Camping World - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered record unit volume (45,602), strong revenue growth, and significant profitability improvement: revenue rose 9.4% to $1.98B, net income attributable to CWH increased to $30.2M, and adjusted EBITDA rose 34.7% to $142.2M, driven by cost execution, used-vehicle margin expansion, and F&I growth.
• Versus Wall Street, CWH posted a revenue beat and an EBITDA beat, while adjusted EPS modestly missed consensus (Street 0.60 vs actual 0.57) amid lower new-vehicle ASPs and Good Sam margin pressure; catalysts include sustained same-store growth, volume momentum in July, and SG&A leverage initiatives.
• Guidance narrative: management now expects FY25 new unit volume to grow “in excess of high-singles,” new ASP down ~10–12% for the year, and SG&A as % of gross profit to improve 300–400 bps; mid‑cycle earnings power reiterated at >$500M adjusted EBITDA, with an internal mandate to accelerate gross margin by 100 bps.
• Additional tailwinds: expected $15–$20M cash tax savings in 2025 from the One Big Beautiful Bill Act and ongoing deleveraging (> $75M paid down since Oct-2024); dividend declared for Q3 2025 at $0.125 per share supports capital return narrative.

What Went Well and What Went Wrong

What Went Well

• Record quarterly volume and broad-based growth: combined new+used units up 20.7% YoY; revenue up 9.4%; adjusted EBITDA up 34.7%—management cited “volume, margin performance and aggressive cost controls” as drivers.
• Used-vehicle margin expansion and F&I strength: used GM rose 149 bps to 20.5% and F&I gross profit increased $22.2M, aided by new offerings and unit volume growth.
• SG&A efficiency improving: SG&A as a % of gross profit improved 276 bps YoY; management emphasized structural cost actions (headcount reductions, location consolidations) and continued focus on per-rooftop productivity.

Management quotes:

• “Our nimbleness is a true testament to the differentiation and durability of our model.” — Marcus Lemonis.
• “Same store unit growth trends July month-to-date are tracking up high-teens on used and up high-singles on new.” — Matt Wagner.
• “We’ve paid down debt by over $75 million in total since October of last year.” — Tom Kirn.

What Went Wrong

• New ASP and gross margin pressure: average selling price of new vehicles fell 10.6% YoY, compressing new-vehicle GM by 149 bps to 13.8% and reducing front-end yield per unit.
• Good Sam Services margins declined: GM in Good Sam Services and Plans fell 777 bps to 59.5% due to higher roadside assistance claim costs, partially offset elsewhere.
• Products, service and other revenue declined 5.5% YoY: reallocation of service labor to used inventory reconditioning and prior divestiture of RV furniture compressed top line in the segment (though margin improved).

Transcript

Speaker 2

Good morning and welcome to Camping World Holdings' conference call to discuss financial results for the second quarter ended June 30, 2025. 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. Joining on the call today are Marcus Lemonis, Chairman and Chief Executive Officer, Matthew Wagner, President, Tom Kirn, Chief Financial Officer, Lindsey Christen, Chief Administrative and Legal Officer, and Brett Andress, Senior Vice President, Investor Relations. I will turn the call over to Ms. Christen to get us started.

Speaker 3

Thank you, and good morning, everyone. A press release covering the company's second quarter ended June 30, 2025, 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 our business plans and goals, macroeconomic and industry trends, customer trends, inventory strategy, future growth of our operations, capital allocation, and future financial results and position. 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 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 2025 second quarter are made against the 2024 second quarter results unless otherwise noted. I'll now turn the call over to Marcus.

Speaker 5

Good morning. Thank you, Lindsey. Along with Lindsey, the rest of the team is joining: Matt, Tom, Brett, and myself. We obviously will cover all the operational and financial highlights as we go through the prepared remarks and the Q&A. Before we jump into very particular numbers, we want to give a broad overview of how we're feeling about our business, particularly inside of the backdrop of both the RV industry and the general macro environment. When the quarter started, it was obviously a nerve-wracking situation for all of us. Liberation Day had started, tariffs had set in, the general market was in a bit of a freefall and a volatile situation, and people were obviously concerned about what was going to happen to a discretionary item like RVs. I'm proud to tell you that our 12,000 team members purely, simply delivered for the quarter.

We set a record selling more RVs than we ever have in an entire quarter, 45,000 units. We set a record in our finance and insurance department, highest amount of revenue we've ever generated, $200 million. We set a revenue record for Good Sam, all in the backdrop of what looked like an industry that was in freefall with shipments and new registrations. We never ever started this company or built this company under the premise that market share was the most important thing. I guess our pure execution just delivered that market share. We don't wake up every day thinking about how many units we're going to sell.

In terms of market share, we think about how many units we're going to sell, how much money we're going to make on those transactions, and how those customers enter our ecosystem, both from the first purchase of buying a new or used RV, all the way through F&I, service, Good Sam, etc. We're starting to really see file size growth. In fact, for the quarter, our file size growth was up 80,000 new customers. If you go back and you look over the previous years, you may say the file size looks down. As we've shed ourselves of businesses that are non-core and gotten out of certain things, we have flushed through that on a 48-month trailing basis.

