Camping World Holdings, Inc.

Good morning everyone and welcome to the Camping World Holdings conference call to discuss financial results for the first quarter of fiscal year 2021. At this time all participants are in a listen only mode and later we will conduct a question and answer section. Instructions will follow at that time. Please be advised that the call is being recorded and the reproduction of this call is not permitted without prior written authorization from the company. Participating in the call today are Marcus Limones, Chairman and Chief Executive Officer, Karen Bell, Chief Financial Officer, Tamara Ward, Chief Operating Officer, Matt Wagner, Executive Vice President, and Mrs. Brent Moody, the company's president. A press release covering the company's first quarter 2021 financial results was issued this morning, 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 the impact of COVID-19 on our business, financial results, and financial condition, our business goals, plans, abilities, and opportunities, industry and customer trends, our 2019 strategic shift, increases in our borrowings, our liquidity and future compliance with our financial covenants, and anticipated financial performance. 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-Q, and other reports on file with the SEC. Any forward-looking statements, including statements regarding our long-term plans and costs related to the strategic shift represent our views only as of today, and we undertake no obligation to update them. Please also 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 2021 first quarter results are made against the 2020 first quarter results unless otherwise noted. I'll now turn the call over to Marcus.

Thanks, Brent. Good morning, everybody, and thanks for joining us today. The quote really pleads with Q1 results, especially since a good chunk of the country has opened up for business. It's clear that people are out and about. Let me start by reinforcing that our business continues to have explosive growth. We expect our trajectory over the next 10 years to be similar to what we experienced over the last 10 years. As a management team, we are laser focused on how we get our company to a billion dollars of annualized earnings. Here's how we plan to get there. We will continue to expand our footprint with strategic acquisitions and new greenfield locations. We will continue to focus on and grow our high margin installed base oriented revenue, similar to our existing good sand businesses, through the expansion of our service, collision, and renovation centers. We recently acquired a campground reservation system and trip planner. This technology will support our core Good Sam annuity businesses, our Good Sam parks network, and enhance our data ecosystem. These new platforms, in combination, will also differentiate our soon-to-launch peer-to-peer marketplace. We have and will continue to invest time and money in the RV and outdoor enthusiast-oriented technology. FinTech, and other vertical integration of the supply chain in an effort to drive innovation and mostly enhance our margins. As with our last earnings call, today will be broken up into two primary sections. Let's start with our high-level financial summary, with additional supporting information in detail available in today's earnings release and our soon-to-be-filed 10-K from Q1 2021. Consumer demand was and continues to be strong. Net income for Q1 was $147.4 million, a $161.6 million improvement compared to Q1 of 2020. Adjusted EBITDA for Q1 was $189.3 million, a $153.3 million increase over the same quarter last year. Our revenue for the quarter was $1.558 billion. One of the most important metrics for us as a management team is the strength of our balance sheet, which continues to improve. At the end of the quarter, our working capital was at $541 million. We had $393.5 million of cash, broken up between $256.9 million of cash and equivalents on our balance sheet and an additional $136.6 million of cash in our floor plan offset account. We're pleased to announce that our net leverage is 1.3 times at the end of the quarter. With respect to our operational initiatives and performance, website activity across all brands continues to experience significant growth. For the recent quarter ending, website user sessions grew to 48 million sessions, an improvement of nearly 50% compared to Q1 of 2020. We have successfully launched our Good Sam RV Valuator tool, and we've already provided 30,000 customers their respective values. This tool ensures that RVers will receive greater value for their units, plus guarantee the company's long-term ability to source these inventory. As a matter of fact, for example, As of today, we are sitting north of $200 million of used inventory, compared to $142 million around the same time last year. I'm thrilled to announce that we have launched buy online and pick up from store, as well as buy online and ship from store. As we roll out these features, we expect to drive more revenue, improve our delivery times, and reduce shipping costs. Utilizing our digital footprint, we have progressed nicely in launching over 60 unique RV models that can be purchased totally online and shipped anywhere in the country. We see massive potential as we allow customers to buy nationwide, finance, and take delivery without actually stepping in foot to a physical location. With regards to the expansion of our national infrastructure into all 48 contiguous states, I'm proud to announce that we currently own a facility or are in the process of acquiring a dealership, land, or building a facility in 45 of the targeted 48 states. We will complete this at some recent time. We have made significant progress with the development of our Good Sam service network. It's one of a kind. Proprietary marketplace will be comprised of independent service operators, both mobile service providers and folks that operate brick and mortar locations, as well as our own facilities. Specific test markets will launch in early fall. As we mentioned earlier, our collision business continued to experience significant revenue growth in Q1 of 2020 with very strong margins. We currently operate 46 collision centers as part of our current footprint of locations and plan to add full collision and renovation centers to over 20 additional locations. Based on all the things that we've just talked about, we are increasing our full year adjusted EBITDA estimates to between $770 million on the low side to a high side of $810 million. Before I turn the call over to the operator for Q&A, you may have seen that last week we increased our annualized dividend to $1 a share. While the date of our Q2 dividend has not been announced, we noticed that at least one brokerage firm is showing an ex-dividend date of May 7th and a payment date of May 21st. We have no idea where this came from, but we haven't yet declared the ex-dividend or payment date for our Q2 dividend. We will announce when declared by our Board of Directors. Let me turn the call back over to the operator for Q&A.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star 1 to ask a question. We'll pause for a brief moment to allow everyone an opportunity to signal for questions. As a reminder, that is star 1 to queue for a question. Star 1. We will move on to our first question from Rick Nelson of Stevens. Please go ahead. Your line is open.