All right, good morning, everybody. Thank you for joining us. I'm Joe Altobello, Leisure Analyst here at Raymond James, and I'm very pleased to have with me today senior management from Camping World Holdings, including Chairman and CEO Marcus Lemonis, President Matt Wagner, CFO Tom Kern, and Senior Vice President of Corporate Development and Investor Relations, Brett Andress. Welcome, everybody. Camping World is the largest RV dealer in the United States, with annual revenue of over $6 billion across roughly 200 locations. We do have a lot to discuss, but before we get to it, there was a little bit of news that broke last night. So, Marcus, I'll hand it over to you to talk about the change in management succession.
Yeah, so last night we announced that we executed on our succession plan that we had talked about internally over the last several years. Twenty-five years ago, when I founded the business, I never would have imagined that it would have turned into something as meaningful as it did, and that definition of meaningful really is a function of how many people have come through the doors and really blessed our company with their presence. One of those people is a once-in-a-lifetime opportunity for our company, and that's Matt Wagner. He joined our company 19 years ago, has been by my side more regularly for the last eight, and has demonstrated a form of leadership that any founder/owner would really aspire to have on their team. This transition is meant to be exactly what it is: a very smooth transition.
I'll continue to be an advisor to Matt, really helping him answer any questions that he doesn't have access to. But I did make the decision to make a clean break from the company. And a clean break means to not be on the board. And part of the reason for that is that my ownership stake and my golden share don't require me to sit in meetings for me to be effective. And I thought a lot to myself about what I would want if I was in Matt's shoes. And I would not want to have the founder looking over my shoulder the whole time and really double-guessing, exactly second-guessing, you know, what I was doing. Matt knows that we talk regularly. And I think from my perspective, what did Matt need to be successful? He needed a clean transition.
He needed to know that the golden share and material shareholder was in his pocket. And I don't say that in a nefarious way, but had his, you know, supporting him, but gave him the opportunity to lead the organization internally and externally in a way that gave my equity stake the greatest chance of maximizing its value, which is really the task at hand. So that change will take effect on January 1, formally, but it has essentially been in motion, gosh, for a couple of years now as we make decisions. Matt and I don't disagree on much, but what we do disagree on is healthy and is public for consumption. We kind of have fun with it.
I really believe, and I'll say this before I hand it over to him, I really believe that part of the reason why the timing was right from my perspective is that after 25 years in the business, I feel like I understand the business and the industry better than anybody and have a really good pulse on when it's going to be up and to the right. And when we talked about it a year ago, I wasn't quite sure. And while we made significantly more money this year, I think we both agreed that there was more wood to chop in 2025.
As we head into 2026, I am very optimistic about not only where the consumer will land at some point in 2026, whether that's first quarter or third quarter, I don't know, but the midterm election and the material changes that we've made inside the business on the SG&A side, on the product mix side, on the recruiting additional new talent side feels like a great setup. And when you have a personal and professional relationship with somebody, it is your duty to ensure that the setup, the stage that you're setting, is nothing but positive for them as you cheer them on. And I felt like this was the moment where everything would be up and to the right. So with that.
Yeah, thank you for the kind words. And to further elaborate upon what Marcus was suggesting, I would anticipate a very seamless transition. Marcus and I have worked hand in hand. In fact, he hired me 19 years ago, straight out of the same alma mater, in fact, where he and I have experienced, goodness, going on four different cycles that I would call within the RV space. And we both understand what it takes to actually maintain whatever is required on the bottom side of a trough while taking advantage of those heightened, elevated demand levels at the top side. Really, the task that we have before us, though, is to reduce some of the volatility that exists within our business and within our industry.
Marcus has built a market-leading platform that we will be able to continue to take advantage of, never mind a world-class team that he's personally recruited or been involved in the recruitment of. We know what's laying out before us, where we have to aggressively deleverage this business while aggressively growing our earnings profile. That's where Marcus and I have a very similar values ecosystem of really growth, continuing to win at whatever cost, but more importantly, the people that it takes to actually achieve whatever these dreams are. Marcus has impacted countless lives over the last two decades plus, and it's pretty unbelievable the icon that he has become in this entire RV industry. We know that we have a massive amount of work to do to ensure that the legacy of this company continues to evolve and exist long after us.
