Good morning, and welcome to the Camping World Holdings conference call to discuss financial results for the first quarter fiscal year of 2022. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Please be advised that this call is being recorded and the reproduction of the call in whole or in part is not permitted without written authorization from the company. Participating in the call today are Marcus Lemonis, Chairman and Chief Executive Officer, Brent Moody, President, Karin Bell, Chief Financial Officer, Tamara Ward, Chief Operating Officer, Matthew Wagner, Executive Vice President, Lindsey Christen, Executive Vice President and General Counsel, and Tom Curran, Chief Accounting Officer. I will turn the call over to Lindsey Christen to get us started. Please go ahead, ma'am.
Good morning, everyone. A press release covering the company's first quarter 2022 financial results was issued yesterday afternoon, and a copy of that press release can be found in the investor relations section on the company's website. Management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks may include statements regarding the impact of COVID-19 on our business, financial results, and financial condition. Our business goals, plans, abilities and opportunities, industry and customer trends, our recently disclosed cybersecurity incidents, our strategic initiatives, acquisitions and planned capital expenditures, potential stock repurchases, future dividend payments, increases in our borrowings, our liquidity and future compliance with our financial covenants and anticipated financial performance.
Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our Form 10-K, our Form 10-Qs, and other reports on file with the SEC. Any forward-looking statements represent our views only as of today, and we undertake no obligation to update them. Please also note that we will be referring to certain non-GAAP financial measures on today's call, such as EBITDA, adjusted EBITDA, and adjusted earnings per share diluted, which we believe may be important to investors to assess our operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial statements are included in our earnings release and on our website. All comparisons of our 2022 first quarter results are made against the 2021 first quarter results, unless otherwise noted.
I'll now turn the call over to Marcus.
Thanks, Lindsay. Good morning and thanks for joining us. I'm here with members of our senior management team as we report results for the first quarter 2022. On today's call, we're gonna lay out our financial results and the supporting comments around them. We'll also discuss macroeconomic industry trends with our short and long-term view. As all of you know, 2021 was a historic year for Camping World, and 2020 was right behind that. Our industry grew at explosive rates during the pandemic, but it's important to remember the historical path leading to 2020. For over 50 years, RVers have loved this lifestyle, and the industry has grown every single decade since inception. From our perspective, the world's passion for the outdoors has never been hotter.
With new and younger buyers coming into the market and new, lighter, more innovative units being produced, our prospective customer file continues to grow. Look, I've been in this industry for almost 20 years now, and I'm gonna continue to work diligently to ease people's concern when they see a flattening or a reduction compared to prior years of new RVs sold. While some see temporary shifts as a risk, our company sees it as a new launch pad, an opportunity to strengthen our infrastructure, improve areas of weakness, and most importantly, make opportunistic and strategic acquisitions that further strengthen our foundation. We're proud to report for the first quarter of 2022, we generated record revenue and saw that trend continue into April. Our total sales for the quarter were nearly $1.7 billion, up over last year by $105 million.
While some of that revenue increase is attributed to a rise in prices year-over-year, it is also true that some of that came from an increase in our service and repair business, specifically when you eliminate the sale of outdoor categories that we exited in Q3 of 2021. It was also bolstered by our core Good Sam business as well as our used RV business. Our adjusted EBITDA for the quarter totals $182 million, compared to $189 million a year ago. Our second-highest first quarter since the inception of our company.
The primary change to adjusted EBITDA was due to rebalancing our distribution centers, costs associated with opening new locations added to the system, our cyber incident, and our increased floor plan expense. Our gross profit for the quarter was up $40 million from the previous year, stemming from a combination of same-store contribution and additional locations added on to the platform over the last 12 months. Our SG&A was also up, but it was attributable to those same additional stores we added and the before-mentioned expenses. One metric that we focus on heavily is our variable cost structure. It is important for us that as the different segments come under pressure, either in revenue or in margin, that we maintain our variable approach to expenses, namely compensation.
For the quarter, we were pleased that our expenses as a percentage of gross were 69%, which is well below the historical Q1 average. Included in that number were the expenses from the internal adjustments to our supply chain process, separation costs for rightsizing our staff, and the cyber incident. Those items are what drove the increase up from roughly 65% the same quarter last year. We're proud of the overall result, and we recognize that there's a constant need for improvement. When we field investor questions about our business and the industry, these questions commonly emerge. Number one. What is the current status of inventory in the industry? How will the stabilization of the supply chain affect margins? Will the manufacturers resist the temptation to overproduce? What are the financial factors that have the greatest impact on this industry?
Let's start with the inventory levels. From our perspective, the products that make up the bulk of the industry, which are towables, are now adequately restocked. As a reminder, right now, the start of the key selling season is when inventory is at its highest on a same store basis. Over the next few quarters, through the natural selling season, it will appropriately reduce. We are hopeful, and we rely on manufacturers to shift back to production that matches retail demand. In an abundance of caution, we have positioned ourselves strategically in case that doesn't happen with rigorous and disciplined forecasting and ordering for our own just-in-time process. As for our used RV business, we have continued to see progress.
We stacked on an additional $100 million of used revenue growth for the quarter on top of the $1.7 billion of used revenue that we reported at the end of last year. We reached a peak used inventory of over $423 million in the quarter, but have since made the decision to increase our turns, essentially reducing that inventory. We continue to see robust demand for used and believe it to be a great alternative, specifically in a rate-increasing environment, so that we can provide multiple payment options for our consumers. In addition, it's important to note that we closely monitor values on a daily basis, and we run a very tight day supply of used of less than 100 days. Turning to the supply side.
