Camping World Holdings, Inc. Class A Stock

Thank you. Thank you.

Good morning and welcome to Camping World Holdings Conference call to discuss financial results for the second quarter ended June 30, 2026. This time all participants are in a listen only mode. Later we will conduct a question answer session and instructions will follow at that time. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without written authorization from the company. Joining on the call today are Matthew Wagner, Chief Executive Officer and President, Tom Kern, Chief Financial Officer, Vincey Christen, Chief Administrative and Legal Officer, and Brett Enders, Senior Vice President, Investor Relations.

I will turn the call over to Ms. Kristen to get us started. Ma'am, please go ahead. Thank you and good morning, everyone. A press release covering the company's second quarter and the June 30th, 2026 financial results was issued yesterday afternoon. 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 our business plans and goals, macroeconomic and industry trends, customers' needs, and the needs of our customers. customer trends, inventory strategy, future growth of our operations, capital allocation, future financial results and positions, future SG&A savings, and operating efficiencies.

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, on our Form 10-Q, and other reports on file with the FCC. Any forward-looking statements 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 are included in our earnings release and on our website. All comparisons of our 2026 second quarter results are made against the 2025 second quarter results unless otherwise noted. I'll now turn the call over to Matt.

Thank you, Lindsay. Good morning, everyone, and thank you for joining our second quarter 2026 earnings call. Let me start with what this team delivered. In the weakest new RV retail environment in over 15 years, we executed on the priorities we set for this year, growing new and used unit share, accelerating Good Sam and driving SG&A efficiency. We gained new unit share through May on top of last year's record, grew same store used units over 5%, improved F&I productivity, expanded Good Sam services and plans margins, generated significant operating cash flow, materially reduced inventory and floor plan borrowings, reduced our SG&A by over $26 million. Those are the building blocks of a stronger company, and I'm proud of the way our team is executing. I'll be equally direct about the results. This was not the quarter we expected back in April.

The new RV sales market weakened during the peak selling season, and we made the decision to move through aged and prior multi-year inventory rather than carry those assets into the back half of the year. That decision pressured vehicle gross profit in the quarter, but it was the right call. And we were beginning to see the payoff with margins improving sequentially July to date. First, I want to turn to our used business, because I believe our ability to grow this segment remains paramount to the long-term success of our organization. We believe used RVs give customers a more affordable path into the RV lifestyle, and used sales create opportunities across F&I, Good Sam, and service. Our same-use vehicle unit sales grew over 5% in the quarter, representing share gains through the May STAT surveys reporting information. For the full year, we continue to expect the used RV market to track within the 715,000 to 750,000 unit range.

On the new side, according to preliminary SSI data, new vehicle retail registrations declined 16% through May. And it is our expectation that these trend lines persisted into June and July, with July potentially seeing more acute pressure. We recognize a correlation in the second quarter between geopolitical tensions in the Middle East and new unit sales. We believe as the conflict resolves, this results in the stabilization of new sales trends. But I do not want these headlines surrounding the new industry to obscure the work our team accomplished. We gained new unit market share through May, noteworthy because May of last year marked the highest unit share in our company's history. And we exceeded a 29% share of all new RVs sold in the US.

We did this while growing our new vehicle average sales price by 13% of the quarter, driven by targeted share gains in the fifth wheel and motorized segments. Given what we are seeing in the market, we now expect the industry to track in the 290,000 to 310,000 unit range for the full year as geopolitical tensions, gas prices, affordability, consumer confidence, and higher rates remain real constraints on new demand. This compares to our previous range of 325,000 to 350,000 units. We believe our current inventory levels are appropriate for the current pace of demand, but we expect competitor dealers to remain focused on cleansing aged inventory for the next several months. We believe we are now in our best current model year new inventory position since 2020. Our Our prior model year exposure of new RVs is nearing 1%, down from over 6% a year ago, and our cohort of new vehicles aged over 365 days has been cut by over 60% compared to the same time last year. At quarter end, the total number of new vehicles on our lot is down roughly 17% year over year, while dollars are down about 5%, reflecting the richer mix of inventory we're carrying as the industry continues to struggle with the travel trailer demand.

Turning to our used inventory, the story is very similar. Compared to where we ended 2025, used inventory units are down 18%, but the more substantial progress has been made on aging. In July, the average age of our used inventory is down over 30% compared to the end of the first quarter. and the percent of used inventory that is aged over 180 days which is a core internal kpi for us is down almost 50 we head into the back half of this year with a leaner fresher used book Total RV and outdoor resale inventory dollars were down nearly 10% year over year, and floor plan notes were down approximately $280 million from year end. We are starting to see this progress on inventory optimization pay off. July to date margins have improved sequentially from the second quarter, despite the softer industry demand we are seeing. Lastly, as it relates to our SG&A, we have identified initiatives that we expect will deliver approximately $100 million of incremental annualized savings. This is a broad operating efficiency program built around 20 specific initiatives.

We are retiring legacy software, replacing third party systems with purpose built technology, renegotiating agreements and simplifying back office processes. Last quarter, we had spoken about the in-house CRM we developed for the Good Sam extended service business. Over the last four months, we developed and deployed another larger in-house enterprise-grade RV sale CRM. We currently have it in production in five locations, The early results indicate improvements in sales volumes, closing ratios, employee experience, and customer satisfaction. Once we fully roll out this product, we anticipate eliminating in excess of $20 million of annualized cost. Our objective in all these initiatives is to create a simpler, faster, and more scalable operating model with better tools for our team and a more consistent experience for our customers. When we last spoke in April, we had early indications that new RV industry sales had the potential to track towards the low end of the 325,000 unit range.

At the time, we were seeing improvement in total new and used RV sales through April, and we had sufficient visibility on near-term cost actions to reach that target. reiterate our guidance range. However, the new RV market weakened during May and June, and industry volume trends have remained soft July month to date as the re-escalation of the conflict overseas began to weigh on demand. we are resetting our adjusted EBITDA outlook to $230 million to $270 million. Reflective of the trends we see today and what has proven to be an exceptionally volatile market. We are focusing on the variables we have more control over. Leaner inventory, structural cost actions, used growth, and stronger good SAM and service execution. We are not waiting on affordability or consumer confidence to stabilize. We are focusing on building a better business with better operating leverage at the end of the cycle.

Now we will turn the call over to Tom. Thanks Matt. For the second quarter, we recorded total revenue of $1.9 billion, down 2.1% year over year. vehicle revenue was 869 million, down 5%, on new unit sales, down 16.4%. Used vehicle revenue was 580 million, up 1.4% on 5% higher unit sales. As Matt described, we deliberately moved through aged and prior model year inventory in the quarter, and that shows up in our reported vehicle margins. New vehicle growth margin was 10.9% compared to 13.8% a year ago. used vehicle growth margin was 16.5% compared to 20.5% a year ago. We expect these margins to look better sequentially in the second half of the year, supported by the early signs of margin progression we've seen thus far in July. Within Good Sam, we completed our ERP overhaul in the second quarter on the timeline we laid out last quarter, enabling the team to chase B2B opportunities with our extensive platform.

Good Sam services and plans gross margin expanded to 61.8% from 59 and a half percent a year ago, we remain confident in the ability of Good Sam to be a long-term growth driver for the company with additional top-line opportunities ahead. We reduced total SG&A by 26.6 million, or 6.1% year over year, continuing the cost discipline we discussed on our last call. SG&A as a percentage of gross profit was approximately 76.3 million, up from 73.9 million a year ago, with the increase almost entirely function of gross margin compression. Let me take a moment on the incremental $100 million of expected structural SG&A and operating efficiencies. Three points on the timing of these savings. The first $50 million of that run rate savings are expected to be executed by the end of 2026, with the balance by early 2028. Second, our revised 2026 guidance includes roughly $15 million of benefit in the year, mostly in the fourth quarter.

Third, that means we expect about $35 million of those savings to carry into 2027. That carryover is one of two identifiable tailwinds into 2027 that we expect to total roughly $70 million. The second is the lapping of the roughly $35 million of inventory clearing impact from the first half of this year. Turning to the balance sheet, we ended the quarter with $224 million of cash, $185 million of unencumbered real estate, and total outstanding long-term debt of $1.4 billion. even against significant gross margin pressure this quarter, our capital deployment framework continues to prioritize strengthening the balance sheet while retaining working capital within this business and reducing our net debt leverage. With that, I will turn it back to Matt. Thanks, Tom. I'll close with this. It was a challenging quarter, but this team.

grew share to record levels, expanded Good Sam, and took $26.6 million of costs out with a goal of $100 million more coming. We're building a better business and I'm optimistic for what this team will accomplish in the quarters ahead. We'll now turn the call over to Q&A.

Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. If you would like to withdraw from the polling process, please press star then the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any case. Your first question comes from the line of James Hardiman from Seeding Group. Please go ahead. Hey guys, this is Sean Widener for James.

Wondering if you can maybe bridge the prior adjusted EBITDA outlook range to the revised range. beyond the lower industry unit outlook, what are kind of the key puts and takes from a new and used ASPs and margins perspective?.

Really from starting with your last topic first, from an ASP perspective, ASP is actually held in relatively well. Our used average sale price came in a little bit lower than our expectations, maybe to the tune of about $1,500, give or take. New average sale price, though, actually rebounded quite well year over year and rebounded immediately. compared to consensus, I believe even built into your model, Shawn. But when we take a step back and look at the myths, I mean, this is really just a new unit volume myth and new margin myth and used margin myths. They came in a little bit under expectations. And largely speaking, we realized the pain of those realizations of those misses in May and June. We ended April in a position where we felt pretty good about the current progress we were making in April.

You same store sales were up high single digits. New same store sales were down mid single digits. We have started to see a stabilization of our margin profile, but as we balance through May and into June, we started to realize that there was a lot of pressure on new RV sales demand. And we knew that we wanted to continue to work through some of our prior model year new inventory, as well as our age used inventory. So with that goal in mind, and also when confronted with pricing and promotional pressure from our competitors that put a little bit more strain and pressure on our margin profile and our average sale price hung in there but ultimately this is a new volume new margin and use margin impact.

Okay. I guess following up there, you spoke of sequentially improving vehicle margins. what should we be modeling for new and used margins for the year? Do you expect it to improve sequentially from 2Q to 3Q and from 3Q to 4Q or sort of what's the phase in that?.

Yes, we'll I'll give it to you from an annualized basis, given that in Q2, we oftentimes are going to generate in excess of 50% of our annualized earnings for the entirety of a year. And that's just based upon this historical trends that we've seen. While we do believe in the back half of this year that we'll see some benefit by means of all these costs actions that we're taking. So perhaps that 50% could be a little bit less. But I say that in so much as Q2 is such a massive volume period for us, which is going to disproportionately impact the overall annualized EBITDA and margin percentages for the entire year. So when we think about 2026 right now, we're thinking that new margins could land anywhere in the range of 11.5, 12% for the entirety of 2026. And use margins could land anywhere in the range of 17.5 to a little over 18% for the entirety of 2026.

We do believe that there will be a sequential improvement in Q3, but really in Q4, it's always a matter of what's the promotional activity? What are we trying? to do to prepare ourselves for next year. So historically speaking, in Q4, you do see a little bit of a step down in margin. But even still, I'd look at this holistically over the course of all of 2026 to arrive at those conclusions.

Okay, and just one more quick follow up on the ASP part. To your point, new ASPs have been around sort of that just under 39,000, which I think was your maybe target for the year, a quarter or two ago. You were targeting 31 and a half for used. Obviously, it's been a little below that. So should we be assuming used ASPs in the back half look similar to the first half?.

reason to believe they improve. I think that there is a high likelihood as we head into the fall and winter time periods that you'll actually see you use ASPs come up a little bit. And I say that in so much as historically you'll see those consumers that have a willingness to buy fifth wheels and motorized units, which oftentimes are going to yield a higher ASP, they'd have a higher likelihood of starting to buy in Q3 and Q4. So for the entirety of 2026, I think use ASPs could land right around that $30,000 range or maybe even a little bit higher potentially. But I think where we landed for the entire quarter we were in Q2 at about $29,000. That's going to be indicative of the fact that there's a lot of consumers that are buying towables and more expensively priced assets. And generally seeing Q3, Q4, you see a bit of a recovery there.

Got it. Thanks a lot. Your next question comes from the line of Joe Altabello from Raymond James. Please go ahead.

Thanks. Hey guys, good morning. First question on the new ASPs you mentioned, Matt, they were up almost 14% in the quarter.

Was that all mix? Morning, Joe. In large part, that was mixed. As we spoke about in the prepared remarks, we're seeing a lot of pressure on the travel trailer segment at large, but juxtapose that against the success that we're realizing in the fifth wheel and Class C segments, where we're seeing material market share gains within those specific segments in particular. And we believe that the consumer that's probably a higher net worth individual that has a willingness to buy in this current marketplace, where that travel trailer consumer, you could argue, just doesn't have a willingness to engage in a bigger ticket purchase right now, or they're going to have a monthly payment that they're anchoring to for a longer term. So we were very effective at replenishing and calling the shot on the Class C and fifth wheel segments. In fact, there was a number of periods where we were up in excess of 15% of each of those respective categories throughout the balance of this year so far. We believe we still have more opportunities through the balance of the year, which would then support the case that new ASPs are probably in the range where they'll end up for the year if not going up a little bit.

Got it. And you also mentioned margins improving here sequentially in the third quarter. What's driving it? Is that your cleaner inventory? Is it less discounting, maybe a combination of the two?.

Definitely a combination of the two. I'd actually weigh a little bit more heavily on the former variable and so much as we were very disciplined about cleansing aged assets especially on the used side in May and June in particular, when we realized that demand had slowed down a little bit more than we had anticipated, we wanted to ensure that we were positioning ourselves as well as possible for the second half year. Equally as importantly, though, heading into next year. So yes, we did have that goal in mind, but there was the additional pressure of promotional activity because many other dealers recognize the same. I would argue based upon our research that we're in a way healthier position than the broader industry and we believe that we've taken a lot of pain in the first half of the year to set ourselves up. I can't necessarily say that the broader industry has taken that same approach.

Got it. And if I could just squeeze one more in, model year 27 pricing, how are you thinking about that right now?.

As of this moment, Joe, we use our own in-house index, where we call it our RV price index, modeled very similarly to the producer price index, where we take a basket of goods that we look at every single quarter and we go back 15 years, and we try to assess it on a like-for-like basis. That's a long-winded way to say, based upon that research, we're seeing seeing right now to end this last quarter that model year 27 compared to 26 is we're up about 1.7%. I have heard certain rumblings that over the next couple of months, manufacturers might be put in a position where they have to raise prices slightly again. I would anticipate maximum be another one and a half to 2%, maybe. And that could be okay. I say that in so much as we're obviously confronted with general inflation. And as long as these price increases consistently are below inflation, I believe that continues to answer that question of can we create a more affordable asset for these consumers to engage in this lifestyle?.

Great, thank you. Next question comes from the line of Tristan Samismartin from VMO Capital Market. Please go ahead.

Good morning. Good morning. Okay, I jumped in a lot of things, so I apologize if any of this is touched on, but I know you called out gain new unit share through May, I kind of understand the industry dynamics in June and July, but like what changed with your performance relative to the industry?.

Well, I think in some respects we were very aggressive in our pursuit to cleanse ourselves of aged assets. So we were very promotional to ensure that we were removing ourselves or getting rid of aged model year units, model year 25. And just as well, we picked up actually most of our share when you look at it on an individualized segment basis within the fifth We had introduced over the course of this last year a number of new products and floor plans within each of those respective categories. And I can tell you that our campsite reserve fifth wheel, for example, has quickly amassed market share where that brand now sits as the seventh most popular brand in North America. And that brand didn't even exist then. up until a year and a half ago. This last year, we debuted a whole new fifth wheel line that's complete with six different floor plans. And we've been up materially with that one brand in particular.

If we turn to our Class C segment, we've worked very effectively with Thor Industries to reimagine a number of different products within our Class C segment, and we're really just satisfied that consumer with a very affordable asset, but that is complete with a number of features to incite them to actually engage with our business.