But make no mistake, in the short term, we know that we need to execute upon these objectives that we've set forth, which, as we declared on the last earnings call, was having a minimum floor of earnings of at least $310 million of earnings, which would represent about a 20% improvement year over year. And we believe that we'll be able to execute that above and beyond by means of achieving four certain pillars. We believe we'll be able to reduce our SG&A. We believe that we'll be able to exceed some of the new growth expectations in the new RV sales market. We believe we'll be able to exceed the used RV sales market. And we think that there's some opportunities for M&A that exist out there.
To put a finer point on some of the technicalities, you know, over the last 12 hours, we've been asked a number of questions that I think are really germane to the way our structure sits. I have no intention on changing my material position in the company. In fact, I expect value extraction to happen over the next 12 to 24 months. Second thing is, when we set the company up, we did have a golden share, and we expect that to maintain itself for Matt's benefit, quite frankly, and for the rest of the company's benefit. And we expect, you know, obviously, an increase in revenue and earnings in 2026.
Could you guys speak to maybe what differences you might see in terms of the strategic direction of the company, how it might operate differently under Matt versus you, Marcus?
Marcus and I have very similar values and focus between the growth, winning, and people. Ultimately, how we achieve that growth at times can be directly at odds, where he and I have suggested at different times what's going to be the return of the consumer that bought within the model year 2021 and 2022 during the COVID peak period, and when they'll be in that positive equity position, thereby suggesting that there'll be some additional growth in the new RV market. Whether or not that happens next year or the following year, that's up for debate. But ultimately, we know that there's different tech endeavors that we could pursue in the short term to ensure marketplace activity. An example of that is we've built an environment called rvs.com.
What are we disagreeing about yet? Just curious.
Just when the return of the new RV sales market is. We built out an environment, rvs.com, as an example, which is very similar to like an RV Trader, a Trader Interactive portfolio. We offer up to consumers a reduced listing price for them to participate in a private-party marketplace. We know that the used RV marketplace is about double the size of the new RV marketplace. What we're anticipating is, by means of setting up this marketplace of rvs.com, we should be able to insert ourselves in this entire process with consumers to ensure financing capabilities between one party to the other, as well as a seamless title transfer process. Think of digital retailing, where we have not necessarily effectively rolled that out over the last couple of years, but we see countless opportunities that exist within that space, never mind a variety of other marketplaces, automation efforts.
I see this as an opportunity for Good Sam to truly come alive, where we haven't necessarily positioned Good Sam as effectively as I believe that we could, and that's really the ultimate hedge against any sort of volatility in the new or used RV sales marketplace.
Thanks for that, guys. Just wanted to shift over to the business. You guys reported third quarter results late October. At the time, you did mention some modest softening in the new RV market in late September. I think the term you used was resistance. Can you elaborate on that for us and what you're seeing today and maybe what caused that?
Yeah, we reported, just to clarify, we reported, I think, a 40% increase in EBITDA in the third quarter, just so we're clear about that. And so I want to make sure modest and increase don't get tied together.
I mean, as some of you may have seen, yesterday, Statistical Surveys released some information. And for those that aren't familiar, Statistical Surveys is an independent third party that reports on RV registrations in the United States. And Statistical Surveys suggested that the new RV marketplace was down about 8%, 7.5%-8% in October, which is largely in line with what we suggested. Between September and October results, we suggested there's always this lag period. And we also called out that by means of these massive gains that we put up in unit sales over the last two years consecutively, at some point, the compounding annual growth rate of our market share gains was going to naturally just slow down.
We're suggesting heading into the balance of this year, so between November, December results, as well as the early part of next year, there could sequentially be some sort of slowdown in the new marketplace broadly. We believe we might track a little bit more similarly to just what the industry does at large. That's to suggest that if the market is up, the new RV sales market is up next year, we'll be up at least that, if not more. If it's slightly down, we might be flat to slightly down, depending upon what could transpire. We know, though, that we need to continue to show better gross profit per unit sales and an improved average sale price in the new RV marketplace.
What have you guys seen so far in November and December?
We are seeing much of what we had suggested on the call, whereby on the new side, still slightly more difficult comps, whereas on the used side, we continue to perform exceedingly well, and we're continuing to see double-digit plus growth on the used side.