The scarcity of RV inventory that existed during 2021 has, for the most part, repaired itself. From our perspective, it happened a little quicker than anybody anticipated, and that's a credit to the work done by manufacturers to keep our industry moving. With the shelves now restocked, we are now operating with stocking levels on the new side similarly to historical levels. We hope to maintain these levels, but see manufacturing production discipline as a key to that. As we move through the balance of the year, we anticipate margins continuing to normalize on the new side. However, we expect used margins to be more consistent with historical five-year averages, which are pretty good. Lastly, when we look at the macro factors that impact new RV sales, it's easy to recognize the pressure, consumer confidence, inflation, rising interest rates, et cetera.
For us, it's more complex than that. When you study our business, it's true that new RV sales are a big part of our company's revenue. However, it's also important to remember the other key areas that serve the installed base of RVers. Based on retail data over the last several years, we believe the installed base of RVers grew by over 1 million in the last several years. The installed base feeds our high-margin service, collision and parts business, our recurring, steady and predictable Good Sam business, which happened to grow 9% quarter-over-quarter, and our used RV business, which is up over 35% in revenue. As a management team, it's our job to anticipate changes and adjust our business for them. The common discussion we have is. What would our business look like if the new RV sales retracted at different levels?
We sensitize the model. If you make the assumption that revenue is the only factor in determining the variability of our business results, then this is often the guide that I use. As a reminder, we generated $3.3 billion of new RV revenue in 2021. For every $1 of new RV revenue reduction that our company could experience, we would expect to eliminate approximately $0.30 in gross profit related to that $1 of revenue. After factoring in the elimination of SG&A attributable to that $0.30 of gross profit, which is primarily compensation and commission, the expected impact to EBITDA could be around $0.20-$0.25, so we don't lose every dollar. This small example does not include any additional modifications that we would make to SG&A as a result of the reduction in revenue.
The reason that I provide this math is to give all of our investors a clear path to their own expected questions. What happens if? I hear that a lot. After doing this for 20 years, we've learned a great deal. We understand the importance of a variable cost structure, and our results show that. The importance of acknowledging what the market is both giving you and telling you, and most importantly, being nimble in all cases to maximize our results. While we can't forecast exactly where the economy is going, we do know that our core business fundamentals are solid. We're proud to have delivered meaningful dividends since going public quarter after quarter, with several increases along the way. To be clear, we are confident in that strategy. We're also committed to growing the dividend through consistent improvement in our business results and a disciplined stock repurchase program.
During the quarter, we repurchased 2.6 million shares totaling $80 million. In the last year, we have reduced our net outstanding total common units by 5.4 million units. Our outstanding fully exchanged share count today sits at 83.7 million in both Class A shares and common units held by the non-controlling interest. That's down from 89.2 million just a year ago. As we head into the core selling months for our company, we are pleased with revenue trends in April and through today, and we're going to continue to monitor closely those factors that affect our industry, our consumers, and your investment. As part of that investment, our commitment is to grow profitably. We added 4 stores in the first quarter, and we'll continue to be disciplined in meeting the range of new locations we forecasted.
Between acquisitions that are signed and new stores that are under construction, we believe we'll finish the year with no less than 14 new operating locations. On an annualized basis with maturity, we expect those locations to add approximately a half a billion dollars of revenue with profitability consistent with our other mature locations. Let me clarify, that's on an annualized basis with maturity. Lastly, we are making great progress on two specific fronts that we've spoken to you about in the past. First, our Good Sam RV Rentals. We're experiencing significant month-over-month growth as we enter season, and it's a new business. With rental dollars processed through the platform in March 2022 over 7 times higher compared to the end of 2021.
Our rental units on the platform have grown over 67% from the end of the year to now, the end of the quarter, with three relationships setting up the platform for continued growth at scale throughout the remainder of the 2022 year. Secondly, by the end of Q2 2022, RVs.com expects to launch our beta end-to-end RV purchase experience in specific states. This digital consumer experience, including unit selection, finance, and home delivery, would allow our company to serve customers well beyond the markets that we currently operate in. Our company, unlike some other fully digital automotive companies, will be able to sell both new and used in 42 states where we currently have a physical presence and license today. Over the next 24 months, we anticipate operating a physical location in 47 of the 48 contiguous states, consistent with the goal we laid out last year.
I'll now turn it back over to the operator for questions.
Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove yourself from the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Craig Kennison of Baird. Please go ahead with your question.
Hey, good morning. Thanks for taking my question and for the summary of your results. I wanted to ask about GPU or gross profit per unit on your new business. You had mentioned that inventory is now back to optimal levels. I'm wondering if that means we should look at GPUs coming down further to be more consistent with what you had on a pre-pandemic basis, or if you think they can hang in at a higher level.
Well, you know, obviously, Craig, with a traditional supply and demand curve, there is going to be pressures on margins as the competitive landscape ramps up. It is important to note that we do not believe that we are going to return in the short term to margins like we experienced in 2018 and 2019. When we talk about pre-pandemic margins, we want to extract 2018 and 2019, because there was a glut of inventory in the marketplace. I want to caveat that. A return to 2018 and 2019 margins could happen if, but we don't expect it to, the manufacturers continue to produce at a rate that far exceeds retail demand. From the conversations that we've had with all the manufacturers, I think everybody learned their lesson.
