Camping World Holdings, Inc. (NYSE:CWH) Q2 2023 Earnings Call Transcript August 2, 2023 8:30 AM ET Company Participants Lindsey Christen - Executive Vice President & General Counsel Marcus Lemonis - Chairman and Chief Executive Officer Matthew Wagner - Executive Vice President Conference Call Participants Joe Altobello - Raymond James Daniel Imbro - Stephens, Inc. Noah Zatzkin - KeyBanc Capital Markets John Healy - Northcoast Research Brandon Rolle - D.A. Davidson Tristan Thomas - BMO Capital Markets Alice ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Basis of Presentation and Forward-Looking Statements](index=4&type=section&id=BASIS%20OF%20PRESENTATION) The report's basis of presentation is defined, along with cautionary notes on forward-looking statements and associated risks - The report defines key entities including 'Company' as Camping World Holdings, Inc, and its subsidiaries like CWGS Enterprises, LLC ('CWGS, LLC')[342](index=342&type=chunk)[343](index=343&type=chunk)[345](index=345&type=chunk) - Forward-looking statements are subject to risks including financing availability, consumer preferences, IT disruptions, and ongoing litigation[327](index=327&type=chunk)[347](index=347&type=chunk)[349](index=349&type=chunk) [Item 1. Financial Statements (Unaudited)](index=10&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements detail the company's financial position, performance, and cash flows Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | **Assets** |||| | Cash and cash equivalents | $54,458 | $130,131 | $133,957 | | Inventories | $2,077,024 | $2,123,858 | $1,995,796 | | Total current assets | $2,443,893 | $2,483,662 | $2,467,947 | | Total assets | $4,803,093 | $4,800,147 | $4,610,301 | | **Liabilities** |||| | Accounts payable | $200,516 | $127,691 | $249,218 | | Notes payable – floor plan, net | $1,155,356 | $1,319,941 | $1,000,808 | | Total current liabilities | $1,841,948 | $1,872,327 | $1,770,563 | | Total liabilities | $4,544,850 | $4,552,461 | $4,310,370 | | **Stockholders' Equity** |||| | Total stockholders' equity | $258,243 | $247,686 | $299,931 | Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Total revenue | $1,900,721 | $2,168,632 | $3,387,601 | $3,831,028 | | Total gross profit | $571,102 | $716,793 | $1,012,122 | $1,276,995 | | Income from operations | $132,677 | $254,100 | $191,276 | $403,225 | | Net income | $64,723 | $197,985 | $69,626 | $305,284 | | Net income attributable to Camping World Holdings, Inc | $28,703 | $84,311 | $31,872 | $129,041 | | Basic EPS | $0.65 | $2.02 | $0.72 | $3.03 | | Diluted EPS | $0.64 | $2.01 | $0.71 | $3.01 | Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---| | Net cash provided by operating activities | $227,964 | $183,994 | | Net cash used in investing activities | $(131,907) | $(131,505) | | Net cash used in financing activities | $(171,730) | $(185,864) | | Net decrease in cash and cash equivalents | $(75,673) | $(133,375) | | Cash and cash equivalents at end of period | $54,458 | $133,957 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes provide context on accounting policies, revenue, debt, leases, and other key financial statement components [1. Summary of Significant Accounting Policies](index=16&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company consolidates the financial results of CWGS, LLC, where CWH holds sole voting power and control; as of June 30, 2023, **CWH owned 52.6% of CWGS, LLC**[390](index=390&type=chunk) - A February 2022 cybersecurity incident affecting **~30,000 individuals** is not expected to have a future material impact following a settlement agreement in June 2023[365](index=365&type=chunk)[368](index=368&type=chunk)[394](index=394&type=chunk) - The business is seasonal, with **higher revenue and profits in Q2 and Q3**; SG&A as a percentage of gross profit is typically higher in Q1 and Q4[225](index=225&type=chunk)[369](index=369&type=chunk) - The Company early adopted ASU 2021-08 as of January 1, 2023, which did not materially impact its financial statements[2](index=2&type=chunk)[370](index=370&type=chunk)[425](index=425&type=chunk) [2. Revenue](index=20&type=section&id=2.%20Revenue) - For the six months ended June 30, 2023, **$64.1 million of recognized revenues** were from the beginning-of-period deferred revenue balance[373](index=373&type=chunk) Total Unsatisfied Performance Obligations (in thousands) | Year | Amount | |:---|:---| | 2023 | $60,761 | | 2024 | $54,981 | | 2025 | $25,580 | | 2026 | $13,284 | | 2027 | $7,231 | | Thereafter | $4,822 | | **Total** | **$166,659** | [3. Inventories and Floor Plan Payables](index=21&type=section&id=3.%20Inventories%20and%20Floor%20Plan%20Payables) Inventories (in thousands) | Category | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Good Sam services and plans | $565 | $625 | $343 | | New RVs | $1,206,493 | $1,411,016 | $1,329,604 | | Used RVs | $651,396 | $464,310 | $358,060 | | Products, parts, accessories and other | $218,570 | $247,907 | $307,789 | | **Total** | **$2,077,024** | **$2,123,858** | **$1,995,796** | - The Floor Plan Facility allows borrowing up to **$1.70 billion**, maturing September 30, 2026; in July 2023, the committed notes payable **increased by $150.0 million to $1.85 billion**[401](index=401&type=chunk)[429](index=429&type=chunk) Floor Plan Facility Interest Rates | Category | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Floor plan notes payable | 7.00% | 6.01% | 2.93% | | Revolving line of credit | 7.35% | 6.21% | 3.13% | Floor Plan Facility Outstanding Amounts and Available Borrowings (in thousands) | Metric | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Total commitment | $1,700,000 | $1,700,000 | $1,700,000 | | Less: borrowings, net of FLAIR offset account | $(1,155,356) | $(1,319,941) | $(1,000,808) | | Less: FLAIR offset account | $(133,483) | $(217,669) | $(277,867) | | Additional borrowing capacity | $411,161 | $162,390 | $421,325 | | Unencumbered borrowing capacity | $322,498 | $85,082 | $310,889 | | Revolving line of credit: Additional borrowing capacity | $49,115 | $49,115 | $49,115 | | Letters of credit: Additional capacity | $18,629 | $18,629 | $18,500 | [4. Restructuring and Long-Lived Asset Impairment](index=23&type=section&id=4.