Income from operations, net income and diluted earnings per share of Class A common stock decreased to $120.2 million, $81.8 million, and 72 cents, respectively, and included $15.4 million of pre-opening expenses related to the Gander Outdoors store openings
Other highlights showed:
- Record total gross profit of $416.2 million, an increase of 11.7%.
- Sales of new and used RVs were more than $1 billion, an increase of 6.5%.
- A record 33,637 new and used RVs sold, an increase of 8.5%
- A record 21,745 new towable units sold, an increase of 14.1% in total and 5.1% on a same store basis, with travel trailer same store units increasing 6.7%.
- Finance and insurance revenue and gross profit of $124.1 million, an increase of 23.7%, and an all-time high.
- Good Sam Club file size of over 1.92 million members, an increase of 9.2% over the prior year, and the highest since inception.
- Income from operations decreased to $ 120.2 million net income. Income totals included $15.4 million of pre-opening expenses related to the Gander Outdoors store openings.
- Adjusted pro forma net income increased 10.6% to $85.6 million, and adjusted pro forma earnings per fully exchanged and diluted share increased 6.8% to 96 cents.
- Adjusted EBITDA decreased 1.2% to $140.2 million.
Marcus A. Lemonis, chairman and chief executive officer, stated, “Our RV business is on pace for another record year. While the early part of the RV selling season was impacted by unseasonal weather, we saw nice improvements as the second quarter progressed and our team did an excellent job of balancing our promotional activity to maintain strong profitability while driving sales growth and dramatically lowering our inventory levels of new RVs.
“We continue to invest in the growth of RV dealerships through traditional RV acquisitions, new store openings, and the launch of Gander RV Sales which will transform our recently acquired Gander Outdoors’ locations through the integration of RV sales and service,” Lemonis continued. “The launch of Gander RV Sales has provided the opportunity to rapidly expand our RV business in key states like Wisconsin, Minnesota, Texas, Michigan, Ohio, Pennsylvania, New York, North Carolina, and Illinois, which represent nine of the top 16 RV states, according to Statistical Survey Inc.’s new RV registration data, and accounted for nearly 35% of all RV registrations over the past twelve months.”
Strategic Growth Initiatives
The company continues to pursue opportunities to expand its customer base and grow its market share in the RV, outdoor and active lifestyle categories. Recent strategic highlights include:
- Completed six dealership acquisitions and added new RV dealerships in Sioux City, S.D.; Sherwood, Ark.; Nashville, Tenn.; Redding, Calif.; Oklahoma City, Okla., and Newport News, Va., in the second quarter 2018.
- Opened 52 Gander Outdoors stores in key markets with strong RV registrations in the first half of 2018.
- Added RV sales to the Gander Outdoors stores in Kenosha, Wis., and Fayetteville, N.C., in the second quarter 2018.
- Signed agreement to purchase Russ Dean RV in the Pasco, Wash., market.
- On track to add RV parts, accessories and services to all Gander Outdoors locations and operate co-branded Camping World and Gander Outdoors stores by the end of 2018.
- Announced plans to expand the number of RV sales locations by more than 30% through next year with the launch of Gander RV Sales in up to 40 locations, new store openings and continued acquisitions.
Second Quarter 2018 Segment Results
The company has two reportable segments: Consumer services an plans, and retail. Revenue, income and other operating highlights for the two segments in the second quarter were as follows:
- Consumer services and plans revenue increased 9.7% to $52.7 million.
- Consumer services and plans segment income increased 15.2% to $27.6 million.
- The number of RV-related active customers increased 4.6% to 3.714 million over the prior year.
- The number of members in Good Sam Club increased 4.6%, or 85,000, from March 31, 2018 and membership reached an all-time-high of more than 1.92 million members.
- Retail revenue increased 13.1% to $1.392 billion.
- Retail segment income decreased 18.4% to $95.5 million.
- Vehicles sold increased 8.5% to 33,637 units
- New vehicles increased 11.5% to 24,442 units
- Used vehicles increased 1.3% to 9,195 units
- Average selling price per unit sold decreased 1.9% to $30,269
- New vehicles decreased 4.8% to $33,038 per unit
- Used vehicles increased 6.3% to $22,909 per unit
- Same store unit volume of new vehicles increased 2.4%, with travel trailers increasing 6.7%
- New travel trailer unit sales to total new unit sales increased 259 basis points to 72.2%, contributing to the decrease in average selling price per vehicle
- Gross profit per vehicle sold including finance and insurance decreased 2.2% to $8,384
- Finance and insurance revenue as a percentage of total vehicle revenue increased 170 basis points to 12.2%
- Inventory of new vehicles decreased 14.2% in total and 17.5% on a per dealership basis from March 31, 2018
- There were 223 retail locations as of June 30, 2including: 147 Camping World retail locations, 54 Gander Outdoors locations, two Overton’s locations, two TheHouse.com locations, two W82 locations, five Uncle Dan’s locations, four Erehwon locations and seven Rock Creek locationsOf the 223 locations, 132 sold recreational vehicles
Select Balance Sheet and Cash Flow Items
The company’s working capital and cash and cash equivalents on June 30, 2018, were $593.2 million and $212.4 million, respectively, compared to $478.7 million and $224.2 million, respectively, at Dec. 31, 2017.
Total inventories increased 5.0% to $1.49 billion on June 30, 2018, from $1.42 billion on Dec. 31, 2017, primarily from the new stores acquired or opened. New vehicle inventory decreased 12.7% to $971.6 million and new vehicle inventory per dealership decreased 18.0% to $7.4 million on June 30, 2018, from $1,113.2 million and $9.0 million, respectively, on Dec. 31, 2017. Parts, accessories, and miscellaneous inventory increased $212.8 million to $409.4 million on June 30, 2018, from $196.5 million on Dec. 31, 2017, primarily attributable to the growth in the Outdoor and Active Sports businesses.
At June 30, 2018, the company had $24.4 million of borrowings under its revolving line of credit as part of its Floor Plan Facility, $1.16 billion of term loans outstanding under the Senior Secured Credit Facilities, and $854.6 million of floor plan notes payable under the Floor Plan Facility.