All right, we're gonna get this started right on time. Good afternoon, everyone. Thanks for joining us for the Camping World Holdings group presentation. I'm Craig Kennison with Baird Research. Camping World Holdings represents an equity stake in Camping World, which is the largest RV retailer in the world. We're so pleased to have with us the team from Camping World, that includes Marcus Lemonis, who's the Chairman and Chief Executive Officer, Karin Bell, who is now the retiring CFO, and Tom Kirn, the Chief Accounting Officer. It's great to have all of you here. This is gonna be fireside chat. I'm gonna ask all of you to participate. If you have a question, feel free to just ask it or shoot me an email on this device. But otherwise, maybe I'll ask you, Marcus, to start. Just introduce the company to everybody. Yeah. So for those of you who are new to the company, we operate two distinct businesses. One is the operation of 200+ dealership locations, and so if you thought about an auto dealership, they function just the same: a sales department, finance, service, body shop. The one nuance to our dealership business is that we have a retail business that actually is the original business of Camping World. So that's like taking AutoNation and Pep Boys, putting them in the same box. The second business that we operate is a business called Good Sam. It's an affinity organization, the world's largest RV membership club, with over 2 million members, and its primary sources of earnings are roadside assistance, extended warranties, property and casualty insurance, and then the club, the Good Sam Club, along with a host of other little ancillary businesses. As you would imagine, you know, this business has been built as a roll-up strategy. Karin and I started it twenty- One ... years ago, in two cubicles with an idea that we could roll up the RV business, and it's been a pretty interesting ride. We've seen a lot. The good part of us seeing a lot, is that we learned a lot from the things that we didn't do well. And so as we sit here today, we are, I think, 13,000 plus or something like that? Yep, yep. 13,000 team members strong. But like the rest of the industry, we're going through what we would call an unusual soft spot, temporary soft spot in the market, coming off of what we believe is never to be seen again, hopefully, COVID numbers. The business today is a little different in that it really, really focuses on two distinct things. One is the installed base of RVers, of which we believe there's around 11 million, and two, the first-time buyers. What has been unique to our business in the last 12 months, particularly the last 90 days, is that we've had significant, significant market share gains. In fact, in the Q1 of 2024, Camping World has reached an all-time high market share, north of 25%. We had always been in the 15%-18% range, and we believe that we possess a little bit of secret sauce, but sitting at 25% has given us a taste of what it feels like to continue to grow. So it's kind of the basic business. Well, let's start with your market share gain. What fueled that enormous growth this year? Well, I give Tom Kirn and Karin Bell the bulk of the credit for our market share gain, as we started to study through a lot of data analytics, where the elasticity of customers were, and we knew that as the price of units climbed materially over the last three years, almost 40% in some cases, we noticed that the elasticity band had been broken. And we were starting to see a slowdown, both in the back half of 2022, all of 2023, and we started to fix that in 2024. And the significant market share gains have been driven by us consciously knowing that our consumer buys on payment, not on price. And the two inputs for payment are the price of the unit and the interest rate. So we built a model that essentially told us where we needed to be from an ASP standpoint, to maximize the elasticity of it all, and that ended up being a target of about $37,500. It was our initial goal that Tom and Karin laid out for us to get to $37,500 by the end of 2024. We got there- Pretty, pretty quickly here. Right away. We're already there. Yeah, we're already there. Yeah. So when we look at the volume as an example, we did 13,000—approximately 13,100 units in the month of May. That is the second highest volume month we've had in 24 months, only to May of 2022, when the market was far more robust. The difference is, the ASPs are materially lower, and the margins, unfortunately, are not what they were then. The highest level we've seen in the last 24 months was 13,400, and that is our goal for June of, of 2024. So it's hard to look at your business sometimes and get a read on the industry, because if you're taking that much share, maybe the industry's not as healthy. But what's your view on the health of the industry and sort of current industry-level RV demand? So if you really study where the cleanliness of the inventory is today compared to a year ago, we believe that while we may be a best in class in that regard, we think both manufacturers and dealers have done a nice job getting their inventory cleaner, and that's an overall general statement. There is still a subset of dealers who are really struggling to get their inventory clean, and for most of you that do data scrapes across the various websites, you'll see that 2022s still exist as new units on lots, and 2023s are making up a larger share as a percentage of the total than we would like. So that's giving us two different sort of reactions to that. One is, it's giving us reason to pause a little bit in terms of how we're thinking about the overall space, but it's also giving us reason to be more conservative