Joe, I think we may have glossed over one part of the answer to your former question, which is the difference in strategies and our similarities. The company was built as an acquisitive company. It is not a business that sits around and waits for things to happen. And so I think as the leverage comes down, which we've had material impact in the last 12 months of bringing that leverage down, I would expect the company to get back into the acquisition mode. I don't think Matt and I are in a difference of opinion on that topic. The one thing that I would hyper-focus on that I believe really solidified Matt as the right choice is his capital allocation strategy around where those acquisition dollars should go.
And in many cases, I'm sure the company will continue to be the leader in making dealership acquisitions and stacking on $25-$30 million tranches of revenue. But when we look at the opportunity on the Good Sam side, that for me is really where I think things could be much different in the coming years, far more lucrative for the company and creating a far more predictable EBITDA track. The company historically has had the best of highs and the worst of lows. And that level of volatility doesn't instill the kind of confidence that we believe this company should instill. And so I think that's one thing that we are in alignment on.
Most definitely. Yeah, I think you guys have said on the pricing front that on average, model year 2026 invoice prices are up roughly 5% to 7%. Is that all tariff-driven? And do you think that's what's causing some of the resistance you're seeing on the new side?
It's nearly impossible for us to get that pure visibility in so much as a Lippert or Patrick Industries, as an example, would primarily be sourcing those products. And there's obviously going to be some labor associated with it and capitalized and then sold to either Winnebago or Thor, and then we'd ultimately be the benefactor on the backside. So really, only a Lippert or Patrick could intelligently answer that. But I would have to argue most of it is a byproduct of tariffs. There's also going to be an element of just a margin grab and also some personnel in there. So who knows? But ultimately, we do believe 5%-7% will be the norm here for the foreseeable future.
In some price point segments on the new RV sales side of the business, we'll just have product mix down, especially within like a motorized selection or some fifth-wheel products. We believe we'll be able to maintain what we've built within most of the towable segments on the new side. Make no mistake, when new RV sales prices go up, that's an opportunity for the used RV market once again, where the spread between new and used becomes that much more pronounced. We're still only 8.5% of all used RVs being sold in the United States. When we think of the future growth opportunities, we see a very clear-cut path for the next 5 to 10-plus years to continue to have growth within that space.
Which is a very nice segue to my next question on the used side. You guys have been very healthy, have driven very healthy growth, I should say, taking a lot of share. What's been driving that? And what's the, I guess, more to the point, what's the competitive advantage of Camping World on the used side?
Yeah, so you think about our used business going from, I mean, what used to be 20,000, 30,000 vehicles a year to upwards of 60,000, 70,000 at this point or tracking to that. The biggest strategic advantage that we have as a company really is our balance sheet when we think about our competitive landscape. The single-door dealerships really have to lean in and buy these used assets. They have to then lean in further and then recondition those used assets and not use their floor plan that they would use on the new side of the business. So it's much more capital intensive. So that's one angle. Two is the service base, right? So you think about reconditioning them to add value to those units. We have over 2,000 or 2,500 service bays across the business. And then the last would be our buying power.
So when we think about the ability to procure basically what we call off the street, we essentially have a boiler room in Arizona where all of our leads come in, and then that team basically focuses on procuring those units. That really makes us unique in the sense that we're able to tactically move around and manage that inventory and buy that much quicker than, I guess, someone coming up to a dealership. So if you wrap those three together, that's really the strategic advantages we have. There's definitely a path to this business having upwards of 15% plus used market share when you think about the next 5-10 years and what the opportunity set is.
Got it. Matt, earlier you mentioned $310 million of EBITDA as sort of the floor for next year. You characterize that as conservative, and I think you talked about several potential drivers of upside to that number. Can you kind of walk us through those potential upside drivers and where you have the best line of sight?
Yeah, I'll list it in order of magnitude and that which is highest likelihood of accomplishing. The SG&A cuts that we listed of at least $15 million will be achieved in no time. We do believe that we'll be able to push those SG&A savings well above and beyond the $15 million. However, more to come there, whereby some of this will be modifications of different independent internal resources that perhaps we could look at other variable pay models outside the business. There's also different ways we could restructure our IT marketing spend, which we feel very confident that the SG&A number of $15 million will be hit by the end of the year. When we think of the used side of the business, we conservatively suggested that we'll only be up 8% or 9%. I do believe that there's a higher likelihood that we'll be up low double digits.