As we look at the overall business, you look at the results and you try to shy away from the big glaring number of new and used RV sales and the improvement in F&I and the improved margin in service, you come down to one simple number, which is, what's the bottom line look like? While we were happy with beating what analysts call consensus, we were probably not as happy as one would imagine. Through the quarter, we continued to consolidate locations, looking to really get more proficiency and efficiency out of every single one of our locations. We look at the number of units we sell per location, we look at the SG&A per location, we look at the overall headcount, and I'm disappointed to tell you that we're 1,000 people down is what we've had to get rid of since January.

That's never something to be braggadocious about. That's an unfortunate circumstance, but we have made the hard cuts. I'm also happy that with the pressure that we've seen in the general macro environment, our nimbleness and our knowledge of inventory and our ability to act quickly has put the right kind of inventory on the ground on both the new side and the used side. Customers walk in our front door. We don't try to drive them to one specific unit. We try to drive them to a transaction. Folks have different levels of affordability and different preferences around floor plan, and our sales process leads them to a transaction that ends up closing. I'm also happy to report that our gross margins broke 30%. Any idea that we grew our volume on the backs of heavy discounting, that would be false.

Earlier in the year, I think probably in January or February, we set a short-term goal of reducing our SG&A by 600 to 700 basis points. Let me be crystal clear. That goal isn't moving. We made a lot of progress in the quarter despite the ASP pressure that the general market gave us. We're not going to stop selling affordable, inexpensive units. The goal is to build the file, build the transactions, get lifetime value out of people, put them in Good Sam, have them buy warranties, come back for service, have them buy parts, and then trade in again and do it all over again.

I think as we start to look at what is the general backdrop of the overall industry, we have to make the assumption that in the short term, the new RV market is going to stay relatively in the range that it's in today. I think in 2026, we'll get a small bump. Instead of being in the $340,000 range, I think we could see a 15,000 to 20,000 unit increase in 2026. Of course, we'll get our lion's share. For us, the growth, both on the top line and on the bottom line, is largely going to come from our recent pivot back into used. If you go back and look at our COVID numbers, our profitability was driven by our used focus. Then when the market got a little dislocated on new pricing, we had to pull back.

More recently, we've gotten back in it and we've delivered massive growth on the used. It's important to note that that massive growth is, it's okay. We're happy with it, but it's against a backdrop of pretty easy numbers last year. What we're committing to you going forward is that we expect double-digit growth. I'm not going to pin in whether it's going to be 10% or 11% or 19%, but we expect double-digit growth to continue on the used side. As we look at the SG&A, we believe we have another $10 million to $15 million of fixed cost opportunity reductions to happen through the balance of the year, through, unfortunately, headcount reduction and/or location consolidation. For those people who have been hyper-focused on the number of locations we've operated, we don't want you to be.

We want you to be focused on the productivity of the locations we have, the profitability and revenue per employee, and the contribution that we drop to the bottom line in doing that. What we were surprised to see is through consolidating 16 locations over the last, call it five, six months, our unit count per store has risen, our profitability per store has risen, and our margin profile per store has risen. We understand that the important part of getting to 600 to 700 basis points of improvement in SG&A are not as complicated as one would think. Sure, the big pressure point in all of that is what's happening on the average selling price, not because of the price itself, but when margins remain constant, the amount of gross profit generated per transaction is just simply lower. Here's the good news.

We've already started to see a rebound in our average selling price in July, close to $1,000 already. We expect that to continue to accelerate. We don't see, however, it getting back to $40,000 for the full year as we did last year, but we hope to see that march back towards $40,000 happen over the next 6, 8, 10, 12, 15 months. We can't predict what's going to happen. We don't know what's going to happen with the general economy and interest rates. As we have proven, we will continue to make the adjustments to our business to reach the level of profitability that we believe we should have. When we look at the balance of this year, many have said, if your ASPs are going to be lower and your SG&A is going to be higher, you're mathematically going to make less.

Look, we don't know what's going to happen to the ASPs, and we're being conservative in giving you a range of what they could be in terms of the downside. Quite frankly, we're comfortable giving you that and sticking to it. When it comes to SG&A of 300 to 400 basis points of improvement that we've experienced so far, we know that there's more to take out. In fact, if we pro forma some of the expense reductions we made in the second quarter, the number would already be better. You'll see some of those benefits happen in Q3 and then again in Q4. As we look forward to our capital allocation, you can see the $118 million of cash on our balance sheet, the amount of inventory we own free and clear, the amount of real estate that we own without a mortgage.

Our balance sheet, quite frankly, has never been stronger. So far for the year, we've delevered a pretty significant amount, and Tom Kirn will address that in his results in his comments a little later. As we think about growth for this business, we want you to think about capital being allocated this way. For the first time in a very long time, we are in heavy discussions at looking at alternates around what acquisitions or what investments Good Sam could make to start to really grow its business. When you look at the Good Sam revenue number for the quarter, it's, I think, a record revenue number. When you look at the profitability, it's slightly down, but it's slightly down for two simple reasons. One, we're investing in that business to grow it.

