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Category: Stock Market and Camping World
Date: 10 November 2019 Stock Price: $10.61 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Camping World, a outdoor and camping retailer selling recreational vehicles, RV and camping accessories as well as RV maintenance and repair services.
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About Camping World
Camping World Holdings, headquartered in Lincolnshire, Illinois, is the leading outdoor and camping retailer, offering an extensive assortment of RVs, RV and camping gear, RV maintenance and repair, other outdoor and active sports products, and the industry’s broadest and deepest range of services, protection plans, products and resources. Since the Company's founding in 1966, Camping World has grown to become one of the most well-known destinations for everything RV, with more than 200 locations in 36 states and a comprehensive e-commerce platform
Financial overview of Camping World's 3rd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Total Revenue: $1.387 billion (up from $1.309 billion for the same quarter of the previous year)
- Revenue increased by 5.9% over the last 12 months
- Costs applicable to revenue: $1.049 billion (up from $936.472 million for the same quarter of the previous year)
- Costs applicable to revenue increased by 12.1% over the last 12 months
- Net loss: -$30.692 million (down from a profit of $14.123 million for the same quarter of the previous year)
- Diluted loss per share -$0.82 (down from $0.38 for the same quarter of the previous year)
- Diluted number of shares outstanding: 37.361 million (up from 37.055 million for the same quarter of the previous year)
- Cash and cash equivalents $130.234 million
- Cash and cash equivalents per share: $3.48
- Cash and cash equivalents makes up 32.7% of Camping World's current market capital
- Cash and cash equivalents makes up 3.8% of Camping World's total assets
- Inventories: $1.380 billion
- Inventories makes up 40% of Camping World's total assets
Camping World's management commentary on their 3rd quarter 2019 earnings report
LINCOLNSHIRE, IL.--(BUSINESS WIRE)-- Camping World Holdings, Inc. (NYSE: CWH) (“Camping World,” “CWH,” “Company,” “we,” “us” or “our”) today reported results for the third quarter ended September 30, 2019.
Third Quarter 2019 Results
Good Sam Services and Plans Segment
Third Quarter 2019 Results
Good Sam Services and Plans Segment
- Segment revenue(3) increased 2.2% to $42.2 million;
- Segment gross profit(3) increased 0.2% to $22.8 million and segment gross margin(3) decreased 108 basis points to 54.1%; and
- Segment income(4) decreased 2.4% to $18.2 million.
- Segment revenue(3) increased 6.1% to $1.35 billion;
- Same store revenue decreased 5.0% to $1.04 billion
- Segment gross profit(3) decreased 9.9% to $315.6 million and segment gross margin(3) decreased 416 basis points to 23.5%;
- Segment loss was $42.8 million compared to segment income of $68.9 million in the third quarter last year and included $77.7 million of impairment and restructuring costs;
- Vehicle units sold increased 1.3% to 28,653 units;
- New vehicle units sold decreased 4.7% to 18,592 units
- Used vehicle units sold increased 14.6% to 10,061 units
- Average selling price per vehicle unit sold increased 2.3% to $32,383;
- New vehicles increased 2.4% to $36,613 per unit
- Used vehicles increased 9.0% to $24,565 per unit
- Same store vehicle units sold decreased 8.0% to 24,285 units;
- New vehicle same store units sold decreased 14.7% to 15,553 units
- Used vehicle same store units sold increased 6.9% to 8,732 units
- Gross profit per vehicle sold including finance and insurance increased 2.5% to $8,679;
- Finance and insurance revenue as a percentage of total vehicle revenue increased 47 basis points to 12.3%;
- New vehicle inventory per dealership location decreased 20.9% to $5.7 million from December 31, 2018;
- Products, service and other revenue increased 13.5% to $290.8 million and gross profit decreased 44.1% to $57.6 million;
- Same store products, service and other revenue decreased 7.3% to $140.9 million
- Good Sam Club revenue increased 17.7% to $12.6 million and gross profit increased 20.8% to $9.4 million; and
- Good Sam Club memberships increased 7.7% to approximately 2.17 million
- At September 30, 2019, the Company operated a total of 209 RV and Outdoor Retail locations, with 153 of these selling and/or servicing RVs.
Restructuring and Long-lived Asset Impairment
Restructuring
On September 3, 2019, the Board of Directors of CWH approved a plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs (the “2019 Strategic Shift”). As of September 3, 2019, the Company operated 37 locations that do not sell and/or service RVs but sell an assortment of outdoor lifestyle products (the “Outdoor Lifestyle Locations”), and an additional five Outdoor Lifestyle Locations that were previously closed or had not opened as of that date. In addition, the Company operated seven specialty retail locations operated by TheHouse.com, an indirect wholly-owned subsidiary of the Company.
Of the Outdoor Lifestyle Locations operating at September 3, 2019, the Company closed three locations during September 2019 and currently expects to either sell, divest, repurpose, relocate or close 28 of the remaining Outdoor Lifestyle Locations, at which sales and/or service of RVs cannot be performed, and two of the seven specialty retail locations operated by TheHouse.com. The Company was able to, or is in the process of, acquiring and/or obtaining the developmental consents, approvals and permits necessary for the sale and/or service of RVs at six of the Outdoor Lifestyle Locations. As part of the 2019 Strategic Shift, the Company has evaluated the impact on the Company’s supporting infrastructure and operations, which included rationalizing inventory levels and composition, closing one of its distribution centers, and realigning other resources. The Company expects the majority of the store closures and/or divestitures related to the 2019 Strategic Shift to be completed by January 31, 2020. The Company will have a reduction of headcount and labor costs for those locations that are sold, divested or closed and the Company expects to incur material charges associated with the activities contemplated under the 2019 Strategic Shift. In connection with the 2019 Strategic Shift, the Company expects to incur costs relating to one-time employee termination benefits of $1.0 million, contract termination costs of between $10.0 million and $15.0 million, incremental inventory reserve charges of $27.3 million, and other associated costs of between $4.0 million and $6.0 million.