However, we're still trying to suggest. Let's see, once we get through the first quarter of next year, ultimately what transpires within all the marketplaces. On the M&A side of the business, I believe there will be opportunities for us to acquire a handful of dealerships in the short term, and we could pursue a handful of other opportunities within the Good Sam space, and we're not suggesting any larger bulkier tuck-ins, but there will be some smaller ones that could just naturally just reduce some of the volatility in our earnings profile, and then finally, the one that perhaps is at most risk and where we have the least amount of clarity is the new RV market, and we don't necessarily know exactly how new RV sales will behave over the next couple of quarters.
We do believe there will be opportunities over a longer term in the new RV marketplace. This comes back to that debate of when is the next large trade-in cycle for new RV sales.
So if you're right about your outlook for 2026 in terms of the industry, how would you characterize your inventory right now? Do you think you need to take that down a little bit next year?
If the new RV sales marketplace is down next year in terms of overall demand, we will be forced to reduce our new RV inventory balance by the end of next year. However, how this industry works is it's incredibly seasonal and cyclical, where you'd like to load up to the best of your ability with the clearest line of sight by the end of March, knowing that you should be able to take advantage of whatever will be yielded in April through June, and that April through June time period will be the greatest amount of volume that the entire industry sees, and then it starts to taper a little bit by July thereafter.
So the tapering in July and thereafter could suggest that perhaps that trough inventory level that we normally see as an industry by the end of September or October, we maybe will have to take that a little bit lower. And by the end of 2026, we may not be as aggressive in trying to rebuild that inventory position.
So you mentioned Good Sam earlier. And I should have asked this, but for the benefit of the people who don't know what that business is, maybe describe exactly what Good Sam does.
Let me even take a step back. I mean, when you think of our entire enterprise, think of us as just offering the full suite of RV-related products to ensure that consumers can engage in this lifestyle. You have the RV dealership business that's really the hook or the catalyst where we sell new and used RVs. We attach financing products, then service. We have a massive retail parts and accessories offering. Think of more like soft goods like patio mats, chairs, coolers in addition to some of the hard goods required to live the lifestyle. You really have Good Sam that encapsulates that entire consumer within our ecosystem by means of protection products, insurance products, as well as different affinity-based products like roadside assistance, as well as a campground network.
So in its simplest sense, think of like a Good Sam as like a AAA, as AAA is into automotive. Think of our retail business much as like an O'Reilly Auto Parts is to automotive. And then think of our dealership business very similar to like a Sonic or Lithia or AutoNation. But it's all housed under one roof, satisfying that consumer through every portion of their journey. So yes, within Good Sam, we'll offer them the protection products, the roadside assistance, your insurance, your extended service plans. We also have that massive campground network. And we offer the capability for RV owners to book their campground trips through our own platforms. So we offer the end-to-end environment where they can also rent their RV through our RV rentals platform, sell it through rvs.com.
But Good Sam is that trusted brand name where we frequently get very high NPS scores and consumer sentiment scores because it's truly there as a mechanism to help protect these consumers in this lifestyle.
Is there an opportunity to take Good Sam beyond RVs and maybe go into marine or power sports, for example?
That's really been our challenge that we have taken on internally over the last couple of years to overcome, where we do believe that there's a space or an opportunity within marine power sports that we should be able to, at a minimum, expand our insurance footprint, never mind our roadside assistance footprint, and we have seen a lot of propensity for individuals that participate in the marine or power sports lifestyle that also are Good Sam members, so the challenge internally is, what can we do to get closer to those sources of originations vis-à-vis a dealership within marine or power sport, or we've been actually most effective within the RV space just going direct to consumer, so why can't we just go direct to consumer within the marine or power sports space just as well?
Albeit that cost of customer acquisition is a little bit greater as opposed to just getting into the finance office in a marine or power sports dealer. We do see that opportunity over the next year plus.
I want to shift over to the capital allocation for a second. You guys have done a very nice job of reducing your balance sheet leverage. I think you're down to around five times, still a little bit elevated. So is debt reduction priority number one?
Net delevering is priority number one. But yes, we need to obviously and aggressively pursue net deleverage over the next year plus. And then we still, at the same time, need to grow some of those earnings. I mean, that'll obviously go hand in hand, but to a certain extent, it can be difficult at times for companies to achieve both. I believe we will be able to this year.
