Good morning, everyone, and welcome to the Camping World Holdings conference call to discuss financial results for the first quarter of fiscal year 2021. [Operator Instructions]. 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 Lemonis, Chairman and Chief Executive Officer; Karin Bell, Chief Financial Officer; Tamara Ward, Chief Operating Officer; Matt Wagner, Executive Vice President; and Mr. 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 finance -- 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. Look, we're really pleased 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 $1 billion 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 Sam businesses through the expansion of our service, collision and renovation centers. We recently acquired a campground reservation system in 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 2 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…

[Operator Instructions]. We will move on to our first question from Rick Nelson of Stephens.

Congrats on a great start to 2021. Marcus, I'd like to address the inventory situation. I see inventories are down 35% per dealer location. If you could speak to the flow of inventory when you expect supply to catch up with demand and these outsized CPUs that you're earning today, where do you see those trending as inventories improve?

Yes. Look, there's no doubt that there is an inventory shortage based on the explosive demand that we are seeing every single day that we wake up. And I think a lot of people thought that the demand was solely tied to a COVID reaction. But for the last several months, many, many parts of the country had been opened up, and people are back to business, and the demand doesn't seem to be taking a breath. We're disappointed that we don't have more new inventory. But because of the strength of our balance sheet, because of our RV evaluator tool because of the size of our database, we're able to tap into other unique proprietary systems that allow us to grow our inventory on the used side, which is up about 20-plus percent. We have no idea where the manufacturers are going to land for the 2021 year as it relates to shipments, but we're confident that they're doing everything they can to produce products at a rate that is as good as it can be to keep up with demand. And where there are some shortages on the raw material side, I think we're hearing that in every industry in America. The good news is that we placed our order 6, 7, 8 months in advance, and we probably have a competitive advantage in receiving the new inventory. As we look at the margins, Rick, it's really important to understand that while the margins are at an all-time high, they're a function of a simple supply and demand curve. So if the supply was greater, we'd be meeting that demand, and the margins may come down. And so we feel like we're either going to trade volume or we're going to trade margins on a per unit basis. But keep in mind that when we talk about margins, there are 2 components to margin. There's the margin that we make on the front end of the unit, that's the gross profit directly attributable to the unit itself. And there's the margin that we make on the back end, that's the financing portion. And so as volume increases, when we start to get more inventory, we may have a smaller front-end margin, but we'll have a larger back-end margin, so the combination of the 2 will be in a similar range. We expect that as the balance of the year progresses, we're going to have to continue to be aggressive in our used procurement, and we're going to have to do the best we can at managing every single transaction in every single dealership every single day to maximize the opportunity. We are not in a volume game. We are in a make-a-lot-of-money game. And so I don't know if that helps address that.

That's terrific. I appreciate that color. Acquisitions, I've noticed things are really ramping. I think I counted 17 acquired stores or greenfield openings to date. If you could speak to the acquisition environment, the pipeline? What you're seeing in terms of valuations? That would be helpful.

We have always said that we want to acquire or open 8 to 10 new stores a year. And when the opportunity presents itself and it's attractive and accretive to our business, we'll obviously accelerate that. The acceleration of that is also tempered with our ability to absorb that from a human capital standpoint. We obviously want to continue to improve that process. As we continue to invest in more technology platforms and more systems, it's making it easier for us to integrate and open and operate these locations at a quicker pace than we were able to, let's say, 10 years ago. Our ability to buy stores is probably more robust than I can remember seeing it maybe other than the 2010 coming right out of the recession. We have not seen any dramatic movement in the overall blended multiples that we're paying for these deals. In some cases, though, we are quite surprised that we're seeing a high volume of calls coming in as opposed to us going out of people looking to sell their business. I think people are struggling, the smaller dealers are struggling to get the kind of inventory they need to be successful. And we're sensing that we're seeing a little bit more of that. Our game plan is very clear and very focused. We want to make sure that we're in the top 150 markets or more. We want to make sure that we're achieving our goal of being in the 48 contiguous states. And we want to make sure that we're buying businesses or building locations in markets that we believe are ripe for growth, particularly in the outdoor space. And so as we have told you about all the deals that we've announced, there are a series of additional transactions that have either been signed but not announced or in discussions in that signed as well as land that's under a contract or about to be under contract. So you could expect over the next couple of months, there'll be an additional cadence of announcements. We'll probably take a slight pause as we go through the summer, which as everybody knows, our key selling season, and then we'll get back at it late summer in anticipation of adding new locations in the back half of the year and the beginning of 2022. As we said earlier, my goal and the team's goal is to try to find our way to $1 billion of earnings. And while there are organic things that we can do to grow our margins and to grow our business in each location and to grow our technology and to grow our Good Sam business and add peer-to-peer and grow our collision networks, acquisition still are the biggest generator of revenue pops on a quarter-by-quarter basis. We think we're the best in the business at it, and we'll continue to execute it in the foreseeable future.

