Executives: Marcus Lemonis - CEO Tom Wolfe - CFO Brent Moody -

COO
Analysts: David Tamberrino - Goldman Sachs Samik Chatterjee - JPMorgan Seth Sigman - Credit Suisse Rick Nelson - Stephens Tim Conder - Wells Fargo Securities Craig Kennison -

Baird
Operator: Good afternoon and welcome to Camping World Holdings Conference Call to discuss financial results for the third quarter of 2016. At this time all participants are in a listen only mode, later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instruction] And as a remainder, this call is being recorded. On the call today from management are Marcus Lemonis, Chairman and Chief Executive Officer; Tom Wolfe, Chief Financial Officer; Brent Moody, Chief Operating and Legal Officer. I’ll turn the call over to Mr.

Moody to get started. Please go ahead, sir.

Brent Moody: Thank you. And good afternoon everyone and thanks for joining the call. A press release covering the company's third quarter 2016 financial results was issued this afternoon and a copy of that press release can be found in the Investor Relations section on the company's website.

I want to take this opportunity to remind everyone that management's remarks on this call may contain certain forward-looking statements within the meaning of the Private Securities Litigation reform act of 1995. These may include statements regarding our ability to generate earnings and increase cash flow, overall trends in our business and market, expectations and trends regarding customer behavior and growth, our comparative advantages, plans and ability to expand our customer base, new store openings, anticipated acquisition and expectations regarding our market share and market penetration. These statements involved inherent assumptions with known and unknown risk and other important factors that could cause our actual result to differ materially from our current expectations. Including those discussed and the risk factors section in our filing with the SEC you should not place undue reliance on these forward-looking statements which speak only as of today. And the company undertakes no obligations to update or revise these statements for any new information or future events.

Factors that might affect future results may not be in our control and are discussed in our filings with the SEC we encourage you to review these filings including the company's quarterly reports on Form10-Q for more detailed description of these factors. Please, also note that we will be referring to certain non-GAAP financial measures on today's call such as EBITDA and adjusted EBITDA that we believe maybe important to investors to assess the operating performance of our business. Reconciliations of these non-GAAP financial measures to be most directly comparable GAAP financial measures are included in our earnings release and filings with the SEC. Now, with pleasure I’ll turn the call over to Marcus.

Marcus Lemonis: Thanks Brent.

Well I can't believe we are finally here. It's a pleasure and very exciting to be speaking to you for the first time as a public company in our first earnings report. Our third quarter results were strong and we continue to see positive trends across the industry with no signs of a slowdown. In the third quarter, total revenue increased 4.6% to $1.01 billion. Income from operations increased 14.4% to 87 million and operating margin increased 74 basis points to 8.6%.

Net income increased 17.6% to 67.6 million with a 17.7 pro forma earnings per share increase to $0.94. And adjusted EBITDA increased 16.1% to 89.5 million and adjusted EBITDA margin increased 88 basis points to 8.9%. We recently announced two acquisitions of RV dealerships in the Minneapolis, Minnesota and the Tulsa Oklahoma markets, and the acquisition of five consumer trade shows in Dayton, Ohio; Milwaukee, Wisconsin; Knoxville, Tennessee; Columbus, Ohio and Chattanooga, Tennessee. We are going to continue to look for opportunities that are accretive acquisitions to grow both our market share and most importantly our proprietary database. Following our IPO we use 2,400,000 million of the proceeds to reduce our senior credit facility resulting in ratings upgrade by Moody's and S&P, with the reduced leverage and ratings upgrades we have refinanced our senior secured credit facility with a seven year, $645 million term loan facility and the five year $35 million revolving credit facility.

The new term loan bears interest at LIBOR plus 3.75% with a 75 basis points LIBOR floor. Outstanding balances under the new revolving credit facility bear interest at LIBOR plus 3.50%. This refinancing reduced our senior credit facility interest rate by 1%, reduced the LIBOR floor by a 0.25% and reduced the mandatory amortization by 4.6% per year. We believe we have a unique business that is capable of delivering sustainable long term earnings in cash flow growth through a model that offers the comprehensive portfolio of services protection plans, products and resources across a growing base of lifestyle oriented customers. Being the only provider of a full suite of services and products and operating the largest national network of RV-centric retail locations in the United States we are well positioned to benefit from continued growth in the install base of RV-owners that is being driven by a number of favorable industry trends, including a higher number of younger first time buyers, and the aging of the baby boomer demographic.