Okay. But I mean, just kind of trying to read between the lines there, World, you guys are maybe a little bit more promotional than some of your peers, so you maybe pulled forward a little demand, or am I reading too much into that?.

new margin profile wasn't exactly where we wanted it to be. We ended Q2 with about just shy of an 11% consolidated margin on the new side. But just as well, we do a lot of research to ensure that we're at least market competitive on prices. So I don't know that we were that much more promotional compared to our competitors. I think it's just a byproduct of of what consumers can afford and ensuring that we're hitting our sales goals and at the same time retaining as much margin in our business as we can.

Yes, and then just, I don't think you touched on kind of how maybe early thoughts on 27 and also just kind of a general high-level question. I mean, besides macro rates, is there anything else you think the industry needs to do to really spur demand? Thanks.

We had not provided any commentary on 2027 and we're not in a position to start to weigh in on 2027 yet. We still have a lot of this year to go. But I can tell you that our focus right now in the short term is still on affordability, creating more innovative and interesting products to consider having more consumers come into the market. to this lifestyle and ensure that we're continuing to grow the general TAM that exists within this industry. We haven't seen as much growth as we'd like to see. And we've seen new RV sales and the general environment continue to decline going on almost six years now, once we last 2026. So for us, this is just, what can we do to grow.

for this industry. Okay, thank you. Your next question comes from the line of Arzat Gupta from JPMorgan. Please go ahead.

Great, thanks for taking the question. I just wanted to like quickly clarify the the margin cadence for the second half. I think I heard that you would expect the fourth quarter to step down from the third So in order to like hit the 11 and a half to 12% on new and 17 and a half to 18 on used, it would imply a pretty meaningful pickup in 3Q.

and then a slight decline in 4K. Am I understanding that cadence correctly? I don't. In Q4 historically we have seen some decline in margin. I think last year we did have some significant promotional activity in Q4. you saw those margins dip pretty aggressively, particularly on the used side. I don't know that we're projecting like that level or that level of dip Q3 to Q4. I would expect it to be a little bit more even Q3 to Q4 this year, given what we've done in Q2 on the inventory side.

Understood, that's helpful. And then, you know, the breakup of the incremental 100 million. Could you give us a little bit of, a little more color on like just the areas? from where these costs are coming out, you know, technology, procurement, centralization, like what's, which areas are those restructuring actions being taken? Thanks.

Those are really the areas. It is a combination, like Matt gave the example of sales CRM. That's the second CRM that we've launched this year. So I think you'll continue to see us make enhancements on the technology side. And that not only saves on the actual staff piece, but also on the consulting fees and some of the other in the licensing fee. and some of the ongoing cost and friction that that creates within, within the business. Um, And it also enables us to centralize more processes. So it does create opportunities for more labor efficiency down the road. The third bucket is that procurement and supply chain piece where we're continuing to dive into certain agreements. they come up for renewal or frankly, as we get through some of these technology initiatives where it opens up more opportunities for us to look at third party contracts and third party arrangements in a different light and look at different alternatives.

So I think the teams, across the board are being very creative in how they're thinking about the future of this business and where they want to remove friction with the employee base, as well as with the customer in all of our processes.

Understood. Great. Thanks for all the color and good luck. Your next question comes from the line of Scott's timber from Roth capital partners. Please go ahead.

Good morning, thanks for taking my questions. Um, Matt, I thought I heard you say that. June and July were equally as rough as the quarter. But it sounds like July, I think you used the word a little bit more acute, Maybe talk about that a little bit. It sounds like it got a little bit worse in July. you know, where do you, what do you attribute in that to just the general macro environment?.

Morning, Scott, and you are correct. We did say that our prepared remarks and we did see a slight step down from June to July. It's still in the range, but we can't help but recognize as we've conducted our own internal research and external research that there's definitive corollaries that exist between the geopolitical tensions overseas. and certain key moments, like for example, earlier this month in July, that is, when there was a re-escalation based upon stat survey information, as well as our own internal information, we started to see a dip almost overnight in sales. And that's where we started the month with a lot of hope because it seemed as though there was going to be some resolution perhaps on the horizon, but immediately upon that specific instance, you can see it in weekly stat survey data that we procure, as well as I'm sure many do on the call. You can see the overnight sales dip, and unfortunately, that lended itself to the possibility that there was going to be a little bit lower comp year-over-year compared to June, but it's basically the same. So our hope is that as we're approaching resolutions for all these different tensions, that you'll start to see the stabilization, the new RV marketplace, and that's really where we'll start to yield the operating leverage that we're creating in this business.

Got it. And then on the parts side and the service side, I know there's been this argument or weighing where you use your utilization for used reconditioning or for customer pay work. Maybe just talk about how customer pay is trending and at some point, do you guys feel like you need to.

either increase capacity to be able to handle more customer pay work or maybe divert some more utilization towards that? I'll start with the last. I believe that we have plenty of opportunity to utilize our bays more efficiently and effectively. And we have a number of bays that aren't occupied with technicians right now. So we know that is one of the most difficult things within any service industry right now to find the right talent, retain that talent, and make sure to constantly train that talent. We put an incredible emphasis on ensuring that we're keeping that pipeline full and retaining technicians in this space. When we think about the utilization levels, though, and that debate between internal, external, yes, it is. true that internal still does take up a little over half of actually all of our available hours within the base. And it is true that our external work has tremendous upside and opportunity.

We have seen the improvement in external work compared to the trend lines that we were seeing last year and this year. Really, though, we're seeing that because we made a strategic call about a month and a half ago now where we changed our labor rate structure for consumers. And this is a recognition of consumers having to affordably service their assets. So we debuted a rate structure where we offer installation of any one of our components or products for $99 an hour, maintenance for $120 an hour, and for more complicated jobs, especially collision, it's $199 an hour. Previously our posted labor rate was $199 an hour across the board, what we have seen that our revenue is actually improved, but because we did drop some of these labor rates, our gross profit has remained flat. So while revenue is going up, gross profit is flat. Where that serves a benefit though, is if you look at our retail and parts business, we're actually seeing a nice improvement there, which tells us these consumers do want to service their assets,.

to add these upgrades and features, we just needed to make certain that we could affordably enable them to do this by means of the service work actually being reduced for the mature labor rate. And Scott, I would I would add to that. That's something that we changed intra quarter, so we've seen it come through the numbers in the back part of the quarter, but it definitely did not come through obviously in the consolidated results for Q2.

Got it. If I could just sneak one last one in. Could you give us an update on how your Costco initiative is progressing?.

As we shared last time, we paused in April, took a reset of the entire program, wanted to reimagine the entire lead process flow, figure out a more effective marketing strategy. We kicked it back up in May, and we've had a number of different roadshows. We've noticed a correlation when we have a roadshow specific Costco, that region actually sees an uptick in general sales volume. But this is still early days, given that we had to go through that reset period. So we're seeing nice progress, but we're not going to hit the goals that we were originally intending to. That's just the reality of it. We originally were trying to goal seek at least 3500 sales this year. if not upwards of 5,000 through the Costco program, I can tell you we're in the hundreds of units sold.

We're still seeing a number of leads that we're cultivating and there still are opportunities. But now that we're beyond the peak selling season, the reality is seasonally you start to see demand fall off in Q3, Q4. So this would really be more of, yes, I think we could pick up some, incremental volume demand through Costco through the balance of the year, but this will really be a play for next year.

Your next question comes from the line of Alice Wilk-Wieckland from Mayor of the Police.

Yes, good morning, gentlemen. Thanks for taking my question. Just want to touch on kind of the F&I business and maybe what expectations for that should be in this macro environment. I think you had a good performance here in Q2, but I guess I'm wondering, is there any appreciable difference between the attachment rates depending on the type of customer that's coming through the door?.

or maybe that more premium one versus that travel trailer customer. Yes, not a big difference, hey, Alice, even though our mix has shifted a little bit. I think if you think about the back half of the year, I would think about F&I as a percent, right? That penetration rate, pretty similar to what we saw in the front half. I think as you see used continue to grow and you see new have some of that relative pressure, that does kind of shake out to some of the trends that we saw in the first half of the year. So that business continues to remain obviously very strong for us. Will continue to be driven largely by volume and attach. but there's really not too much of a difference we're seeing across the cohort within the attach. I'll just say as a percentage, what you do have historically, when you do sell more travel trailers, you see a higher percent, but when you start to sell some of these, fifth wheels and larger items, that percent kind of comes down, but I would focus on that dollar number, that FNI per unit to be,.

a little bit more steady than that percentage. That makes sense. And then on the balance sheet, I apologize if I missed it, but did you share kind of where you expect leverage to end the year and maybe any thoughts on how that might play out early into 2027?.

Yes, so leverage for the year. I mean based off of the guidance change, we we want to get as deep into the fives as we can this year. Our long term goal though still remains to get below three and a half times or below three times over the course of the coming years and that's really going to be driven by a lot of these cost initiatives and efficiency initiatives we want to control our destiny on the leverage side and improve the operating leverage of this business so that we can have uh you know you know, a lower floor and have a steadier long-term leverage target for the enterprise.

That's it for me. Thanks. Thanks, Alan. Next question is from the line of Noah Zatzkin from KeyBank. Please go ahead.

Hi, thanks for taking my questions. I guess just high level question, you know on the on the kind of 230 to 270 adjusted EBITDA range. What's embedded in the low-end and what's embedded in the high-end? and just kind of any thoughts on like degree of confidence.

in kind of the 230 floor there. Thanks. Morning, Noah. So when we think about the low end and the high end, we obviously have a number of inputs that are designed between that low and high end. The principal ones though being how does the industry behave? And we believe on that $230 million range, that would suggest then that the industry new retail activity about 290,000 new RV sales for the total of 2026. And on the high side, we're anchoring to that 310,000 new unit range. When we think of the used marketplace, that's where I'd also anchor that to. On the low side, 715,000 used unit sales for the entirety of the year. And on the high side, the 750,000 So embedded within that is market share implications, where we believe that we'll end up in North America at about 22 and a half to 23% total market share in North America, which would also be higher if you just look at the US.

And then on the U side, we believe that our used market share for the entirety of 2026 will be about 8.8 to 9%. So if you're to take those anchors, and then we've obviously provided previously our new average sale price, we think it's going to be right around, 39.5 to $40,000 for the entire of the year, use average sales price, hanging in that range is about $30,000. And we previously provided on this call the gross margin range. That really becomes your input then to suggest where the potential range of outcomes are. And we believe that the industry should settle into that 290,000 to 310,000 range.

So just to put maybe a little bit more context around that as well, if you think about the lower end of that industry assumption, right, that $290,000, you're looking more towards, you know, a trend line or a trend rate that would reflect more of what we're seeing in the industry and in our business in July and really flowing that completely forward, while the higher end would, you know, have not a, you know, a sharp or a meaningful recovery. just a little bit of improvement as industry compares ease slightly. You're up against things like the government shutdown last year. That would kind of reflect more of the industry outlook contextually into the higher end.

Thanks, and then maybe just kind of any thoughts around in inventory positioning and how you're kind of planning. the back half there, you know, not to pry on kind of next year strategy, but just any thoughts on the back half from an inventory perspective. Thanks.

No, we went through a lot of pain to ensure that we ridded ourselves of age model year units as well as age use units. So we're taking a very conservative approach to replenishment here heading into the balance of the year. If we look at channel inventory across the board, we believe that the broader industry still has a little bit too much inventory based upon current demand trends and that's even if we end up on new RV sales of 310,000 units in the entire industry. So we think the industry has a little bit more work to go to cleanse itself and channel clear it. But for us, we're being very thoughtful about replenishment of those products that we know we're doing well with and we want to ensure that we maintain the market share that we've worked very hard to gain over the last few years. Thank you.

Your next question comes from the line of Jim Chartier from a Nass Crespin Heart and Company. Please go ahead.

Good morning, thanks for taking my question. You know, Matt, you talked about the importance of the used business going forward. You know, how has the pullback in used inventory, how's that impacting your expectation for use growth this year? then what's a reasonable expectation that we can think about how the used business can grow for the next few years. Thanks.

We still believe that the used sales for this year should be positive year over year from 25 to 26. But we were very conservative in terms of replenishment of certain used categories. We are down on our used inventory quite a bit year over year. We also have leaned a little bit more heavily into consignment business, which is ensuring that we're at least replenishing certain components of our business and it doesn't show up in our balance sheet. So we are setting ourselves up to yield that opportunity, but we have gotten a lot more thoughtful and better in terms of the AI enablement that we have to identify certain market demands. And this has just been a recent over the last couple of months to understand what our market data supply are by price point, by segments, down to model, down to different vintage model years. So that's helping to inform exactly where we should perhaps maybe either raise the value to procure an asset or start to decrease the value to ensure that we don't procure too many of that specific asset.

But the used business is obviously very difficult in terms of procuring and setting up all the processes to cultivate that relationship with the customer transact. So we believe that we're well positioned just as well. You are hitting home on something that we discussed internally of we want to make sure that we're not out of the right floor plans and the right products in all these markets nationwide.

Okay. And then as far as kind of future, you know, the next two or three years, you know, how are you thinking about the potential for used unit growth?.

You know, we're not looking out that far, but sufficient to say we believe that the use market is very stable, impervious to any sort of the issues that we're seeing on the news side of the business in terms of affordability. And this is a long-term strategy for us. We believe we can continue to compound these gains that we've seen. As I stated earlier, we're sitting at about just shy of 9%. percent market share of the used business that number over the next few years should grow to 12 plus so in consolidation we still maintain that new and used market share combined we have 15 as our short-term target and over a longer term over the next five years we believe 20 percent is still a very reasonable goal that we had previously stated.

That's helpful. Thank you and best of luck. Thank you. Your next question comes from the line of Brandon Roll from Loop Capital. Please go ahead.

Good morning. Thank you for taking my questions. Given the strength in used RVs, could you talk about the used versus new pricing spread you saw during the quarter and how that could potentially evolve throughout the back half of the year given prices for new RVs could potentially be increasing?.

You are zeroing in on a factor that is normally indicative of the health of the balance and spread between new and used and what is going to result in the actual outcome. So this becomes like a causation factor. So, when you have a healthy spread between new and used true inventory costs or actual cost value in excess of twenty to thirty thousand dollars. to 30%, that's generally a healthy balance for both portfolios. So when we're anchoring to our average sale price for the balance of this year, settling into about $40,000 on new assets and about $30,000 on used assets, this speaks to the historical norm that exists of a near 30 plus percent split between new and used average sales There was a time this time last year we saw our new average sale price dip considerably and that spread between used and new started to be negatively impacted. That's where we didn't actually see that healthy gain opportunity on both sides. We like this spread as it sits today. Obviously there's different dynamics that exist of like are there certain price increases. price points or segments we're selling more of on used versus new, where you could see these numbers flex up and down a little bit.

But this is a really nice environment when we look back over the course of history.

Okay, great. And is that impacting your promotional activity on the new site at all to maintain that healthy pricing spread?.

No, no, that was a goal that we had over a longer term, but that's where you look at different segments. Brandon, you've been around the industry for a while. There's so much noise when you look at travel trailers and fifth wheels to motorize and how you need to right-size certain segments within the Class B segment where you just need to make sure that you are getting rid of those assets that could represent risk in the future. And we know on the new side, anything that's over a year old, you can expect that you're going to feel a lot of margin pressure. And on the use side, any assets that's over 180 days, you're going to expect to give up that margin that you would embedded when you had procured that asset. So we're just being thoughtful about looking at every single asset on an individualized journey basis where every single asset has an individualized story remarketing plan. Great. Thank you.

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press tar followed by the number one on your touchtone phone. And if you're using a speakerphone, please make sure to lift your handset before pressing any case. Your next question comes from the line of Brett Jordan from Zephyrs. Please go ahead. Hey, good morning, guys. This is Patrick Buckley on for Brett. Thanks for taking our questions.

On the service side of things, how have labor pay rates trended recently? As we think about margins moving forward there, where does the math end up between the new lower rates you guys had mentioned that you're charging in any labor inflation that you're.

So actually our effective labor rate, remarkably, is settling into the exact averages that we were seeing previously. So we're settling into that effective labor rate in that range of about $165 an hour, which the reason why our posted labor rate previously was 199 bucks an hour. We've now introduced this tiered labor rate structure. But the assumption in the former example, the 199 labor rate across the board, we would discount, of course, to ensure that we were just looking at a job holistically and whatever we could yield in terms of that labor compensation, we would. But ultimately, consumers can only afford so much. So we've recognized with this tiered labor rate structure, we're seeing revenue go up, gross profit flat, effective labor rate is flat. And we are seeing more customers come through the door and actually attach more retail parts and accessories to install on their assets.