We think everybody learned their lesson, but we have to be clear, we're pretty good on inventory right now. We have seen some pressure in the first quarter, as you saw by our results on the new side, but are very pleased and very confident that we can continue with pretty decent margins on the used side. We're comfortable. We have forecasted it internally, and one of the things that we are looking to do, consistent with what we did in Q1, is continue to make sure that we're getting our fair share. We do not want to get our fair share by creating a race to the bottom. We are a bellwether both for pricing and for promotion, and we believe that a healthy industry by all dealers and all manufacturers benefits us just the same.
We want to make sure that we're not creating unnecessary pressure on margins along with the manufacturers doing the same.
That's very helpful. I think I heard you say that you plan to reduce your investment in used RVs. I'm curious if that's true. What drove that decision? If you could follow up. I believe last quarter, you had targeted a goal of getting that used RV business to $3 billion over some horizon, like 18 months or so. Is that still attainable, or does your approach to that market change as you try to balance inventory?
No, I think, you know, ultimately what happens, anytime you're going to try to test new highs, you have to put more on the table to see what the appetite of the market is. We want to be very disciplined in recognizing when we can achieve increases in sales, much like we did in the first quarter. We want to be prudent about the amount of capital we have deployed to achieve those goals. When we ran our models, we believe that reducing that inventory at or slightly below $400 million would yield us about the same result, but most importantly, keep the margins where we want them. While we want to chase revenue, we want to make sure that we're not breaking our margin model.
Because we manage our day supply so tightly, looking at a goal of less than 100 days, and we want to have turns at 4 times, we want to find that balance. As you know, Craig, when we try something, if it works, we go for it. If we want to make slight adjustments to be sure that we're efficient with our capital, we're not scared to make that move as well. It's a slight reduction from 423 back down to, call it 390-400. If we continue to see positive results in the second quarter, which we did in April, and we can do it on 380 or 375, we're going to continue to finesse that number so we get the optimum result based on the capital that's deployed.
Got it. Okay, thank you.
Our next question is from Brett Andress of KeyBanc. Please go ahead with your question.
Hey, good morning. Following up on Craig's question, I hear you on not returning to 2018, 2019 levels, but on the new vehicle GPU, could you maybe help us understand where you entered the quarter and maybe where you ended it or exited it into April? I think we're just trying to get a little bit more color on how, you know, the second quarter and kind of the back half could play out based on maybe where we are today.
Yeah, I'm gonna let Matt cover that.
Morning. As we entered into this year, we obviously were very optimistic with 2021 results. We took what the market was giving us at that time, and we saw a little bit of a change from our GPUs at the end of last year heading into this year, but frankly, not a very material change, heading into the year. By February, we saw a little bit of an adjustment, and we made some changes in our online pricing environment. By March, we continued to see that sustain. Heading into April, we've really not seen much of a change in terms of those GPUs.
We're confident that throughout this quarter we'll just continue to modify as necessary based upon whatever demand trends we're seeing out there and what sort of pricing logic we want to make certain that we're using to actually garner as much opportunity out there as possible. As Marcus has said, we're not going to have a race to the bottom at all. We don't see major fluctuations in short terms. However, as we continue to see quarters elapse and depending upon what the inventory situation is, then there's always the possibility that those GPUs could come down a little bit more over the coming quarters.
What that is, I'd hate to speculate as we like to manage based upon current demand, current supplies, and of course, we recognize what our competitors are going to do to actually garner a little bit of attention, and we want to make certain that we're getting our fair share of that marketplace.
I think one thing that I'd like to add to that is, you know, look at the trends and I look at our goals, and I combine those together, and I wouldn't be surprised if the GPUs in the second quarter were anywhere from a half a point to one point lower than the first quarter that we just reported as they stabilize into that number. Part of that is when we look at the core of our business and we look at attracting, continuing to attract first-time buyers to the market, we're taking a different approach, both on how we present payments to the market in terms of affordability and making sure that we're leading the charge on those entry-level units.
We're still trying to sell a $13,000 unit, arriving at, call it a $129-$139 monthly payment as we look to bring in new people into our ecosystem. We're not going to ever resist trying to capture that. One metric that I thought was interesting is what happened to our trade percentages in the first quarter.
Well, we started to realize we're going back to those normalized levels of trade percentages. We're going back to 2020. We had that reduction in trade percentages where we were down in the teens at that point. However, we've reached that more sustainable level of higher 20% of trade-in rates, and we've really maintained that same track over the past few quarters. Now at this point, we're continuing to see that returning buyer coming back into the marketplace.
As well as the first-time buyers still showing up. That's a good indicator for us is that when we continue to see that entry-level travel trailer still being a big part of our business, and I can't recall what month it was, it could have been March. We had sold 800 of what we consider our entry-level unit, our Coleman 17B. That was the single biggest month we had had in that particular space. It's important to note that we don't think that 800 units of entry level came at the expense of a more expensive unit.
We don't think that somebody said, "I want to buy an RV and I'm now not going to buy the bigger one." We actually think we found new audiences in that quarter, and that's a big focus for us through the balance of the year, is continuing to attract new buyers, not only to the industry, but more importantly to our business.
