Camping World Holdings, Inc. Third Quarter 2026 Results Conference Call - CAMPING WORLD HOLDINGS INC

Explicit Guidance:

• FY2026 Full-Year: No new full-year guidance provided; confirmed adjusted EBITDA will be below the previous low-end range.
• Q4 2026 SG&A: Expected to be >$50 million lower year-over-year.
• Full-Year 2026 SG&A: Targeting a run rate ~$130 million lower than 2025 (total structural savings of ~$150 million).
• FY2027 Cost Savings: Expected to realize an incremental $75 million in SG&A savings.
• FY2027 Margins: Anticipate gross margin normalization with new vehicle margin improvement of 100–150 bps and used vehicle margin improvement of ~100 bps.
• FY2027 Earnings Impact: Projecting ~$60–$70 million of total earnings benefit (combining $75M SG&A savings, margin improvement, and ~2–3% cost inflation).
• FY2027 Capital Expenditures: Expected gross CapEx to be < $80 million (vs. $92 million YTD 2026).
• FY2027 Cash Flow: Expect business to generate positive free cash flow (post- refinancing).

Business-Segment Outlook:

• New Vehicle Units: Expected to decline in mid-single digits to mid-teens for Q4 2026; industry-wide new retail expected to be flat to down mid-single digits in early 2027.
• Used Vehicle Units: Expected to remain flat in Q4 2026 and 2027; Q4 2026 volume down mid-teens YoY.
• New Vehicle Margins: Q3 at 10.2%; projected to improve 50–100 bps sequentially into Q4 2026; long-term target of 13–14%.
• Used Vehicle Margins: Q3 at 18%; projected to improve ~100 bps in 2027; long-term baseline ~18%.
• Good Sam Services: Recurring segment running >60% gross margin (62.3% in Q3); now selling extended service/insurance to third-party dealers; targeting growth via 6 million+ installed base.
• F&I Revenue: Expected to outperform combined new/used vehicle sales growth long-term; Q3 saw a non-recurring $12.7M chargeback reserve adjustment (excluding this, EBITDA was $49M).
• Service Segment: Q3 gross margin dipped due to win-back promotions; margins expected to normalize in future quarters.

Market and Competitive Outlook:

• Inventory Position: New RV mix of prior model years at 5-year low; aged used inventory (>180 days) reduced by largest amount in 6 years (down ~25% on cost basis YoY).
• Model Year Mix: 61% of new assets are MY27; competitors estimated at 40–45% MY27.
• Competitive Pricing: Industry promotion intensity (up to 37–40% discounts off MSRP) is easing as competitors de-risk aged inventory; Camping World refused to chase deep price cuts to protect margins.
• Market Share: Maintained ~21% North American share (24.5% US) and ~8.4% used market share (TTM).
• Customer Behavior: Average trade-in age ~7.5 years (target: 4.5 years); expecting customers to self-heal balance sheets and re-enter the trade-in cycle.
• Exclusive Brands: Campsite Reserve 5th wheel is #8 best-selling in NA; exclusive brands accounted for ~47–48% of new sales in Q3.

Macro / Industry Outlook:

• Consumer Sentiment: Expected to improve in 2027 as consumers absorb interest rate hikes and stabilize against inflation; confidence readings showing improvement.
• Interest Rates: Anticipate rates to increase from current favorable levels (last refinanced 2021) but view as manageable.
• Inflation: General inflation expected to remain 2–3% in 2027, impacting wages, freight, and general costs.
• Industry Drivers: Energy prices and general inflation expected to persist into early 2027.
• Geopolitics: Q1/Q2 of prior year impacted by weather and geopolitical tensions; expects 2027 comps to be more manageable.
• M&A Impact: Monitoring potential LCI/Patrick merger; hopes for reduced costs/pricing to benefit consumer demand.

Strategic Initiatives:

• Cost Reduction Program: Total annualized structural savings of >$150 million ($100M initial + $50M incremental from headcount/footprint actions).
  • Components: ~15% headcount reduction (Aug–Sept), closure of 4 dealerships (2 reserved for reopening), software/CRM consolidation (in-house RV CRM live in all locations), elimination of third-party license fees.
• CRM Efficiency: New in-house CRM reduced lead-to-interaction time by 70% and increased initial outreach response by 150%.
• Good Sam Scale: Expanded system overhaul complete; now selling insurance/service products to external dealers and partners.
• Refinancing: Evaluating refinancing of senior secured credit facilities to increase flexibility; term loan matures June 2028, mortgage facility extended to 2031.
• Capital Discipline: Restrained CapEx strategy for 2027.

Risks and Headwinds to Outlook:

• Margin Pressure: Front-end margins remain under pressure; potential for unfavorable actuarial adjustments in F&I if cancellation/refund trends increase.
• Inventory Replenishment: Competition may not replenish aggressively, but pricing volatility could impact used margin normalization.
• Macroeconomic Sensitivity: Consumer sentiment, interest rates, energy prices, and inflation remain key variables that could push 2027 volume to "down mid-single digits" if conditions do not ease.
• Cost Inflation: 2–3% general inflation could partially offset cost savings and margin improvements.
• Operational Timing: Lag time between recognizing volume drops and executing cost actions (e.g., headcount/store closures).
• Debt Refinancing: Future refinancing could occur at higher rates than current 2021 levels.

Management Tone on the Future:

• Confidence Level: High confidence in the "rebuilt" inventory position and cost structure; "tremendously proud" of progress on key priorities.
• Strategic Stance: Willing to accept volume/share losses to protect margins; committed to "gliding" into Q4/Q1 with improved margin profiles rather than chasing volume with deep discounts.
• Future Outlook: Cautiously optimistic for 2027; believes the industry is approaching an inflection point for margin normalization and consumer confidence recovery.
• Hedges: No full-year 2026 guidance provided due to Q4 variability; 2027 outlook assumes "freezing" current variables for baseline mid-single digit decline, with upside potential if sentiment improves.
• Commitment: Reaffirmed commitment to Good Sam as a cornerstone and long-term growth engine; no asset sales planned (excluding closed dealerships).

Miscellaneous:

• Cash Position: Ended Q3 2026 with $263 million cash and $444 million working capital; floor plan borrowing reduced $349 million YTD.
• Real Estate: Book value of unmortgaged real estate ~$200 million.
• Profit Sharing: New recurring profit-sharing agreement with credit card partner to yield ~$8 million annually (starting Q4 2026), up from prior royalty model.
• CRM Systems: Third-party service CRM following the retirement path of the sales CRM.