Got it. That's helpful. And then as you look at recent trends across the new RV market, how are metrics like foot and web traffic holding up? Are there signs of a more healthy underlying demand there, but conversion ends up being the issue when they see where the monthly payments end up?.

We are seeing pretty consistent trends throughout the balance of this year that are really just a continuation of the end of last year, where web traffic has been consistently slightly down pretty persistently throughout last year, end of last year into this year. As such, lead volume is slightly down. As such, even walk-ins and showroom visits are somewhat down. However, we are seeing improvement in showroom close rates. So that suggests that customers come in the door, they have a willingness, if they're there, to actually close on the deal. Really the question is, how can we just ensure that the everyman can actually engage in this lifestyle again. This industry is built off that middle class American that wants to just buy something affordable, wants to actually engage in a lifestyle.

And we're seeing that opportunity manifest itself within the used business, where the used business in the industry is healthy. It's been flat to up every period this entire year. So we know that the consumer is healthy, however, they don't want to make those long-term commitments on a big ticket purchase. And we're also seeing that in the housing industry. We are, however, seeing those consumers that are higher income consumer have a willingness to actually engage in the lifestyle because they feel very comfortable and confident in their equity positions right now. So we'll continue to keep a watchful eye on this. We believe that there's different marketing levers that we could pull upon, and we'll continue to get creative with manufacturers to drive down the cost of these assets and continue to maintain a focus on used assets.

Great, that's all from us. Thanks, guys. Thank you. There are no further questions at this time. I would like to turn the call back to Matthew Ragnar for closing comments. Sir, please go ahead.

Thank you, everyone, for the time this morning. This was a challenging quarter, but I'm very proud of how the team continues to execute. And I look forward to speaking with all of you again in another three months.

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

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good morning, and welcome to the Camping World Holdings Conference Call to discuss Financial Results for the First Quarter Ended March 31, 2026.

[Operator Instructions]

Joining on the call today are Matthew Wagner, Chief Executive Officer and President; Tom Kirn, Chief Financial Officer; Lindsey Christen, Chief Administrative and Legal Officer; Brett Andress, Senior Vice President and Investor Relations.

I will now turn the conference call over to Lindsey Christen, Chief Administrative and Legal Officer. Please go ahead.

Thank you, and good morning, everyone. A press release covering the company's first quarter ended March 31, 2026 financial results was issued yesterday afternoon, 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 our business plans and goals, macroeconomic and industry trends, customer trends, inventory strategy, future growth of operations and market share, capital allocation and future financial results and position.

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-Qs and other reports on file with the SEC. Any forward-looking statements 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 2026 first quarter results are made against the 2025 first quarter results, unless otherwise noted.

I'll now turn the call over to Matt.

Good morning, everyone, and thank you for joining our first quarter 2026 earnings call. I'm pleased to report that despite a challenging RV industry backdrop, we delivered a first quarter that demonstrates the discipline and operating leverage we discussed on our last call. These results are a validation of the steps we believe will grow adjusted EBITDA and generate strong free cash flow for the full year. Market conditions came in softer than expected, but the underlying quality of this quarter is what I want you to take away from this call. On a year-over-year basis, we reduced SG&A by more than $29 million or 7.5% and improved our SG&A as a percentage of gross profit by 135 basis points. This is the transformation showing up in the numbers.

On this call, we'll walk through the 3 priorities I laid out to start the year, growing new and used unit share, driving SG&A efficiency and accelerating Good Sam. Then I'll close with our outlook for the year.

Our new unit sales outpaced the industry. According to SSI, new unit retail sales through February were tracking down in excess of 15%. We believe we outperformed the broader new RV sales market in every major category, driven largely by our exclusive brand strategy. Within the new Fifth Wheel segment, we're up nearly 10% year-to-date, driven by the introduction of private label products that hit compelling price points with unique features.

On the used side, SSI data shows that the used RV industry has grown in 6 of the last 8 months through February, reinforcing our strategic focus on this end market. While we saw positive signs of growth within certain categories, our same-store used sales were down 2.6% in the quarter. We attribute the decline into January and February weather disruptions that limited our ability to aggressively move assets. More importantly, the year-over-year trajectory of our new and used volume improved as we moved through March, with new and used units in April trending to end the month slightly positive year-over-year.

Moving to inventory and SG&A. Our message has been simple. Disciplined execution drives profitability and our metrics at the end of April reflect that focus. As of today, our total same-store RV unit inventory is down over 10% year-over-year, and we have purchased over 20% less units year-to-date year-over-year. Even on fewer units in inventory, our daily sales velocity for the month of April is positive versus last year. Our new model year 2025 inventory now sits at roughly 8% of total new inventory, down over 50% in units versus the same time last year.

On SG&A, I'm very pleased with our progress. The 135 basis point improvement in SG&A to gross profit and the $29 million reduction reflects a fundamentally lower cost basis, not onetime savings. This includes $19 million of compensation reduction in the quarter and the consolidation of 13 store locations over the last year that sharpened the efficiency of our footprint. On top of $29 million SG&A reduction fully realized in the quarter, we also executed about $10 million of additional annualized cost rationalization, bringing our year-to-date total to nearly $35 million of annualized cost savings.

Looking ahead, we see the potential for significant cost takeout opportunities from the AI initiatives we're rolling out across the enterprise, with the bulk of that opportunity sitting within our IT spend. We expect these initiatives to drive material hard dollar savings and improvements in dealership productivity and the customer experience. Longer term, we believe we are building a leaner, stronger company with greater operating leverage, and we expect that to translate into enhanced earnings and free cash flow.

Good Sam also made great progress in the quarter, continuing its top line growth pace while stabilizing margins to roughly flat year-over-year. We expect to complete our Good Sam ERP overhaul in the second quarter, which will allow us to accelerate entry into adjacent marketplaces. And using AI, we have developed and deployed a custom in-house CRM solution specifically for our extended service plan business, and it's already showing early signs of productivity, conversion and revenue uplift. Good Sam remains a cornerstone of our long-term growth and the early margin stabilization we are seeing reinforces our conviction in the opportunity ahead.

Less than 4 months into this year, we believe the new RV industry is likely tracking towards the lower end of our 2026 retail outlook, calling for 325,000 to 350,000 units, while the used RV industry is likely playing out towards the midpoint of our range, which is between 715,000 to 750,000 units. We believe that the momentum we have built on new market share, on inventory, on SG&A and on good Sam keeps us on track to grow adjusted EBITDA year-over-year. Today, we are reiterating our full year 2026 adjusted EBITDA guidance range of $275 million to $325 million.

With that, I will turn the call over to Tom to walk you through our financial results in more detail.

Thanks, Matt. For the first quarter, we recorded revenue of $1.35 billion. New and used unit declines were partially offset by a richer mix with new vehicle average selling prices up approximately 4% year-over-year. On the new side specifically, we believe our unit volumes outpaced the industry in the quarter. As expected, vehicle gross margins were under pressure in the first quarter as we moved through assets in certain aging buckets. New vehicle gross margin declined 148 basis points to 12.2% and used vehicle gross margin declined 91 basis points to 17.7%. We expect this gross margin trend to continue through the second quarter, consistent with our commentary on last quarter's call before beginning to improve in the back half of 2026 as we expect velocity and aging improvements to take hold. New ASPs should also continue to increase at a similar rate year-over-year as we progress through the second quarter.

Within Good Sam, we were pleased by the sequential improvement in gross margin from Q4, which is consistent with our expectations to yield returns on the significant operational investments we've made over the past 18 months. We believe Good Sam margins should show year-over-year improvements through the balance of the year.

Our first quarter adjusted EBITDA of $28 million compares to $31.2 million in the first quarter of 2025. The decline in gross profit was largely mitigated by the $29 million SG&A reduction. We ended the quarter with $200 million of cash on the balance sheet, and our net debt leverage ratio improved to 5.6x compared to 8.1x at the end of the first quarter of 2025. Our cash flows from operating and investing activities improved markedly year-over-year as we remain focused on our inventory turn goals and CapEx restraint.

We also paid down $56 million of debt in the quarter. Our capital deployment framework continues to focus on strengthening the balance sheet while retaining growth capital within the business.

With that, I will turn it back to Matt.

Thanks, Tom. I'll close with this. This is my first full quarter as CEO since stepping into the role at the top of the year. And while we're still in the early innings of the plan we laid out on last quarter's call, I am proud of what our team has accomplished so far. We took share, we pulled down costs, and we strengthened our balance sheet.

Operator, we're now ready to take your questions.

[Operator Instructions] And your first question comes from Bret Jordan from Jefferies.

This is Patrick Buckley on for Bret. On the F&I per unit, it looks like a pretty healthy step up. Can you talk a bit more about the dynamics there and what drove that and maybe the outlook moving forward?

Yes, it has been a really fascinating dynamic where historically speaking, when our average sales price goes up, that F&I penetration typically goes down a little bit. And oftentimes, it's an immaterial amount, maybe 25 to 50 basis points. But we have seen some interesting dynamics recently within the F&I segment. Specifically, we've been tracking the amount of down payment that consumers are coming into the finance office with. And therefore, they also are looking to add on a number of different finance products in the back-end. More specifically, we've recognized a pattern that those consumers that are buying more expensively priced assets, oftentimes in excess of $50,000 average sale price are actually coming down with a higher down payment than we've seen historically, whereas those consumers that are buying lower-priced assets, oftentimes under, say, $25,000, they're actually coming to the finance office with a little bit lower down payment amount.

In either cohort, though, we're still seeing a higher product attachment. That is all the Good Sam affinity products that we offer, be it roadside assistance, extended service plans, tire wheel protection, et cetera. So largely, our inventory strategy has been derived from these trends that we've been seeing not only over the last few months, but even leading into this year, that there's clearly this K-shaped economy that's forming here. And those customers that are oftentimes buying those higher average sale price assets do have a willingness not only with more money that they're coming to the finance office, but also to protect their asset and becoming a part of our whole Good Sam affinity network.

Got it. That's helpful. And then on the recent used value trends, a bit of a decrease in ASPs. I guess is there anything notable driving that? And a bit of a follow-up there. We have seen some headlines on negative equity value in light vehicles and cars. Are you seeing any trends like that in your customers?

We've spoken extensively over our last few earnings calls about just the negative equity position that a lot of consumers have found themselves in coming out of that pandemic period in particular. We're not seeing that negative equity trend being amplified similar to what I saw in that same article you probably read within the automotive industry. Rather, we're seeing more of a corrective self-healing environment in this industry, where we've been in this environment for the last going on 5 years now, where you've seen declining demand on the new RV sales side, which I believe is a high corollary to what that negative equity position has been historically.

So when I think of just that ASP coming down, it was kind of an immaterial amount. And we're keeping a watchful eye on that. But I wouldn't put too much stock in Q1, which I would oftentimes regard as a very volatile quarter, where we know about 20% of our volume in terms of new and used unit sales oftentimes comes out of Q1. Really, it's in the meat of the selling season where I think you can more effectively assess what the trends are going to be. And we're seeing it in Q2, Q3, there is a stabilization here compared to what we had projected for the year. We believe that we're still on pace for our used ASPs to land in that $31,500 range, give or take. And we believe that there should be stabilization here as we look into out years.

And your next question comes from James Hardiman from Citigroup.

Congrats on a strong quarter given a lot of moving pieces, a lot of curveballs thrown at you guys. And I guess maybe along those lines, obviously, rough weather to start the year. And then just as the weather seems to be getting a little bit better, war started in the Middle East. So maybe walk us through some of what you saw over the course of the quarter and beyond to help us discern the weather impact from the Middle East impact and how you're thinking about that going forward? Were it not for the Middle East situation, do you think you'd be raising today? Just trying to understand sort of the moving parts there.

James, thanks for the question. This really was quite a textured quarter, and I wish it was a lot smoother and a lot clear to be able to explain. But I can tell you, we entered the year firing on all cylinders. We had a great show season. And actually, our success at show seasons prevailed throughout the entirety of the quarter, which really manifested itself in, I believe, our outperformance on the new RV sales side, regardless of whatever the backdrop was that we were confronted with. But you are correct that when we had to shut down in excess of 60 of our stores for at least a day between January and February, that was clearly the biggest disruption that we saw.

In our last earnings call, we spoke about we think that we missed out on about 1,500 unit sales. And coincidence or not, we were actually off on same-store unit sales about 1,700 units. So perhaps that was the biggest driving factor. And as we transition into March, in particular, that was also kind of a choppy month, where we had a couple of weeks stretch where we did very well in particular. And then we had a couple of week stretch where we were just kind of scratching our head and so why were we off a little bit?

So either way, though, we saw a lot more stabilization as we started to exit March and enter into April, where things started to come into clear focus and picture as to what we believe we could experience throughout the balance of Q2 in particular. And we took a lot of thoughts in the fact that we ended March strong. We're now trending throughout April. And obviously, today, we're closing a lot of deals, and we're looking to wrap up the month of April, but we are trending to be positive on a same-store basis, new and used combined. Used obviously trending up high single digits year-over-year on a same-store basis, new about flat to slightly down, which we believe is still an outperformance of what we're seeing. More to come here, though, as this year progresses. But to start the year, we believe that we weathered a very volatile environment exceedingly well.

That's really helpful. And then the headline here is obviously that you guys are reiterating the $275 million to $325 million. Obviously, it's never quite that easy, but nothing changed. I think you guys called out new RV from an industry perspective, maybe at the lower end of the previous range, used in line. But maybe within the context of the full year EBITDA guidance, any other puts and takes we should be thinking about, whether it's ASPs or margin within that broader context?

I think the numbers that we previously provided for our full year outlook of ASPs and margin in particular, really hold true still, where we did have a bit of an outperformance even based upon our expectation of some margin on the used side. And that's largely attributable to the fact, as I said previously, that Q1 is a volatile quarter, and it's not necessarily going to be the principal driver of the overall annualized results. But as we think through the balance of the year, we know that we can control much more of our SG&A structure. And that's where you saw as evidenced by our Q1 results that we were very focused on ensuring that we are optimizing every component of this business, and we're going to remain focused on all of the SG&A opportunities that still exist out there. We're providing updates as we complete different objectives as opposed to projecting what we think we will get done. And we'll continue to over the ensuing quarters ensure that we're hitting our goals in this guidance range with the things that we can control.

And your next question comes from Joe Altobello from Raymond James.

A few questions on the inventory initiatives. You've talked about taking turns on new and used up by roughly, I think, half a turn or so by the end of this year. Is that still your target? Is the bulk of that going to be done by the end of the second quarter ahead of the model year changeover? Or do you think some of that spills over into the second half? And is the hit on that EBITDA still around $35 million?

We believe that you should be looking at those turnover goals on an annualized basis, in particular, because how we calculate that for purposes of just the markets in particular, is looking at a quarterly snapshot of any inventory balances as compared to a trailing 12-month total COGS amount attributable to that inventory. So as such, the annualized turnover number takes a little bit of time to actually percolate throughout the entire system. So we will make very good progress, we believe, throughout the balance of Q2 in terms of rationalization of inventory that we'd like to continue to push through. And that's going to be aged multiyear new 2025 units, which, by the way, we reduced those 50% from the last time we even spoke with you. Never mind when you look at year-over-year. So we've made really good progress on the new side of derisking that in particular.

On the used side, just as well, we didn't quite sell as much volume as we wanted to in Q1. So we know in Q2, this is our greatest opportunity where demand just seasonally adjusts and seasonally becomes a bigger opportunity for us to continue to push assets through the system. We would anticipate that our Q2 ending inventory balance on used will actually probably be close to down if we had to project out. And as we look through the balance of the year, that's where we're being very diligent about replenishment as well as ensuring that we have this nice balance of good fresh product coming in with margin augmentation while continue to push out some assets that are a little bit aged at this moment. So when we think of these actual annualized turnover goals, I look more so over the total balance of the year as opposed to trying to break it down quarter-by-quarter.

Okay. So it will be gradual. Is that kind of what you're saying? Okay. And then the second question on the Costco partnership. Curious how that's going and maybe what we could see from an EBITDA contribution. So I believe that's not in your guidance at this point.

