Camping World (CWH) Q3 2025 earnings review
Used Vehicle Surge Drives 42% EBITDA Growth, Overshadowing One-Time Tax Hit; 2026 Guidance Signals Confidence
Camping World reported strong operational results in Q3, with Adjusted EBITDA growing 42% YoY to $95.7 million, fueled by a remarkable 33% surge in used vehicle unit sales. This highlights a successful strategic pivot towards affordability that is resonating with consumers. However, the company posted a significant GAAP net loss of $(0.64) per share, a figure entirely driven by a one-time, non-cash $175 million tax valuation allowance that masks underlying profitability. The new vehicle segment remains a weak spot, with revenue declining 7% due to falling average selling prices. Looking ahead, management issued a confident initial outlook for 2026, establishing an Adjusted EBITDA floor of $310 million, which implies double-digit growth and continued operational momentum.
🐂 Bull Case
The strategic pivot to used vehicles is a clear success. A 33% increase in used unit sales drove the quarter, proving the company can capture demand from affordability-focused consumers and outperform the market.
Management's initial FY26 Adjusted EBITDA floor of ~$310 million signals strong conviction in continued earnings growth. This provides a solid baseline for investors, suggesting the profit recovery is sustainable.
SG&A expenses declined 0.8% YoY despite revenue growth, demonstrating effective cost management. This operational discipline is improving margins and profitability.
🐻 Bear Case
The new vehicle segment is struggling, with revenue down 7% and average selling prices falling 8.6%. This indicates significant consumer price resistance and creates a drag on overall growth.
Used vehicle inventory surged 41% YoY to nearly $600 million. While fueling sales growth, this ties up significant capital and creates a substantial risk of margin pressure if demand for used RVs softens.
The large GAAP net loss, caused by a non-cash tax charge, complicates the financial picture and may deter investors not focused on non-GAAP metrics like Adjusted EBITDA.
⚖️ Verdict: 🟢
Bullish. The operational momentum is undeniable, and the strategic shift to the much larger used vehicle market is the correct move in the current environment. While the new vehicle segment is weak and the inventory build-up warrants monitoring, the strong Adjusted EBITDA growth and confident forward guidance are more compelling. The GAAP loss appears to be non-operational noise that the market has correctly looked past.
Key Themes
Strategic Pivot to Used Vehicles Fuels Growth
The company's core growth driver has decisively shifted to used RVs. In Q3, used vehicle unit sales accelerated, growing 32.9% YoY, which drove a 31.7% increase in used vehicle revenue. This strategy effectively counters the consumer resistance seen on the new vehicle side, where prices are rising. Management confirmed this focus on the call, noting the used business will be a key differentiator and that they are building out a 'market leading used' supply chain.
New Vehicle Segment Struggles with Price Resistance
While used vehicles thrived, the new vehicle segment lagged significantly. Revenue fell 7.0% YoY despite a small 1.7% increase in units sold, the result of a sharp 8.6% drop in average selling prices (ASPs). On the earnings call, management noted 'signs of resistance on the new side of the business' due to rising OEM prices, confirming that affordability remains a major hurdle that the company has yet to solve in its new vehicle offerings.
SG&A Discipline Creates Operating Leverage
Camping World demonstrated strong cost control, with SG&A expenses falling 0.8% YoY to $411.0 million. With gross profit rising 3.7%, SG&A as a percentage of gross profit improved significantly to 79.5% from 83.1% a year ago. Management plans to continue this focus, highlighting a $15 million cost takeout opportunity in 2026 from technology and AI implementation.
Used Inventory Skyrockets, Increasing Risk Profile
The aggressive push into used vehicles has led to a massive inventory build. Used vehicle inventories stood at $595 million at quarter-end, a 41.4% increase from the prior year. This contradicts a statement made in the Q2 call where the CEO admitted they were 'probably slightly over inventoried on the used side'. While necessary to support sales, this level of inventory increases balance sheet risk and could lead to significant margin pressure if demand wanes or used vehicle values decline.
Headline GAAP Loss Driven by Non-Cash Tax Charge
The company reported a net loss of $(29.4) million, a stark contrast to its $95.7 million in Adjusted EBITDA. This divergence was primarily caused by a one-time, non-cash income tax expense of $207.5 million. This charge stemmed from a $175.4 million valuation allowance against deferred tax assets at the public holding company level, indicating historical operating losses have made it uncertain these tax assets can be realized. While not an operational issue for the quarter, it adds significant complexity to the financial statements.
Technology and AI Initiatives to Improve Efficiency
Management specifically called out technology as a source of future efficiency gains. They are planning to launch two additional CRMs and implement 'agentic AI' across parts of the business. These initiatives are expected to contribute to a $15 million cost takeout opportunity in 2026, demonstrating a focus on leveraging technology to improve the cost structure.
Other KPIs
Total same store unit sales grew strongly, reversing the declines seen in prior years. The growth was entirely driven by a massive +33.4% increase in used vehicle same store sales, while new vehicle same store sales were up only 2.9%. This confirms the growth is organic and not just from store acquisitions, and pinpoints the source to the used vehicle strategy.
Total gross margin decreased by 27 basis points YoY. This was a result of mix shift. While the higher-margin Used Vehicles segment (18.3% GM) grew as a percentage of sales, the even higher-margin Products, Service and Other segment (45.2% GM) shrank, as labor was reallocated to recondition used units. New Vehicle gross margin remains weak at 12.7%.
The company ended the quarter with a strong cash balance of $230.5 million, up from $28.4 million a year ago. Management emphasized balance sheet improvement as a key initiative, and this cash position provides flexibility for debt paydown, investment, and potential M&A activity.
Guidance
Accelerating. Management provided an initial FY26 Adjusted EBITDA floor of ~$310 million. Based on an estimated ~$270 million for full-year 2025, this implies YoY growth of at least 15%. This signals a strong acceleration in profitability recovery, driven by cost savings and continued momentum in the used vehicle business.
Decelerating. While still positive, the outlook for 'high-single-digit' growth represents a significant deceleration from the +30% growth seen in the current quarter. This may be a reflection of tougher comps or a more conservative initial forecast.
Management identified $15 million in additional cost takeout opportunities for FY26. These savings are expected from marketing technology, new CRMs, and the implementation of AI, underpinning the company's ability to expand margins.