The way that revenue happens and the recognition of revenue happens, you realize the expense today, you realize the revenue over a period of time. You'll see that start to blossom over the next several years. The second thing is that RVers are out using their unit. Our claims on roadside assistance are also up. Sure, there's a little bit of inflation related to the claims costs. We think we have some ways to mitigate that here in the next 12 to 15 months. As we look to grow the profitability, we know that raising our gross margin on an annualized basis above 30% is a great target for us. We know that keeping the guideposts of new revenue growth and new unit growth and used unit growth, those are all things that they're going to continue.

Because the clock strikes 12 on December 31st, we're not going to come out with a new set of ideas. The idea is to continue to sell more RVs, take fixed costs out of the business, grow our Good Sam business, and deliver the kind of EBITDA performance that we know we're capable of. When I look at the performance for the quarter of $140, whatever number it was, $140 some odd million dollars, I have to tell you that that's probably the best performance that I've seen in my 20 years in light of the backdrop of what's happening in the macro. For those people that are wondering, we believe that the macro environment in 2025 was actually tougher than 2024. A lot more uncertainty with tariffs and interest rates and just the general overall economic environment.

That's why we go into the next quarter, into next year, with a very, very high level of confidence. I'll now turn the call over to Matthew.

Speaker 0

Thanks, Marcus. As Marcus suggested earlier, we cannot be more proud of our team and the outsized results that they delivered within the second quarter. Our same-store unit growth trends continue to show promising signs as we move into the third quarter. July month to date, we're already seeing unit growth tracking up in the high teens on used RV sales and high single digits on new RV sales year over year. On a multi-year basis, both of these trends are in line compared to what we saw in our record-setting second quarter. We also continue to make significant gains in our new and used market share, achieving the distinction of selling over 14% of all new and used RVs registered in North America year to date. We continue to separate ourselves from the competition, and we are driving these results with fewer but more productive rooftops.

On a trailing 12-month basis, our new and used retail same-store growth is now tracking up in excess of 10%, which compares to an industry that continues to track down in excess of high single digits. A year ago, we set a long-term goal of achieving 15% combined market share of new and used RVs. Given our performance and consistent ability to navigate a complex industry backdrop, we now see 20% market share of all new and used retail sales as a very realistic medium-term goal. During the second quarter, we further developed and enhanced our used procurement methodology, resulting in a record amount of used RVs purchased within the quarter. As I look out over the next several quarters, I'm most optimistic about the capabilities and the scalability that we've built into our used RV supply chain.

We approach this segment with a very long-term mindset, having made significant investments into a centralized team with the ability to flex up and down our values and buy in real time. We know that used RV sales is going to be the key to our continued idiosyncratic earnings growth in the years ahead. I'll now turn the call over to Tom.

Speaker 1

Thanks, Matt. For the second quarter, we recorded revenue of $2 billion, an increase of over 9%, driven by unit volume increases in both new and used in excess of 20%. New and used gross margins both performed in line with their historical averages. Within Good Sam, the business continues to post positive top-line growth, with the organization positioned for margin stabilization as we make additional investments in our roadside business and lapped claims cost increases. Within products, services, and other, our core dealer service revenues and our accessory business showed improved gross profit dollars and margins despite reported top-line pressure from a higher allocation of service hours to used inventory as we deployed our cash towards used RV acquisition throughout the quarter. We also lapped the sale of our furniture business during the second quarter of last year.

We reported adjusted EBITDA of $142.2 million compared to $105.6 million last year. SG&A as a percentage of gross profit improved 276 basis points year over year as we continued to consolidate underperforming locations and pull costs out of the business. The team achieved these improvements despite pressure from lower ASPs on new vehicles. In sum, we've strengthened our operating models, enhanced financial performance, and created more room to grow. We ended the quarter with about $118 million of cash. We also have paid down $75 million of long-term debt since October, including a prepayment made yesterday. We also have about $519 million of used inventory net of flooring and another $193 million of parts inventory. Finally, we own about $247 million of real estate without an associated mortgage. I'll now turn the call back over to Marcus.

Speaker 5

Thanks, Tom. We'll go ahead and jump right into the Q&A.

Speaker 2

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Joe Altobello with Raymond James. Please go ahead.

Thanks. Hey, guys. Good morning. I wanted to ask about ASPs, not surprisingly. You mentioned the weakness on the new side is really all mixed, but I'm curious what you're seeing from a promotional standpoint this summer. Are competitors getting more aggressive, particularly as you guys continue to gain pretty significant market share?

Speaker 5

I think the important thing is that we don't see the ASPs as a problem. We see that as an opportunity to grow our file, to build our base, to sell them other things through our whole ecosystem, and we're happy about it. In terms of competitors, we've stopped paying attention to how other people are pricing because we actually are very focused on growing our margins. You saw that margin growth through the quarter breaking 30%. I don't know what other dealers are doing right now. Quite frankly, what I've told the team every single day that we wake up is, I don't care.