As more and more first time buyers enter the lifestyle, we continue to focus on lower price and higher margin, entry level towable units. These first time buyers have shown a high propensity to have us facilitate the financing of those units and purchase our other products and services. Such as extended warranty and road side assistance. We believe these first time buyers are more likely the upgrade their RV overtime as their family and needs change and become loyal customers for life. As many of you have heard me say on the IPO road show, one of our most important assets is our propitiatory database, with over 3.3 million active customers in our database that have transacted in the past 24 months.

This proprietary database allows us to cross-sell our full suite of services and plans with high margin recurring revenue streams. We will continue to focus on the growth of this database and opportunities to increase penetration of our recurring revenue products and services. Before I wrap up I want to take a moment to thank our more than 7,000 dedicated team member and employees. We have built a very experienced team here at Camping World and building a strong key team and company culture is something that I am very passionate about. The initial public offering was a huge milestone in the company's history, and something we can all be proud of.

While being public comes with great responsibility that also comes in great opportunities. I thank our team have the hard work, the passion and the dedication. I am honored to be leading this organization. Together we built an incredible business, together we will built an even brighter future. Those are my prepared remarks, I’ll now turn the call over to Tom, take you through the third quarter financial results in more detail.

Tom Wolfe: Thank you Marcus, good afternoon everyone. Total revenue for the quarter increased 4.6% to 1 billion with consumer services and plans revenue up 11.1% to 45.4 million and retail revenue up 4.3% to 960.5 million. The increase in consumer services and plans revenue was driven primarily by increased revenue from our insurance, credit card, road side assistance and Good Sam membership program. The increase in retail revenue was driven by increases in finance and insurance, new vehicle and parts and services of 16.7%, 16.5% and 5.6% respectively. This is partially offset by a decrease in used vehicle revenue of 23.6%.

The decrease was primarily due to reduced RV inventory of availability resulting from fewer trade on new unit sale, and the elimination of automobile unit sales as a result of the distribution of the auto match business in the second quarter of 2016. On a unit basis, new RV unit sold increased 22% to 14,333 units, and the average selling price of the new RV units decreased 4.5% to $38,040. Used vehicle units sold decreased 24.4% to 7,986 units and the average selling price of a used vehicle increased 1% to $22,767. As Marcus discussed the trend towards towable units and first time buyers continues to be net positive to the business. We believe this continues to expand the base of RV customers and allows us to cross sell a higher number of other products and services.

Most notably is finance and insurance, which increased to 9.3% of total vehicle revenue in this year’s third quarter versus 8.2% in last year’s third quarter. Same stores sales increased 5.8% in the quarter to 831.2 million, the increase was primarily driven by a 13.5% increase in new vehicle same stores sales, a 14.9% increase in finance and insurance same store sale, and a 4.7% increase in parts services and other same store sale, partially offset by a 13.6% decrease in used vehicle same stores sales. The company operated a total of a 120 retail locations as of September 30, 2016. Compared to 117 retail locations at September 30, 2015. On a same store basis, we operated a 107 retail locations.

Total gross profit increased 8.8% to 282.1 million and total gross margin increased 110 basis points to 28%. On a segment basis gross profit increased 18.6% to $25.5 million and gross margin increased 353 basis points, 56.1% in the Consumer Services and Plan segment. The majority of the gross margin increased was driven by an increase in the insurance and credit card programs and increase in roadside assistance contracts enforced [ph] and a reduction in roadside assistant claim cost. In the retail segment gross profit increased 8% to $256.6 million and gross margin increased 91 basis points to 26.7%. The majority of the increase in the retail gross profit margin was driven by an increase in our finance and insurance revenue.

Selling, general and administrative expenses increased 7% to $188.9 million. The majority of the increase in SG&A was driven by two items. The first was a $6.6 million increase in wage related expenses which was mostly related to the increase in unit sold in the five new retail locations added this year, and one acquired location expected to open in the fourth quarter of this year. As we discussed, we have a highly variable cost structure which will increase and decrease its sales. The second is a $4.9 million of additional lease expense primarily attributable to right to use leases that were derecognized in the fourth quarter of 2015, as a net requirement to be reported as operating leases.