Got it. Okay. Marcus, we've been getting more questions lately on the dividend and the payout ratio. Look, I know no one here has a perfect crystal ball on macro, but how low would EBITDA have to go before maybe you take a step back and think about the current dividend level?
We have no plans in the near term to modify our dividend strategy at all, and we have sensitized multiple scenarios to ensure that our strategy is sustainable.
Thank you.
The next question is from Daniel Imbro of Stephens Inc. Please go ahead.
Hi, this is Joe Enderlin on for Daniel. Thanks for taking our question.
Sure.
Noting the negative growth in Good Sam Club members, what do you think is driving that, and what do you think is going to drive positive growth moving forward?
We're actually very pleased with the performance of our Good Sam Club. It's important to note that when we exited the Gander business and we exited the categories in Q3 of last year, particularly firearms, hunting equipment, fishing equipment, and apparel, that we lost a set of buyers that were part of that file. We made a decision not to chase that particular buyer because the crossover between their behavior and our core RV behaviors didn't match up. For us, it's more of a cleansing to a pure file, and we feel good that we've done that. In our core RV customer, particularly with our acquisitions and our new stores and our ability to add new names to our file, we're positively seeing growth in some of those areas, and so we're very happy with where that's happening.
We understand through the third quarter of 2022, both on the revenue side and on the membership side, we have to cleanse out all of the consumers and the revenue associated with those categories that we exited.
Thank you. That's super helpful. Just as a follow-up, it was noted in the release, the new and used inventory, partially driven by the easing of new vehicle supply chain and in the prepared remarks, new inventory, closer to historical levels. Just wondering what's kind of driving the easing of supply chain or what is normalized? And then do you expect that's more of a structural step in the right direction, or could that be more of a temporary alleviation? Thanks.
When you look at historic levels, we're still actually maintaining as an industry, relatively light supply of inventory levels out in the field. However, we know as the largest dealer, we also have a disproportionate ability to be able to source from a variety of manufacturers, given our relationships with manufacturers to create exclusive products, exclusive brands. Over the past year and a half, as we saw that scarce supply of inventory, we worked diligently to make certain that we were not without these core products and floor plans. We feel good with all of the work the manufacturers put in, that they've been able to take care of our inventory needs adequately well to make certain that we were well prepared heading into this season.
However, we also wanted to make certain that we were more than covered heading into this season because we know that there's always certain things that could happen in the supply chain moving forward. We don't see any of that today, but we also know right now we're in May. Excuse me, April just ended. As we're heading into prime selling season, we are adequately prepared, and we feel like we are well stocked to be able to capture what the market requires of us. Then heading on the back half of the season, we see those inventory levels seasonally adjusting to be prepared for the natural sell season of actually reducing inventory levels.
Yeah. Let's maybe even add a layer of texture on there. We are monitoring on a daily basis the open orders that we have in our own system. Historically, we would always base those orders on what we forecasted with demand. What threw a wrench into all that is when we had breaks in the supply chain. A lot more orders had to go into the system in anticipation that we knew we weren't going to get a great percentage of them. As those shelves have restocked, and we brought some inventory forward for the selling season, we have already planned for reductions in inventory in excess of normal seasonal reductions.
When you look at the amount of inventory that's going to come in in May, June, July, August, September, we expect to have right-sized our new inventory to a level that we're comfortable with because we've proven that we can sell more with less. We did not want to go into this selling season, particularly with COVID still having a presence in Asia and other markets where parts and pieces were coming from, that the supply chain could get disrupted in May, June, July and August. We brought some inventory forward, but let's be very clear. As we take inventory in over the next several months, it is our plan to take inventory in at a slower rate than we're selling it, more than we normally would as we seasonally adjust.
However much people want to read through those lines, I'll make it more clear than that. We are not going to be keeping our inventory levels where they're at today as we go through the balance of the year because we recognize the risk associated with inventory and the importance of the disciplines that have made us a lot of money in the last several years and are not going to give that up at anybody's expense. At our own expense, excuse me.
Thank you, guys. That's super helpful. That's all for me.
Our next question is from Michael Swartz of Truist. Please go ahead.
Hey. Good morning, everyone. To start off, maybe Marcus, with regards to the 2022 outlook, I know you didn't provide much detail, but I think on the last call, you had said that you had expected comparable sales to be slightly positive for the full year. Is that, I guess, still the outlook? And maybe give us some thoughts around, you know, how maybe that plays out throughout the year.
Yeah. You know, when we did have our last call, the macroeconomic issues and the geopolitical issues had not really flared up to the extent that they have. As we deal in a rate increasing environment, it's tough. When you look at our new same-store sales for the first quarter, we were down 16%. I think that slightly outperformed the overall market. When we look at our used, we were relatively, you know, flat. And then on a combined basis, which is how we look at it, we were down 11%. We expect those types of trends to continue and have adjusted our SG&A internally to address that.
We know we have some further modifications to make, but I think based on the new information that presented itself after the last call, including the political unrest, including inflation, including all the other macro factors that affect consumer confidence, we have retracted our own selves, but still feel confident, very confident that our used business will continue to perform. We feel confident. We saw that in April again. We feel confident that our service parts and other business will continue to perform. As a caveat to that, I received a lot of questions last night, why is our service parts and other down year over year? I want to clarify it one more time. Our service parts and other was down because of the elimination of the Gander products, firearms, hunting, fishing and apparel.
