Camping World F&I down 15% YoY

Camping World ’s first-quarter finance and insurance revenue declined year over year due to a drop in new-RV sales and heightened payment sensitivity amid rising interest rates. Camping World’s finance and insurance (F&I) revenue for Q1 was $129.8 million, down 15.4% YoY, according to the company’s earnings release. Q1 F&I gross profit per vehicle declined 3.7% YoY to $4,926, largely due to a dip in new-unit sales and an uptick in used sales along with rising interest rates, Camping World Chairman and Chief Executive Marcus Lemonis said Wednesday on the company’s earnings call. “We tend to perform a little better on new with F&I than we do on used,” Lemonis said. “With interest rates rising , there is payment sensitivity, so your ability to monetize that single transaction has some risk. What you saw in Q1 is probably what you’re going to see for the balance of the year.” Unit sales down Camping World’s new-RV unit sales in Q1 were 13,912, down 26.9% YoY, with the average new selling price landing at $46,489, up 5.9% YoY, according to the company’s earnings release. Used-RV unit sales in Q1 tallied 12,432, up 13.3% YoY, with the average used selling price landing at $35,774, down 2.6% YoY. Used-RV unit sales “meaningfully outperform[ed] our new-vehicle sales as we posted a record Q1 across the board in this category,” Lemonis said. “For the quarter, new-RV unit sales were down more than anticipated. However, new-RV margins were better than expected.” While F&I revenue declined due to the change in the RV sales mix, Lemonis indicated that the Lincolnshire, Ill.-based RV dealer will continue with its strategy to grow its used-RV business. “We don’t want to abandon our used strategy because the front-end margin is so much better on new, and when you look at the total gross profit per transaction taking the front end and the F&I and you put them together, the used clearly still outweighs the new transaction,” he said. “I would take a look at Q1 and I would extrapolate that out within a 5% range. ... I’d look at the current result and build a very tight band around it.” Concerns over floorplan Camping World’s floorplan interest expense was $20.8 million, up 232.1% YoY due to rising interest rates, according to the company’s earnings release. The company has 188 RV dealerships as of the end of Q1, up 5% YoY. Rising interest rates and the slowdown in RV manufacturing is creating a floorplan concern for RV dealerships, Lemonis said. “Our manufacturing partners need to get manufacturing again and we have to do a good job of helping them do that, but other dealers who are faced with sizable curtailments on their 2022 [models] are at risk of either having their floorplan pulled or their manufacturers not being willing to ship them based on exposure,” he said. “I would expect that our order positions with key manufacturers like Thor , Forest River and Winnebago will start to increase , and their backlog as it relates to our company should increase over the coming months.” New inventory down, used inventory up Camping World’s new-RV and outdoor retail inventory landed at $1.2 billion, down 14.1% YoY, while used-RV and outdoor retail inventory was $510.7 million, up 20.6% YoY, according to the company’s earnings release. New-vehicle inventory per location at the end of up 14.8% YoY. The changes in per-vehicle inventory percentages exceeded the expectations of BMO Capital Markets , which estimated an 8% decline in new inventory per location and a 7% increase in used inventory per location, according to a Tuesday research note. Inventory concerns are likely to remain and affect dealers for the next few months, Camping World’s Lemonis said. “Other dealers in the first quarter had no choice but to sell certain inventory; we knew of dealers that were selling units at [$5,000 to $20,000] losses because they were being faced with curtailments that they didn’t have the working capital to support,” he said. “I expect that pressure to continue for the next four to six months, but I expect it to be less impactful on us as we exit 2022 and we work into 2023.” Shares of Camping World Holdings [ NYSE: CWH ] were trading at $22.42 as of market close today, up 12% from market open. Camping World has a market capitalization of $2.1 billion. Auto Finance Summit East, Auto Finance News’ new spring event, runs May 10-12 at the JW Marriott Nashville featuring a fireside chat with Peter Muriungi , CEO of Chase Auto . Visit autofinance.live.

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