As a percentage of total gross profit, SG&A expenses declined 114 basis points to 66.9% as we continue to maintain price expense control. Floor plan interest expense increased to $4.3 million from $3 million last year. The increase was primarily attributable to higher inventory for new dealerships added in the past year and a 41 basis points increase in the average floor plan borrowing rate. Other interest expense decreased to $12.7 million from $14.4 million from a $2.7 million decrease attributable to a reduction and right to use liabilities partially offset by a $1.1 million increase from incremental borrowings and a 50 basis point increase in the borrowing margin on our term loan facility in December of last year. Net income for the quarter increased 17.7% to $67.7 million and pro forma earnings per common unit increased 17.7% to $0.94.

Please refer to the table in the earnings release for discussion of pro forma earnings per unit. EBITDA which includes floor plan interest expense increased 11.9% at 88.9 million, and our EBITDA margin increased 58 basis points to 8.8%. Our adjusted EBITDA which also includes floor plan interest expense and excludes nonrecurring items increased 16.1% to $89.5 million and adjusted EBITDA margin increased 88 basis point to 8.9%. Please refer to the tables in the earnings release for a reconciliation of a net income to EBITDA and adjusted EBITDA. Our working capital and cash balance at the end of the quarter were 197.2 million and 115.1 million respectively.

We had no borrowings under our 20 million revolving credit facility, 828.2 million of term loans outstanding under our senior secure credit facility and 532.5 million of floor plan notes payable under a floor plan facility. Inventory at the end of the quarter decreased 7 % to 808.1 million and we believe our inventory level and ageing are in great shape as we enter the off season. Subsequent to the end of third quarter, we completed our initial public offering of 11,363,636 shares of Class A common stock at IPO price of $22 per share. Net proceeds to the company were 233.4 million, net of underwriting discounts and commissions. In addition on November 4th, the underwriters exercised their option, in part, to purchase an additional 508,564 shares of Class A common stock.

On November 9th, we close on the purchase of these additional shares and received 10.4 million in additional proceeds, net of underwriting discounts and commissions. In accordance with our fee structure, we use the net proceeds from the IPO to purchase newly issued common units from CWGS enterprises, LLC, who intern used the proceed to repay 200.4 million outstanding under the under the term loans facility and will use the remainder for general corporate purposes, including the potential acquisition of RV dealerships. Further on November 8th, we entered into a new $680 million senior secured credit facility through our subsidiary CWGS Group, LLC as borrower. Including a seven-year 645 million term loan facility plus a 3.2 million original issue discount at LIBOR plus 3.75%, with a 75 basis points floor and 1% amortization per annum and a five-year 35 million revolving credit facility. We used the proceeds to repay in floor our existing CWGS Group, LLC senior credit facility.

While we are not looking to initially provide formal guidance, we can tell you that our expectations for the overall performance of the business for the fourth quarter in 2017 have not changed. As Marcus indicated, we are pleased with our third quarter results and the underlying trends of our business and across the industry. And with that said, I would like to turn the call back over to the operator to start the Q&A session. Operator?

Operator:

Operator: And we will hear first from David Tamberrino of Goldman Sachs.

David Tamberrino: Great.

Good afternoon gentlemen can you hear me fine?

Marcus Lemonis: Yes sir.

David Tamberrino: I think my first question is just a topline growth for the quarter it looks like it came in the little bit better than what you had really been thinking of communicating to us not to on the go. Wondering what really drove the -- probably better close to that month from a new unit sales perspective in your deal?

Marcus Lemonis: We originally started out the quarter and we had a blip in month of July and while we didn’t see that trend continue into August I was just not as confident that we could not only hit our September number but make up to ground for what the mist was in July. As we drove down that average selling price it definitely had an impact on us. And we were able to get a little bit more aggressive online particularly on the towable side as we ended the season and we were able to make up a lot more ground than I originally anticipated when I gave you the guidance.

David Tamberrino: And then within your prepared remarks Marcus you mentioned you feel like the underlying strength of the industry continues to bode well for the future. I am wondering if we think about this week's results and the election, how did that change if at all your business planning and how are you thinking about the go forward for the industry?

Marcus Lemonis: I don’t see any change in our business, in fact even through the week other than Tuesday itself. We did not see a change in foot traffic, in registering, in phone calls. On Tuesday we definitely did because people were out voting as we wanted them to be. But we are not hearing anything from our employees about any reaction from our customers and more importantly any transactions that had been completed or agreed to prior to the election did not unwind post the election.