When you extract that from the number, our pure labor hours and parts associated with servicing and repair performed very nicely. In one of the months, we actually broke a record year, all-time record. When we look at our Good Sam business performing 9% up year-over-year, we feel confident that those things that deal with the installed base will be fine. What we're dealing with is the pressure on the part of the business that we don't have as much control over. That's the new RV sales. Hear this for sure. We will make whatever adjustments we need to make to our compensation structures, to our fixed structures, to our advertising structures to address whatever changes we see on a daily, weekly, monthly basis.
We think that negative same-store sales number on the new side. For the industry and for us, will continue for the next couple of quarters.
Okay. That's helpful. Thank you for that. Marcus, I think you had mentioned just in terms of maybe the at maturity kind of run rate for the 14 new locations that you expect to open this year was about $ half a billion. I think that backs into right around $40 million per location. Maybe help us think about how that ramp to maturity plays out. You know, is that something that's reached in two years, four years, five years? Just give us a little context around that.
Yeah, that's a great question. You know, we look at our stores today. I think our average store does about $43 million, and we wanted to cut that a little bit shorter because we make acquisitions that sometimes are north of that, and then we open stores de novo that take a minute. On our new stores that we open, as we forecasted in the past, to get to a traditional performance level, it takes 18-24 months. We do sometimes see profitability happen a little earlier than that from a positive cash flow standpoint, but it doesn't reach the operating leverage from an EBITDA performance for about 18-24 months operating in that EBITDA margin. From an acquisition standpoint, oftentimes a variety of things happen.
Sometimes they integrate into the system, and they perform very well, and they exceed our expectations because our systems go in. Sometimes they retract slightly for 12 months. On average, between $35-$40 million is what we expect to see on average within 24 months of them being in our system. If we can do that on a regular basis, assuming that market conditions don't deteriorate at a rate that we, you know, we don't want to be, you know, deploy our capital that way, then we should be able to stack a half a billion every year and then get other organic growth from our core businesses.
Okay, great. That's very helpful. Thanks, Marcus.
Our next question is from Joe Altobello of Raymond James. Please go ahead.
Thanks. Hey, guys. Good morning. I guess first question, Marcus, I just want to go back to your comment you made to Mike's question on same store unit sales. You mentioned, you know, new was down, call it 17% in Q1.
16%.
Used was flat. Yep. Would you expect those trends to continue for the balance of the year? We do have some easier compares coming up, so maybe you can give us some color on what you saw in April. You sound pleased with April, but did those trends improve a little bit in the month?
They actually did not improve on the new side, but they did improve on the used side. As we talked about in the latter part of last year, our company's strategy when we started to sense in the latter part of last year that there could be some pressure around GPUs and potentially some pressure around volume, we had to pivot. We think that we'll continue to see that pressure temporarily on the new side as we're comping big numbers. You know, keep in mind when you're operating 189 stores, two units here, three units there, when you multiply it starts to add up very quickly.
We're doing everything we can to replace that missed opportunity with finding either first-time buyers through our funnel that we haven't met before, which is probably why we performed slightly better than the marketplace, and our used business as an alternative based on people's payment preference or value proposition as well. The fact that we're performing nicely in light of these macroeconomic issues on the used side gives us a lot of bright light for the future. Because historically, we relied on our service business, our retail business, our Good Sam business as the predictable part of our business. Now that we can add our used business in all segments, by the way, as another tent pole of predictability, we have set a goal as a company to take out that erratic behavior.
In terms of the new RV sales, our internal discussions have focused around what adjustments do we need to make to our overall business in anticipation of that new same-store sales number staying in that same range. If we're wrong, and they repair themselves because the comp set is easier as we go through the back half of the year, then our business will be the beneficiary of it, but we don't want to anticipate it and then be wrong on the SG&A side.
Okay. Got it. That's actually a nice segue to my second question, which is your comment earlier about OEMs being disciplined on production. You seem fairly optimistic there, and yet we look at the RVIA data, it's up double digits in Q1 on a record Q1 last year. Maybe help us understand or try to square those two data points, if you will.
I always try to hesitate commenting on any RVIA forecasting or data, and I always hesitate to try to speculate why the manufacturers would continue to produce at a rate when they can see the retail registration information as all of us can. I also do know that the prudent managers that run those businesses also see the data. When you think about lead times for ordering raw materials, for ordering frames, for ordering other parts and pieces, those lead times are not just in time, especially when you're coming out of the supply chain breaks that we had in the last 24 months. We complement the manufacturers on hedging and bringing some of that raw product in speculatively.
Matt and I both had conversations with each individual manufacturer, both that we purchase from and even ones that we have no relationship with, telling them what we were seeing in January and in February. We strongly encourage them to cut their production back to scale to meet and match what retail demand was, and in some cases even withdraw it a little bit so that the inventory that's out there in the system can settle in, and then we can get into more of a just-in-time inventory. We're confident that these manufacturers see the benefit of that in their own business because ignoring of that factor ultimately would lead to a glut in their finished goods yards, a rigorous and disciplined approach to ordering and purchasing on dealers' sides, and it would lead to unnecessary discounting by the manufacturer to clear those yards.