We will now move on to our next question from Brad Safalow of PAA Research.

I really had two. First, on the rental platform, you've provided us with some rough time line. Can you talk about the level of investment that will be required as you ramp up? And then how you're thinking about the notional economics of that business as it grows?

We're not going to be disclosing any information regarding the peer-to-peer until we launch. We know that this is a very competitive space. We know that some of these competitors are out in the market, trying to do different things with their business, and we're going to keep our cards very close to the vest. But here's what I will tell you. We are going to use every single corner of our business to launch this company, and we are going to use every resource inside of our tool belt to ensure that our cost of acquisition, our retention and all the resources that our consumers have are made readily available. We are a different business because of our 360-degree ability to reach into many different boxes. And whether that's the campground reservation platform that we purchased, whether that's our 200 existing -- roughly 200 existing locations that we have that we operate, whether that's our mobile service platform, whether that's our 2 call centers nationwide, whether that's our buy online ship from store or pick up in store, whatever it may be, I think that the marketplace can expect us to tap into every one of those. We don't expect this venture to be profitable in the first couple of years. But we have already factored into our guidance, both for what we had done previously and what we have done for the balance of 2021, the costs associated with launching it. I want to be clear. It's not a death defying number. And the reason that it's a lot easier for us to launch a business like this is because we already have north of 5.5 million customers in our database, 2.2 million Good Sam members and websites that, quite frankly, as we mentioned earlier, generate more traffic than most websites combined in the RV space. So we'll tap into all of those things. But we want to be very prudent about the launch, we want to make sure that the customer experience to load their units onto the system is clear and clean and right, and we want to make sure that when we launch it fully nationwide, that we've tested and gotten rid of as many bugs as we possibly can before we take control of the market.

Okay. And then my second question is more of a high-level question, and it's one that I speak with investors about frequently. And it's really understanding what you view as the baseline EBITDA of the company, let's say, I don't want to call it normal because I do think the demand for RVs and the demand for camping experiences is going to continue to grow for a period of time. But let's just say we have some retrenchment in demand for whatever reason for a period of time. I think a lot of investors want to understand what do you think the baseline EBITDA generation of the company is now, given that you've gone through all these cost changes? You have a much bigger dealership base. You've broadened out the recurring revenue streams, and you will do so obviously with the rental platform, the service network. I think having investors understand what you think baseline EBITDA would be in a year, let's say that shipments are, let's say, RV shipments are 450,000 or 400,000 instead of what we're seeing currently. What is the earnings power of the business in that kind of scenario, given all the changes that have happened to the organization?

It's hard for me to predict what that would look like because I don't see RV demand going backwards anytime soon. And so my short answer is that the guidance that we've provided, we believe, is our baseline, and we want to grow it from here. When you look at our numbers and you look at the profitability that we have in our Good Sam business and how that continues to bolster the foundation of this entire company. And then you layer on the recurring revenue that we get from that business, along with the stable installed base oriented revenue that comes from service, parts, collision, our preowned, our finance, the risk in our model is simply the sale of new RVs into the marketplace, assuming that the overall installed community goes down, which it never has in the history of the industry. So we can't really speak to whether the business will go back to 400,000 units or not. But if you required me to answer it scientifically, I would say, look at the new business, maybe drop it by 10%, just the new business, and take out the relevant gross, but then assume that some of that will be made up with used business. And so for us to forecast what we think the model would look like if the business dropped, we just don't have that anywhere in our internal documents because we're planning on what today looks like and what tomorrow looks like.

