Camping World Holdings, Inc. (CWH) Bundle
Understanding Camping World Holdings, Inc. (CWH) Revenue Streams
Understanding Camping World Holdings, Inc.’s Revenue Streams
Camping World Holdings, Inc. generates revenue primarily from several key segments, including new and used vehicle sales, products and services, finance and insurance, and membership services. The following outlines these revenue sources in detail:
Breakdown of Primary Revenue Sources
| Revenue Source | Revenue (2024) | Percentage of Total Revenue | Revenue (2023) | Percentage of Total Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|---|---|
| Good Sam Services and Plans | $150,027 | 3.1% | $148,117 | 2.9% | $1,910 | 1.3% |
| New Vehicles | $2,328,107 | 47.6% | $2,126,862 | 41.6% | $201,245 | 9.5% |
| Used Vehicles | $1,265,701 | 25.9% | $1,657,935 | 32.4% | ($392,234) | (23.7%) |
| Products, Service and Other | $638,680 | 13.0% | $691,030 | 13.5% | ($52,350) | (7.6%) |
| Finance and Insurance, Net | $480,725 | 9.8% | $460,336 | 9.0% | $20,389 | 4.4% |
| Good Sam Club | $33,227 | 0.7% | $33,757 | 0.7% | ($530) | (1.6%) |
Year-over-Year Revenue Growth Rate
The total consolidated revenue for Camping World Holdings, Inc. in 2024 was $4,895,510, a decrease of 4.3% from $5,117,214 in 2023.
Contribution of Different Business Segments to Overall Revenue
The RV and Outdoor Retail segment accounted for 97.2% of total revenue in 2024, with a significant contribution from new vehicle sales, which increased by 9.5% year-over-year. However, used vehicle sales saw a decline of 23.7%.
Analysis of Any Significant Changes in Revenue Streams
- The revenue from new vehicles increased significantly, reflecting a 22.7% increase in unit sales.
- Conversely, used vehicle revenue experienced a significant drop due to a 14.5% decrease in units sold and a 10.7% decrease in average selling price.
- Products, service, and other revenue decreased primarily due to reduced sales activity, leading to a 6.0% decline on a same-store basis.
- Finance and insurance revenue increased by 4.4%, attributed to a higher number of contracts sold.
- Good Sam Club revenue slightly decreased, impacted by a 12.1% drop in membership numbers.
The following table presents the year-over-year revenue and growth percentages for each segment:
| Segment | 2024 Revenue ($) | 2023 Revenue ($) | Growth Rate (%) |
|---|---|---|---|
| Good Sam Services and Plans | $150,027 | $148,117 | 1.3% |
| New Vehicles | $2,328,107 | $2,126,862 | 9.5% |
| Used Vehicles | $1,265,701 | $1,657,935 | (23.7%) |
| Products, Service and Other | $638,680 | $691,030 | (7.6%) |
| Finance and Insurance, Net | $480,725 | $460,336 | 4.4% |
| Good Sam Club | $33,227 | $33,757 | (1.6%) |
A Deep Dive into Camping World Holdings, Inc. (CWH) Profitability
Profitability Metrics
Understanding the profitability metrics of a company is essential for assessing its financial health. This section delves into the key profitability metrics, including gross profit, operating profit, and net profit margins, while also analyzing trends and comparing these figures with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the financial metrics are as follows:
- Total Revenue: $1,724,988,000
- Gross Profit: $467,383,000
- Operating Profit: $164,022,000
- Net Income: $5,501,000
The respective margins are:
- Gross Margin: 27.1%
- Operating Margin: 9.5%
- Net Profit Margin: 0.3%
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, with the same period in 2023:
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Total Revenue | $4,895,510,000 | $5,117,214,000 | (4.3%) |
| Gross Profit | $1,328,655,000 | $1,436,455,000 | (7.5%) |
| Operating Profit | $158,033,000 | $278,426,000 | (43.2%) |
| Net Income | $(19,336,000) | $100,519,000 | (119.2%) |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the profitability ratios reflect a challenging environment:
- Industry Gross Margin Average: 30%
- Industry Operating Margin Average: 10%
- Industry Net Profit Margin Average: 5%
As shown, the company's gross margin is below the industry average, indicating potential challenges in managing costs or pricing strategies.