I don't believe they want to go back to that level of business where they're trying to push out product at all costs. I don't believe they will do that, and I think collectively as an industry, we learned that lesson. We are hopeful, but I want to reiterate, like I said before, we are not going to bank on anybody else's decisions but our own. We have planned our forecasting and our ordering and our intake of inventory as if they're not going to. If they do, great, the inventory right sizes and margins stabilize.
Okay. Thank you.
Our next question is from Ryan Brinkman of J.P. Morgan. Please go ahead.
Hi. Thanks for taking my questions. I think I recall you suggesting maybe around the middle of 2021, that the industry was probably a year or so away from matching demand with supply, but that there could also be a period after that where inventories remain lean because of, you know, a needed restock of wholesale inventory. You know, the comment that you made today about towable stocks being adequate, does that indicate that, you know, inventories normalized maybe faster than was previously thought? And would you say that is a function primarily of higher supply or lower demand or both, or what do you think?
I think two things. It definitely happened quicker than all of us could have anticipated. I think it's a function of two things. The manufacturers ran hotter than normal in November, December and January than they normally do. You look at the January shipments that broke, I think it was like 60-something thousand. It was the hottest number that we had ever seen. I think in fairness to them, they're trying to get all dealers, not just us, all dealers back to a stocking level that creates some level of normalcy for their own business. We are supporters of that because a healthy industry by all dealers is good for everybody. I think one thing that none of us could have anticipated is that there would be.
The manufacturers would be running hot because they had to forecast months and months in advance, and that the slowdown or normalization of demand, I call it more of a normalization because I want to remind everybody, the demand that we saw in the first quarter of 2022, and even we're seeing in April and May, is still one of the hottest years we've ever had in this industry. While we look at like, we're retracting a little bit, you know, we're retracting to a level that's still pretty darn good. I think when that happens, they're manufacturing hot and retail registrations are dropping by 10%, 15%, 20%. Those two things working in tandem probably got the inventory levels back to normalcy quicker by maybe 4, 5, 6 months than we could have anticipated.
Easy solution: slow down your manufacturing, continue to take inventory in at the slower pace, and have a great selling season. Big mistake if you do this. If you continue to manufacture at a high rate, dealers continue to buy at a high rate, you have a good selling season, and you don't bring it down going into August and September, all you're going to do is push that concern into the fourth quarter. Because the industry is smarter, I expect us to normalize that here quickly in the next four or five months as the industry sells tens and tens of thousands of units. I think we'll be fine, but it did happen quicker.
Okay, great. Thanks. That's very helpful. Just, you know, I think the pandemic and its aftermath, you know, resulted in the demand for RVs, of course, increasing more than the supply did. That resulted in large upward pressure on new RV prices, likely by association, used RV prices too. There were other reasons prices were increasing, including the higher raw material, another manufacturing cost, depreciating dollar or whatever. Generally speaking, I think, you know, prices and margins rose, you know, more than might have been expected.
As we move forward, you know, just curious how you think about if demand were to fall, you know, relatively modestly or supply increased relatively modestly, do you see the potential for, you know, more than might be expected decrease in prices or margins, similar to how we had a more than might have been expected increase earlier? I think it's really hard to say, but just curious how you might be thinking about that in the context of, you know, the inventory management you've been talking about on this call, your outlook for margin, which you're not being, you know, as explicit with as previously, et cetera.
Well, I wanna be more explicit if I haven't been explicit about margins. Margins have come down over 2021 levels. The results in Q1 of 2022 give you an indication that they have done that. We expect there to be slightly more contraction of our margins in Q2 as we look to accelerate sales to deal with a slowdown in demand, and we look to make sure that the inventory stabilizes. Here's what I feel pretty confident about. As long as the manufacturers don't overproduce in the next six months, we will not see a return to 2018 and 2019 margins. While that may not be explicit enough, it is clear for us what needs to happen, and it's clear for the manufacturers.
I do believe that demand is going to continue to feel pressure, and whether that's rising interest rates or general consumer demand, we think it's gonna feel pressure. Our hedge against that is clearly twofold. Number one, in each segment that we stock today, we have to stock at the lower end price point of each of those segments. While we're blessed that financing terms exist from 180 months to 240 months, and a rise in interest rate doesn't affect the payment that materially, it is on the consumer's mind. We have to make sure that we position ourselves at the bottom half. We always wanna have the least expensive home in the neighborhood, not the most expensive home in the neighborhood.
Secondly, our offensive strategy on pre-owned is another hedge that gives our consumers when they raise their hand and say, "I love this lifestyle. I either wanna trade up or trade something out, or I'm new to the industry." Our pre-owned strategy gives us a very smart and intelligent alternative to that rising price. It isn't by accident that we started to grow our used inventory, and it isn't by accident that we started to really focus on that internally, because we knew that if the market started to tighten up, we had to give the customer an alternative. Which is probably why in April, for example, our used business was up materially. The response by the consumer says, "I'm not gonna not go outdoors, and I'm not gonna exit the industry." I wanna make sure that that's really, really loud and clear.
When the market contracts, as it did in 2001, and it did in 2008, and it did in 2018 and 2019, from a new entry perspective, what did not happen is that the installed base of RVers, part of the industry that actually supports the bulk of our company, never retracted. Decade after decade after decade, regardless of the noise that happened inside of a small cycle, every single decade, more people got into the lifestyle than the previous decade. We know with almost certainty, unless something happens that we've never seen happen before, that 10 years from now we'll be saying the same thing. 20 years from now we'll be saying the same thing.