It's not. And admittedly, this is a partnership that both parties want to ensure it's executed flawlessly. So we've started out a little bit slower in that relationship than we would have preferred. We sprung it up really fast, and we've been working diligently with the Costco auto buying program to ensure that we just have the best experience for these Costco consumers.

So while we were just a little bit unhappy with how certain lead flows were going, the general pricing logic, we actually took a little bit of a pause for a moment. And we've been working with them over the last 6 weeks now to actually recreate the entire online product listings pages, product detail pages. We came up with a whole new pricing algorithm. So we'll start to see the fruits of that labor, we believe, beginning in May, when that's when we'll have our first warehouse roadshow begin.

And this actually coalesces very nicely with seasonally the opportunities that we see. May oftentimes is going to be the largest unit volume month for the industry and for us as a company. And June oftentimes represents the highest revenue month as a company and as an industry. So this will be the best opportunity for us to have gone through this exercise, ensure that we are flawlessly executing this and really more to come here. We're hopeful over the next 3 months when we speak with you that we'll have really good feedback to provide back.

And your next question comes from Tristan Thomas-Martin from BMO Capital Markets.

So early in the year, we were hearing quite a bit about kind of like the pre-COVID cohort coming back and trading in. So I'm curious if you could maybe -- one, is that true? Can you quantify it? And maybe how did that trend over the course of the quarter?

In the early phase of this year, Tristan, we've not yet seen a material increase in trade-in percentages yet. We have recognized though that those consumers that had bought in that 2018 to 2021 time period are starting to come back in. And that's just evidenced by us looking at the general average model year of assets that are coming back into inventory right now. So we do believe that there has been some self-healing of these consumers that were confronted with negative equity. But as we said in the last call, we would anticipate by the end of this year to be in the early innings of what we think will be a trade-in cycle that will continue to materialize with greater frequency and really magnitude over the ensuing 3 to 5 years, where at that point, beginning in '27, '28, the industry should start to see the benefit of a double stack effect.

And what that means is, those consumers that were buying in 2020, '21, '22 that have just been sitting on the sidelines here for a little bit longer than we historically had anticipated, but they'll also be augmented by those same consumers that benefited from the deflation that existed in the RV industry in 2024. So in other words, you'll have a 2020 and the '21 cohort as well as the '24 cohort, all coming back into the marketplace all around the same time period. And this is now where we believe it's more of a theoretical debate of the industry has never quite seen this before. So how big is that order of magnitude, don't quite know yet, but we'll continue to provide you more insights as we have them readily available.

Okay. Awesome. And then just given all the talk around kind of raw material inflation, how are you thinking about model year '27 pricing, both like-for-like and then kind of your mix?

So we, obviously, in 2026, have seen roughly a 5% to 7% increase compared to model year '25. We've been working diligently with our manufacturing partners to ensure that we are focused on affordability. That has been a problem that has plagued this industry off and on over the last 5 years. We've already started to receive some model year 2027 motorized units, and we're pleased to report as of this moment, we're only seeing about a 1% to 2% price increase, which we believe is roughly in line with what consumers can handle based upon inflation. And we all know, ideally, these prices be relatively stabilized as opposed to seeing any sort of inflation or deflation. Towables are starting to -- or will be hitting lock over the next, I'd say, 1.5 months to 2 months here.

So we'll have a clearer view as to what those price increases could or will be. Based upon conversations, they could be anywhere from 1% to 3%. We're hopeful that there'll be different opportunities for us to work with our manufacturing partners and supplier partners just to ensure that we are keeping as many consumers in this industry and actually attracting that many more customers back into this industry.

Your next question comes from Scott Stember from ROTH Capital Markets.

Can we talk about the products and parts and service side? I know the narrative over the last year, 1.5 years has been prioritizing used reconditioning work over some of the more like warranty and customer pay work just because of what's available from a service day perspective. Is there any change to that narrative going forward, particularly as the wear and tear cycle on these multiple millions of RVs that have been sold since the pandemic starts to kick in over the next year?

So the narrative still remains relatively the same, given that our focus on used, in particular, is going to drive a lot of the service needs. And as you know, Scott, when we actually recondition that asset, that service revenue gross profit actually moves to that used asset in so much as you're actually improving the value of that asset. So that has worked against us in terms of looking at the parts, service and other category.

But I can tell you in terms of our actual parts component of that segment, we've seen a nice improvement in customers coming back in and looking for those replacement components. But what we need to do is do a better job as a company is continue to ensure that those customers are not only buying that part from us, but they're also leveraging our service capacity. And we need to get a little bit better here as we move through the balance of this year, but really with a focus on the back half of this year into next year to ensure that we're growing more external service work more effectively.

This entire industry has had a capacity issue, inefficient supply chain issue. And we believe we've been working on a lot of creative methodologies and tools to ensure that we do a much better job in the ensuing quarters, but more importantly, years.

Got it. And then last question on the balance sheet, nice improvement on the leverage ratio. It looks like cash flow in the first quarter was up nicely over last year. Can you give us some expectations where you would expect maybe free cash flow to find its way by the end of the year as well as the leverage ratio?

Sure, Scott. As we think about -- I mean, free cash flow for our company, I mean, if you take our guidance range and you back out our term loan interest and our real estate interest, maybe $10 million to $15 million of cash taxes. Our goal this year in terms of net CapEx is to be south of $100 million for the year when you back out sale leasebacks that we're executing on projects that were previously completed. So that's kind of how we're thinking about managing and tightening the CapEx line as we move through the balance of the year.

And your next question comes from Andrew Didora from Bank of America.

Matt, I just kind of wanted to dig in maybe a little bit more on SG&A. You clearly got off on the right foot here to start the year. The way we look at it, it has been running just over $1.5 billion for each of the past 5 years or so, I guess, when we exclude stock comp. Do you think you can flex below that? Or can you maybe give us a little bit more insight into how you think about the opportunity within that line item?

I'm not going to give a specific range yet. And I'd rather we continue down the path that we're on right now, where we are very focused on implementing a variety of different processes, tools and rationalization methods to ensure that we maintain this pace that we're on today and continue to provide feedback. I could tell you as a proof point, over the last few months, we've been heavily invested in researching all different opportunities that exist with AI. We've set up a lot of different teams separately to figure out different ways to optimize different SaaS environments or software environments and also to eliminate unnecessary consulting contracts that exist out there.

As just one proof point, you heard in my prepared remarks that we spoke about how we created our own bespoke CRM for just one specific business line of just our extended service plan business. And using that as just one proof point in particular, we had originally budgeted for this year $800,000 to stand up that specific environment, plus we are anticipating ongoing maintenance associated with that environment of roughly $400,000 to $500,000 a year.

If we were to break that down, that would oftentimes be just a normal environment that we had a third-party tech company come in, help us out with, and every business can speak about the fact that once you bring in this environment, you'll have ongoing support and maintenance costs associated with it. We were able to stand up that entire environment with 3 individuals in particular, taking the product and technical lead, which is really just sweat equity. We were able to then turn it over to the rest of our IT organization to ensure that we are fully in compliance, fully safe and secure, and we're able to stand up our infrastructure team to actually execute all of that in 26 days.

And we believe that on an ongoing basis, it will require the time of maybe 1/4 of the time of one FTE to maintain that environment. And then it just naturally gets inbuilt in our overall infrastructure and security environment as well. So when you think of just that as one specific proof point that we needed to prove to ourselves that we could start to scale up this environment faster and faster, we see a lot of opportunity, specifically within the IT spend.

Got it. That's some helpful color. And maybe just for my second question, I was going to ask the CapEx question this year, but I guess kind of how should we think about that maybe over the next 3 years once you exclude any SLBs that you do?

And I guess on that note, how can you improve maybe your EBITDA to free cash flow conversion over time?

I think, as we look forward, I mean, for this year, obviously, I mentioned south of $100 million is the goal for this year. There are some onetime projects in there or what we believe are onetime projects in there for some new builds and some larger construction items. We haven't typically published a maintenance CapEx range in the past, but I think there is room in there to get that closer to the $75 million range from a maintenance perspective. And then as we continue to grow our footprint or see other opportunities to move facilities or if we have needs on the real estate side to move facilities, that's where you see us historically have to flex and maybe purchase some real estate. And then in a subsequent year, sell that real estate to a REIT as we kind of move in and out of facilities.

So that's where historically, you've seen the number move a little bit year-to-year, and that may be the case going forward. So I don't want to peg it to an exact number, but that's sort of the range for maintenance and also what we're looking at for this year as a goal.

And your next question comes from Noah Zatzkin from KeyBanc Capital Markets.

I guess just on the kind of March and April commentary, it would appear that your comments kind of point to meaningful share gains versus at least what we're hearing from others out there in terms of how the industry kind of trended in March and April. So I guess, first, is your sense that, that's the right way to think about it? And if it is, what do you think has kind of led to the share gain acceleration?

No, as you know, by the way, we'll have some more Stat Survey Information over the next week that will provide us insights into March's retail activity. And that's where we largely rely upon that as the independent third party to provide us actual insights based other than just speculative behavior within the industry or even us speculating on it. But we do believe, based upon January and February's results that we have had a significant outperformance. And I believe that's attributable to our replenishment and our inventory strategy associated with our exclusive brands.

And even as we look at our specific exclusive travel trailer brands in the month of April, we're trending to be up in excess of 20% on just our exclusive travel trailer brands year-over-year, which was a relatively difficult comp for that same lineup of brands. So when I juxtapose that against traditionally OEM brands that exist out there, we're not performing quite as well with those OEM brands. So I think of how creative our team has been of not only continuing to work with manufacturers and suppliers to ensure that we have very creative floor plans, but most importantly, we're hitting the affordability curve of consumers in this industry, and we're attracting greater consumers into the industry. We believe we've been best-in-class at least our exclusive brand strategy, especially over the last 2 to 3 years.

And maybe just one on the industry. Any sense for kind of industry inventory levels right now? Anything in terms of what you're seeing on promo from others? Just kind of a state of what you're seeing out there would be helpful.

I wish we had better insights into what the actual rolling stock of inventory was in the entire industry. It's almost impossible for us to calculate. We've tried in a variety of different ways. But given the very nature that there are wholesalers that exist in the industry, and there's a lot of rental units that are sold, sometimes [ FEMA ] has a contract with different dealers and those don't necessarily get registered as cleanly. It has been really difficult for us to zero-in on what actual rolling stock inventory is. But based upon just us working with different competitors, knowing different competitors, it does appear that there is quite a promotional environment that exists out there, which is why we try to be pragmatic about our approach to inventory and to pricing for the year and be very realistic about what the margin profile could look like for the balance of the year.

And your last question comes from Alice Wycklendt from Baird.

Matt, I think you touched on it a little bit in your comments on F&I with kind of the consumer down payments. But maybe I wanted to step back big picture and hear maybe what you're seeing in the credit environment more broadly from a consumer financing perspective.

I'll handle a portion of the question, and then I'll turn it to Brett Andress as well to speak more intelligently about our relationship with the lenders that we have. But as of right now, we've not seen any sort of different behaviors in terms of like credit profile or approval rates. We have been working very effectively with our lenders to ensure that we're doing our best to maintain current rate, if not driving them down. But in terms of the overall creditworthiness of our customers, we feel really good with what we're seeing right now.

Yes, Alice, I would say from a consumer lending pricing standpoint over the last couple of months, we have actually seen rates start to drift down at a rather increasing rate actually over the last couple of weeks. So with all the rate vol out there, I think that has been encouraging to us as we go into the season. Hopefully, some of that vol starts to probably ease itself, and we can find some additional cuts as we go through the season, but it has been more favorable over the last couple of weeks from a pricing standpoint.

Great. That's helpful. And then maybe just a little bit of housekeeping question. I mean your location is down 10 year-over-year, but up, I think, 3 sequentially. How should we think about your plans for the number of locations over the next 3 quarters or so?

Actually, last month, we did close on an acquisition, tiny little M&A in Indiana, which fit through the very disciplined framework that we spoke about on the last call, where we were able to acquire the store for a little goodwill. It's in a very favorable market with good brands where we have low market share. And we were fortunate in so much of being able to pick this up and just fill out our map. We'll continue to be diligent about looking at different M&A opportunities, but we also want to be very disciplined about how we're approaching them as opposed to we could, in many situations, just buy brands off of dealerships that want to get out of the industry or just want to unwind whatever they're working on within their localized market. And this is frequently as we get opportunities to buy a dealership, we're able to turn that back around then and say, do we really want to acquire the fixed costs associated with that dealership? Or do we really just want the brands and consolidate the marketplace.

And we've taken that latter position in quite a few environments where we were able to work with, I believe, 3 dealerships now year-to-date. We're able to acquire either all the brands or some of the brands off their lot. So what we're going to end up with for the year, tough to say. We're going to be opportunistic and continue to look through the framework of does it make sense for us from a goodwill perspective? It's going to be highly accretive. Are we able to get in there for a low rent factor if we could acquire the real estate for a reduced amount? And do we have low market share there.

And there are no further questions at this time. Mr. Matthew Wagner, you may proceed.

Thank you for everyone's time this morning. We're quite pleased with our results in Q1. We still know we have much more work to do, and we look forward to speaking with you all again in the next 3 months.

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for your participation, and you may now disconnect. Have a great day.

Good morning, and welcome to the Camping World Holdings conference call to discuss financial results for the fourth quarter and year ended December 31, 2025. [Operator Instructions] Please be advised that this call is being recorded, and the reproduction of this call in whole or in part is not permitted without the written authorization from the company.

Joining on the call today are Matthew Wagner, Chief Executive Officer and President; Tom Kirn, Chief Financial Officer; Lindsey Christen, Chief Administrative and Legal Officer; and Brett Andress, Senior Vice President, Investor Relations.

I will now turn the call over to Ms. Christen to get us started.

Thank you, and good morning, everyone. A press release covering the company's fourth quarter and year ended December 31, 2025, financial results was issued yesterday afternoon, 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 macroeconomic industry and customer trends, business plans and goals, future reductions in SG&A, future growth of operations, future deleveraging activities, inventory management objectives, investments in customer experience, future capital allocation and future 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-Qs and other reports on file with the SEC. Any forward-looking statements 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 2025 fourth quarter and full year results are made against the 2024 fourth quarter and full year results, unless otherwise noted.

I'll now turn the call over to Matt.

Thank you, Lindsey. Good morning, and thank you for joining our full year 2025 earnings call. I am proud to report that our team made significant progress in 2025. We achieved full year adjusted EBITDA growth of over 35%. Our same-store unit sales improved over 14%. Good Sam generated record revenue and the parts, service and other category experienced a strong improvement in gross margins. This performance demonstrates the strength of our model and the hard work of our team.

In the fourth quarter, we saw encouraging signs of momentum with same-store sales volume for new and used vehicles increasing by 4% and our combined market share holding firm at 13%. Our 2025 results provide a solid foundation, and we have only just begun to realize our full potential. Since assuming this position, I've spent considerable time with our teams, our customers and many of you in the investor community. My message has been simple. We are focused on disciplined execution to drive greater profitability.

To that point, the first half of January started strong with short-term trends indicating positive new and used same-store sales. Towards the end of January, weather across the country forced the temporary closure of over 60 of our locations for at least 1 day. This widespread weather disruption, which persisted through the first week of February, resulted in a year-to-date estimated miss of about 1,500 new and used unit sales or about $13.5 million of gross profit. This weather interruption in combination with broader industry performance, forced us to reassess our sales expectations and broader industry retail and wholesale shipment expectations.

Our execution amid these short-term challenges gives us confidence in our 3 strategic priorities: grow new and used RV sales, create greater SG&A cost efficiency and accelerate Good Sam's growth. Let's start with RV sales.

Our strategy to grow new and used RV sales this year is multifaceted, including the expansion of exclusive RV brands, improved efficiency of used RV procurement, partnerships with organizations like Costco and the acceleration of inventory turnover rates. Looking beyond the immediate term, we see some significant positive industry catalysts on the horizon. We believe the 4.1 million customers who purchased new and used RVs during the 2020 to 2022 peak are approaching a manageable equity position in their vehicle. We anticipate this will create a substantial wave of trade-in demand over the next several years. We are taking decisive action in 2026 to cleanse and optimize our inventory portfolio to prepare us for this trade-in opportunity. By improving our inventory turnover rate, we will increase working capital efficiency with fresher inventory.