What I care about is an acute focus on turning that new inventory, finding new customers, being very profitable on every single one of those transactions, which we are, including on the lower priced units, and driving the growth of our business both on the top and bottom line by focusing on our used business.

Speaker 0

Joe, let's not forget the competitive advantage that we have with our contract manufacturing and our ability to just add additional content features while we even just like had done previous cursory checks of competitors. I mean, we're clearly coming in under invoice pricing based upon OEM brands that are of equivalent products. I don't know that I'm seeing any different type of behavior than we normally would experience. Just as well, we feel like we've played a much more competitive and intelligent game in terms of our inventory management.

Speaker 5

Joe, one thing that we did discover more clearly in the first six months of this year is that the growth of our new unit volume isn't singularly attributable to selling cheap units. The growth of our new models and the growth going forward in the next 12 to 18 months is us really understanding where the elasticity is by type code. It isn't about just selling an $11,000, $12,000, $15,000 trailer. That's a very small number inside of our overall business. It's understanding as you get into larger trailers, as you get into fifth wheels, as you get into C's and B's and A's, how do we enter into each one of those type codes and start to be disruptive on the opening price points there? We believe that the slowdown in motorized can be accelerated with us finding price points that trigger customers' behavior.

Whether that's a $100,000 Class A, a $69,000 Class C, a $74,000 Class B, we know that in all of those segments, there's significant volume growth opportunities available to us. Understanding that we take our playbook from the entry-level travel trailer and we start to stratify that across all the different price points, that's where we think we're going to win in the next 12 to 15 months. It is not our focus, much like it hasn't ever been, to try to just generate volume by selling cheap things. It is our focus to try to sell as many things as we possibly can and get them into our ecosystem and do all of those transactions profitably.

One thing that I heard yesterday from some feedback that I got is that we look like we're selling units at a loss to try to grow a file or to try to grow market share. That's just total nonsense. Every transaction that we do cumulatively is intended to be profitable between what we generate in the front, what we generate in F&I, what we generate in service, and that cumulative transaction needs to be profitable. Sure, are there cases where we sell the unit with a front-end loss? Yeah, because it has some aging, because we made a mistake trading for it. When you look at the summation of our transactions, they're profitable and they're meant to be contributory, not market share gains.

Appreciate that. Just quickly on used gross profit margin, it looks like it's north of 20% again. Is that sustainable? Would you expect to hold 20% in the back half on the used side?

I'm going to stay consistent with what we provided as a guidepost for the year, which is in that 19%, 18.5% to 19.5% range as we get into the back half. Matt and I have begun testing some different pricing strategies on used. We have a desire to get our used turns up to four times. We have some work to do to get there. We're probably sitting at around 3.68% right now. We are testing some different things because we believe the long-term prospects of generating more gross profit on that asset, getting a better gross margin of return on investment in a 12-month period, is more important than anything else. We think we can get a quarter of a turn more by giving up a half or a quarter of a % of margin, which is going to yield us more dollars.

That is the game that we're playing right now. I would expect that same guidepost to maintain. If we outkick our coverage and come up with 20, then you know that's a win for us.

Speaker 0

This is really a GPU game, as Marcus is saying for us. To enhance that opportunity, let's not forget, Joe, coming out of season, we typically like to accelerate our sales, convert those used assets into cash because once September, October hits, that's amongst the best time periods to actually buy more used heading into next year. There are going to be some consumers that don't want to necessarily pay the storage fees, don't want to necessarily hold on to their assets or pay insurance. They'd rather just buy a new one in March or April of next year. We'll certainly take advantage of those opportunities over the ensuing months.

Speaker 5

To give you a little insight, as we look at July, our margins look pretty close to 20%, and our same-store sales number is pretty close to also 20%. We're seeing that momentum continue, and we're excited about sort of the prospects going forward.

Speaker 0

Super. Thank you.

Speaker 2

Our next question comes from James Hardiman with Citi. Please go ahead.

Hey, good morning. Thanks for taking my questions. You've touched on a lot of this, but maybe just a quick summary as we think about these various guideposts, right? New and used units, price, margin, what's changed and what hasn't changed? The landing point, ultimately, you know, obviously you guys don't give guidance, but the landing point, as we think about, you know, EBITDA for the year, how should that be, you know, at least in your internal models, how is that moving?

Speaker 5

Yeah. We have taken our projections up on new. I think we had originally started the year at, you know, 2%, 3%, 4%, 5%. We're taking that up from here. We're keeping our used number relatively consistent, but we believe we can outkick our coverage there. We believe that our gross margin, our goal is to keep that above 30%. That's a little bit higher than we originally entered the year in our minds. We will continue to make progress on the SG&A. We feel like the SG&A goal of 600 to 700 basis points isn't moved. It feels like it just had some headwind in front of it based on what happened with Liberation Day and some of the other things.