Restructuring
On September 3, 2019, the Board of Directors of CWH approved a plan to strategically shift its business away from locations where the Company does not have the ability or where it is not feasible to sell and/or service RVs (the “2019 Strategic Shift”). As of September 3, 2019, the Company operated 37 locations that do not sell and/or service RVs but sell an assortment of outdoor lifestyle products (the “Outdoor Lifestyle Locations”), and an additional five Outdoor Lifestyle Locations that were previously closed or had not opened as of that date. In addition, the Company operated seven specialty retail locations operated by TheHouse.com, an indirect wholly-owned subsidiary of the Company.
Of the Outdoor Lifestyle Locations operating at September 3, 2019, the Company closed three locations during September 2019 and currently expects to either sell, divest, repurpose, relocate or close 28 of the remaining Outdoor Lifestyle Locations, at which sales and/or service of RVs cannot be performed, and two of the seven specialty retail locations operated by TheHouse.com. The Company was able to, or is in the process of, acquiring and/or obtaining the developmental consents, approvals and permits necessary for the sale and/or service of RVs at six of the Outdoor Lifestyle Locations. As part of the 2019 Strategic Shift, the Company has evaluated the impact on the Company’s supporting infrastructure and operations, which included rationalizing inventory levels and composition, closing one of its distribution centers, and realigning other resources. The Company expects the majority of the store closures and/or divestitures related to the 2019 Strategic Shift to be completed by January 31, 2020. The Company will have a reduction of headcount and labor costs for those locations that are sold, divested or closed and the Company expects to incur material charges associated with the activities contemplated under the 2019 Strategic Shift. In connection with the 2019 Strategic Shift, the Company expects to incur costs relating to one-time employee termination benefits of $1.0 million, contract termination costs of between $10.0 million and $15.0 million, incremental inventory reserve charges of $27.3 million, and other associated costs of between $4.0 million and $6.0 million.
Camping World (NYSE: CWH) stock price history
The image below, obtained from Google shows the stock price history of Camping World since its listing in October 2016. And its been a horrible time for Camping World stockholders. 5 years ago the stock of Camping World was trading at around $22.50 a stock and its currently trading at $10.61. That's a loss of -52.8% suffered by Camping World stockholders since the group's listing.
The stock of Camping World is trading at a lot closer to its 52 week low of $7.12 than it is to its 52 week high of $19.57 which to us is a clear indication that the short term sentiment and momentum of Camping World is very negative at this point in time.
The stock of Camping World is trading at a lot closer to its 52 week low of $7.12 than it is to its 52 week high of $19.57 which to us is a clear indication that the short term sentiment and momentum of Camping World is very negative at this point in time.
Recent coverage of Camping World
The extract below covers the latest regarding Camping World as obtained from Zacks.com
Illinois-based Camping World Holdings Inc. (CWH - Free Report) is a provider of services, protection plans, products, and resources for recreational vehicles (RV) enthusiasts. The firm offers new and used RVs for sale, vehicle service, and maintenance through its retail locations and membership clubs. Over the past 30 days, the Zacks Consensus Estimate for current-quarter earnings has moved south by 5 cents per share. The stock currently has a Zacks Rank #5 (Strong Sell).
Read the full article here
Illinois-based Camping World Holdings Inc. (CWH - Free Report) is a provider of services, protection plans, products, and resources for recreational vehicles (RV) enthusiasts. The firm offers new and used RVs for sale, vehicle service, and maintenance through its retail locations and membership clubs. Over the past 30 days, the Zacks Consensus Estimate for current-quarter earnings has moved south by 5 cents per share. The stock currently has a Zacks Rank #5 (Strong Sell).
Read the full article here
Camping World (NYSE: CWH) latest stock valuation
Based on Camping World's latest earnings report what do we value the stock of Camping World at? It is extremely hard to value a loss making company, and the usual fall back would be to value a loss making company based on their stockholders equity per share. But in this case the group has a stockholders deficit so that cannot be used as a proxy for a valuation.
Looking at the gross profit and removing once of restructuring costs and losses on assets that were disposed off one can derive an estimated profit for the quarter if these costs did not occur. Using that estimated profit of $24 million our valuation model provides a target price for Camping World at $10.60 a stock. We therefore believe the stock of Camping World is close to being fully valued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $10.60. A good entry point into Camping World would therefore be at $9.60 or below. But we would suggest avoiding the stock of Camping World until their restructuring yields positive results
Looking at the gross profit and removing once of restructuring costs and losses on assets that were disposed off one can derive an estimated profit for the quarter if these costs did not occur. Using that estimated profit of $24 million our valuation model provides a target price for Camping World at $10.60 a stock. We therefore believe the stock of Camping World is close to being fully valued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $10.60. A good entry point into Camping World would therefore be at $9.60 or below. But we would suggest avoiding the stock of Camping World until their restructuring yields positive results
Next earnings release of Camping World
It is expected that Camping World' 4th quarter and full fiscal 2019 earnings report will be released towards the middle of February 2020