Analysis of Operational Efficiency
To assess operational efficiency, we can look at cost management and gross margin trends:
| Segment | Gross Margin 2024 | Gross Margin 2023 | Change (bps) |
|---|---|---|---|
| New Vehicles | 13.5% | 15.1% | (162) |
| Used Vehicles | 18.2% | 18.9% | (76) |
| Products, Service, and Other | 43.9% | 40.6% | 332 |
Overall, the gross margin for new and used vehicles has decreased, while the products and services segment shows improvement, indicating a shift in operational efficiency across segments.
Debt vs. Equity: How Camping World Holdings, Inc. (CWH) Finances Its Growth
Debt vs. Equity: How Camping World Holdings, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total long-term debt of Camping World Holdings, Inc. amounted to $1,506,027 thousand. This includes:
| Debt Type | Amount (in thousands) |
|---|---|
| Term Loan Facility | $1,338,321 |
| Real Estate Facilities | $183,497 |
| Other Long-Term Debt | $8,007 |
| Total Long-Term Debt | $1,529,825 |
| Less: Current Portion | ($23,798) |
| Total Long-Term Debt After Current Portion | $1,506,027 |
The company also maintains short-term debt obligations, which are part of its overall financing strategy.
Debt-to-Equity Ratio and Industry Comparison
The debt-to-equity ratio for Camping World Holdings, Inc. stands at 8.72 as of September 30, 2024. This ratio indicates a high reliance on debt financing compared to equity. In comparison, the average debt-to-equity ratio in the RV and outdoor retail industry is approximately 2.5, highlighting a significant deviation from industry norms.
Recent Debt Issuances and Credit Ratings
Recent activity includes a term loan facility with a principal amount of $1,400,000 thousand. As of September 30, 2024, the company reported cumulative principal payments of $47,545 thousand. The average interest rate for the Term Loan Facility is 7.92% for 2024, up from 7.87% in 2023.
The company has maintained a senior secured credit rating, and its credit facilities include revolving credit options that enhance liquidity.
Balancing Debt Financing and Equity Funding
Camping World Holdings, Inc. strategically balances its debt and equity funding by utilizing equity capital to fund acquisitions and growth initiatives, thereby mitigating risks associated with high leverage. The company has made several acquisitions funded through a combination of debt and equity, such as the purchase of nine RV dealership locations for approximately $69.4 million.
In the nine months ended September 30, 2024, the company reported a net cash loss of $19,336 thousand, indicating the ongoing challenges in managing its debt load while pursuing growth.
Overall, the debt structure of Camping World Holdings, Inc. reflects a commitment to leveraging debt for growth while navigating the complexities of the RV market. The following table summarizes the key financial metrics related to the company's debt and equity structure:
| Metric | Value |
|---|---|
| Total Long-Term Debt | $1,506,027 thousand |
| Debt-to-Equity Ratio | 8.72 |
| Average Interest Rate (Term Loan) | 7.92% |
| Recent Acquisition Value | $69.4 million |
| Net Cash Loss (9 months) | $19,336 thousand |
Assessing Camping World Holdings, Inc. (CWH) Liquidity
Assessing Camping World Holdings, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 1.3, with current assets of $563.7 million and current liabilities of $436.5 million.
Quick Ratio: The quick ratio for the same date was 0.6, indicating a more conservative liquidity position when excluding inventory from current assets.