What's a healthy number that you want to target there?
I mean, ideally, anything under three and a half. Ideally, even under three would be fantastic.
You alluded to some acquisitions. Are you able to do acquisitions with that leverage number four times or so?
We have to be very thoughtful, but you could make an argument that we're not acquiring quite as much because of our leverage position as it stands today, but there's always opportunities within the RV space. It just comes down to whatever the dislocation could or could not be between owners' expectations of the value of their business versus what we'd have a willingness to pay. There are always a handful of dealerships or opportunities out there where we could pick up a dealership or two just for assets or maybe even just to assume rent. In those cases where we'd be picking up easy net delevering assets and acquisitions, certainly it makes sense, and I would anticipate there could be a couple of those over the next few months.
Yeah, and Joe, I would just say if you look at the composition of the M&A pipeline at the moment, it definitely is skewed more towards, I'd say, those smaller bite-sized opportunities versus larger scale, so that's, to Matt's point, what we're seeing today. Yeah, more tuck-ins.
Do they tend to be cheaper from a multiple standpoint?
No. I mean, look, I think they definitely fit within that historical range of two to four. I would say if you look at the multiple of the valuations, it's still very much a barbell where we have, I'd say, a good amount in that distressed area where you're sub two, even closer to book value. And then you have some that are definitely more well-run, going concern businesses in that closer to that two to four.
Let's pause here and see if we have any questions from the audience for Camping World. Okay.
Sales far exceed the expectations of people in this room. But if you think about it, I don't know, you think of sort of two main buckets of your customers, what is sort of like the college football weekend SEC guy for family?
ACC.
ACC?
Yeah.
We'll see if Notre Dame sticks around.
Yeah.
But so college football, which is seeing a flood of money and the experience and everything, is growing exponentially. And then I think about the national parks, and I'd be a little bit worried about government austerity and spending there. Maybe nothing really changes. But I'm curious if you have, maybe not the next 25 years, but the next 10 years or so, how you think about your customers' experience and willingness to invest and grow in that as a lifestyle if we do go through a period of federal and state austerity over the next couple of administrations.
If you could just repeat the question for the webcast, that'd be great.
So really the question is, what do we believe the consumer behaviors or personas will be in the development of them over the next decade or so as it pertains to the hobbyist types of experiences that consumers might want to be able to participate in? And I would suggest over the last five years, many consumers amassed an abundance of assets that are either sitting in their garage or sitting in their closets. And many of them are yearning to get back to experiences. And that inherently is the big difference where people are valuing more experiences over more asset accumulation. And we have defined our consumers into really five specific personas. One, the family, that adventure family that will oftentimes camp within just a local proximity to their home. They'll also maybe take a longer trip once or twice a year. You've got the retiree.
You've got a hobbyist, as the gentleman suggested, that there is a hobbyist that likes to go tailgating, likes to go out to a NASCAR event, or likes to go to these weekend trips. You could suggest that there's a luxury bar that money's no object, where they will buy whatever they want, be it Airstream or a Tiffin or a Newmar or whatever it may be, and then I would argue that there's going to be this boom of more of a passenger type of RV, where it's less about sleeping in it and more of just using it as a mode of vehicle to actually enjoy the lifestyle just vis-à-vis some basic bathroom, a road trip, some small kitchen, a kitchenette, a microwave in there, but very comfortable seating.
And that's where I could see the evolution of the RV industry starting to collide more with that passenger vehicle type of longer journeys, where certainly there's a capability to actually sleep within the interior. But ultimately, there's going to be the rise of an autonomous vehicle whereby you'd need some of the prowess and manufacturing capability that RVs brings, which is going to enable a little bit more bespoke passenger-type vehicles.
How far away are we from, I mean, autonomy within that lifestyle seems magical. You spend the day at a national park or whatever. You plug in your next national park and it drives all night, and you wake up and you're there. Maybe that takes away some of the experience. I don't know. But how far away are we from that happening?
Very difficult to speculate, but I'd like to think, just given the motivations, that we could perhaps all be a lot closer than we'd ever realize.
Anybody else? Well, great. I guess we'll end it there. Thank you to the Camping World team, and thank you for everybody being here, and enjoy the rest of the conference.