As I look at the balance of the year, though, just to be very candid, as we're tracking here, we think that getting closer to $350 to $400 on the SG&A side is a goal unless we see those ASPs unlock by thousands of dollars here in the back half, and we could potentially break $400. The goal to 600 to 700 will take, plain and simple, and you can see the slides that we've attached, will take the requirement for us to get our ASPs back up closer to $38,000, $38,500 for us to get to that 600 or 700. We think that's very possible. We think it's even possible in the back half of 2026. In the short term, we think we're still going to have a little bit of pressure from affordability.

We're hopeful that an interest rate cut here in the next several months will be part of that fuel.

Got it. That's helpful. Marcus, you made the point in the prepared remarks that the strategy doesn't change once the calendar flips. It seems like other RV companies are really going out of their way to tell us that fiscal 2026 is unlikely to be significantly better than fiscal 2025. Obviously, there are some differences there, right? They're gaining market share, hand over fist. I guess early thoughts in 2026 is the question.

We expect to continue to grow our new business in 2026 and outsize our growth in used in 2026. We expect to do that with fewer rooftops and a tighter expense structure. That is not something that is going to start or stop today. It is continuing today, and it is going to continue until we get to our goals, and then we are going to set new goals. We are not expecting 2026 to be anything but up for us. We do not really give a shit about everybody else, to be totally honest. I do not mean to be that punchy about it, but we are putting up big market share numbers, and we are going to continue to punish the competitors. You did not have to hang up on that one, though. I do not know who is next. I think he may have dropped off, operator.

Speaker 2

All right. Our next question comes from Alex Perry with Bank of America Merrill Lynch. Please go ahead.

Hey, thanks for taking my questions here. Two questions, I think they're kind of related to each other, not surprisingly on pricing. I guess just more granularly, can you talk through sort of the embedded pricing expectations in the back half across both new and used? For new, are you expecting similar levels of decline year over year as you saw in the second quarter? Maybe just provide a bit more color in terms of any green shoots in terms of higher content and units starting to sell. Are we starting to see an unlock in fifth wheel or motorized? What is driving the higher ASPs in July? Are you starting to see a bit of a mixed benefit there? Thank you.

Speaker 5

I need to understand. I apologize. I understood the back half of the questions. I just need to understand the pricing. I heard pricing dislocation of some kind. Can you clarify that?

Pricing, yeah, more about the embedded pricing expectations in the back half for both new and used to get to your, you know, down 10% sort of guide that you laid out in terms of ASP. Is there an embedded ASP recovery in the back half, you know, across both new and used? Just trying to think through what, you know, what you're sort of anticipating there.

On the new side, as you may be aware, we were just slightly over $40,000 on a new ASP in 2024. We're operating today far below that, but we've already started to see that number tick up. The range that we gave of 10% to 12% down was our very conservative finger in the air guess. That number could be as low as 8% or 7% if we get a little pop here. The growth that we're seeing in our ASPs in July and in the back half are really not that peculiar. We normally see seasonal improvement in our pricing.

Speaker 0

Really, Alex, the confidence stems from the fact that we historically will take a very bullish position on lower priced assets heading into season. Our inventory mix, and ergo, our sales mix, is modified in accordance with whatever our inventory mix is. As we sit here today, the cost of our average new piece of inventory in rolling stock has gone up in excess of 12%, which is going to be just the norm that we've seen in terms of our inventory mix. Therefore, that would give us the confidence just to suggest that seasonally, in Q3, Q4, you're going to see our new ASPs increase. However, when you look at it on a year-over-year basis, we still expect that there's going to be year-over-year declines, much in line with the percentage year-over-year declines that we saw in Q1 and Q2.

In other words, you could just track throughout the balance of the year just to suggest that that same 10% to 12% decline is what we'd anticipate between now and the end of the year.

Speaker 5

Which is still higher.

Speaker 0

Exactly.

Speaker 5

Since everything sort of takes off, I think Q4 was $44,000.

Speaker 0

Yeah. Alex, to transition to your second question, are we seeing green shoots? Yeah, absolutely. Most of the green shoots are a byproduct of the time investment that we made into our contract manufacturing, where it's no coincidence that our best-selling Class B, Class C, Class A are our contract manufactured units within each of those specific segments. We have taken different approaches to continue to expand that lineup heading into next year, inclusive of just adding different elements like in a Class B, a different pop-top optionality to increase the sleeping capacity. We're looking at a Super C as an example, which we've seen as being one of the few segments within the motorized space that's actually growing year over year. We really don't have a meaningful footprint in that segment.

We see a lot of opportunity to weave into and out of different area segments to enhance and up content a lot of our assets while at the same time maintaining what we're doing, where we feel like we've been the market driver over the last two years. You take us out of the market, and this industry has gone backwards a substantial amount.

Very clear and very helpful. Best of luck going forward.

Yeah, thanks, Alex.

Speaker 5

Thank you.

Speaker 2

Our next question comes from Tristan Thomas-Martin with BMO Capital Markets. Please go ahead.

Hey, good morning. Matt, I kind of want to follow up on that question. Marcus, in one of the previous questions, you said you could re-accelerate price points, kind of implying going lower to re-engage customers. How should we think about mix and kind of pricing in calendar 2026?