We will now move on to our next question from Ryan Brinkman of JPMorgan.

Congrats on another strong quarter. Just given the materially higher '21 EBITDA outlook, I'm curious if you have any updated view on the outlook for free cash flow or for the deployment of that cash flow. I'd be interested, in particular, if you could maybe delve a little bit more into your opening remarks regarding possible fintech acquisitions or supply chain vertical integration. And I realize you did just increase the quarterly dividend, but how are you kind of weighing those type of alternative acquisition opportunities relative to still further return of capital to shareholders, such as the opportunistic share repurchase program that I recall being discussed at the Investor Day?

Okay. I'm going to split that up into two specific answers. Obviously, as a management team and as a Board, we work very hard to really figure out what the best and highest use of our free cash flow is. It's clear to me that we, as a team, want to continue to grow our footprint, but we also want to improve the performance of our existing footprint. And so we have spent a disproportionate amount of money and time investing in infrastructure and systems, hiring new really qualified people that make our management team, quite frankly, much better. And as we look at continuing to invest in that technology, we expect, as we mentioned, I think, 2 or 3 calls ago, that it was about $30 million that we wanted to really be looking at in investing into that platform. We get the question all the time about share buyback, and it's one of those simply thought ones. We've already issued, I think, just north of $20 million of the $100 million that was authorized last fall. But delevering the company, making acquisitions that are accretive to the business, both dealerships and nondealerships, continuing to improve the amount of cash on our balance sheet, those types of things are really at the forefront. That doesn't mean that we're rolling out a share buyback, but we want to make sure that we're doing all the other things. And I think the most important thing that we want to continue to do is differentiate ourselves from what the analysts like to call our peers. All those folks that are trading at 12 and 13x in the public auto space, we have to differentiate ourselves by having better EBITDA margins than them, better gross margins than them and, more importantly, trying to…

Okay. And then just lastly, I remember around the time of the IPO, some structural drivers of higher than historical RV demand were being discussed, including younger people being more interested in RVs, maybe more emphasis on experiences versus things on the outdoors, et cetera. Just curious if the experience over the past year, you think might create another shift. If you're thinking any differently about normalized demand for RVs well beyond the pandemic perhaps as, I don't know, maybe people, who might not have otherwise purchased an RV were kind of newly attracted to the lifestyle in 2020 or 2021? And do you have any sort of active plans or programs to try to keep these customers for life?

That's a great question. So we felt over the last 5 years, maybe even more than that, that the buyer continued to shift younger and to be a different buyer than we saw 25, 30 years ago when Good Sam was really starting to build momentum. As we think about how to capture more of the younger buyer, we know that the younger buyer expects a completely different experience. They expect more of a digital experience. This is why you hear us talking so much about 48 states and the online platform and our ability to finance without coming into a store, but it also requires us to have more innovative products. And we've seen really our appetite to co-develop with traditional manufacturers in the RV space and co-develop with nontraditional manufacturers outside of the RV space new and innovative products that we think are going to really set the tone for the next decade. In our goal of getting to $1 billion of earnings, there is no way we get there without finding new buyers. And we spend a disproportionate amount of our digital currency, our digital money, going out and finding people. And so part of we believe not only attracting those younger buyers, those newer buyers, but retaining them is giving them a different experience. So whether that's through curated content, both digitally and in print, or coming up with new experiences like peer-to-peer or campground booking systems, we know that we have to do things differently. And we made an investment in an audio technology not too long ago because we know that people want experiential things tied to their purchase. They don't want to just buy something and drive away. They want to know how they're supposed to use it, and what recipes they're supposed…

We will now move on to our next question from Bret Jordan of Jefferies.

This is Ethan Huntley, on for Bret. Just one here on the service business. Are you seeing sort of any pickup on that business as current RV owners are choosing to sort of fix their older units as opposed to buying new ones?