in the summer of 2024 around growing our used business and continuing to invest in inventory at a more aggressive rate, because we believe there's the possibility, not the absolute fact, but the possibility that there could be some excess inventory, 2,000-4,000 units that could come available in the fall, winter of 2024, and we wanna leave, probably $150-$200 million of available floor plan out there, so that we could gobble all that up as used inventory heading into 2025. So we're nervous, but we're not as nervous as we were a year ago. I think the industry sold at retail around 380,000 RVs last year. What's the right outlook for this year, and how are you framing your business around that? So we, you know, we're not forecasting both our business or the industry, but if we were giving you a kind of a back of the napkin, we think that the retail is gonna be down 25-27 thousand off of that number, and we believe shipments are gonna be down. I know that RVIA posted today that they're hopeful around 340-350. That's, I think, a reduction of about 10,000. We think there still could be a slight bit of air in that number, 2-3 thousand. If it ended with a 333 and a number, as opposed to a 340, I don't think we would be terribly surprised. Part of that is coming from the contraction on motorhomes. Part of that is coming from the contraction on the number of dealers and the consolidation that's happening in the marketplace. For the record, I think we forecast retail around 350. That may be a little heavy, and we have wholesale around 330 now for most of our companies, so that may be a little light relative- Yeah ... to those numbers. I think we're in that. I think we would agree conceptually in your band. In the ballpark. Yeah. So I wanted to ask about, the used side of your business. So on the new side, I mean, I never—I didn't realize it was 25%, but historically, it's been in that 15% plus range. On the used side, maybe frame what your market share is and, like, outside of ups and downs in prices, like, where could that business be? So the used business has historically been about double the size of the new business. So from a total addressable market, it's quite large, and we have, I mean, a single-digit market share that obviously we would like to continue to grow when the time is right and when it's prudent with the inventory mix and where inventory levels are and pricing is. But we think that there's a huge addressable market there that is more stable typically than the new market, as we kinda go through these cycles. Let me add something to that. So when we talk about single-digit market share on the used side, understand that that's not because other dealers are doing it. The used business is primarily driven by private parties. I buy from you, you buy from me, outside of a dealership transaction, and when we looked at the white space that was available, coupled with the margin profile of a used transaction compared to a new, that's why our inventory went from $150 million to $700 million in used, and you saw explosive growth. When you look at our results for 2024, while we're not pleased that our used business will be down 15% year-over-year, I wanna categorize that one with one clean thing: it'll be the second biggest used year in the history of our business. It's still materially better than pre-COVID, still materially better than any time- Absolutely ... in COVID other than 2023. Yeah, and it's been a big differentiator for us. I mean, when we do acquisitions, we typically see dealers with maybe a handful of trades that are still on the lot in used. They aren't going out and buying used inventory 'cause the advance rates are different on the floor plan, the curtailment schedule is different on the floor plan. They don't have the balance sheet to actually go into that business the way that we have the last few years. Even though we have stepped back a little bit, we're still at a much larger scale than the competition. When you look at the used business, and I wanna spend a little bit of time on this because it's the one thing that investors should hyper-focus on because there's real capital deployed, real cash deployed in the inventory, as opposed to it all being floor planned. And when you look at the values moving around in used, that is really what should concern an investor and concerns the three of us, plus the rest of our team. We wanna be very surgical about it, and three years ago, we announced to the marketplace that we launched the Good Sam Valuator. It is a algorithmic tool that we use to put values on used units that have a series of inputs. Through that process, we then walked into 2024 with something that had never happened in the history of the RV industry, and that is deflation on pricing. That deflation caused the used values to go a little haywire, as you would imagine. We decided to pull back, we decided to liquidate down and sit and wait for things to normalize. We think we're getting close, but there's a couple factors that I'll touch on in a minute that have prevented us from doing that. What we noticed is there was still a little bit of white space in understanding values, both on new and used. So in January of 2024, we launched the first of many, many RV auctions. We're hosting them both physically at locations and virtually online... and in the first six months, we have already run through the auction 600 units. Our goal by the end of 2025 is to firmly, firmly establish ourselves as the clear market maker on used values. Now, some would argue that NADA and Kelley Blue Book are the values, but in our opinion, Kelley Blue Book and NADA, just for the science of it all, are nothing more than