Speaker 5

You should think about us putting products on the ground that the customers want to buy. Our ability is to be like the wind. We're going to adjust to whatever's happening with the general consumer. We do, however, want to start to track drops in potential interest rates and our ability to raise the type of unit that somebody could buy. Up to 13B and the 13R and the 17B and the 17R, which are our entry-level units, are meant to bring people into the lifestyle. That's the goal of them. It's not meant to gain market share. It's meant to bring people into our ecosystem so that the lifetime value of that customer can start earlier and the trade cycle can start faster. Those units that I just identified are some of our most popular traded-in units.

We know that the traditional trade cycle of three and a half to four years gets materially accelerated when they buy that entry-level unit. We get to make money on them multiple times throughout their journey and really start to diversify the places that they go inside of our organization, particularly inside of Good Sam. As we look at 2026, we expect to see a growth in ASP for a variety of reasons. We expect to see growth in our new and used combined ASP because we continue to see nice stabilization on the used side. If the market tells us to go up, we're going to follow it. If the consumer tells us to go down, we're going to follow it. Our job is to do what the consumer tells us to do, which is why we have domination on all categories of our business.

Speaker 0

We have really good insight, Tristan, into the monthly payment that a consumer is willing to pay within each specific segment. That's really been our secret sauce this year, driving down that monthly payment year over year, therefore expanding the entire funnel of buyers today and for the future.

Okay, thank you. Just one more on M&A. I know it's a little bit of an, it's in a pause, right? On the dealership side, what would it take for you to get more aggressive there? What would you have to say?

Speaker 5

Let me clarify that. We are never on a pause for M&A. We are more thoughtful and less aggressive at certain times because the capital that we have today is really being allocated to delevering our business. We don't like where our leverage sits while it's materially improved from January 1. Tom mentioned that we paid our debt down $75 million. We are looking at deals right now, and what we want to make sure that we're doing is we're finding white space. However, when we think about capital allocation, allocating money towards Good Sam's growth, allocating money towards used growth, allocating money towards getting more out of our existing stores is just a better return on capital. We are never on pause from acquisitions. We're slightly more thoughtful, and you know, I would never be surprised if you woke up tomorrow and we had a deal to announce.

We just don't know.

Okay, thank you. I appreciate it.

Speaker 2

Our next question comes from Scott Stember with Roth MKM. Please go ahead.

Good morning. Thanks for taking my questions.

Speaker 5

Yes, sir.

Matt, you were saying that the rolling stock coming in these days is low double digits higher, I guess, than last year. How does the 2026 model year, you know, regarding tariffs, how would that get impacted for next year, just from an affordability standpoint?

Speaker 0

Scott, let me clarify one thing in particular. I was suggesting our mix of assets on the ground is actually higher compared to what it was in prior quarters. That's also a byproduct of what's coming in, but also how the mix shifts because as we sell down lower priced assets, naturally, that's going to skew towards a higher average cost. Just as well, we've seen in terms of model year 2026, on the most pure level, looking at a basket of goods, about a 5% increase on the most pure level. There are going to be various levels between 3% upwards and 10% depending upon the category. By and large, I think you could put 5%. Of course, there's going to be chatter here over the ensuing months of different tariffs taking effect.

Therefore, manufacturers might be pressed into raising prices slightly more within that September-October timeframe, or perhaps they try to punt it into next year. We feel like we've been trying to take advantage of every opportunity we have and weave into and out of when to procure these assets to ensure that we're just prepared to meet these monthly payment demands of consumers.

Speaker 5

Any increase in new pricing results in us being the big winner. Because of our ability to have the contract manufacturing relationships, we're always able to be better than everybody else. With every new unit increase in price, the value of our used inventory actually goes up at the same time. That could be some margin expansion for us as well. We're not dissuading any manufacturer to avoid raising prices if that's what needs to happen. As long as content and quality don't get compromised, we're fine with that.

Got it. Last question on F&I, tremendous growth the last few quarters. Is there any reason to believe that we shouldn't be seeing this low double-digit growth as long as the units are growing the way that they are? Also, going 12 months out, talk about how this will help you attain your goals of 600 to 700 basis points of SG&A leverage.

On the F&I side, we see opportunity to grow the gross dollars that we're generating. We don't think that the percentage of penetration that we have per transaction will grow. If that penetration remains constant, as it has for several years in terms of our ability to sell the different products and services, the gross dollars will naturally go up as the ASPs go up with it. I think that's a bit of a hidden secret in this whole process, that as the ASPs start to go up again, which we're seeing already in July, not only do the gross profit per units go up, but the F&I dollars per unit go up with it. When those two things happen, our cost structure does not change other than the small amounts of commission that we pay out.

What's really created the separation between or the delay in us achieving the 600 to 700 points is very simple. Once the ASPs start to go up and the GPUs go up just a couple hundred bucks and the F&I goes up a couple hundred bucks and we continue to take costs out, which I want to be clear, we are going to continue to take costs out. Those two things, when they meet in the middle, get us to 600 to 700, I think quicker than anybody would expect.

Gotcha. Very helpful. Thank you.