So we are not seeing any trend, from an economic standpoint we don’t anticipate any material change to our business.

David Tamberrino: And then just last one for me. As we think about moving from '16 to '17 we are looking at an industry RV as well as the towable units above 400,000 which I think would be a new record. How much further in terms of penetration as percentage of licensed drivers is a percentage of U.S. population? Do you think we can go for this cycle before we reach a peek or plateaued level, at least in terms of RV ownership?

Marcus Lemonis: I don’t even want to predict what I think the industry will do, but I think there is still planning of runway left because as we’ve driven down the average price of the unit, we know that we’ve also driven down the average age of the buyer.

And so the sales funnel is significantly wider than it was during the last downturn. So we have the existing installed base that existed when the downturn happened last time, plus new first time buyers that would have been any historical average age, plus all that buyers that have been added to it as the average age has driven down. I don’t see any reason, but as a company we constantly are thinking about that and so we are always tightening up, as you see there is improvement in our SG&A in the third quarter. We’re always tightening up our expenses we’re always anticipating that. We are going to continue to exercise the same strategy as it relates to acquisitions so that, if the market flattens out a little bit we can continue to grow our base in not only the existing markets, but in new markets to make up for that.

From a cyclicality standpoint this is always the elephant in the room, which is what people usually want to talk about, only a section of our business is depended on it, our Good Sam business, our camping world business, our parts business, our service business, our used business is not impacted by any change in shipments that a new RV manufactures would be impacted by.

Operator: And we will hear next from Ryan Brinkman of J.P Morgan.

Samik Chatterjee: Hi this is Samik Chatterjee on behalf of Ryan Brinkman. The first question we had is about the recent consolidation that we’ve seen amongst the RV manufactures when they were buying Winnebago, Grand Design and Thor Jayco. Wanted to get your thoughts about, do you expect more consolidation in that -- I the manufactures and how do you think that impacts your position in the market place?

Marcus Lemonis: I feel like we have a pretty good handle on what is an opportunistic acquisition for a manufacturer and what isn’t by just understanding the landscape.

From our prospective the acquisitions particularly store of Jayco, reaffirm stores commitment to towable and our company’s commitment to towable. Jayco was already is fantastically run company, but Thor brings in my opinion a little bit more innovation and little bit more aggressiveness to the table. Our relationship with Thor is already so strong, and as everybody knows, we do enjoy certain financial benefits based on the size of our purchases. We anticipate that not only we’ll be able to enjoy a little bit more with Jayco, but more importantly we think that new markets could become available for us. If we obviously earn that right and so we see it as a positive.

As it relates to win a Winnebago and Grand Design, our business with Winnebago is roughly 18% of the entire portfolio, we historically have not bought anything from Grand Design across our entire company, we do no business with them. So we don’t see a positive or negative change as it relates to our business.

Samik Chatterjee: Got it, that’s helpful. And then just want to clarify some of these numbers that we were disclosed today, new vehicle unit sales were up 22%, what is that number on a same store basis because, the 13.5 that you reported is that on a unit basis or a revenue basis?

Marcus Lemonis: Tom will you take that one please.

Tom Wolfe: Yes, that’s on a revenue basis.

Samik Chatterjee: So what would be the same store new vehicles sales on a unit basis, are you disclosing that?

Tom Wolfe: We’ve not disclosed that in the past and at this point in time, we’re not disclosing it going forward.

Samik Chatterjee: So we were looking at the RVIA data base for all the industries track in the third quarter, and looks like the industry is up 19% year-over-year and the third quarter, maybe if you can directionally comment on how you track rated for the industry in third quarter?

Marcus Lemonis: I don’t spend a lot of time -- I’ll Tom answer the technical answer, but I want to give you the non-technical answer. I really don’t care what the rest of the industry is doing. What I care about is, what we’re on a same store sales basis in the local market, as long as it’s profitable. And so what our company is not going to do is, overstock inventory to a point where it requires us to be heavy discounters or move merchandize at a pace that does not really contribute to our EBITDA margin targets.