taking an original invoice and building a depreciation schedule. So unlike the auto business, where there's inputs coming from Manheim and from ADESA and from a variety of sources, that can tell you that 27 2017 Camrys ran through the block, and this is the band of pricing, and this is the band of mileage, the RV industry has not had that. We believe that not only is it a new profit center for our company for years to come, and that includes banks participating, insurance companies participating, other dealers participating. We believe that Good Sam, coupled with its valuator, can establish itself as the foremost value creator, market maker in the space. And we need that to be the case, because if we can set the market value, we can be far more aggressive. We have decided in the middle of 2024 to pull back on used acquisitions for one simple reason: we don't know what the dealer body inventory is going to do in the fall and winter, and we have a little bit of nervousness that there could be a glut of inventory. So we three, along with the rest of our team, have agreed that we were going to leave a lot of dry powder. While we may be missing a little bit of revenue right now, and some would argue that it's not right, we believe that risk mitigation in this kind of macro climate is the best thing for us. We don't wanna have curtailment problems. We don't wanna have floor plan problems. We don't wanna have any value problems. And by late July, early August, the 2025s will be in production. We're anticipating flat, relatively flat pricing on towables, and we're predicting that new motorized, potentially, not because the manufacturers aren't good at what they do, because the chassis manufacturers are controlling that, could potentially be slightly up. We need to see some data to support that thesis so that we know that we can charge forward on used. But until we see that data, we're gonna play it a little safer in the short run. Just to dig a little deeper on the Camping World Auctions, is it Good Sam or Camping-? Camping World. Camping World. Camping World Auctions. If you develop this at scale, what are the major advantages to your retail operations? Will you be able to source for less? Will you be able to buy every type of unit, whether you sell it at retail or find another dealer to sell it? I'm trying to understand what, at scale, what benefits this provides. Yeah. So, so at scale, right, data is the number one proof point for us in understanding how to buy, trade, finance. We need more data points, and we like the fact that we can collect those data points real time. Two, we believe that we can become a market maker and make money on it, because when you look at our auction process, we collect buy fees and sell fees, no different than any other auction. And some have said: "Well, what happens if ADESA or Manheim gets into that space?" They haven't gotten into it yet, and it's such a cottage industry that we believe we can use our physical locations to bring in wholesalers, other dealers, and consumers. The one nuance with our auctions is that consumers can participate. So for scale, it's ultimately additional used volume, additional used margin contribution, additional utilization of our facilities, and the additional gathering of more data points. I would say, too, on the physical use of our current facilities, it's not just having the physical auction there, it's also the ability for a lender or a manufacturer, whomever, to send a unit to any of our 200+ locations and us to market it virtually on the next auction the next week to get it moving quicker. Mm. So that's the other thing that our footprint affords us. Are you basing this on any template that exists in the automotive world at all? No, because there really isn't any single... Like, it would be like AutoNation or Sonic or Lithia holding them at their locations, and today, we don't think that's right. We've started heavy dialogue with a very fascinating company called ACV, public company that does auctions, and we'll be working with them to develop additional technologies. We love the physical auction, but we also know that ultimately, to have real scale, you're gonna need the virtual auction. Keep in mind that in an auto auction, you're loading up 8-10 cars on a carrier and moving them. Our business is a little different, so we have a few things to kind of refine, but virtually is ultimately where we wanna land. There's nothing like it out there. We're doing both. We're doing both. I don't know if this is on, but we're doing both now. We have some physical, and we have some virtual, so that we are testing that out. Thank you. I wanted to ask, going back to the original part of our conversation, just on the demand environment. You know, I felt like Camping World was way ahead of the game, realizing that a lot of the model year 2023 inventory was gonna depreciate quickly when model year 2024 came out, priced the way it was. And so you were very quick to turn that inventory and then create this advantage in price for yourselves. I guess what I'm curious about is, if you had to discount the model year 2023 inventory to move it along. Did consumers react to that in a way such that now that the discounts are fading a little bit, they're a little more skittish? Are we walking into that kind of environment? Well, the '23s were having to be discounted to even be close to the '24s, and so we, we went to à la carte, and we really worked hard with the manufacturers to get the '24s down as much as we could because we wanted the benefit of, of leading that. The detriment was what it did to our '23s and what it did to our used. And so we're down to 2,200 '23s, which is pretty remarkable