Speaker 2

Our next question comes from Ryan Brinkman with JPMorgan. Please go ahead.

Hi, thanks for taking my question. Relative to the trend in new RV pricing, how much of that trend do you think is a result of lower prices for the same type of RV versus how much is driven by that downshift in mix you alluded to that's driven by customer preferences in light of affordability challenges, etc.? I heard you say that aggressive discounting wasn't behind your market share gain in new RVs during the quarter. How much of a contributing factor was maybe your differentiated assortment of more affordable RVs? How much longer will that be a differentiating factor?

Just relatedly, I realize your used RV margin remains strong, but are there any implications for used RV prices to keep in mind, or do you need to somehow position yourself differently on the used side like you had before when there were significant changes taking place in the new RV marketplace with regard to either price or mix?

Speaker 5

The benefit that we have, thank you, Ryan, for your question. The benefit that we have on new RV pricing going up is very different in our used strategy than when new RV pricing went down in the 2023, 2024 model year changeover. Because ultimately, the values of used got dislocated the wrong way. In this particular instance, as we sit here and buy today, and we're buying behind book value in many cases, every time that new price goes up, that gives us margin expansion. That actually increases what the value of used units are in the marketplace. When you think about our market share growth, and I commented and will comment again about the fact that we don't need to be promotional in nature to drive our market share or to drive our volume gains.

It is really our idiosyncratic way of thinking about when to put inventory on the ground, what to put on the ground, and how to price it. It varies by market, and it varies by type code. What we've learned and how to do, what we've learned how to do very well is understand where the white space is from a pricing standpoint across all the type codes top to bottom, not just in the entry-level travel trailer. As we get deeper into 2025 and get ready for 2026, I think you'll see us start to gain more momentum in other type codes that we have historically not had as much of explosive growth like we did on the bottom side.

Very helpful. Thank you.

Speaker 2

Our next question comes from Alice Wicklund with Baird. Please go ahead.

Yeah, good morning, gentlemen. Marcus, I just want to follow up on your comments on the trade-in cycle. I mean, your contract manufacturing strategy is obviously drawing new entrants into the market with that affordable price point. Maybe provide a bit more detail on your approach to follow-up and retention of those customers to keep them in the RV lifestyle, you know, maybe more specifically in your ecosystem and maybe at that faster trade-in rate that you mentioned.

Speaker 5

The one thing that is unique about our business is the multiple touch points that a customer has just slightly right after that RV purchase transaction. Whether that's the interaction with Good Sam and the F&I and the Good Sam F&I office, or the type of interaction they have as a walkthrough in our retail business, or the follow-up with the service department, we just have so many different touch points and ways to engage with customers that it gives us different revenue and upsell opportunities. I think what's unique for us is that the opening price point units have given us the ability to bring people into the lifestyle, get them into an affordable payment, get them to try new products and services inside the business. As they step up their units, they're also stepping up the types of products they have. Let me give you an example.

The price of a warranty on a $14,000 single-axle travel trailer is significantly lower than the price of a warranty on a 25-foot, you know, fiberglass travel trailer. As we bring people in and we take them through the cycle all the way up to maybe the largest unit they'll ever own, not only does the revenue per customer start to increase, but the gross profit that they contribute to their lifetime value also increases. This idea of contract manufacturing that we started many, many years ago was really built on a couple of premises. One, there is no block from us entering a market. We didn't want any resistance or any block of any kind. We can go into any market tomorrow.

Two, we wanted to be able to control features and benefits that were unique to us based on the research that we do, the feedback that we get. Three, we want to increase the trade cycle and the trade rate that we have because we need that supply chain on the use side. Maybe most importantly, last, our ability to have margin protection around those private label units. When you start to sell other OEM products, which we do, and we're the best at it in all cases, we also are competing with other people who may not have the type of infrastructure to deliver the customer experience that we do. They could be operating on a gravel lot, not caring about the return customer, not caring about service, not even having service, and we're competing with them. We have to be careful in that environment.

The reason we have to stick with selling OEM units is because we need the credibility, we need the web traffic, we need the leads. The contract manufacturing units have a very, very unique value proposition in our company. Trade cycle is one of them, but all the other things really are the architecture around all of it.

Speaker 0

We don't disclose how many customers are repeat buyers within the RV cycle. However, we do disclose Good Sam member size, all the different Good Sam products that we sell, and our retention of those customers through Good Sam. We could also share with you that we average about 30,000 trades a year of customers coming back. Many of those we sold, we don't go through and disclose the specifics, but we feel very confident by means of the 13B, 13R, 17B, 17R sales that we've enjoyed over the last few years. We're seeing that as the most common repeat buyer coming back into our system, where those are amongst the most traded-in models and have been for the last three years running now.

This is really us playing a long-term futures game of selling more inexpensively priced assets to satisfy consumers, knowing that they're going to come back here in the next two to three years.

Speaker 5

Alex, I know you know this, but just in case other people do not, when we say inexpensive unit, it doesn't mean decontent without features. It means we're using our scale and using our size and using the time in which we order our inventory and take our inventory and collaborating with the Lipperts and collaborating with the Patricks and working with the manufacturers together to make sure that the value proposition and the front forward foot that we're putting is really great. If you just try to sell on price and decontent things, every other dealer's tried that. You have to bring value to the table and have a good price. I think that is maybe misunderstood in our model.