To put it even more simply, we will do more with less and position ourselves to generate higher revenue and greater earnings power with less inventory. This will require a strict and at times, aggressive approach to move through certain aged and noncore RV assets. While this strategy is essential to reset our foundation and enhance future cash flows, we expect it will create a near-term negative impact on our gross profit per unit for both new and used vehicles. This proactive strategy is a key driver behind our outlook for the year. During our Q3 call, we set a minimum expectation of $310 million in adjusted earnings for 2026. Given our decision to accelerate the cleansing of our inventory, we believe this strategy could negatively impact EBITDA by about $35 million in 2026, particularly in the front half of the year.

This leads me to our second priority, optimizing SG&A. In the last couple of months, we have completed about $25 million of annualized expense reductions. A large portion of these savings are expected to offset some of the gross margin impact from the acceleration of our inventory turnover. We will continue to pursue systems and processes to further centralize our business and remove costs to ensure we hit our targets.

Now let me turn to our final priority, accelerating the growth of Good Sam. For nearly 60 years, Good Sam has been the bedrock of the RV community dedicated to protecting, enabling and empowering the adventures of every RV enthusiast. For our company, Good Sam is the cornerstone of our future growth, driving high margins and best-in-class customer service. We are confident in our ability to execute upon all of these management objectives in 2026. Last evening, we established an adjusted EBITDA range of $275 million to $325 million for the full year 2026. This range encompasses the high and low end of expected industry retail sales, plus it includes the expected impact of inventory corrections and cost savings to prepare this business for the next trading cycle.

Lastly, as a Board, we changed our capital allocation strategy to prioritize the long-term health of the balance sheet. As such, we've elected to pause the dividend and retain operating free cash flow to reduce the net debt leverage and keep growth capital within the business.

With that, I'll turn the call over to Tom to discuss the financial results in more detail.

Thanks, Matt. For the fourth quarter, we recorded revenue of $1.2 billion, driven by a 14% increase in used unit volumes, partially offset by a 7% decline in new unit volumes. New ASPs improved from the trends we experienced earlier in the year and were only down slightly compared to the fourth quarter of 2024 as we expected. Vehicle gross margins and GPUs were primarily impacted by the strategic clearing of aged inventory beginning in December. We expect this margin pressure to persist during the first half of 2026.

Within Good Sam, the business continued to post positive top line momentum with services and plans revenue increasing by about 3% in the quarter. The organization remains positioned for margin improvement in 2026 as we expect to begin to yield returns on several of the significant investments we've made over the last 12 to 18 months. Our Q4 adjusted EBITDA loss of $26.2 million compares to a loss of $2.5 million in Q4 of 2024.

As we think about the drivers of the delta in our fourth quarter results versus our own expectations, the largest was the December hit to vehicle margins as we accelerated the cleansing of our inventory, along with dealer insurance product cancellation reserves. Our 2026 guidance calls for adjusted EBITDA in the range of $275 million to $325 million, with just over 50% of the annual adjusted EBITDA expected to occur in the first half of the year.

Lastly, our liquidity position is solid, ending the quarter with $215 million of cash on the balance sheet. In an effort to further fortify the balance sheet, the Board of Directors made the decision to pause the company's quarterly dividend. Our Up-C structure was designed to require distributions out of the operating company to cover the taxes of our members including CWH. This historically generated excess cash trapped at the public company, which was the primary source of cash for the dividend. We've reached a point where this pool of trapped cash has been returned to shareholders. And while we could choose to fund the dividend out of incremental distributions from operations, we've elected instead to focus in the near term on net debt deleverage and dry powder for growth. As a step toward improving our net debt leverage, we have already repaid an additional $50 million of long-term debt to date so far in 2026.

I'll turn the call back over to Matt.

Thanks, Tom. Before we flip to Q&A, I want to leave you with one final thought. This business is ultimately about bonding people with each other and the outdoors [indiscernible] as a next steward of this company, my goal is to become the most trusted RV company in the world by providing exceptional customer service and experiences. It is through this lens that I intend to lead this company through our next phase of growth with the goal of returning meaningful value to our shareholders.

We'll now turn the call over to Q&A.

[Operator Instructions] Our first question comes from Craig Kennison of Baird.

Matt, you mentioned perhaps 1,500 units that were lost as a result of weather. In your experience, would you expect to get these units back as the season unfolds? Or do you think they're truly lost?

Craig, that's a debate that we constantly have internally. And the brutal reality is that a large portion of those are oftentimes just lost, and then it just gets caught into the jet stream of whatever the annualized outcomes are. But whenever you have an instance like this, it just forces you to change the calculus of what the short-term versus long-term projections are of the business. And that was a painful what you could argue is almost about a 17-day stretch of just weather impacts that were sprawling across the Atlantic region all the way over to the Midwest down to Texas and back over to Florida, which when you think of the whole quadrant of the country, that's where we have a pretty tremendous density of dealerships.

And if customers, for whatever reason, just didn't choose to buy within that period, we do hope that some of them will come back in March. But we certainly aren't banking on that, and we're doing everything within our power to continue to solicit more customers to come back in to at least make up for whatever the shortfall was.

Yes. And sort of as a follow-up, there has been this expectation that tax refund season might provide a lift to the RV demand curve this year. I'm wondering if -- I know it's early, but in the last couple of weeks, if you've seen any improvement in demand that you could tie to that dynamic?

Craig, I think it's still a little too early. I mean we're looking at the same things, obviously, looking at some of the reports you've been putting out weekly just as well, keeping a watchful eye on what these tax refunds are. We anticipate -- if we did see any sort of improvement, it'd be probably over the next couple of weeks, where we anticipate a number of refunds starting to hit the end of February and then starting to accelerate throughout March. So I believe more to come there. We think in certain cohorts of consumers that could yield a significant benefit for us.

I can tell you right now, we've been performing very well in certain categories like new fifth wheels and new entry-level motorized, but there is some softness admittedly on new travel trailer sales and used travel trailer sales remarkably. So when we think of the potential benefits of that refund, I think that would enable more of these potential travel trailer consumers to come back into the market, which would then make up for some of that gap that exists today.

Our next question comes from Joe Altobello of Raymond James.

Matt, just -- you started to do a little bit of this, but maybe if you could bridge the gap between the low end of your EBITDA guidance of $275 million with the prior floor of $310 million. I mean, obviously, inventory cleansing is the biggest part of that, and then you've had weather, but you also have cost savings and the Costco relationship, I think, is incremental as well. So maybe kind of walk us through those steps, if you could.

Yes. Very fair question, Joe. So I'll keep it as simple as possible. When we went through that $310 million base case on our Q3 call, there was a number of elements that were contemplated there. Since that time, what has transpired is we removed about $25 million of annualized SG&A savings for our business. So take that $310 million number and now go up to $335 million of potential upside. But we also realized over the last 45 days is we need to start to improve our inventory turnover rate to prepare for what will be this trade-in cycle, but also just to operate in a healthier environment. When we ended the year with about a 1.7 turn on new inventory, that wasn't satisfactory for us for a number of different reasons.

Historically, we like to operate at about a 2.2 to 2.4 turn. And on the used side, it wasn't satisfactory for us then with about a 3.1 turn. We like to operate typically at about a 3.4 to 3.5 turn. There's a variety of different reasons why you want to accelerate turnover. But as a dealership business, generally, your inventory is your greatest risk, but also your greatest opportunity for growth.

So when explaining this turnover number, I've oftentimes spoken about how inventory is like an ice cube sitting on your lot. With every day that it sits, you have different profitability as well as cost of mass and your profitability starts to melt with each day that passes and it starts to evaporate. So we know we need to accelerate that inventory turnover. And as such, that's where you start to take what is that $335 million EBITDA number and you start to reduce that back down to $300 million because we believe that there could be about a $35 million EBITDA hit by means of accelerating that inventory turnover.

This is the right thing for the business over the long term, especially in preparation for what will be this trade-in cycle. You're correct, though, Joe, that we haven't contemplated what truly the upside will be of Costco. If we end up selling upwards of 3,000, 4,000 or 5,000 more units as a result of the Costco relationship, that would push more towards the outer end. But using that $300 million as a base case, I would say really the biggest input for the downside case of $275 million versus the upside of $325 million is simply going to be how the new and used industry trends in terms of retail sales.

And we're factoring in right now that our retail expectations for the new side of the business in the industry will be about 325,000 annualized sales to maybe upwards of 350,000. And on the used side of the business, we believe that the used retail environment could yield maybe anywhere from 715,000 used sales to upwards of 750,000 which there's a wide range of outcomes in there, which is why like we're in such a business where the average sale price on new assets is going to be about $40,000. If there's a 3,000 or 4,000 unit difference from the high side to low side, that represents pretty material differences in the earnings expectations.

Very helpful. I appreciate that. Maybe to follow up on the balance sheet. I think you're at 5.7x leverage. Could you kind of walk us through where you see that number going by the end of this year and maybe by the end of '27?

Yes. Sure, Joe. I think our -- this is Tom. Our goal for this year is to get as far below 4.7 as possible. So that's ultimately our goal for this year and then to set us up to try to get below 4 in 2027 as we continue to improve earnings.

Our next question comes from James Hardiman of Citi.

So I was hoping we could dig a little bit deeper into sort of the inventory cleansing that seems to be the focal point of a lot of what we're talking about here. I guess, a, when did we get to a place where sort of the trajectory was just a turnover level that now feels like it's unacceptable. I think a lot of the commentary in previous quarters was that we were in a pretty good inventory place. And then how does it play out over the course of the year? I think there were some -- I think the expectation is first half headwind, maybe a tailwind or at least less of a headwind in the second half. But maybe walk us through some of the puts and takes. I'm assuming that ordering activity is going to come down pretty meaningfully and that gross margins are going to be negatively impacted as we maybe get a little bit more promotional to clear out some of those units. I didn't know if there's an SG&A impact to all of that, but maybe walk us through some of the moving pieces there.

James, fair questions all around. Really, the simplest way to even answer your first question is this is my inventory philosophy of simply hitting those elevated inventory turnover rates because inventory turnover really is important for 3 specific reasons. Number one, there's carrying costs associated with inventory. Every single day that it sits on our lot, you ultimately are hit with floor plan carrying costs. Number two, all these inventory assets are depreciable assets. With every day that it sits on our lot, you're going to lose more and more value. And number three, if you're locking up these assets on your lot, you're ultimately losing some opportunities elsewhere.

So for example, we'd rather have a travel trailer that we're going to sell 6 times a year for a $2,000 profit versus having a travel trailer that we're only going to sell twice a year for a $5,000 profit. We know that we can redeploy that capital over and over again. And that truly starts to quantify bottom line improvement. So for example, our turnover rate to end 2025 on the new side was about 1.7. If we're to improve that to about 1.8, that's an additional $7 million of straight gross profit. We believe that we should be operating on the new side with a turnover rate somewhere in that range of 2.2 to 2.4. And by the way, that's just historically being healthier there.

So when you think about just philosophically how we'd like to operate moving forward and then also in connection with the reality that there is a massive opportunity that we believe will start to brew in the back half of this year in terms of trade-ins. And we do believe that this will be a longer tail that will continue to materialize with greater and greater magnitude over the ensuing years. We wanted to make sure that we set ourselves up. And most of this impact to selling through the inventory on both the new and used side would be in the front half of the year. And there's some possibility that it could bleed a little bit more into Q3 because we have to be relatively judicious in terms of our approach into how fast we want to sell through those assets.

But we wanted to reset the stage to say, okay, if we want to cleanse our inventory, which you could argue, it's still relatively healthy. We'll still make good margins. We're just not going to make margins to the same extent that we wanted. So I would expect that our margins for the collective 2026 could maybe be down year-over-year like 120 basis points to maybe upwards of 130 basis points on the new and used side combined over the course of the year because of the pressure on the front half of the year.

Got it. That's helpful. And then to this point about the better equity position for consumers. I just want to be clear here. It seems like in the context of the guidance, we're factoring in the costs associated to being in a better place to take advantage of that, but it doesn't seem like we're necessarily factoring in that positive inflection that it seems like you anticipate starting in the second half of the year. Just want to make sure that's the right way to think about this.

No, I would argue that we are factoring in what will be that improvement in the second half of the year in terms of the volume opportunity, which is why you can make a case that the front half of the year just based upon perhaps just like limited replenishment in certain categories of certain orders, which you alluded to, that is a distinct possibility. You're going to see more dealerships inclusive of ourselves re-up in anticipation of a model year '27 changeover, in which case, I think we set ourselves up very nicely to take advantage of an uptick in general demand and trade-ins in the back half of the year.

Okay. But maybe the disconnect, I mean, as we think about sort of your assumption for industry retail, does that factor in that positive inflection? Or is that more you think maybe specific to you guys rather than the broader industry?

James, it's Brett. So when you think about how we're factoring in that trade-in cycle this year into those retail outlooks, it's fairly minimal. I mean the way we see this trade cycle playing out is pretty long duration. I mean we're talking very, very early innings at the end of 2026 potentially, building itself into '27 going all the way out to 2030 when you think about having to replace 3 years of RVs that normally are on a 3- to 5-year trade-in cycle that essentially got elongated by at least 3 years based on what we see from those cohorts. So minimal expectations as we think about '26 because it's much more of a longer tail event for the industry.

Our next question comes from Scott Stember of ROTH Capital.

This is Jack Weisenberger on for Scott. Just moving into the parts and services segment. I mean, we have seen a decline in '25 compared to used sales rising. I assume you attribute that to prioritizing the space for used reconditioning. But is there any way you could give some detail kind of on that underlying business there?

Jack, you broke up for a moment there, but I think I captured the general essence of your question. Yes, last year, we generally were impacted in terms of reallocation of our internal work, so that necessarily was a detriment to the overall external service work in PS&O category. Heading into this year, though, this is one of our focal points, which we internally have been working through diligently, and we don't speak about it too much extensively in a public setting. But we know we have a lot of work to do to expand our service capabilities and our service network. Yes, we have more days and more service technicians than any other entity within this industry. But we do believe we're not getting as much in the external space as we should.

So for this upcoming year, we have focused pretty extensively on our tech training, which is really the people component of the business. Within the process side of the business, we're launching a service CRM here, which will be live over the next 60 days, which we've been focused on for the last 60 days. So this has been a sprint for us to try to stand up a proper CRM. And then finally, what we're also working on with manufacturing partners, especially Thor, is creating a more streamlined parts process for reordering and reducing the repair event cycle time for consumers. That last component is perhaps the most important. So I can tell you that is a pain point in our industry of just that repair event cycle time and how long it takes to get parts to actually satisfy consumer needs.

So we'll continue to keep the group posted. I know, in particular, you, Jack and Scott have maintained a focus on this category. So we'll do a better job out speaking about this publicly. But we're quite excited about the opportunity there. And then while it's not going to be huge revenue, we do believe it's really good gross profit because the margins within our service business are oftentimes going to be pushing upwards of about 60% in service, whereas collectively in that parts, service and other, it's going to be a little bit less than that.

Great. And then kind of focusing on pausing the dividend and M&A. So just kind of what are you seeing in the M&A environment going into 2026? And does kind of pausing the dividend allow you to look any more aggressively for deals? Or does it kind of get put in the back seat kind of ahead of leverage?

Yes, Jack, it's Brett. So as we think about the M&A environment today and the pipeline we're seeing, it continues to lean more on the, I'd say, the stress side, if you look at the assets available and coming to market. We are continuing to be extremely prudent, extremely disciplined when we think about deploying any incremental capital towards M&A. We do have one that we have currently signed up that we plan to close in March that fits all of the criteria when we think about having a low rent factor, having a manageable small goodwill bite-size number and having incremental brands to add to the portfolio. But outside of that, I would say our criteria is very, very tight. And we're going to continue to allocate and deploy that capital much more towards that repayment. But we will always be in the market for it.

Our next question comes from Noah Zatzkin of KeyBanc Capital Markets.

I guess maybe just to kind of follow up on kind of improving inventory turnover. Is the decision there really driven by kind of aged mix or optimization of kind of unit type? Just trying to kind of understand like maybe the puts and takes to kind of repositioning the inventory here.