An excellent question. The current RV-ers are not only repairing their units, but they're renovating them. And we're seeing a really accelerated pace for people, who want to put in new floors, new cabinets and new furniture, largely because they know that the jewel they have in their hand is going to be hard to replace. This break in the supply demand curve doesn't just exist from manufacturers selling new units, it exists with private party transactions. And you can see it in the used values growing so rapidly and, much like the housing growth, people are saying like, "Look, I don't want to get rid of my unit. My wife is not going to let me. My husband is not going to let me. But I'm willing to put $3,000, $4,000 into my unit." About 3 weeks ago, we launched deferred payments with our Good Sam credit card, and we've seen really nice growth in that overall card. And we're seeing people start to take advantage of investing in their RV on wheels or their home on wheels, like they're investing at their home and land. So renovations at Home Depot and Lowe's are starting to really accelerate. They have over the last 12 months, we're seeing strong numbers. We're starting to see the same thing, which is resulting in nice improvement in the retail portion of our location business. I think more than anything else, we are seeing that the consignment business, our ability for people to want to sell them, it's been a little bit tougher. And we're seeing that our ability to procure units has been a little tougher, and we're having to pay up for them because I think the consumer knows the value in their hand today. And if they don't get the price they want, they'll just spend money picking it up, fixing it up.

Okay. Great. And then just one here on sort of any color you can provide on the sales cadence throughout the quarter. And then anything sort of you can provide on how things are looking thus far in Q2.

Overall sales data continues to be strong, both for the quarter and as we are in the first couple of days of May. I think for us, it's -- as I said earlier, it's really maximizing the profitability of each transaction. We expect that there's going to be a difficult time procuring inventory for the next 3, 4 months. We think that's a reality, which is why you see our focus on use. But if I showed you our demand and our leads on a daily basis, they're stunning. And we're frustrated by our inability to take care of every single customer that wants to buy an RV. And hopefully, over the next several months, as the supply chain fixes itself, we'll see a nice uptick, hopefully, in the third, fourth quarter in some of those sales numbers. But for the second quarter, we're feeling good about our numbers. We obviously are tempering our tone by the fact that inventory is not as easy to get. I want to be clear also that in the guidance that we've provided, there's a low end and the high end, and we factored in the fact that the supply curve is -- it's got some pressure on it.

Great. And then just the last one here, if you don't mind, just sort of a general housekeeping question. But is there any color you can provide on the percentage of sales that are to first time buyers?

We don't track it that way internally. It's difficult. I mean we can make assumptions based on the number of trades and if we've seen them in our system before. But we'll work harder to provide more color. But with privacy rules and things like that, we don't necessarily collect all the information that we would like.

[Operator Instructions]. We'll take our next question from Gerrick Johnson of BMO Capital Markets.

I think the new vehicle prices are up 10%. Is that mix to bigger vehicles or pricing on your side?

I would say it's a combination of two things. It's margin improvement. And in addition to margin improvement, we have seen the manufacturers being required to pass through some of those commodity increases. When a supply curve is broken, prices go up, both on metal, wood, things of that nature. We've been working very closely with them to ensure -- and they've been very focused on it to ensure that we're not stunning the customer, and we're not shoving all of those through the channel, but it's a combination of both margin improvement and some commodity price increases.

Okay. And curious on the used vehicle inventory, if you had a number in units. You gave us the dollar amount, but wondering what that looks like in units used.

And how many we sold for the quarter? Or how many we have in stock?

Well, the comparison year-over-year, let's put it that way. Your inventories unused were up 26% in dollars, but what would that look like in units?

In terms of our revenue being up or down, I don't think we reported...

No, no, no, not revenue. Inventory, inventory, used inventory.

We have 8,000 units in stock right now. And that's up. Is that right? We were $141 million approximately this same time last year. We're north of $200 million today. And so our count is up. One thing that we are starting to do is expand our pre-owned B, C, Class A business, so the average cost may be up by $1,000 or $2,000, as we continue to destock on the new diesel side, largely based on allocation with -- from the manufacturers.

Okay. So your used vehicle inventory is up year-over-year?

$141 million last year, $200 million today.

Okay. And lastly, wondering what the trade-in rate has been on your new unit sales. Last quarter, you said it was about 25%, up from 18% over the summer. Wondering what it looks like in this most recent quarter.

28%.

We'll move on to our next question from Brett Andress of KeyBanc Capital Markets.

