Camping World (CWH) Q2 2025 earnings review
Record Volume & Cost Control Drive Big Beat, But ASP Pressure Continues
Camping World delivered a strong Q2, shattering volume records by selling over 45,000 RV units (+21% YoY) and driving a significant earnings beat. The performance was powered by a deliberate strategy of leaning into more affordable new vehicles to capture market share, which caused the average new vehicle selling price to drop 11%. This top-line volume, combined with aggressive cost controls that improved SG&A leverage, pushed Adjusted EBITDA up 35% to $142 million. While the company raised its full-year unit growth outlook, it also guided for continued ASP pressure. A notable concern is the negative year-to-date operating cash flow, a stark contrast to the positive net income, driven by a build-up in working capital to support the sales growth.
🐂 Bull Case
The company's focus on affordability is working, driving record new and used unit sales (+21% YoY) and significant market share gains. Management raised its medium-term market share goal from 15% to over 20%.
SG&A expenses grew only 4.2% while revenue grew 9.4%, demonstrating strong cost control. SG&A as a percentage of gross profit improved by over 270 basis points YoY, a key driver of the EBITDA beat.
The pivot to used vehicles is paying off. Used vehicle gross margin expanded by 149 basis points to a healthy 20.5%, providing a profitable counterbalance to the margin pressure on new vehicles.
🐻 Bear Case
Year-to-date operating cash flow was negative $45 million, compared to positive $84 million in the prior year period. This divergence from positive net income signals a significant build in working capital is required to fuel growth.
The 11% drop in new vehicle ASPs, while strategic, led to a 149 basis point decline in new vehicle gross margin. The company lowered its full-year SG&A leverage target, acknowledging the impact of lower gross profit dollars per unit.
The gross margin for the high-margin Good Sam Services and Plans segment fell sharply by 777 basis points due to higher roadside assistance claims, pressuring a key source of profitability.
⚖️ Verdict: 🟢
Bullish. The company is executing its strategy to dominate the market on affordability flawlessly. The record volume, significant market share gains, and strong cost control resulted in a decisive earnings beat that outweighs the negatives. While the negative operating cash flow warrants monitoring, it appears to be a function of funding rapid growth rather than a structural issue. CWH is proving it can win in a tough environment.
Key Themes
Affordability Strategy Drives Record Volume
CWH's core strategy is to sacrifice new vehicle ASPs to drive volume and gain market share. This was highly successful in Q2, with new unit sales up 21% and used unit sales up 20%. Management is unapologetic, stating, "we're not going to stop selling affordable inexpensive units," as it builds the customer file for higher-margin services. The company's ability to execute this is enhanced by its contract manufacturing relationships, which provide exclusive, lower-priced models.
Cost Discipline Creates Operating Leverage
Management's focus on efficiency is paying off. SG&A as a percentage of gross profit improved significantly to 73.9% from 75.7% a year ago, and down sharply from 88.5% in Q1. This was achieved through structural changes including a headcount reduction of over 900 people since the start of the year and the consolidation of 16 underperforming locations. This discipline was the primary driver of the quarter's strong EBITDA performance.
Strategic Pivot to Used Inventory is Working
The company has successfully shifted its inventory focus. While new vehicle inventory was down 10% YoY, used vehicle inventory was up over 53%. This strategic pivot aligns with the goal of growing the higher-margin used business, which saw gross margins expand to 20.5% in the quarter. Management is confident that this segment will be a key driver of idiosyncratic earnings growth.
Cash Flow Diverges from Earnings
A key red flag this quarter is the negative operating cash flow. For the first six months of 2025, the company used $45 million in cash from operations, a stark contrast to generating $84 million in the same period last year and reporting a positive net income of $33 million year-to-date. This was primarily driven by a significant increase in working capital, including a $240 million build in inventories and a $102 million increase in contracts in transit, required to support the massive sales volume.
New Vehicle Margin Pressure
The strategy of selling lower-priced units to drive volume comes at a cost. The 10.6% decline in new vehicle ASPs led directly to a 149 basis point contraction in new vehicle gross margin to 13.8%. This reduces the gross profit dollars generated per transaction, requiring the company to sell significantly more units to achieve the same profit level.
Navigating a Challenging Macro Environment
Management acknowledged the tough macro environment but expressed high confidence in their ability to outperform it. CEO Marcus Lemonis stated the Q2 performance was one of the best he's seen in 20 years given the backdrop. The strategy is to position RVing as an affordable vacation alternative, a message that resonates with consumers who are pulling back on more expensive travel.
Other KPIs
Accelerating. Same-store sales growth showed a massive acceleration across the board. New vehicle SSS grew 22.2% and Used vehicle SSS grew 20.8%. This follows a mixed Q1 where new SSS were negative. The powerful Q2 result indicates the growth strategy is resonating strongly with customers at existing locations.
Stable. F&I, a key profit center, reached a record quarterly revenue of $201.2 million, up 12.4% YoY, driven by the surge in vehicle sales. However, F&I gross profit per vehicle unit decreased by 6.9% to $4,412, reflecting the lower transaction values of the vehicles being sold. The overall dollar growth demonstrates the power of the high-volume strategy.
Stable. Used vehicle inventory turnover remained healthy at 3.3x, consistent with the prior year. New vehicle turnover improved slightly to 1.9x from 1.6x. Management has a desire to increase used turns to 4.0x, which may involve testing different pricing strategies in the second half of the year.
Guidance
Accelerating. This is an upgrade from the prior 'low single digits' guidepost provided in Q1. It signals management's confidence that the strong volume trends seen in Q2 will continue through the second half of the year.
Decelerating. This guidepost confirms that the sharp drop in ASP seen in Q2 (-10.6%) is the new expectation for the full year. It implies little-to-no recovery in mix or pricing in the back half, cementing the company's commitment to the affordability strategy.
Decelerating. This target represents a step down from the 600-700 bps goal set at the beginning of the year. Management directly attributes this revision to the pressure that lower ASPs place on gross profit dollars, making it mathematically more difficult to show the same degree of SG&A leverage.
Stable. Management reiterated its confidence in achieving over $500 million of adjusted EBITDA in a mid-cycle environment with the current store count. This serves as an anchor for the company's long-term earnings power.