Yes. optimization, number one, Noah. Flexibility number two. And really the driving factor behind that all is the flexibility is being limited by the fact that we're locked up in some noncore assets that we'd ideally like to redeploy that capital into better turning assets. So as we sit here today, about 18% of our new assets are model year 2025, which inherently those are going to be 1 model year too old. And we're on the shot clock right now where model year '27s are going to be debuted somewhere in that June, July time frame. So we want to position ourselves to be completely out of those assets to take advantage of the opportunity of a newer model year.

Never mind, on the used side, we were relatively aggressive in pursuing expansion of our used inventory investment in the second half of last year. We just want to make certain that we turn through that product as fast as possible. There's a general rule of thumb in operating a dealership. I mean your first loss is your best loss or simply put in another more positive light is your first opportunity to sell something is probably your best opportunity to sell it. So while in the case of used margins, we still think that they'll be healthy in the context of the general like dealership business. We think that there could be a little bit more pressure on used margins more holistically on the front half of the year compared to the back half.

So I wouldn't be surprised if our used blended margin for the entire year ended up in that like 17.5% range, maybe even a little lighter. Whereas on the new side, we'll again be under some pressure on the front half of the year, paving the way very nicely for the back half of the year, where I could see our new blended margin for the entire year being somewhere in that like 12.5% range. So collectively, though, this is all about optimization and flexibility. And some of that flexibility is being hindered by means of just having some noncore assets today.

Got it. That's really helpful. Maybe just one housekeeping question. I think you mentioned kind of thinking about retail in a range of 325,000 to 350,000 units. Is it too simplistic to kind of assign the ends of those ranges to the EBITDA guidance range, meaning like the $275 million would be associated with 325,000 industry units? And then just any other color on the top and the bottom of the range.

No, I think that's a pretty constructive way to look at it. And obviously, there's going to be some weird variables in there in terms of like general SG&A as a percent of growth and then ultimately, is there market share gains, and that's where you get caught in this trick bag. But I think if you were to bracket it just holistically, that's a helpful place to start. And then we're giving you a range where you can then figure out your puts and takes of what is that bull versus bear case. We think that $300 million is a really helpful place to start at the midpoint. And then there's going to be different opportunities that arise throughout the balance of the year. I mean we're sitting here only about 55 days into the year and 55 days into a different management change, where there's a different amount of possibilities and range of outcomes here as we go through the balance of the year.

Our next question comes from Tristan Thomas-Martin of BMO Capital Markets.

When you talk about noncore RV assets, what are you referring to specifically?

So when I think of noncore on the new side, I'm thinking of floor plans that are no longer being built or in the case of like Thor, Thor has consolidated some of their manufacturing businesses from like a Heartland into a Jayco. And some of those older Heartland units, while still a relevant brand, they're no longer in production. And while it's still a good product and while we still will make a margin on it, we can't expect to make that same elevated margin that we would on our fresher product. And when we look at the used side of the business, once a used asset generally hits about 120 to 150 days, there's a high likelihood that unless you sell in that ensuing 30-day time period that it's going to start to hit an age bucket of like 210 to 280 days. We want to avoid that at all costs.

Used especially is one of those categories where you need to move quickly through those assets because every 60 to 90 days, there's going to be some sort of depreciation hit associated with NADA at a minimum. And NADA, unfortunately, is going to be relevant because that's a determining factor of advance rates for financing capabilities.

So to put that in simpler terms, when a customer comes in and they want to buy an asset, it doesn't matter what the fair market value is of that asset, they're going to be limited by that financing advance rate on the front end and back end based upon an NADA valuation. We, as a dealership, have 2 options. We either ask that customer for an increase in their deposits, their down payment to reduce that overall advance or that financing amount. Or number two, you have to cut margins to actually satisfy that. And unfortunately, we're in a period on some of those older assets. We just might have to have a willingness to cut some margin to ensure that, that customer could buy that asset because there's a significant amount of credit available. It's just a matter of consumers having a willingness to actually put the down payment and actually afford that monthly payment.

Okay. And then another question kind of around like this new industry inventory strategy, I'm sorry. How does that impact your ordering with the OEMs? And then also have OEMs kind of handle this change plus the weather and their production schedules?

This is like a [ fishing ] question. We will continue to reorder with manufacturers at the same pace we always have on the best-selling products. What we have gotten into a nice cadence on is actually ordering more frequently, so with greater frequency and with shorter lead times. So in other words, like we'll place orders this week, and we'll be focusing largely on April orders. Whereas historically, there's been time periods where we've had to order out in excess of like 3, 4 months, and we have to project out then the following 3 or 4 months of sales, which is playing a dangerous game of like what are the various outcomes of retail sales activity and what sort of ending inventory balances do you want and need.

So I would argue we're in a really nice pull-through environment as opposed to a push environment where demand is truly being pulled through, and we're having to just modify orders on an as-needed basis based upon short-term trends. So the best-selling brands products will continue to order in mass. And I can tell you, we work extensively with all of our partners at Thor, Forest River, Winnebago, and we make sure that they have as much visibility into our real-time demand so they can also modify whatever sort of parts materials they're ordering up in the verticals.

Our next question comes from Patrick Buckley of Jefferies.

Could you talk a bit about the trends you're seeing in the market?

Hello can you hear me? Our next question comes from Patrick Buckley of Jefferies.

We're having some technical difficulties. We're chatting with the operator right now to try to get you, Patrick Buckley up next to ask another question.

Patrick, could you please speak into the line?

Can you guys hear me out?

Pardon me, it seems there's an issue with your line, if you could dial back in. Our next question comes from Brandon...

Patrick, we're going to dial back in. I know we have queue -- more individual sitting in the queue with Brandon and Jim. So give us one moment, I'll try to get back to you.

Operator. I believe we have the speakers back on the line.

[Technical Difficulty]

This is the operator. I do believe we have the speakers back on the line.

Sorry about that. And Ariel, thanks for reconnecting us. We are available for the next question.

Our next question comes from Brandon Rollé of Loop Capital.

First, just on weather. Obviously, there's been some weather in the Northeast over the past weekend. Any early takes on maybe impacts to lost unit sales or location closures for that area?

So we were largely impacted in particular, across that Atlantic region. So really beginning in Virginia all the way down to Florida. And then if you span it over into that Midwest down to Texas. So almost that entire expansive quadrant, where there are certain areas in the country like, for example, in Arkansas, where kids were home from school for upwards of 2 weeks or in like Nashville, where the power was out for 5 straight days. So there is varying levels of magnitude of impacts, but we have a pretty tremendous amount of density of dealerships within that general quadrant. So it's tough to say, obviously, what sort of true miss sales exist out there versus what the opportunity will be for March. But that's really been our focus, in particular, in the short term is how do we just take back what we feel like we've lost over that prior 17-day time period or so.

Okay. And just on the retail front, obviously, it seems like the RV shows have gone pretty well. But just in the normalized retail environment, can you talk about maybe trends you've seen year-to-date outside of the shows and outside of where weather is impacting demand?

Yes. So it shows we performed very well from a volume perspective at every show that we participated in. However, what's been lost in that is some of the actual gross profit generation has been down year-over-year. So that suggests with the fact that there was just more pressure across the board in certain categories, in particular, on the travel trailer category this year. But more broadly, if we take a step back, if you look at both the new and used segments, travel trailers, in particular, are not performing as well as they were last year. Within the new side of the business, we're doing really well on fifth wheels and entry-level motorized. When I say really well, like new fifth wheels on a same-store basis, we're up in excess of 25% and have been year-to-date in both January and month-to-date in February. And then on the used side of the business, we're performing really well in the context year-over-year in every category.

What's lost in that, though, Brandon, is travel trailers often account for on the new side of the business in excess of 70% of our sales and on the used side of the business in excess of about 60% of our sales. So we, as a company, have still a heavy dependency upon that category. And we're going to be working extensively to try to see what we could do to turn that fortune around that short-term pain to ensure that we're picking up more benefit here as we enter into the selling season. But we feel good with the general demand out there, especially the void of this weather event, where if you look at the front half of January, we did really well, and we are putting up really positive results across the country. And then in certain pockets like out West, like in Arizona, Denver, the Northwest, we've consistently performed well across the board. Mind you, it's been unseasonably warm out there in that general region. And while there are some industries that have suffered like the skiing industry, for example, in Colorado, we've actually benefited from that this entire winter.

Okay. Great. And just one last question on the strength in fifth wheels. It seems like the private label products are really gaining some traction at the shows. And I think a supplier last week had mentioned it seems like demand is trending towards good, maybe not better, best. Is private label fifth wheels really where the demand is centered around right now?

We are seeing our most material improvement within all the exclusive brands that we've launched across the board. So that's where I would argue our fifth wheel improvement is truly idiosyncratic to us. And I would be shocked if the entire industry was seeing the amount of gains that we're seeing year-over-year. So I'd assume that within each of these categories of fifth wheels and entry-level motorized, we're picking up material market share because we just had a more creative strategy heading into this year.

[Operator Instructions] Our next question comes from Jim Chartier of Monness, Crespi, Hardt.

Can you hear me?

Yes.

Okay. So historical used gross margin was in the low 20% range, new kind of 13% to 14%. What are -- what is kind of the new gross margin target for new and used under the kind of the more strict inventory turn targets?

I'd say for this year, Jim, we anticipate over the balance of the entire 2026 year that new margins will probably settle into that like 12.5% range and used margins probably in that 17.5% range. But once we get into a more balanced environment of just redeployment of capital and maintaining just standard steady-state turnover rates, I'd expect that our margins will structurally be higher and we'll get closer to what have been those historical norms. So I would hope that by 2027, if we're seeing improvement in turnover, we feel really good with our deployment of capital and a replenishment of inventory that our new margins should be settling into that like 13% to 13.5% range. And then on the used side, I wouldn't be surprised if we start to settle into that like 18% to maybe pushing upwards of like 18.75% range. But I do believe on the used side that it will be really difficult for us to rationalize sitting in at that 20% margin range because I do believe we'll be giving up opportunities in terms of just raw gross profit generation.

I think I'd argue over time and over a longer tail that used margins settling anywhere from like 18% to 19% is probably a better way to approach it, especially in connection with turnover rates being more elevated than the new side. That's still a much better gross margin return on investment for us on the used side. So we'd rather be aggressive there even if we start to just like tap down some of that new side a little bit more.

And so how does that translate then if used is going to be lower than it was historically by a couple of points, is a 7% EBITDA margin for the business still realistic? Just SG&A to gross target change? How do you kind of get back to a historical operating EBITDA margin?

Yes. I think that it definitely is possible, but this speaks more to just how do we optimize our footprint. You've seen us make a lot of tough decisions over the last year in terms of shutting down locations that were underperforming, making certain that we're eliminating some of the fixed cost structure that exists in this business. And we're less in this cost-cutting mode to get closer to that EBITDA margin and that SG&A as a percent of gross. It's more of this cost optimization mode where we do believe that we'll be able to accelerate our used business that much more and come up with a more predictable GPU model compared to the straight gross margin model, which becomes a lot easier for us to then rationalize what our fixed cost structures are to start to drive that EBITDA margin back up to historical norms and ideally in a mid-cycle hitting that 7%.

And then also on the SG&A side, we know we still have some work to do to get closer to that 80% or better SG&A as a percent of gross. Never mind, get back to some of the levels that we experienced in 2016, 2017, which I think we have a lot more work to get down to that like 72% to 74% SG&A as a percent of gross.

And then just on the new side, where do you think the ASP is going to shake out for the full year?

I could see new ASPs for the full year shaking out at like that like $39,000 to $40,000 range. And on the used side, I could see it being in that like $31,500 range.

This concludes our question-and-answer session. I would like to turn the conference back over to Matthew Wagner for any closing remarks.

Thank you very much for everyone's time this morning. As you can tell, we're very excited for the opportunity that lays before us, but we know we have quite a bit of work to do in the short term to pave the way for a much brighter future. We look forward to speaking with all of you again in another couple of months.

This conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Camping World Holdings conference call to discuss financial results for the third quarter ended September 30, 2025. [Operator Instructions] Please be advised that this call is being recorded and the reproduction of the call in whole or in part is not permitted without written authorization from the company.

Joining on the call today are Marcus Lemonis, Chairman and Chief Executive Officer; Matthew Wagner, President; Tom Kirn, Chief Financial Officer; Lindsey Christen, Chief Administrative and Legal Officer; and Brett Andress, Senior Vice President, Investor Relations.

I will turn the call over to Ms. Christen to get us started.

Thank you, and good morning, everyone. A press release covering the company's third quarter ended September 30, 2025 financial results was issued yesterday afternoon, 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 our business plans and goals, macroeconomic, industry and consumer trends, future growth of our operations, capital allocation and future financial results. Actual results may differ materially from those indicated by these remarks as a result of various important factors, including those discussed in the Risk Factors section in our Form 10-K, Form 10-Qs and other reports on file with the SEC. Any forward-looking statements 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 to 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 2025 third quarter are made against the 2024 third quarter results, unless otherwise noted.

I'll now turn the call over to Marcus.

Great. Thanks, Lindsey. Leading our company on today's call are Matt Wagner, our President; Lindsey Christen, Chief Administrative and Legal Officer; Brett Andress, Senior Vice President of Corporate Development; and Tom Kirn, our Chief Financial Officer. On today's call, we're going to cover both the operational and financial highlights of the quarter, while providing some initial insights on the year ahead.

Look, our mandate remains clear: improve revenue and earnings, while improving net leverage. I'm encouraged by our company's financial performance in the quarter, growing adjusted EBITDA by over 40% to $95.7 million. The team drove record volume on a year-to-date basis and sold nearly 14% of our new and used RVs in North America. This sales milestone further intensifies and proves out our thesis that consumers are focused on value and affordability across every single segment in the RV industry. Consumers build their monthly financial models around monthly payments, period.

We anticipate entering 2026 with consumer sentiment and labor markets uneven and OEM new pricing rising on like-for-like models. While we see signs of resistance on the new side of the business, with our proven track record to address affordability and on used, I believe we can have another record year of combined new and used unit volume growth. I'm extremely confident in our ability to once again outperform the RV industry in 2026 and grow our earnings, thus reducing leverage.

Our business has made tremendous strides on improving our net leverage position over the last several quarters, reducing net leverage by nearly 3 turns since the beginning of the year. We accomplished this through a combination of debt paydown, earnings improvement and cash generation. As we plan our cash flow for 2026, I believe it is appropriate to set expectations conservatively. Our company will continue to rely on our market-leading used sales, service and Good Sam businesses as our differentiators.

Look, it's still early in our forecasting, and we see another consecutive year of earnings growth with an adjusted EBITDA floor of around $310 million. Now, this floor deliberately does not incorporate several sources of cost takeouts upside, used unit upside, M&A upside or upside that could come from our conservative new unit forecast.

Now, I'm going to turn the call over to my teammate, Matt Wagner.

Thanks, Marcus. While I appreciate the conservative approach to our 2026 outlook, we certainly have a plan to exceed this starting point through 3 -- through 4 sources, excuse me, of upside: SG&A, used RV sales, dealership acquisitions and new RV sales. Over the last 12 months, our team has made meaningful improvement to our cost structure, but we constantly reevaluate efficiency opportunities. We see $15 million of additional cost takeout opportunities next year through marketing technology, the launch of 2 additional CRMs and implementation of agentic AI across portions of our business. This estimate is not included in our preliminary models.

The second potential driver of upside is used RV sales. I remain the most optimistic about the capabilities and scalability we've built into our used RV supply chain. Model year 2026 prices have a direct positive impact to our used industry outlook. If our used business exceeds our high-single-digit outlook, we expect to yield roughly $6 million of adjusted EBITDA for every 1,000 additional used units sold.

We also see potential upside in the dealership acquisition space. While we are driving record volumes with fewer, more productive rooftops, we know there still exists significant white space in the North American RV market, and we are seeing a pipeline of activity percolating that we intend to pursue. We conservatively do not have any M&A activity embedded in our preliminary models.

Finally, we are purposely modeling a conservative outlook on the new RV market, given the OEM prices passed along to dealers. Our track record of developing exclusive products tailored to consumer preferences and desired monthly payments suggest that we may yield additional upside beyond the current outlook.