Our business thesis and our long-term thesis of our company, when you study it from the day we started it to the day we went public to today, supports that strategy. Our financial results may fluctuate from time to time, but if anybody anticipates that the fluctuation that they saw in 2018 and 2019 is what the range of performance will be, I would caution you against that. I want to say that again. If you're looking at this industry and you're sensitizing your models based on it dropping 10% or 20% or 30%, the hedge for our company, not the manufacturers, not other dealers, is different. Because so much of our gross profit comes from service parts and other, from used, from our Good Sam business, from our finance business, from all those other things.
If you take $1 billion of revenue off the table, like we showed in our prepared remarks, you can do the math. A $1 of revenue, 30 cents of gross profit, and the associated cost of delivering that gross profit get removed as well. For a $1 of revenue, do you lose a lot of profitability? Yeah, you lose some, and you can do the math and extrapolate it out. We've done that internally, which is why we're able to demonstrate that so clearly. The other benefit to our company in a retraction of demand is that it allows us to tighten up our own belt. The thing that I think people miscalculate in our company is what we do and how we behave in that retraction period.
If you go back and look at every other period, we grow the base of our company at a disproportionate rate. Today, as we sit here, we have 40 new locations, not acquisitions, 40 new locations on the board over the next 4.5 years. We've started to forecast and plan that out because we understand the cost of investment, the cost it takes to open them, the time it takes for them to mature, and we started to factor that into our cash flow. We've also started to think about the necessity to return predictable dividends to our shareholders, and we've factored that into our cash flow. Whatever sensitivity models everybody's putting out in the marketplace, we're doing them first.
We understand what's about to potentially happen with this perception. We would caution people on looking at other moments in time and thinking that they know where our business is going.
Very helpful. Thank you.
Our next question is from Bret Jordan of Jefferies. Please go ahead.
Hi, good morning. This is Ethan Huntley on for Brett. Thanks for taking our questions. Could you maybe just talk about some of the trends or maybe the cadence you're seeing in the service segment? I know you mentioned things were trending pretty positively with a greater installed base, but sort of any color on the cadence of that business?
Yeah. You know, one of the Achilles heels of our industry, and I guess furthermore our own company, is when that installed base grows at the rate that it has and people don't leave the space, they stay. We have a real, I would call it a problem in our industry, and I know that I shouldn't use words like problem. We have more consumers who love the lifestyle and wanna use their product because it's so affordable to do compared to everything else out there, that we don't have enough bays or enough technicians to meet that demand.
Our demand for repair, service, collision, renovation, new couches, new floors, new roofs, new awnings, reconditioning, warranty work, customer pay work, new tires, and I'm sorry to keep rambling about all the new things, is so significant that we can't even swallow it ourselves. What has started to happen more recently that is positive in one sense, and giving us a greater focus on where we deploy our capital in another sense, is that other dealers don't seem willing to service the customers that they're selling. A good chunk of the customers that show up on our doorstep didn't even buy from us, and that's probably because of the strength of the Camping World name or the confidence they have in Good Sam, but it's creating a real bottleneck for our own customers.
As we look at our capital allocation over the next several years, part of what's driving us to put 40 stores on the map is a disproportionate amount of service bays compared to retail square footage that those bays, those new stores will take on. Historically, we build a store with 10,000 sq ft and 12 bays. We're now building them with 6,000 sq ft of retail and 18 and 24 bays because the demand that we're seeing is more than we can even swallow. If anybody has a concern about where the health of the industry is, come visit one of our service departments and see thousands and thousands and thousands of units waiting for repair. What we're hopeful is that the manufacturers continue to learn about the importance of investing in repair parts and the excess production of those repair parts.
We're gonna try a few strategies here in the short term to actually hedge and take a chance on some of those, so we can improve the number of days that it takes for a customer to get their unit into the shop and out of the shop. It's unacceptable today. We need to reduce that by at least 4 or 5 days, if not even more. The service demand is unbelievable. We had one month, and we don't report this, but we had one month where our service labor and parts was in excess of $50 million in the first quarter. We had never crossed $50 million before, and we hit right up against it in April again. We know where our capital needs to be allocated, and we know where that return is, particularly when you look at the margins associated with that business.
That's very helpful. Thank you. Then maybe just as a follow-up here, I think the, you know, the current RVIA forecast for 2022 shipments is about 590,000 or so. Do you think that's, you know, still about where things shake out? Or is that? Do you think that's maybe a little bit on the high side?
We better hope not. We think that number better be at least 50,000-60,000 less than that. At least 50,000-60,000 less than that. Again, we know that we're dealing with sophisticated and very smart management teams at those respective manufacturers. Starting from Lippert on the supply side, and Patrick Industries, all the way up to the finished, you know, manufacturer with Thor and Winnebago and Forest River. We are confident we're dealing with smarter people than even us in predicting those models. We just hope that they are putting those things into practice.
Great. Thank you very much for taking our questions.
Thank you. Our last question is from Garrett Johnson of BMO. Please go ahead.
Great. Good morning. Sorry, I was disconnected for a moment, so if you've answered these, just say pass. I'm curious on unit ASPs, the increase you saw there, the proportion that was mix versus price increase, and I have part B to that.
I'm sorry, just to clarify, you were asking about the ASPs?
