Camping World (CWH), which has been a huge mover since its IPO debut in October 2016, is under some pressure today (-7%) after reporting Q4 results. This is just its second quarterly report as a public company.
You may have seen Camping World's billboards, but perhaps not really sure what they do. CWH is a retailer of RVs and a provider of services to RV enthusiasts. It provides these offerings through our two iconic brands: Camping World and Good Sam. Camping World is the largest national RV retail network in the US and Good Sam is the largest RV organization in the world. Its Camping World brand operates 124 RV-centric stores in 36 states. Camping World believes it's significantly larger in scale than its next largest competitor.
Camping World sells new and used RVs, repair parts, RV accessories and supplies, RV repair and maintenance services, protection plans, travel assistance plans, RV financing etc. Its retail locations are staffed with knowledgeable local employees and its retail locations are strategically located in key national RV markets.
Good Sam's offerings are believed to provide the industry's broadest and deepest range of services, protection plans, products and resources, including: extended vehicle service contracts and insurance protection plans, roadside assistance, membership clubs and financing products. A majority of these programs are on a multi-year or annually renewable basis.
Since the IPO, CWH reported very strong Q3 earnings on November 10. So let's see how they did with their Q4 results last night. Non-GAAP EPS doubled to $0.14, up from $0.07 in the prior year period. Revenue increased 3.5% YoY to $670 mln. EPS was above market expectations but revenue was below expectations. Gross margin increased 154 bp YoY to 29.3%.
New vehicle units sold increased 24.5% YoY to 7,986 but the average selling price of a new vehicle decreased 8.5% to $41,731. The increase in new units sold was primarily driven by strong consumer demand for both new and used vehicles and a shortage of supply of used vehicles. The decrease in average selling price was driven by a higher mix of lower-priced towable units, which was partially driven by an increase in the number of first-time vehicle buyers. Used vehicle units sold decreased 19.1% to 5,330.
Retail revenue increased 3.4% to $621.1 mln, with new vehicle revenue increasing 13.8% to $333.3 mln. Used vehicle revenue decreased 19.7% to $128.9 mln while parts, services and other revenue increased 3.2% to $117.7 mln. Same store sales comps were a good +5.4% although down slightly from +5.8% in Q3. Consumer Services and Plans revenue increased 4.4% to $48.9 mln, driven by increases in club memberships, roadside assistance contracts, and vehicle insurance written premiums.
So why is the stock down so much? It seems to be a combination of things. While CWH did report a nice Q4 EPS beat, it was nowhere near the blowout EPS upside results reported in Q3. Also, revenue came up light which is a concern to investors. Another thing to consider is that the stock has run nearly 70% since mid-November when they reported Q3 results. So expectations were likely pretty high heading into this report.
It's been a tough week in the RV space as CWH's results follow a disappointing JanQ report from RV maker Thor Industries (THO) on Monday. The RV stocks have made huge runs over the past year but they have stumbled a bit. With interest rates rising in 2017-2018, consumers may step back from making large purchases like RVs.