equivalents

$

147,521

 

$

138,557

 

Contracts in transit

 

44,947

 

 

53,214

 

Accounts receivable, net

 

81,847

 

 

85,711

 

Inventories

 

1,358,539

 

 

1,558,970

 

Prepaid expenses and other assets

 

57,827

 

 

51,710

 

Total current assets

 

1,690,681

 

 

1,888,162

 

...