Great. That's very helpful. Just on the used side, I think your used inventory per location was up over 60%. You talked about record purchasing in the quarter. Is that inventory at a level you're comfortable with today, or do you have more to go there? Maybe just in general, talk about the supply dynamics on the used market.

What Matt and I have done for probably a decade together is we find new watermarks. We push, we see how far the business can go, and then we adjust. I would say today that if both of us were being totally honest, we're probably slightly overinventoried on the used side. The good news is we're still selling at a 20% up clip, and we can toggle the purchases up or down in an instance. For example, in the month of August, if we wanted to just reduce our used inventory, nothing cataclysmic has to happen. We just pull back a little bit on the marketing spend on used acquisitions, sell that inventory down, see if we've hit that turn level that we want to be at, and then adjust the toggle from there. It is very much of a real-time thing.

Great. That's it from me. Thank you.

Speaker 2

Again, if you have a question, please press star then one. Our next question comes from Brett Andress with Jefferies. Please go ahead.

Hey, good morning, guys. This is Patrick Buckley on for Brett. Thanks for taking our questions.

How are you doing?

On the parts and service side, now that you've launched the sale of the furniture business, should we expect to see a rebound of growth in the second half? I guess more long-term, what is the primary driver of that business? Is it used sales and refurbishing, or is it keeping units in the ecosystem for repairs and maintenance? How do the margin profiles compare between those two?

Speaker 5

Our growth is to keep our bays and our service technicians busy. There is a finite amount of hours in a week and a finite number of technicians that we have and a finite number of bays. We look at really maximizing the yield out of that particular facility. The challenge that we have is that we want to take care of every customer that walks in the door, whether they're coming for warranty or whether they're coming for external customer pay. As we've grown our used inventory, we also have to be sure that we're reconditioning our units because the assets that we're selling need to be properly valued and we need to maximize our margin. Any shortcut in reconditioning the unit leads to aging and leads to poor margin performance.

At the end of the day, as we get through the back half, I would expect that our customer paid business as a percentage of our total will start to inch up again because we've reached a level with our use that we're relatively happy with. I see growth happening over the next 12 to 24 months in our service and parts business. Whether it's going to come from internal work or external work, I'd like to tell you that we're relatively agnostic. We want to take care of every customer, but a customer includes the used unit that needs to be reconditioned that's sitting in the bay that pays the same price as a customer walking through the door and in some cases has less discount associated with it.

We're looking for margin yield out of those bays and looking to make sure that we're capturing all of that revenue.

Got it. That's helpful. Could you talk a bit more about what you're seeing in the competitive market and broader dealer health? Any signs of distress from some of the smaller players, or does it feel like the broader dealer network is also starting to see the benefits of a unit recovery?

Look, we're not spending a lot of time polling what the competition is doing, but we know that there are a number of competitors out there that are really struggling. They've reached out to us, you know, asking us to either buy their business or invest in their business. As we sit here today, we are capitalists, and our job is to give our shareholders a maximum return on every dollar that they put into this business. If we believe that there's an opportunity to make an acquisition, we're going to wait till the very last minute to ensure that the yield is there. As an example, many people know that we purchased five Lazydays locations, I think, gosh, a little less than eight or nine months ago.

The trailing 12 of those five locations, and this is just to give you an example of why we make acquisitions, the trailing 12 of those five locations was significantly negative EBITDA, significantly. In less than one year, we've gone in and changed the entire process, changed the branding, changed the training module, changed the mix, and those locations year to date are close to $4 million in EBITDA contribution, a massive swing. When we make these acquisitions, we also want to make sure that they don't create cannibalization in a market for us. They don't change our general thesis behind how we think about inventory. We're not going to go out and buy somebody that sells $300,000 motor homes. That's not our model. They must possess the right process around finance, service, and parts.

There are plenty of those opportunities out there, and we will always exploit every opportunity that's out there. We also want more out of our existing base. That was our number one goal in 2025 that we committed to some of our large shareholders. We will give you the type of performance on a per-rooftop basis that you expect us to have and that we've had in the past. We can make acquisitions, but not at the expense of hurting the existing performance of our existing stores.

Great. That's all for us. Thanks, guys.

Thank you.

Speaker 2

This concludes our question and answer session. I would now like to turn the conference back over to Marcus Lemonis for any closing remarks.

Speaker 5

Thank you. Heading into the second half of the year, we are more confident than ever in our mid-cycle earnings power. On today's store count, we really believe we can generate well over $500 million of adjusted EBITDA. That is being driven by accelerating the per-door productivity, delivering better earnings, better leverage, and the confidence to explore new market expansion opportunities. To capitalize on that ambition, we have set a new internal mandate. We want to accelerate our gross margin by 100 basis points over the next 18 months, regardless of the broader industry trends. Thanks so much for joining our call.

Speaker 2

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.