for us to be sitting here with very, very few '23s as a subset of our total inventory. But we're gonna have to discount, continue to discount heavily, and as you would imagine, the last unit, the last '23s, the last '23 that sells, is going to be materially more impaired from a discount standpoint than the ones we sell today. We had told the market a quarter ago that we were gonna get out of the burning building first. While everybody in the room will see sequentially better margin performance in Q2, both on new and on used, the margins are not where we want them to be. We had debates internally, should we pull back and let just normal course of business go and get our margins up? The answer is, the units aren't gonna get any prettier. So we need to take our medicine through the balance of the Q2 model year through Q2, and through a little bit of Q3, and just be done with it. Where do you want margin to be at a sustainable level? Where do you want them to be, Tom? I mean, I think we'd love to be returning on the used side to that historical, like, low 20s, low-to-mid-20s, and then around 15 or a little bit higher on the new side. Mm-hmm. That's really what our-- if you look at our business model, we had posted a slide in January of 2024 that was a mid-cycle performance model, that would show people exactly where this business is, with no real big changes to the business. And it presumed 20% on the used, and I think it was 14.5%-15% on the new, and 450,000 shipments on the new side. So utopia for us, at least our short-sighted utopias, we need to get back to 450,000 units as an industry. We need to have more market share than we did last time, and our margins just have to return to some range of normalcy, and that's after eliminating out all the COVID years. Those margins that we're talking about isn't taking COVID and non-COVID and blending them together. That's taking 2021 and 2022 out of the equation for the most part. So I just said, I thought you played the transition to model year 2024 well. Now we're about to transition to 2025. What's the game plan for that? The game plan is to get back to our regular cadence. So we always historically had a little bit of lagging. We're probably 1,000 units more than we want in the 2023s, but close. And then we would start to decline the amount of 2024s that we're bringing in starting now, and we'll start to ramp up 2025s in, call it late July, early August, as the manufacturers start to build. There are some 2025s that are getting built on the motorized side. That's a function of chassis, not a function of the RV OEM. That's a function of the auto chassis manufacturer driving that. And I think the manufacturers are more motivated than ever because they have come to the conclusion that model year gains only cost them money, because they have to pull the old model years through with discounting. They have to pull the old model years through with rebates. I think they finally realized that if they overproduce and they build the cycle quicker, they're just gonna pay the freight. I believe they're doing the right things, truly, particularly Thor and Forest River. Wanted to ask about interest rates. We got fairly far along without having to talk about that, but what... Talk about how it plays out in your business. I think of it as affecting demand and affordability, but also your costs as it relates to the floor plan. But, maybe just address what you're seeing today. Yeah, I wanna split the interest rates into two buckets. I'll have Tom and Karin take what it does to the P&L in terms of floor plan and things of that nature. But I'm a big believer that, as I said earlier, consumers buy on payment. And if they buy on payment, that payment band hasn't changed. So the only two inputs to a payment are price of the unit and interest rate. That particular conundrum has caused our ASPs to drop to a level that, quite frankly, aren't great. They're great for volume, but they're not great for GPUs. We need GPUs to be $500-$700 more than they are today, and the only way to do that, if your margins are constant, is you got to get back to a $40,000 ASP. Now, remember, we're still financing these things anywhere from 180 months to 240 months, so $4,000, $2,000 in ASP doesn't make a big difference, but it does make a big difference when you're putting 15% margin on $1,000, $2,000, $3,000, $4,000. The ASPs have dropped to a level that, quite frankly, we don't believe are optimal for our profitability. So as that interest rate comes down a quarter of a point, the ASP can go up $1,000. And then we get the correlating margin, gross margin dollars on that particular unit. That's what we're missing today, and that's what we're gonna continue to miss while interest rates stay here. We have removed any thesis out of our model-... which is a big departure from January, of any rates getting cut in 2024, and are getting close to removing rates getting cut out of our Q1 2025 model. We don't believe that we're going to see 375,000 to 400,000 to 425,000 in volume until we start to see rates drop. So if 350 is your base, I would give you strong advice to then build a model that says, for every quarter of a point decrease, you could assume that 350 turns into 365 or 370, et cetera, et cetera, all the way up. If the rates drop two points, or when the rates drop two points, I wouldn't hold me to this, but I'd get pretty close, we'll see 450,000 again. But until that happens, it'll sequentially move towards that, but it won't move expeditiously unless we get massive rate cuts. That's a great comment. I appreciate that. We're about 350 for this year at retail and maybe 360 for next year, in that ballpark, so we'll see