Camping World Holdings, Inc.

Good afternoon and welcome to Camping World Holdings conference call to discuss financial results for the second quarter of this year 2021. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. Please be advised that this call is being recorded and that the reproduction of the call in whole or in part is not permitted without written authorization from the company. Participating in the call today are Marcus Lamonis, Chairman and Chief Executive Officer, Brent Moody, President, Karen Bell, Chief Financial Officer, Tamara Ward, Chief Operating Officer, and Matthew Wagner, Executive Vice President. I will turn the call over to Mr. Moody to get us started. Please go ahead, sir.

Thank you and good morning, everyone. A press release covering the company's second 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 factor section in our Form 10-K, our Form 10Qs, and other reports on file with the SEC. Any forward-looking statements, including statements regarding our long-term plan 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 measures are included in our earnings release and on our website. All comparisons of our 2021 second quarter results are made against the 2020 second quarter results unless otherwise noted. I'll now turn the call over to Marcus.

Good morning, everybody, and thanks for joining us for what is a very exciting day. As we celebrate Camping World and Good Sam's 55th year in business, we continue to be astounded by the insatiable desire that Americans have for experiential travel, exploration of this country, and most importantly, a community of connection with others. That desire resulted in our company's best quarter in its history. Our incredible growth and our enduring success over the decades is proof of that demand and a testament to the 360-degree business that we have built. As we enter our 56th year as the clear leader and disruptor in this industry, we will invest heavily in our people and technological evolutions, two of our greatest single differentiators, and continue to separate ourselves as the clear industry leaders. We believe our high-margin Good Sam product and service offerings, such as roadside assistance, the Good Sam membership, and extended service protection, to name a few, strengthen our long-term relationship with our customers. To further strengthen the retention of our customers, we have begun a transformational process to meet the ever-changing customer. how we transact, how we service, how we communicate, along with all the other necessary resources to create a customer for life. New platforms such as the Good Sam RV Valuator, Good Sam RV Rentals, also known as Peer-to-Peer, Good Sam Campground Reservation Systems, and the Good Sam Service Marketplace are the types of dynamic offerings that allow us to meet the needs of new and existing customers. Today's call will be broken into two primary sections. First, a high-level financial summary with additional information available in our 10Q, and second, an overview of the highlights of our operational progress. In regards to financial performance, demand was strong in Q2, and we have continued to see very strong demand to date using record-breaking results. Adjusted EBITDA for Q2 was $333.3 million, a $112.6 million, or 51% improvement compared to Q2 a year ago. Demand remained elevated with revenue of $2.1 billion for the quarter, an increase of $455 million, or 28.3%. Our balance sheet is the strongest it's ever been. At the end of June, our net debt leverage was 1.14 times adjusted EBITDA. In Q2, our team successfully refinanced our senior secured term loan into a new term facility, maturing in June of 2028. In October of 2020, our board of directors authorized a stock repurchase program for the repurchase of up to 100 million of our Class A common stock. In the second quarter, we repurchased 45.5 million. We have about 33 million left in that availability. We ended the quarter with $322 million of cash consisting of $192 million of cash and cash equivalents and $130 million of cash in our floor plan offset account. Additionally, we had $468 million of working capital with more than half made up of used RV inventory without a related floor plan financing. And lastly, we have $191 million of real estate without related mortgage financing. With respect to our operational results, we ended June with over 2.2 million good SAM members. This represents nearly 150,000 additional members compared to June of last year. Heading into this year, we knew there was a huge opportunity with our Good Sam credit card. We made a big shift and brought in a specialized team to focus on this area of our business. We set a goal of 10% annual growth. Year-to-date, our file size has grown to north of a quarter of a million active account holders, an increase of nearly 19% compared to June of 2020. Our Good Sam RV Evaluator tool fuels our growth in the used RV inventory and provides what we believe is a huge competitive advantage. We ended June with nearly 260 million of used RV inventory, more than double Q2 of last year. In the second quarter, we added nine new locations to our footprint. Today, we operate in 101 87 locations. I couldn't be more excited about our future. We anticipate demand will remain strong in the foreseeable future as RVing has become way more mainstream. Our team will execute the operational plan to attract the next generation of RVers. expand good sand and drive innovation in the industry to reach our internal goal of generating $1 billion of annual adjusted EBITDA. As we continue to work towards that goal, our trailing 12 month annual adjusted EBITDA as of June 30th, 2021 was $831 million. We are now increasing our full year adjusted EBITDA estimates to between $840 million and $860 million. I'd like to turn the call back over to the operator for Q&A.