We’re an EBITDA margin target company, not a focus on revenue only company and so while we think that the data from the industry is helpful keep in mind that we do not follow the trends on new motorized eyes like the balance of the industry because Roger Nuttall who is our President Camping World Retail Company and I have agreed that that is not our business model. And so there may be some skewing in the numbers as it relates to what the industry is doing overall new without breaking it down by categories. We’re not riding that same wave on the motor eyes side, for us it’s a measurement of how are we performing based on our own metrics, based on our own performance, based on our own standards, and yes we look at our competitors in the local market to see what our market share is in that market and that market only. What’s happening in the market that we’re not in is a relevant other than that Brent and I use that data to determine not only our acquisition strategy, but Greenfield build strategy. So, just to quickly focus on what’s happening in the markets where we operate, we don’t care about what’s happening in the markets where we don’t operate, other than we use that data for acquisition targets and new store openings.

Tom Wolfe: Yeah, Mark. I think it’s important to know through that RBIA data would track shipments, not retail sales. So, we’re really not talking apples-to-apple there.

Samik Chatterjee: Got it. That’s helpful.

Thank you.

Operator: And we’ll go to the question from Seth Sigman of Credit Suisse.

Seth Sigman: Thanks and good afternoon. Nice quarter guys. My first question is just on the used business.

Can you just give us of the supply situation today and in general how you’re thinking about the outlook for that segment?

Marcus Lemonis: The supply side of the used business is tough today. And while there is inventory available I’ve drawn a line in the sand with our team that we’re not going to chase inventory that ultimately would yield us a low single-digit margin and leave us with high risk on the trade. We’ve seen that really tighten up in last 12 months to 24 months, but we also know that all the first time buyers that have come into the market place in the last 24 months that we and we know their trade cycle being 24 to 36, we anticipate the supply to grow in the 2017 calendar year, and our philosophy that we’ve stuck with sometimes to our payroll to pay dividends. What we know for sure now, is that we have a very tight used inventory management system, what we know today is that our gross margins continue to be strong and in some cases grow. And what we know is that we’re not comfortable taking risk with inventory that we buy for a dollar then we move for a $0.10, then we recondition it’s a $0.10 and then we pay a commission for $0.10 and we sold it for a $1.34.

That is not our business model and that is not in our opinion a good return on capital. It looks good on the revenue side, but again we’re gross margin, SG&A and EBITDA focused. And so where we are probably more disciplined and then you would think, but that’s -- it’s paid dividends particularly if things get tight.

Seth Sigman: Okay. Understood.

That’s helpful. And then just the increase in F&I as a percent of sales this quarter, I mean that’s been the trend for some time now, but obviously a really nice increase. Is that mix of new versus new or is it mix within new or something more specific that you’re doing from a sales perspective to drive that attachment rate?

Marcus Lemonis: Roger Nuttall in my opinion has been a legendary and continuing to focus his team on driving down the average cost of the units that we stock and also that we sell. And as that average price drives down, we continue to penetrate the number of products consistently on a lower price units, so that obviously raises that number and it raises the gross profit in comparison to that number. Additionally, we have added more trainers to our arsenal and giving them a smaller footprint of stores to manage where they are going in and they work with these S&I managers on a very regular basis, and we use these dashboards and the systems that we believe make a difference.

But it's largely driven by a continued effort to drive down the average selling price. Keep in mind that as you drive down that average selling price, you are seeing a buyer that is typically more focused on their monthly payment and because of that effect, RVs are typically financed anywhere from 10 years to 20 years that means that a $1000 warranty, a $400 road side assistance product, a $500 maintenance product that gets amortized over a longer term and because of our selling style and our selling system and our value added systems we’re able to really penetrate that, I would expect that to stay strong, but I would not expect it to continue to grow at the same rates. There is some feeling there, I don’t think we’ve reached that yet because we’re driving that average selling price down but our numbers, we feel very good about.

Seth Sigman: Right. All right, thanks very much.

Operator: And we will go next to Rick Nelson of Stephens.

Rick Nelson: I would like to ask about the acquisitions pipeline, how that looks? Mostly single store operators talk to the bigger players -- it’s seen -- summery shows more recently you could address the pipeline, Marcus?
Marcus Lemonis : Absolutely, our pipeline philosophy is solely -- I mean I can't stress it enough slowly focused on, yes it has to add cash flow, yes it has to be at the right multiple. But what is it going to do for the data base. And as we continue to look for new markets to go to and new acquisitions to make, all I want to know is what's he going to do to the file and how are we going to cross sell to those folks. And one think that everybody on this call can expect to see out of the company in the near and distant future is a diversification of the types of things that this company is going to get into that we believe will add value to the Good Sam club, to Good Sam credit card, to Good Sam road side assistance products and our Good Sam insurance in the warranty.