Analysis of Working Capital Trends
Working capital has shown a declining trend, with values reported as follows:
- September 30, 2024: $397.2 million
- December 31, 2023: $401.3 million
- September 30, 2023: $523.7 million
Cash Flow Statements Overview
The following table summarizes cash flow information for the nine months ended September 30, 2024, and 2023:
| Cash Flow Activity | 2024 (thousands) | 2023 (thousands) |
|---|---|---|
| Net cash provided by operating activities | $408,541 | $543,273 |
| Net cash used in investing activities | ($57,096) | ($277,535) |
| Net cash used in financing activities | ($362,712) | ($342,551) |
| Net decrease in cash and cash equivalents | ($11,267) | ($76,813) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $28.4 million, down from $39.6 million at year-end 2023 and $53.3 million a year prior. The decline in net cash provided by operating activities is notable, decreasing by $134.7 million year-over-year. This is primarily attributed to a $119.9 million reduction in net income and a $69.1 million decrease in the working capital adjustment for inventory.
Furthermore, the Floor Plan Facility had a FLAIR offset account balance of $151.5 million, with $128.3 million available for withdrawal while remaining compliant with financial covenants.
Is Camping World Holdings, Inc. (CWH) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: The P/E ratio for Camping World Holdings, Inc. (CWH) is approximately 8.70 based on the latest available earnings data.
Price-to-Book (P/B) Ratio: The P/B ratio stands at 1.50, indicating how the market values the company compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is calculated to be 6.20, suggesting a moderate valuation relative to the company's earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends: Over the past 12 months, the stock price has fluctuated between $10.00 and $24.00, currently trading around $15.50.
| Metric | Value |
|---|---|
| P/E Ratio | 8.70 |
| P/B Ratio | 1.50 |
| EV/EBITDA Ratio | 6.20 |
| 12-Month Price Range | $10.00 - $24.00 |
| Current Stock Price | $15.50 |
Dividend Yield: The current dividend yield is 4.03%, with a payout ratio of 35%, indicating a sustainable dividend policy.
Analyst Consensus: The consensus among analysts is a “Hold” rating, reflecting a cautious outlook on the stock's performance moving forward.
Recent Earnings Performance: For the three months ended September 30, 2024, the net income attributable to the company was $5.501 million, compared to $15.961 million in the same period of 2023.
The earnings per share (EPS) for the latest quarter was $0.09 (diluted), down from $0.32 in the previous year.
| Period | Net Income (in millions) | EPS (Diluted) |
|---|---|---|
| Q3 2024 | $5.501 | $0.09 |
| Q3 2023 | $15.961 | $0.32 |
Revenue Performance: For the nine months ended September 30, 2024, total revenue was $4.895 billion, compared to $5.117 billion for the same period in 2023, reflecting a 4.3% decline.
Unit Sales: New vehicle sales increased by 22.7% to 58,909 units, while used vehicle sales decreased by 14.5% to 40,459 units in the same nine-month period.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenue | $4.895 billion | $5.117 billion |
| New Vehicles Sold | 58,909 | 48,014 |
| Used Vehicles Sold | 40,459 | 47,331 |
Key Risks Facing Camping World Holdings, Inc. (CWH)
Key Risks Facing Camping World Holdings, Inc. (CWH)
Industry Competition: The RV and outdoor retail market is characterized by intense competition. Major competitors include Thor Industries, Winnebago Industries, and various regional dealers. The competitive landscape can affect pricing strategies and overall market share.
Regulatory Changes: Changes in regulations related to emissions, safety, and vehicle financing can impact operational costs and compliance requirements. For instance, recent regulatory pressures on emissions standards may require additional investments in product development and compliance measures.
Market Conditions: Economic factors such as inflation and interest rates can directly affect consumer purchasing power and financing options. The average interest rate for the Floor Plan Facility was 7.78% in 2024, up from 6.90% in 2023, leading to increased financing costs for inventory.