That's correct. On units.
We've continued to see a little bit of an increase here sequentially from last quarter to this quarter. Given that our mix around this time of year in April-May timeframe, we start to sell a heavier density of towable units. You start to see that average sale price start to level off a little bit more. Furthermore, as we've continued to put that emphasis on used units, which the ASP on used is going to be lower than a new unit, we think that's relatively sustainable here for the next quarter, where we don't see much of a material change from quarter to quarter.
Yeah. One thing for clarifying point. On the new side, Matt has laid down a mandate with his team that he wants to see a mix to lower price units, particularly in light of what's happening in the macro environment, right? We wanna continue to make sure that we make camping more affordable for people than anybody else. On the used side, however, we are playing a little bit different game than we've played in the last 24 months because we're not heavy on the new motorized business. In fact, we really don't play much in the new diesel business. We are going after because there are still some supply constraints on the new motorized side.
We are playing in that used motorized business, and that is what has contributed, not necessarily to the gross profit margin of our used business, but the gross profit dollars of our used business. We wanna bifurcate those two and look at the ASPs in new one way and used another way, and we'll continue to provide color. The way I've thought about it for my entire life is that the more you can drive down ASP, the more you're widening the funnel to the addressable market. The more you can make financing affordable and available to consumers, you're widening the market. I do not believe that a consumer makes the decision to not buy an RV for $159 a month to take vacations and enjoy the outdoors with their family, as something that feels so discretionary.
I don't think they look at it as a luxury good. When you look at the cost of airlines, the cost of hotels, the cost of theme parks, the cost of doing a lot of other things, $159 a month, or essentially $5 a day, is still cheaper than a gallon of gas. The primary product that we sell, towables, don't take any gas. The tow vehicle does. When you look at the distance that people drive to go camping, 25, 50, 75 miles max. This isn't the days where people are just full timing and traveling all over the country. Households have mostly two working incomes, and they're camping on the weekends, which means they can't go that far. We see consumer credit tightening as a potential impediment, interest rates as a head-scratcher.
If we drive down ASP and we have a good used offering, we're providing enough of an alternative. That's how we think about ASP, new separately from used.
All right. Thank you for all that detail. Matt, you know, I was kind of thinking year-over-year, not sequential. Just for reference, you know, whenever we as a sell side ask questions, we're usually asking year-over-year. Year-over-year, you know, you're up 15% in new ASP and 30% in used. I'm wondering there, you say you're mix shifting to more towables, so that should bring your ASPs down on mix. Are we saying that, you know, on a consolidated basis, you put it together, ASPs are up, what, 17% year-over-year. Is pricing up 20% and mix bringing it down a couple of points, or how should we think about mix versus-
Well, I brought up the sequential element of it because that was far more relevant compared to year-over-year, given that just about every industry has seen price increases across the board. You're in that range with that 20% suggestion of invoice price increases year-over-year, which we've seen that quarter-over-quarter, that ASP, as well as if you start to back into the same store new units versus some of the other factors in the supplemental data, you'll see the average rough COGS associated with these assets has also continued to go up that same amount. Yes, we were able to yield a greater gross margin as well, our GPU, but that ASP has come up year-over-year. We don't see that, though, continuing to change much here from quarter-over-quarter now. We feel like the biggest price increases transpired over the past couple of quarters, especially.
Okay, great. You know, cadence of retail during the quarter. You know, Matt, you mentioned adjustments in February. I guess that coincides with the invasion. How did you see things starting off year-over-year? How they transition through the quarter? If they did downshift in February, did they pick back up again in March?
February started out actually relatively well. It was around that time, about the second, third week in February, we started to see a bit of a slowdown year-over-year. Then heading into March, we saw a little bit of a bigger difference in terms of the decline year-over-year. Heading into April, it's been roughly about the same compared to March. As we're heading into May, we actually feel very good about current sales volume year-over-year. We'll continue to monitor this and make modifications to our strategies to ensure that we are capturing demand that exists out there. By the end of the sales season, we're confident that our inventory levels will be in a very good position based upon whatever retail sales volume will transpire here over the next three or four months.
Okay, great. Since I'm last, I think I'll throw one more in there for the benefit of the group here. Now that you have about $10 million per location RV inventory, that's about double from last year's $5.5 million. If you adjust it for ASP, maybe 55% higher, so big increase. Understanding it's not all spread by like peanut butter, where might you still have holes in your inventory? Where might you be a little bit heavy?
I don't think we have any holes in our inventory today. Where we believe that we are heavier than we would like to be, but it was strategic in terms of bringing that forward, was on the entry-level travel trailer side. That, that's from my perspective. I don't know if Matt, if you wanna add some color to that.
Yeah. I think you are right in summation. However, within the motorized segment in particular, there's still a little bit of opportunity for us to be able to supplement some of our inventory there to capture a little bit more of the market. We also know that motorized is only gonna account for about 12% of the total amount of units sold annually. We feel like we've covered the mass production of the marketplace and the mass retail volume.
Used helps us fill that void.
Correct.
Okay. Thank you for that. To keep it in Marcus terms, I'd probably wanna know what motorized would be as a % of gross profit dollars, but we can talk about that later. Thank you very much.
Okay. Okay, guys. Thank you very much for joining us on this call. We look forward to getting back to you on our second quarter results. Thank you so much.
Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your line.