These 4 idiosyncratic sources create clear path to upside in 2026, but our long-term objectives remain clear. Our used RV sales, Good Sam and service businesses remain the bedrock of our company, and we believe they will enable us to achieve our mid-cycle adjusted EBITDA target of $500 million on today's store base.

I'll now turn the call over to Tom.

Thanks, Matt. For the third quarter, we recorded revenue of over $1.8 billion, an increase of 5%, driven by unit volume increases in used in excess of 30%. New ASPs improved sequentially to just under $38,000, a decline of roughly 9% year-over-year, better than our initial expectations. ASPs benefited from a richer mix in the quarter, while this weighed slightly on our gross margin percentages. On a GPU basis, we were pleased with our gross profit performance. Within Good Sam, the business continues to post positive top line growth with the organization positioned for margin improvement in 2026 as we continue to make additional investments in our roadside business. Within product services and other, our core dealer service revenues and our accessory business continued to show stable margins.

We reported adjusted EBITDA of $95.7 million compared to $67.5 million last year. SG&A as a percentage of gross profit improved 360 basis points year-over-year as we start to fully realize more of the run rate savings from earlier in the year and the sequential improvement in new ASPs.

Lastly, as we think about the remainder of 2025, we expect our fourth quarter to experience impacts from the previously mentioned new unit trends, and we will be lapping a couple of important items to call out from last year. These include Good Sam loyalty breakage benefits of [ $4 million to $5 million ] experienced in Q4 of last year and [ $4 million to $5 million ] of F&I actuarial benefits that we experienced last year. That said, we ended the quarter with stronger unit sales per rooftop, improved fixed cost leverage and $230 million of cash on the balance sheet. We also have $427 million of used inventory owned outright, another $173 million of parts inventory and nearly $260 million of real estate without an associated mortgage.

I'll now turn the call back over to Marcus.

Thank you. We'll turn into the Q&A section. But before we do that, I think it's important to just sit with the improvement on the balance sheet in 2025. As we started the year, improving our cash position and deleveraging our business was really key initiatives for our management team. And as we head into 2026, continuing to improve our net leverage through performance, through operating efficiency, through improved sales is absolutely the focus for our team.

So we'll turn it over for questions. Thank you.

[Operator Instructions] Our first question comes from Joe Altobello with Raymond James.

First question, I guess, on new RV demand. Marcus, you talked about rising prices weighing on that. And I think at least some of the industry data during the summer seemed to indicate that retail was stabilizing. What have you guys seen so far, maybe September and October, that would indicate that that's starting to soften again?

Joe, this is Matt. I would argue the fact that, yes, we saw some stabilization so much as we are seeing high-single-digit declines in the new RV industry up until that summer time frame, but we are still seeing declines year-over-year. So while it's not nearly as severe, we've obviously been outperforming this, and we feel like we've had more of a purview and line of sight into what's happening real time within the marketplace. And we've been speaking with all of you over the last few months suggesting that we had a line of sight on the 5% to 7% price increases on invoice prices. And we knew that there could be some opposition from consumers to be able to absorb that. However, we know through our very creative mechanisms of our exclusive products, brands that we oftentimes are able to buck trends that exist in the broader RV industry. And that's where we've been able to yield material market share gains over the last 2 years, leveraging that strategy.

But as we sit here today and we think of the exit rate of new sales in September and we think of what's happening currently in October, there's a couple -- or a few factors really that have weighed on the consumer perhaps a little bit more than we anticipated. And when I think about them, the evolving job market that we're seeing more and more headlines, which naturally will just bleed into the psyche of different consumers, really the uncertainty resulting from the government shutdown, and then finally, when we think of the general inflation environment out there, we're seeing within certain price points, there's a dispersion of activity and customer demand where consumers are able to yield whatever they need in terms of a product and a relating price point to ultimately be able to afford this lifestyle.

The RV lifestyle is alive and well, and we know that consumers want to participate in this lifestyle. And that's really where our used strategy has continued to take hold. Our September used results were very good, perhaps amongst the best comps year-over-year on a used same-store sales basis. That trend has also continued within October. So while we're very cautious and cautiously optimistic on our strategy on the new side of the business, we know that the used side of the business will continue to be our buoy, whereby we could satisfy consumer demand that still exists out there.

Joe, the one thing that I think Matt and the team have done very well in acknowledging the potential resistance on the new side is, if you look at the stocking of used, we've become far better at that side of the supply chain. And part of the really intentional conservatism for '26 is that we really start to build out our cash flow and our inventory positions. And when we think about placing orders 3, 6, 9 months in advance on the new side, it was more judicious for us to build that model with a lower expectation, knowing that if we wanted to take on more new at any time, if we were wrong about our calculus, that would be easy to get inventory. But I think what I really appreciate about our strategy is, if we are right about our strategy, if the new is going to have a little bit of resistance, we're not going to be kicking the can on new aging into the next 12 to 24 months. And when we look back on what happened over history, we may have gone into the years with just because we were outperforming everybody else, a little bit of a delusion about what was happening, and we would go for it on the inventory side and then find out 18 months later that we have to discount our way out of stuff. So what you're hearing from us today is just a more tempered approach to stocking and to forecasting and that we know that if we outperform like we always do, it's easy for us to get more inventory. It's really hard to get rid of inventory that we miscalculated.

Very helpful. Maybe just a follow-up on that. If you look toward '26, the more bullish view was that lower rates would help to drive unit growth. It sounds like what you're saying is that the price increases we're seeing would offset any impact from lower rates and basically, affordability doesn't get any better next year.

So Joe, a good way to think about it is, our combined average sale price is roughly in the range of about $36,000. If we're to add about $1,000 of cost and the interest rate drops for a consumer about 50 basis points, that would actually create the same exact monthly payment. So yes, there is the opportunity for consumers to be able to absorb more cost or more features with -- while paying the same money or less, depending upon the pricing and segment. However, we're not quite seeing that take hold just yet where the retail lending rates have really not materially changed in any capacity. But next year, there is a possibility that they could come down, in which case, this could be a more conservative outlook in the new space [ what ] we believe a very pragmatic view.

Yes. When we look at -- Joe, when we look at the lack of predictability around what the Fed is going to do compared to previous years and decades and the lack of predictability on the tariff side, that's probably the 2 most imposing factors that are causing us just to be really conservative just because we don't know. When we went into '25, we never would have expected Liberation Day. And while we were able to make a lot more money by reacting to different things in the market, we just want to go in and set the expectation low and hope that our performance and our -- I guess, our track record of idiosyncratically operating comes to fruition. I think our track record proves that. We don't want to have any missteps.

Our next question comes from James Hardiman with Citi.

So I like the sort of framework that you've given us with respect to 2026. I just want to make sure we're on the same page from a starting point perspective. The Street is at about $280 million for this year with 1 quarter left. I don't know if you'd sort of disagree with that number meaningfully. But that would sort of assume, call it, a $30 million expansion, right, to get to that $310 million floor that you've laid out. If that's all right, sort of how are you thinking about the building blocks of getting there? It sounds like overwhelmingly sort of the used business driving that extra $30 million.

And then, I don't know, maybe order of magnitude of the 4 upside drivers that you laid out, like which of those are you really -- I guess, the $15 million of cost saves are pretty straightforward. But which of those are you most excited about? At the end of the day, the Street is looking at more like, I don't know, $100 million of EBITDA growth, which it sounds like is not all that realistic as we sit here today.

Well, we're hopeful that we can have that sort of upside growth. But as we mentioned earlier, we just really don't know what's happening in the macro, and I think that's caused it. When I think back over the 20 years, the fourth quarter, quite frankly, has rarely, if ever, been a quarter where we've made money. And in this particular year, we're still dealing with high floor plan rates, and we're still dealing with other tariff issues around pricing. I will be candid with you and tell you that the optimistic nature that I have on the fourth quarter is that we will still grind hard to try to get anywhere close to breakeven, which would be really a big size improvement over like even the last decade of averages.

It's a little early in the quarter for us to predict where things are going to land. As Matt mentioned earlier, we have seen resistance on the new side. Nothing that alarms us, but it is a resistance where we're starting to comp year-over-year-over-year growth. On the used side, we're continuing to see performance there. I have sort of laid down the gauntlet with the team on wanting to make sure that we're going into 2026 with, again, clean inventory, no excuses in 2026. So I've been a little bit more aggressive in pushing them to liquidate out of inventory, and that's probably a little dangerous of a word, liquidate, sell-through a little inventory just to make sure we go in a little cleaner.

This is Tom as well. We also noted a couple of laps as well. We had -- last year, we had kind of a onetime benefit on the Good Sam Club side. It was our first year really with experience on the new loyalty program, and we had some adjustments that were in that [ $4 million to $5 million ] range in the fourth quarter. And then, on the F&I side, we always go through with our actuaries and review cancellation rates and estimates on certain products and all the products we sell. And in the last couple of years, we've had a benefit from that because we've seen continued utilization of those products. And when we looked at things in the third quarter of this year, we started to see a little bit of an uptick in those cancellation rates. And so, [ that's where ] we called out the benefit that we got last year in the fourth quarter. I don't know that we'll necessarily see that same benefit this year.

Yes. Again, we're taking that conservative approach. But on the upside...

I mean, just as well, James, when we're thinking of Q4, this is really a setup time period for us where there could be some additional OpEx that has to flow through our balance sheet -- our income statement really to set the stage nicely for next year to truly yield those 4 upside opportunities that I laid out in the prepared remarks. Most specifically, we're making quite a bit of investments in different agentic AI functions, as well as enterprise AI functions, which we do view this as an opportunity for us to yield even greater cost savings potentially than the $15 million that I laid out earlier. And that's really going to be by means of just looking at different components of our business that will not only help the consumer experience, but really our employees to yield more efficiencies of actually being able to get to a customer quicker, be able to sell them quicker and be able to be much more intelligent about all of these complicated products that we sell throughout our entire industry. And that's really been, in many ways, a handicap of this industry at large. We don't necessarily have as much insight as we need to in the product, the repair event cycle time. So we have been aggressively and quietly pursuing this in the background, and we haven't spoken as boldly about all of these different AI initiatives because this has been a test-and-see environment. We know that all these AI implementations can quickly spiral out of control in terms of AI actual usage and different advancements in what we're going to be pulling on these LLMs. So by means of that, we've been setting the stage nicely. We know that we'll be able to make some nice implementation guidelines set out here pretty quickly, and we know we'll be able to take advantage of this opportunity that's before us.

Over the next several years -- and I really applaud our team's very aggressive and progressive approach to looking at how AI can create staffing efficiency, and that's really top to bottom. And when you think about the efficiency that AI has already started to create in portions of our business, where we're able to spend a little less and convert a little better, we're able to take care of our customers a little faster and avoid other things. But I think the next 12 to 24 months could create significant, maybe more than I've seen in 20 years, significant upside to staffing efficiency and more importantly, a better customer experience through all of the learnings that we have over 2 decades. When we compare what we have that nobody else has, that is lots of data. And as Matt puts that data to work in the way that he is exceptionally skilled for, I think the SG&A upside opportunity plus the revenue and conversion opportunity could be unmatched to anything we've seen in years past.

Got it. That's all really good color. And then -- so if I think about -- it sounds like if you did, at best, flat EBITDA in the fourth quarter, so we're maybe looking at closer to, I don't know, $269 million, $270 million number, and then -- for this year, and then, call it, $310 million for next year, how do we think about leverage in the context of year-end '25 and '26? And then, specific -- maybe more specifically, there was some discussion about reengaging M&A. Sort of what's the decision criteria around that in the context of leverage?

As a management team, we talked about it in our prepared remarks that we've seen a significant improvement in our overall net leverage. We have not seen the kind of cash on the balance sheet that we showed at the end of third quarter in a long time. And as we continue to sell properties and sell down the mortgage and use some of our free cash flow to pay down debt, we know that those are parts of the building blocks to deleveraging the business. As a team, we want to get back into the neighborhood of 4 and below. And so, as we think about capital allocation in 2026, yes, we are investing a significant amount in AI. That's going to unfortunately partially go through OpEx, but there is some CapEx associated with some of the things that we're doing as well. And as we look at the capital allocation, our goal would be to get into that 4 or below neighborhood by the end of '26. That's a very lofty goal, but it's a goal that we're committed to. And we know that when we do that, we have to make tough choices about staffing, about acquisitions, et cetera. And so, the only acquisitions that we're truly looking at are ones that we believe are going to be accretive, ultimately accretive to not only the earnings profile, but the leverage.

In looking at small dealerships, we know that we can buy dealerships at 1x, 2x, 2.5x, clearly accretive to our business. But as we start to look at other bolt-ons inside the RV industry, any kind of bolt-on, we are probably going to have to be a little more aggressive, still staying inside of the dilution versus accretion. We think it will still be accretive. But we need to start to build a bigger business with bigger tentacles reaching different parts of the industry.

Our next question comes from Patrick Scholes with Truist.

My first question concerns market share. I know year-to-date, you were tracking 13.5% and you had previously given a medium-term target of 20%. For next year, 2026, do you have a target to reach for market share percentage?

Just for clarity's sake, we have been very clear over the last 2 years that 15% was our goal.

I'm sorry. Okay.

That's okay. But because we started to accelerate from the 11.3%-ish that we were a year ago, we moved our own goalpost, and maybe that's our greed in just wanting to dominate the space more.

That's certainly a fair observation. Well, Patrick, it was really about 4 months ago, we woke up and realized that we were on a clear-cut trajectory to hit that 15% a lot quicker than we anticipated. I would anticipate over the next year that a very realistic goal is to achieve another 50 basis points to 100 basis points of market share improvement on a combined basis. And a lot of this is really going to hinge upon the creativity that we're able to deploy on the new side of the business to yield even more market share gains, which has been compounding substantially over the last 2 years. But we're trying to be as realistic as possible, understanding that market share gains on the new side could continue to be a little bit more difficult, whereas on the used side of the business, we see a very clean and clear path for us to continue to achieve that compounded growth.

As a reminder, the used business is essentially double the size of the new market. And when we look at our own penetration of used, the amount of white space that we believe exists, not only in the affordable categories, but all the way up through motorhomes, is unbelievable. And we've been very thoughtful in how we've allocated capital in the last 12 months to growing that used business, and quite frankly, don't see any barriers of any kind that would prevent us from continuing to grow that used business as much as high-single digits to low-double digits every single year for the next several years. Yes, we are very good at it, but B, the market is much bigger. And if the consumer is going to continue to be under pressure for the foreseeable future, we will absolutely allocate the bulk of our working capital towards where we know that business will take us and the margins that come with it.

Okay. And then, a follow-up question related to where you talked about setting the stage for a return to measured and accretive M&A, certainly laid out improvements in your business and wanting to add stores and a better balance sheet. Regarding potential M&A targets, with those targets, are you seeing some financial stress in potential targets where they might be more willing sellers at this juncture because of that financial stress?

Yes, Patrick, it's Brett. So what I would say is, it's a bit of a barbell when you think about how that pipeline is unfolding. I think we have several opportunities on the distressed end, as you can imagine, in this industry backdrop over the last couple of years. And on the other end, there's still a good amount of, I'd say, high-quality, very good performing opportunities out there. So we feel good about that. I would tell you that when we talk about the word measured on the M&A, I think the bite size and the priority is going to be at least on that smaller end and where the white space is very, very clear to us, given the consolidation that we've done in the footprint in the last 12 to 18 months.

Okay. And just one -- I got a question from an investor right now. You didn't put out any guide points that we kind of think about -- you talked about sort of flattish EBITDA. But with those...

No, no. We didn't say flattish.

No, no, no. I apologize. You didn't. But sorry, I think you said -- well, anyway, with those guide points not provided anymore, would there be -- if you were to give them, excuse me, guidepost, any material changes or updates in those -- from those previous guideposts as we think about the rest of the year?

What we decided to do rather than providing guideposts and having people sort of figure out what the calculus was, we established the most conservative, what we believe, number that we could hurdle of $310 million on the EBITDA side. And then, Matt outlined and outlaid all of the building blocks, those 4 specific building blocks, and certain numbers attributable to those that he believed we would be able to achieve on top of that floor.