how that- You're at $360 for next year? Yes. Yeah, we're $370+ next year. Okay. We think 2025 is gonna be far better for one simple reason: people get used to interest rates. And the first six months of this year, people have said, "Why are your numbers worse than last year?" There's two factors: one, we accelerated the liquidation of inventory, and two, 9% interest rates at the retail desk when we're talking to a customer, didn't exist in the first six months of last year. As we get through the back half, we'll start to lap that, and people will just accept it as the new norm. They're not gonna love it, but they're gonna accept it. M&A has been a huge factor for you getting this large, although you've taken a lot of share without it recently. What's the opportunity set for you today? I mean, there's still a lot of inbound, but I would say today, we don't have any term sheets. We don't have any APAs right now, so we're holding our cards right now and seeing what opportunities kinda come in the fall as we get through season. We're really focused right now on improving that core business, so service, and try to make sure that once this entry-level buyer or new buyer that's come in and ordered that single-axle trailer from us early in the year, once they have a chance to go through service, we wanna earn their next unit on that trade up, whether it's next year or the year after. We have 31 more locations today than we did starting in January of 2023. So that's a lot to absorb, human capital, training, et cetera. But please don't walk out of here mistaking the fact that we don't have term sheets or APA signed as any concern. I'm waiting for the fall because I know things are only gonna get better, and so we have a massive war chest that's building and plenty of credit availability, and whether it's a company with one location or a company with 8 locations, I would expect us to be highly opportunistic in the fall, 'cause we see that there's a lot of opportunity. But we also wanted to improve our business. Fun fact, our service NPS went from negative to positive 34 in 12 months, and we believe that's a nice recipe for growth over time as well. That's the highest our NPS has ever been in service. We've changed the model a little bit. We're doing same-day service. We're working to get install back to same day, but we are an acquisition company, period. That is how Karin and I started this business, and that's how Tom and Matt will end this business. We are an acquisition company, but we also wanna be really-- We, we learn from our mistakes. Oh, yeah. Karin said to me, "Can I just get, like, three months for you just to stop? Yeah. Because it's only gonna get cheaper. It only gets cheaper, and the more we improve our business in process, the better off we will be when the market starts to take off. Because we are a stronger business, our training systems are much better, our people are much better. They're knowledgeable about the products, they're knowledgeable about what the process is, and the more you enhance those folks, they can sell more. I think the piece that we didn't expect, Craig, is the macro is a lot harder than we thought it was gonna be this year. I mean, we went into the year pretty much rared up and revved up for 2024. It's just, it's been harder. Interest rates have been higher. That's been tough. The consumer's a little more fragile. That's been tough. And I keep hearing about inflation, inflation, inflation. Those things have really affected our consumers', pocketbooks. But even besides that, the fact that we did over 13,000 units in one month, in May, we feel pretty good about. Well, I wanna say, this is the last conference for Karin. Karin, you've built a great business, along with Marcus and the team. It's been a pleasure to work with you. Thank you. And we're gonna miss you. Thank you very much. I appreciate that. It has been a wonderful, wonderful ride, and I'm looking forward to, You're not going anywhere. I know. I know I'm not going anywhere. Oh, my God! But I'm just looking forward to the transition. That's really what I wanted to say- So, yeah ... both, both in the business as well as for me. So, for those of you that are unaware, we announced yesterday, and it's been years in the making, that Karin and Brent Moody, Brent Moody is our president, we've, the three of us, have been together for 20 years. Mm-hmm. They've been asking to not be 70 and still working, so we brought Tom in five years ago, and I've said this in front of Karin, Tom is an exceptional leader. The difference between Karin and Tom is that Karin—Tom had the benefit of having Karin, and he's far more involved in the weeds, understands the operations a lot differently than Karin does, and the same with Matt. Many of you have been exposed to Matt, who is the brightest shining star in the entire RV industry. I mean, the smartest guy to ever, ever be in the, in the RV industry. Mm-hmm. So, as we transition from Karin and Brent, Brent will be on the board in a meaningful position. Karin will not be leaving till the K is filed next year, and then she'll be in the senior advisor position for years to come. Tom and Matt will take over their respective roles July 1, with them continuing to be mentored by Karin. So it's maybe the best succession planning execution that I think we could have imagined. Very happy about it. Very sad, but very happy. Thank you, all. Appreciate it. Thank you. Thank you. So management will be available for further Q&A in a breakout session. Alice and Kevin will help us find where that is. Next in this room, we have Akamai. We also have... It may be in this room, I should say. We have WNS, SolarWinds, and IMAX Technology.