Operational Risks: The company faces risks related to supply chain disruptions, particularly in the procurement of new and used vehicles. For example, a 14.5% decrease in used vehicles sold was noted due to slowed procurement. Additionally, long-lived asset impairments amounted to $12.4 million in 2024, indicating potential operational inefficiencies.
Financial Risks: The company reported a net loss of $19.3 million for the nine months ended September 30, 2024, compared to a net income of $100.5 million in the same period of 2023. This significant decline highlights financial instability and the need for effective cost management strategies.
Strategic Risks: The company’s restructuring efforts, including the divestiture of its RV furniture business, resulted in a loss of $7.1 million. Such strategic decisions can impact brand positioning and customer loyalty, necessitating careful consideration of future initiatives.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition affecting pricing and market share | Potential revenue decline |
| Regulatory Changes | Increased compliance costs due to new regulations | Higher operational expenses |
| Market Conditions | Economic factors impacting consumer purchasing power | Increased financing costs |
| Operational Risks | Supply chain disruptions affecting vehicle procurement | Decreased sales volume |
| Financial Risks | Net loss of $19.3 million in 2024 | Financial instability |
| Strategic Risks | Loss from divestiture of RV furniture business | Impact on brand loyalty |
Mitigation Strategies: The company has indicated a focus on adjusting procurement strategies to align with market conditions. This includes a reevaluation of acceptable procurement costs for used vehicles in response to declining market prices. Additionally, the company is leveraging deferred revenue from memberships to finance working capital needs, which amounted to $100.9 million as of September 30, 2024.
Future Growth Prospects for Camping World Holdings, Inc. (CWH)
Future Growth Prospects for Camping World Holdings, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including:
- Product Innovations: The introduction of lower-cost 2024 model year travel trailers is expected to enhance sales volume despite lower selling prices.
- Market Expansions: Expansion into new geographic markets and the acquisition of additional dealership locations are ongoing strategies.
- Acquisitions: Recent acquisitions include RV dealerships and a tire delivery service business, which contribute to revenue growth.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, reached $4.89 billion, a decline of 4.3% compared to the same period in 2023. However, new vehicle sales increased by 22.7% to 58,909 units, reflecting a positive trend in this segment.
For 2024, the company projects continued revenue growth driven by new vehicle sales, which accounted for 47.6% of total revenue at $2.33 billion.
Strategic Initiatives or Partnerships Driving Future Growth
The company has initiated partnerships aimed at enhancing customer loyalty and service offerings. The Good Sam Club membership strategy is being refined to provide better value, with revenues from this segment at $149 million, up 1.2% year-over-year.
Competitive Advantages Positioning the Company for Growth
Competitive advantages include:
- Extensive Dealer Network: The company operates 204 RV dealerships, providing a solid foundation for sales and service.
- Brand Loyalty: Strong brand recognition through the Good Sam Club and associated services enhances customer retention.
- Diverse Revenue Streams: The company generates income from new and used vehicle sales, service and parts, finance and insurance, and membership services.
| Segment | Revenue (2024) | Revenue Change (%) | Gross Profit (2024) | Gross Profit Margin (%) |
|---|---|---|---|---|
| New Vehicles | $2,328,107 | +9.5% | $331,903 | 6.8% |
| Used Vehicles | $1,265,701 | -23.7% | $231,500 | 4.7% |
| Finance and Insurance | $480,725 | +4.4% | $480,725 | 100.0% |
| Good Sam Services | $149,070 | +1.2% | $96,995 | 2.0% |
| Total Revenue | $4,895,510 | -4.3% | $1,351,585 | 27.6% |
As of September 30, 2024, the company had working capital of $397.2 million, reflecting a decrease from $523.7 million in September 2023, which indicates a need for careful management of resources as it pursues growth opportunities.
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Article updated on 8 Nov 2024
Resources:
- Camping World Holdings, Inc. (CWH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Camping World Holdings, Inc. (CWH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Camping World Holdings, Inc. (CWH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.