I think there's one thing that we want to make sure that everybody takes away from this. The single biggest driver in us having a very ultra-conservative approach is our reluctance to be aggressive on the new side. And so, when we think about the outcome of new in 2025, the band of possibilities in 2026 on the new side is wide. And we happen to be stocking and forecasting towards the lower end of that band, knowing that in a matter of 60 to 90 days, if things pan out the way we hope they do, that we'd be able to stock more inventory. We want to set an expectation that we know we can hurdle, that we can build our cash flow around and we can build our leverage targets towards. And I think that's probably a bit of a shift for us. That shift largely happens because when we entered 2025, we did not expect this administration to create the kind of unpredictability around the economy that we dealt with. And we don't know what next year looks like. We don't know if there's a new Liberation Day of some kind. And that's why we just are sitting in this number hoping that it doesn't look like that.

And Patrick, I think I believe part of that question related back to 2025 and the guideposts that we had previously out there. I would point back to Tom's commentary around 4Q, our evolving view on the new market going into the year-end. I would tell you the biggest change, while we didn't formally update those, would be to that kind of that new volume assumption that we had made for that full year for 2025, and that would be the biggest driver, I would say, as you think about 4Q.

Our next question comes from the line of Craig Kennison with Baird.

I wanted to start on price. Can you just remind us of the average price increase that OEMs have pushed through for model year 2026?

So Craig, on average, it's panning out to about 5% to 7%. There's a handful of outliers that exist out there just as well, as there's a handful that we're able to keep prices down. But across the blended portfolio or bag of goods, it's roughly that 5% to 7% price increase.

Is that a like-for-like comparison? Or is there some change in content?

That's like-for-like. Great question. And so much as we look at a specific basket of goods that we've been tracking now for going on 15 years, where we modify those goods based upon the like-for-like nature of it, so if there's something that materially changes from year-to-year, we extract that altogether. So we feel this is the most clean pure view of roughly where we're settling in. However, just as well, I mean, there's always going to be certain segments where, for whatever reason, there's going to be a chassis price increases in certain segments that are just going to be unavoidable or where there's going to be a chassis change altogether, which might significantly modify features and price points. So sometimes we have to remove these assets from our basket of goods. We're still playing a game, though, where we have roughly like 10% to 12% of the consumers that exist out there, up and down all the different [ types of ] price point segments. So we tried to distill it down to a very simple number, but in reality, it's far more complex.

Yes, Craig, as we built out our conservative model, we anticipated that those 5% to 7% increases would stick for 12 months. But you and I have been around this industry for 20 years, and the manufacturers are going to need to spur demand. And if they feel like the price increases aren't going to do that, it wouldn't surprise me if, in the spring or the summer of 2026, there tended to be some reprieve on that. We're not factoring that into any of our assumptions, but it's highly possible. The offset to that, and Matt talked about all the data that we've been collecting for several decades, is that when those price increases happen on the new side, they do bolster the value of used units, not only the inventory we have in stock, but our ability to meet the customer where they want to be on a monthly payment. And so, as we're very scientifically and surgically issuing certain marketing tactics to drive the purchase of used, we're going to identify those segments on the new side that are maybe experiencing the most friction and lean into that on the used side to help mitigate that floor plan or that segment in our business so we can outperform everybody else.

And maybe just following up on contract manufacturing, you've been able to lean into that strategy to keep your prices in check. I'm curious what your mix looks like for model year '26 versus model year '25.

As of this moment, we're leaning in a little bit more for '26 compared to '25, and we'll probably end up 2025 with all of our new sales, about 40% or so being derived from our exclusively branded products and contract manufactured products. We are going to have additional segments roll out that we believe satisfies different consumers that have either been avoiding to buy in the short term because of price increases or that we believe we're offering different feature sets floor plans we'd be able to induce additional consumers to actually come into the lifestyle. So we still feel very confident. However, we're really tempering back expectations because there's a lot of unknowns.

I think Craig, Matt misses sometimes patting himself on the back on the innovation side. And I want to make sure that the market doesn't believe that the only reason that our market share on new has grown and the only reason that our unit volume has grown is because we're just selling cheap products. That's just not the case. And we saw a nice ASP improvement in Q3 and hope to see it again in Q4. I think the real reason that we've been really outhustling everybody is, the contract manufacturing opportunity provides a sandbox for innovation, provides a sandbox for testing out new segments, new floor plans and new ideas. And when you look at 2025's results, a giant portion of the outperformance on new came from the innovative ideas across the board. I actually think that what's happened is that's now accelerated. And in '26, you could expect more of that from our company. Private label started as a way to advertise the same kind of floor plan as everybody else at a lower price. It's turned into something much different. And the R&D side of that part of our business has evolved into something that has given us the ability to outperform everybody else, not just on price.

Our next question comes from Noah Zatzkin with KeyBanc Capital Markets.

I guess, first, I know this has been touched on, but maybe if you could kind of rank order the size of the 4 opportunities above and beyond kind of the $310 million floor? And within that, if you could just maybe touch on how you're thinking about M&A? Is it possible that you kind of get back to the 10 to 15 kind of run rate of acquisitions? And if so, like how meaningful could that be within the upside?

No, I tried to thoughtfully rank those 4 in sequential order in terms of either order of magnitude or order of opportunity in terms of additional upside. However, embedded with each one of those 4 between the cost savings that exist between different implementation of marketing technology and agentic functions between our used RV sales, M&A activity or new RV sales, there's obviously going to be some additional elements that could come into play here over the next few months that would lend itself to this order of events or magnitude to actually shuffle out of order one way or the other. But we do feel confident in these numbers that we laid out here that they're relatively conservative. So when we say $15 million of cost savings in terms of SG&A, there's always the opportunity for more, depending upon the opportunity of these different agentic functions, marketing technology, CRM launches, et cetera.

Yes. And Noah, I would say, on the M&A pipeline, our confidence and our line of sight into returning to that 10-plus door growth per year, I would say, the activity in the pipeline would support that today. I would also note, it's probably going to lean at least initially a little bit smaller on the door size, just given the opportunity set. But you're normally looking at an EBITDA opportunity anywhere from $500,000 incremental to $2 million. It really depends on the size. I mean, every dealership is different, but I would [ err ] towards the smaller size just initially in the modeling.

Got it. Really helpful. And then, maybe if I could just touch on -- new gross margins in the quarter were maybe a bit softer even with the kind of maybe better-than-expected new ASPs. So just what kind of happened there? And then, how should we think about new gross margins going forward?

Purely a byproduct of mix where -- we've spoken about this previously, but as average sale price goes up historically, our gross margin typically will be a little bit more pressured, which is why we saw that gross margin figure remain relatively elevated or at least in a nice suitable range as the ASPs came down. And it's just the very nature of the RV industry. If you think about -- and you're a consumer that's shopping for a $120,000 Class A gas, you're going to have a higher willingness or likelihood to travel outside of your local area to buy that asset to yield perhaps $5,000 of savings, in which case, the higher-end price points in the RV industry are generally much more competitive, where you're competing much more on a national or regional at a minimum level, in which case, there's going to be more people that will actually compete for that same deal. Whereas in the travel trailer space, that consumer largely remains within a 50 to 75-mile radius and lives within a 50 to 75-mile radius of the dealership from which they'll actually transact with, where as I said a Class A gas, that could be upwards of about 150 to 175 miles. So the dealer management areas just become totally different scale size.

So when you look at our ASPs improving, part of that comes to the detriment of that gross margin profile, albeit it was still very healthy, [ plus ] sitting right around or just shy of 13% front-end gross margin on the new side, while coming out of season and while generating a higher ASP, we felt very good with that number.

Our next question comes from Tristan Thomas-Martin with BMO Capital Markets.

I think you guys have kind of mentioned a couple of times the bands of your assumption of new RV retail demand next year. Can you maybe -- maybe I missed this -- let us know what those are in terms of the industry and kind of your own expectations, what's embedded in that $310 million number?

Tristan, we believe it's conservative to estimate that as the RV industry has trended this year, low-to-mid single digits down year-over-year, that we anticipate that trend line and that slope to continue at the relatively same rate heading into next year. So, as such, given the material market share gains that we've been able to post over the last 2 years, we're also suggesting that new on our side could be potentially down low-to-mid single digits. As we've maintained, though, if you look at the collective sum of new and used sales combined, we are still very confident that we'll post additional gains and another record volume year when you look at the summation of the 2. I don't want to go too far down this rabbit hole of the new side, but we also know that this is a big portion of our business, but we know that used has become an even more material portion of our business. In fact, for the first time over the last 2 months, we were able to hit a 50-50 split between new and used sales. So when we think of the amount of gains that we made on the used side, we're really just setting the stage to offset any sort of new shortcoming or shortfall next year by means of continuing to pump the used business.

Tristan, the silver lining in all of this, because we always try to find it in our own business, is that we don't control the OEMs pricing and we don't control the rates in the environment. But nobody really cares because we have an obligation to make more money and sell more units and delever our business. And the silver lining for me is that as we look back at the violent swings that have happened in this industry over the last 10 years, we know that for investors to continue to want to be invested in our business, we have to take out some of those swings. And our used business, our service P&S business, our Good Sam business provide that road map. We aren't just leaning into used because we're concerned about the new. We're leaning into used because we want to eliminate these wild swings in earnings, and we believe that the trough of earnings is behind us. Every single time that we can grow our used business, we further substantiate a floor in our business, and that's kind of the theme of this call. We have to give people a floor.

Matt also mentioned on the call that mid-cycle at $500 million-plus isn't something that's outlandish. It is something though that will require the new business to be more stable. What does that mean? You need interest rates to be lower than they are today, and you need pricing to really settle out at a payment range that people can afford. This move to used is structural. It's not temporary. It's philosophically, I think, what our management team believes makes sense.

Okay. Got it. And then, just because you mentioned the $500 million-plus mid-cycle target, I think it's on the same store count as today. Can you maybe just go over some of the other building blocks that gets us from the $310 million to $500 million?

From $310 million to $500 million, it really has to do with increased industry volume, right? So I think if you think about the $500 million, you're looking at an industry that's in the 400,000 range. That's down previously from prior estimates of 425,000 to 450,000, and that's really a testament to our market share gains. And then, from there, there's a slight increase in assumed ASP over the next, call it, 1, 2, 3 years, whatever you want to pick for your mid-cycle time frame, that would drop down to really SG&A percent of growth in that mid-70s. Those are really the building blocks outside of it, and really it's based on historical trends and not any assumptions that we haven't built in the model before.

And the math model is pretty simple. If it goes to 400,000 and we maintain some level of market share, we'll be selling north of 80,000 new units. And I don't know where that is in terms of like is it 82,000 or 84,000, just north of 80,000 units. Those things help because everything else flows with it. Service flows with it. P&S flows with it. And so, as we see that new business stabilize, we'll be in pretty good shape.

Our next question comes from Scott Stember with ROTH Capital.

Can you talk about what you're seeing on the financing front? Have you seen rates coming down, given the recent drop in short-term rates? And what does the credit profile of the consumer look like? Has it deteriorated at all?

Scott, it's Brett. So when you think about where the 10-year has been really over the last 1 to 1.5 months, it's kind of been hanging sustainably below that 4%. We've seen a handful, a select handful of retail bank moves within them. But when you think about -- and this just goes back to the conversations that we always have with our lenders, thinking about their appetite and their propensity to take advantage of those lower rates and pass them on to the consumers. This time of year, I think you're possibly going to have a little bit more of a time lag, I would expect, as you get into a more retail-heavy period like 1Q, January, February, March, April. I think that's when we'll start to see the fruition of a lot of the rate cuts that are out there. So right now, I think the setup for retail lending rates to come down is very constructive. It's just a matter of does it happen in November or does it happen in January, February around show season.

Got it. And the credit profile?

Yes. No, credit profile has been very stable for us when we think about our F&I trends over the last couple of months, couple of quarters. The consumer credit profile has been stable and so have the approval rates. And that's really how we judge credit availability in those 2 contexts.

Got it. And then, just last question, just putting some finer points to '26. What would you predict the new and used margins or the ranges should be for '26?

I would anticipate that our new margins should be within that historical range still that we suggested earlier of like that 13% to 14% range even. And then, on the used side, I would factor in somewhere within that like 18% to 20% range. I mean, there's going to be some months, some quarters where we might have to get a little more aggressive, in which case, we could veer towards the lower end of that spectrum. And then, once we're in peak periods and we feel like we've optimized certain inventory levels, we could push it closer to 20%. But I would say throughout the summation of the year, I mean, that's obviously somewhat of a wide band. But when you look contextually and historically, it's really pretty tight, 18% to 20% on the used side.

Our next question comes from Bret Jordan with Jefferies.

This is Patrick Buckley on for Bret. Looking at the parts and service decline versus the continued momentum in used, I guess, is there a goal or target moving forward for what customer pay service growth and margin should be?

I think what we're seeing -- this is Tom. I think what we're seeing right now is kind of that trend that we saw in Q2, where as we build used inventory, we have to reallocate that technician time to reconditioning the units and getting it frontline ready. So, as you've seen that sequential increase in new vehicle inventory on our balance sheet quarter-to-quarter, we've had to allocate more of that time to the internal work that doesn't necessarily flow through that PS&O line. It bolsters rather our used volume and our used margins. So I think heading into next year, I do believe that at this point, we see that -- we feel like we have a lot of initiatives out there to continue to grow. And Matt talked about use of agentic AI and some other things that we're thinking about in service. When we think about some other programs that we're looking at in the online marketplaces and trying to kind of continue to bolster our margins with some other programs on the parts and accessories side, I do think that we have some upside opportunities there to grow from where we are today.

And Patrick, we'll be the first to acknowledge that there's been a lot of noise in that revenue line item over the last few years, more than a few years, even at this point, of either divestitures or different acquisitions or different movements in different categories. However, we believe that we're at a point now where we have a nice, clean baseline. And the entire focus of this line item now is to really induce more usage of RVs. And we could oftentimes do that by means of obviously, service and the reconditioning to ensure that people have assets that are ready to be on the road again, but more importantly, having all the retail products and install items that these consumers need to actually enjoy this lifestyle more and more frequently. And as Tom referenced, we obviously are diving quite deeply into the Amazon marketplace. We've been very effective at working with different partners like [indiscernible] and Lippert and Dometic and Camco, where those are the 4 largest names within the RV aftermarket space. And it's through those relationships, partnerships that not only do we think we could gain more market share in the parts business, especially, but also yield that additional upside when we actually install those items within our service channel.

I do want to have one big takeaway on the P&S. It really does prove out how strong the base of our business is. And while it may go up or down 1% or 2%, the same consumer pressures that people may feel on price, they feel on any money leaving their wallet. And what I'm really proud of what this team has been able to do is to hold the line on that revenue line in the face of a consumer saying, I can't afford things. They're still able to induce people to come in for the proper maintenance and all the other items. But in certain cases, much like a lawyer may have to, you sometimes have to discount rates to make it affordable for people. When you look at the stability and the strength of that particular segment, regardless of what's happening in the macro, it really is that and Good Sam are the 2 differentiators of our business that nobody is able to or nobody will ever be able to penetrate. And that for me is what we're trying to do on the used side as well, just to build a very strong foundation. So the P&S business is just fantastic. It's just resilient.

Got it. That's helpful. And then, on the Good Sam Club, it does seem like there's been a bit of a slowdown there. Is that decline at all related to less usage?

No. So, a few things to note, Patrick. We had announced maybe about 1.5 years ago that we were migrating our Good Sam memberships to a loyalty program. By means of that introduction, we actually created a whole new free tier, and we don't report the free tier in those numbers because we've only historically reported a paid membership. So we didn't want to mislead people by means of bolstering this free tier. But we do have nearly 1 million additional members that are part of our free tier that are not reported in numbers. I call attention to that because through a free tier, you're also earning points when you shop at our facilities, however, not as many points compared to the paid memberships, never mind, an elite membership. And if you look quarter-to-quarter at this line item, we've actually seen a stabilization where we're able to actually offset now any sort of detraction or any sort of depression of that membership growth. And we do believe now we're at this inflection point of being able to stack on gains now because we've been able to stabilize it. Never mind the gains that we yielded within the free tier of the loyalty program.

I think that's the remainder of our questions.

Yes. This concludes our question-and-answer session. And I would like to turn the conference back over to Marcus for any closing remarks.

Great. Thank you so much. We hope you heard the confidence in our ability to deliver these results, and most importantly, as Matt laid out, the building blocks for a much better performance than the floor we've set out. So we look forward to delivering better results and talk to you soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.