Anything that’s going to add value to that. And so as we make these acquisitions we are looking for good data basis, good traffic, if you think about the shows they bring tremendous customer data to the table when you know they are in that life style, it's people calling themselves out. If you can envision a sales funnel, it's a greatest funnel in the world. The acquisitions of the dealerships not only bring cash flow and parts and service and other things we love, but they also bring a historical data base of people that we know bought units overtime. And so if you look at the acquisition that were made, that we’ve announced, they both bring a nice data base to the table, they bring an opportunity for us to add camping world stores, collision centers, parts, service those recurring revenue things that aren’t solely tied to vehicles.

But our acquisition strategy from a dealership standpoint will always be tilted towards towable centric dealers. Our acquisitions on the show side will always be tilted to high volume, high traffic, consumer shows where we can gather names, but this company will continue to look for businesses whether it's in the RV space or outside the RV space that we believe will add legs to this stool that can support Good Sam and flatten out this so called cyclicality that I keep hearing about from everybody. And whether that’s other outdoor leisure businesses or lifestyle companies whatever it may be, anything that can build the Good Sam base. That’s the crown jewel here. That’s the price possession.

Anything that can build that will get focused on. Pipeline is rich and we are always, always talking to people them integrating with our company.

Rick Nelson: Thanks for that color. Two dealer transactions that you made here recently, can you comment on the multiples that were paid?

Marcus Lemonis: I can tell you that they range from less than a half turn to three times and in most cases our acquisitions typically range, some we pay zero for by their inventory and their assets with no premium on the earnings, because there is distress situation, others they are looking for just an exit strategy and then there is other who just see it as an opportunity to sell before we come to the market anyway. So it's anywhere between zero and three times on those two.

Operator: And we’ll go to the question from [indiscernible] of Bank of America.

Unidentified Analyst: I was wondering if you can give a just little bit more color on the how the Good Sam membership trended in the quarter versus last year?

Marcus Lemonis: Tom?

Tom Wolfe: We are up on the overall Good Sam membership side and what we’re really keenly focused on is the 24 month active count and the 24 month active count was up about 45,000 from June 30 of '16, up just 3.324 million numbers [ph] or active customers.

Marcus Lemonis: And I want to be clear -- I want to just add a little color to that if I may. We are very disciplined on always looking for the interest of raising the price and holding on to the file. And we have disciplined ourselves well to avoid over promoting the membership in a way that minimizes the importance of it.

One thing that we are spending a lot of time on right now is looking for ways to create additional stickiness whether that’s connecting it more with the credit card or finding other benefit that RV'ers they use in their life that are not RV oriented. We are going to continue to do that. So not going to give away the membership, not going to discounting, not going to drop the price whether on a regular price or sale price and look to add value. Those are the two levers that we are constantly thinking about. And it is difficult because there are movements and time where you want to put your foot on the gas and grow the file, but you cannot compromise the integrity of the pricing structure, because you may have a shorter gain and long term punishment and I’m in this company for the rest of my life and I can’t afford a shorter gain.

Unidentified Analyst: Thank you, that the extra colors were very helpful. Just in terms of the industry, can you talk a little bit about the inventory levels that you seeing for Camping World or may be some other competitors. So what is the industry inventory turns looking like, and how is that trending kind of overtime and more recently?

Marcus Lemonis: We don’t have any actual data that would support our industry claim because we don’t have access to other folk’s inventory. But there are two things that we know for sure, we sometimes, not today, but some the manufactures, manufacture at a rate that is greater than our inventory level and it has to be going somewhere and we don’t think we’re getting out sold, the numbers support that we’re not getting out sold. So that’s one key metric in my opinion.

The other is, as we make acquisitions and we’ve done it historically for years, we tend to see that every acquisition we make, there inventory turns are inferior to ours, even when the operators are successful and they have got great EBITDA margins. But I believe the inventory manager, we have a gentleman by the name of Lukman Wagner [ph] who overseas this entire enterprise, as really -- with about a 15 people, has really put this to a science. The level of sophistication that we manage our RV inventory with is probably as close to a big box retailer managers there big box stores. And so, while the stores have the entrepreneurial spirit to order inventory and we that, it’s goes through our filter system that strongly regulates levels and it’s in a real time basis. So on a thirty day trailing average, we’re looking at trying to get over three turns, trying to get over four turns and any drag on sales would adjusted the inventory down, any raise in sales would allow the inventory to go up and it’s adjusted every 30 days.