I hopped on late here, so apologies if these are redundant. But with the new vehicle inventory per location down 35%, do you feel like you lost any sales in the quarter? And is there any way to maybe quantify what you left on the table?

I don't think we can quantify it, but the answer is definitively yes. We definitely did. But we also, in some cases, made that decision our own while we were holding margin, right? So when you have a valuable commodity that you don't know if you can get replaced readily, we're looking at every single transaction to maximize the profitability. Had we had more inventory, we would have sold more, clearly, but I don't know what we actually left on the table. I think we'll have a better indication of that as we get through the balance of the year. And the only thing that we essentially see right now is that we have a tremendous, tremendous amount of demand, and we're really struggling to try to figure out how to satisfy it, which is why you see this heavy lean in and then you'll see a continued lean in on preowned.

Got it. Okay. And then as we look at the updated guidance, is there any way to frame up what the contribution is from the recent dealer acquisitions that you've made?

You know what, no, actually, not really today. And part of the challenge, and I know you can appreciate this is, we make the acquisition announcement, but they fade in over time. And so some of the ones that we've announced are going to be closing in the next 30 to 60 days. And unfortunately, with the DMV in some of the last 12 months working from home, the ability to get licensing has been a much longer process. What used to be 60 days now could be 120 days. So it's hard for us to really map out what that looks like. But we think it's meaningful. But as we get through the latter part of the year, I think we'll be able to provide more color on that because they'll have been baked in for a period of time. So we'll do our best to try to give you clarity maybe in the third or fourth quarter.

Got it. So is it maybe fair to say that you don't really have much baked into your guidance from those right now?

No, we have it baked into our guidance. I just am not prepared to give you exactly what that breakdown is.

[Operator Instructions]. We'll take our next question from Marc Cohodes of Alder Lane.

Well done, Marcus, very well done. Is it one way to answer Safalow's question is that things are very different now that the demand has far outpaced anything that people can manufacture, and in this window of shortages, it's a huge plus for the top end of your funnel?

I think, ultimately, demand is clearly materially outpacing the manufacturer's ability to produce. And it isn't just material shortages because those will resolve itself. I think we're dealing with manufacturers, at least on our end, that are responsible in the way they're growing. They're thoughtful in the kind of products they're making. They're being considerate to the quality of the units. And when you look at Thor, Forest River in Winnebago, their reputations rely on them making really good products. And so as we get through the balance of the year and materials start to come back in, we'll pick up the pace again. But the current infrastructure will need to be built just like we need to build stores, to build our business, and we need to invest. And so I would imagine that in the boardrooms of those 3 companies, they're already talking about building new factories and building new facilities, but they're doing it in a way that is responsible and thoughtful to the quality of the unit and the innovation. So demand clearly is outpacing the manufacturer's ability to supply. I don't see that -- in my opinion, I don't see that slowing down anytime soon.

And a follow-up. Where do you see in what year supply demand equilibrium with all the factors you mentioned? And two, I heard through some people, who've seen things that Outdoorsy just did a private round at $1.7 billion in valuation. And your thoughts on that versus what Good Sam may be worth?

I'm really happy for anybody else's business that achieves the valuation that works for them. I've always believed that our business is undervalued. And the only way to prove that up is to put numbers on the board and let the market tell us if they agree or disagree with that number. If the market disagrees with our ability, we have the ability to use our share buyback and other mechanisms to deal with that. And so I can't really speak to that. In terms of your first question, I'm the eternal optimist, but I also believe that we are good scientists. I think that the RV lifestyle, which has existed since the '50s, by the way, it's not a new thing, it's not like a fab that just happened because of COVID, we told people about a year ago, is here to stay, but in a different way. And we think with the development of new smaller, lighter products in the van life, B vans and hybrids and a variety of other products, that -- the $500,000, we should be laughing at years from now. We should be laughing at it. And as we talk about it as a management team and we look at buying dealerships or opening new locations, we're developing new products, we believe that this industry in the next decade should be making 1 million RVs a year. And that's still a scratch as it relates to the penetration of 330-plus million people. I know it sounds like a lot for an industry that was small many, many decades ago. But from our perspective, we're going to continue to invest. And we believe that this industry is not only ripe, but we know that we are the leader, we have been the leader, and we…

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.