We believe that’s been a strong contributor to our organic growth and we think there is more opportunity there.

Unidentified Analyst: Thank you, it’s helpful. And then just on the real estate pipeline for potential, how do you see about your real estate pipeline for potential Greenfield openings? And then, can you talk a little bit about how you evaluate Greenfield versus acquisitions going forward?

Marcus Lemonis: Brent, could you take that please.

Brent Moody: We have a two stores under construction and we have a few different sites, that we’re in various stages on, just having a properties under contract and through the entitlement process and as far as how we evaluate acquisitions first is, new Greenfield locations, we have an opportunistic strategy. So we’re looking in the market for buying opportunities, we’re looking line availability and many times we’ll go into -- and we’re looking at pricing.

We’re looking at what we have to pay on an acquisition versus what we would pay for a piece of real estate and to develop the property. And in many instances as we go into a market, one strategy may make more sense than the other. We may go into a market, if we can’t do an acquisition, tie up a piece of property, put up a sign that we’re building a store and we’re coming soon and that may lead to an acquisition from our competitor in the market. We’re somewhat in different as to whether we’re doing an acquisition or it’s going to be a Greenfield location, it’s just the best opportunity that present itself.

Marcus Lemonis: Let me give a little more color real quick on that.

As Brent and I are looking at those markets, keep in mind the couple of key things. I don’t want to go into a market where the land and the building are going to be expensive, because that means I’m giving with high fix cost. I don’t want to go into a market where the advertising is going to be close to a top 20, top 30 markets. I’ll never be able to get my message out at an affordable rate. And I never want to go into a market where I believe that the cost of living is so high that the wage has to be commensurate with that, we already pay at the top end of the market.

And so we really look for those -- I don’t want to call them Tier 2 markets, but Ib markets, Tier 2, Tier 3 markets where land is affordable, building is affordable, advertising is affordable, and we could pay at the top end of the market and it’d still be affordable. We are an EBITDA focused margin company and so going into Los Angeles and doing $85 million of revenue and making $36, I’m just not interested in that. And so those acquisitions have to have that extra little color on them -- the Greenfield excuse me.

Unidentified Analyst: Great. Thank you.

That’s very helpful.

Marcus Lemonis: And by way there is -- you could go into a 150 cities tomorrow, and in the company would have no problem doing it. So, there is plenty of runway left including applying the philosophy that I outlined.

Operator: [Operator Instruction] we’ll go next -- at this time, we will hear next from Tim Conder from Wells Fargo Securities. Please go ahead.

Tim Conder: Two questions here, one in markets on the related type of the adjacencies you were alluding to. You talked a little bit also around the IPO about parts and accessories and distribution opportunity as well as regional service centers. It would seem that if that could fit into that bucket would you tie that customer in sort of on a proactive basis, hey, we see you might want to check this out on your RV, whether it’s from a service side or parts and accessories. But you need that fast turnaround getting the product to the consumer or the dealer location within a few days. Do you have anything you can you expand on that?

Marcus Lemonis: Yeah.

So, there is two ways I’d like you to think about it. The first is, we’re always looking for verticals insight of the RV sector that utilized our existing asset base, our inventory, our facilities. And so what’s been developed is a wholesale distribution model that we’re competing with other wholesaler distributors, but what we’re not bringing to the table is additional distribution centers, additional local market distribution points, additional overhead, additional inventory. We made the decision to utilize our three national distribution centers and at our 120 plus locations as the factor of distribution centers. And we want to continue to find every last dollar of opportunity to turn that inventory and capture margin even though it’s at a lower rate, because as you know wholesale is at a lower rate, we still want to just turn and earn, as fast as we can.

So, the faster we turn that inventory, the easier it is for us to go back to our vendors and look for an additional quarter of a point, half of point, one point or margin and so it is the volume game in that sense and we love the vertical there. A good example of the vertical is utilizing our relationship that Good Sam has with camp grounds around the country who also have little parts stores inside their camp grounds to become their distributor. We authorized several thousand camp grounds to use our Good Sam, housekeeping seal of approval, Good Sam approval on their camp ground. We want to start to tie in a more plentiful relationship where we can find verticals with wholesale, shared data basis and sale products and give them a revenue share, so we’re always looking for ways inside this space. However, we have to be smart enough to know that in order for this company to do the kind of numbers that I expect it to, we have to look for other affinity like industries or categories where the Good Sam club, credit card and product and services can lay into so that the RV sector can be a leg on the stool, side by side with other affinity type organizations or industries or products where we can duplicate that.

Because, we are not going to ever be able to convince you guys that the cyclicality is not that big deal. And I believe that the value of our business is really the hidden gem behind Good Sam, and I know that I have the pressure of demonstrating that and I need to do that and diversify so that I could highlight it. And so I am looking hard, we believe we have some good opportunities out there. But again the opportunities to add legs on the stool are meant to slowly and singularly give Good Sam a diversification to grow its file.

Tim Conder: Okay, and then on the regional service center part of the question?

Marcus Lemonis: So we don’t have one today, but we are going to test one out where we believe that we can add heavier type work whether that’s chasses or transmission work or frame work or heavier body work.

I would expect that in the next 24 months we are going to explore the idea of a regional service center where hub and spoke model can exist for the heavier repair works that we currently aren’t comfortable or don’t offer at our current locations. But we do not have that today.

Tim Conder: Okay, and then last question here with the new debt agreements that you’ve put in place and granted it’s two days and who knows what will happen in the absolute change here, it's not that much, but significant move in the bond market on a percentage basis, any swaps or anything that you all put on with the new debt agreements?

Marcus Lemonis: No and never.

Tim Conder: Okay, thank you.

Operator: And we will hear next from Craig Kennison of Baird.

Craig Kennison: Marcus, as you emphasis towables over motor homes, what are the downstream implications for Good Sam and for your parts and service attachment rate, do those towables take on more or less in terms of parts and services?
Marcus Lemonis : Well, I want to remind everybody that we see over 3 million parts and service transactions on an annual basis through our Camping world and our parts and service centers. And we only sell 80,000 units. So it's important to remember that we serve Good Sam and Camping World, non-dealership business serves the installed community. The RV community is going to continue to sell motor homes and Good Sam because it sells so much people outside of our dealership, that’s where the bulk of the revenue comes from. We will continue to enjoy whatever opportunity the market wants to create on motor homes side, we don’t see to take hit.

We’re making a calculated decision to just take motor homes out of our -- just our dealership -- new motor homes let me clarify, new motor homes out of our dealership business that are at the top of the range. We still sell gas motor homes, $80,000, $90,000. It’s the $140,000 to $150,000 gas motorhome and the $225,000 plus diesel motorhome we just have no interest in it, and that’s like basically taking the heart and just cutting the fat off and saying -- yes, in the good times we’re mincing a little bit, but in the bad times we avoided a big problem.

Craig Kennison: Got it and then with respect to the consumer shows that you’ve required under Good Sam, could you walk through the economics that realize you’re are really chasing an opportunity to grow your file, but what are the economics of a show like that in terms of the revenue and profit contributions?

Marcus Lemonis: Typically the show -- like the shows we just bought on -- Tom correct me if I’m wrong, I think they earned closed to $300,00 is that right Tom?

Tom Wolfe: That’s correct.

Marcus Lemonis: And you may pay around $1 million so you could pay anywhere from three to four times.

That’s the purely economic analysis, there may be shows that you have to pay four and five times as far as they have a 20, 30 year history and I am not cared to do that because we have a strangle hold in the market. The additional benefit from the database and from the products is really our gravy on the investment. So you will rarely see us making investment that is purely for the database, there has to be some intrinsic value in it, that doesn’t mean I won't do it. But in most cases like the ones you just mentioned where is a return on it from a cash standpoint and then the added benefit from the database.

Craig Kennison: That makes sense, thanks.

Congratulations.

Operator: And we have no further questions in the queue. I would now like to turn the call over the Marcus Lemonis for any additional or closing remarks.

Marcus Lemonis: No, I just want to thank everybody for helping us to this process. It's been an exciting couple of months and at the end of the day we made a decision as we should have to continue to run our business the same way we ran it before and look for opportunities to manage cash, and we hope that we demonstrated that in the third quarter and plan to continue to do that.

So if there is no more questions, thank you very much.

Operator: And again that does conclude the call. We would like to thank everyone for your participation and you may now disconnect.