%20Restructuring%20and%20Long-Lived%20Asset%20Impairment) - The 2019 Strategic Shift involved divesting from Outdoor Lifestyle Locations, with total estimated restructuring costs of **$121.0 million to $129.7 million**[9](index=9&type=chunk)[11](index=11&type=chunk)[407](index=407&type=chunk)[435](index=435&type=chunk) 2019 Strategic Shift Restructuring Accrual (in thousands) | Metric | Balance at June 30, 2019 | Charged to expense | Paid or otherwise settled | Balance at June 30, 2023 | |:---|:---|:---|:---|:---| | One-time Termination Benefits | $— | $1,239 | $(1,239) | $— | | Lease Termination Costs | $— | $19,579 | $(19,579) | $— | | Other Associated Costs | $— | $41,007 | $(39,998) | $1,009 | | **Total** | **$—** | **$61,825** | **$(60,816)** | **$1,009** | - The Active Sports Restructuring, initiated March 1, 2023, has estimated total costs of **$3.8 million to $4.1 million**[14](index=14&type=chunk)[409](index=409&type=chunk)[440](index=440&type=chunk) Active Sports Restructuring Costs Incurred (in thousands) | Metric | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |:---|:---|:---| | One-time termination benefits | $193 | $193 | | Incremental inventory reserve charges | $2,646 | $2,646 | | Other associated costs | $420 | $420 | | **Total** | **$3,259** | **$3,259** | Long-Lived Asset Impairment Charges (in thousands) | Type of Asset | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Leasehold improvements | $0 | $740 | | Operating lease right of use assets | $476 | $476 | | Furniture and equipment | $0 | $329 | | Software | $0 | $1,362 | | Construction in progress and software in development | $0 | $113 | | Intangible assets | $0 | $4,501 | | **Total** | **$476** | **$7,521** | [5. Assets Held for Sale](index=30&type=section&id=5.%20Assets%20Held%20for%20Sale) - As of June 30, 2023, two properties were classified as held for sale, with associated secured borrowings of **$4.1 million**[413](index=413&type=chunk)[445](index=445&type=chunk) Assets Held for Sale and Related Liabilities (in thousands) | Category | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Assets held for sale: Property and equipment, net | $4,635 | $0 | $0 | | Liabilities related to assets held for sale: Current portion of long-term debt | $206 | $0 | $0 | | Liabilities related to assets held for sale: Long-term debt, net of current portion | $3,919 | $0 | $0 | [6. Goodwill and Intangible Assets](index=32&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill by Segment (in thousands) | Segment | Dec 31, 2021 | June 30, 2022 | Dec 31, 2022 | June 30, 2023 | |:---|:---|:---|:---|:---| | Good Sam Services and Plans | $23,829 | $24,234 | $24,234 | $24,234 | | RV and Outdoor Retail | $459,805 | $483,050 | $598,189 | $631,510 | | **Consolidated Total** | **$483,634** | **$507,284** | **$622,423** | **$655,744** | Intangible Assets, Net (in thousands) | Category | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Good Sam Services and Plans | $4,646 | $5,074 | $5,600 | | RV and Outdoor Retail | $10,382 | $15,868 | $17,409 | | **Total** | **$15,028** | **$20,945** | **$22,943** | - During Q1 2022, the Company recorded **$8.8 million of incremental accelerated amortization** for certain trademark and trade name intangible assets being phased out[164](index=164&type=chunk)[481](index=481&type=chunk) [7. Long-Term Debt](index=33&type=section&id=7.%20Long-Term%20Debt) Outstanding Long-Term Debt (in thousands) | Category | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Term Loan Facility | $1,351,543 | $1,360,454 | $1,361,853 | | Real Estate Facilities | $188,449 | $145,911 | $22,076 | | Other Long-Term Debt | $8,403 | $3,280 | $3,341 | | **Subtotal** | **$1,548,395** | **$1,509,645** | **$1,387,270** | | Less: current portion | $(26,766) | $(25,229) | $(15,826) | | **Total** | **$1,521,629** | **$1,484,416** | **$1,371,444** | - The Term Loan Facility has a principal amount of **$1.4 billion**, with an average interest rate of **7.66%** at June 30, 2023, up from 3.82% a year prior[421](index=421&type=chunk)[451](index=451&type=chunk)[484](index=484&type=chunk) - The Revolving Credit Facility has a total commitment of **$65.0 million**, with **$22.75 million** of additional borrowing capacity as of June 30, 2023[421](index=421&type=chunk)[422](index=422&type=chunk)[452](index=452&type=chunk) - The M&T Real Estate Facility has a maximum capacity of **$250.0 million**; an additional **$59.2 million** was borrowed in the first six months of 2023[486](index=486&type=chunk)[488](index=488&type=chunk) - Other long-term debt totaled **$8.4 million** outstanding at June 30, 2023, with a weighted average interest rate of **4.27%**[27](index=27&type=chunk) [8. Lease Obligations](index=38&type=section&id=8.%20Lease%20Obligations) Net Lease Costs (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Operating lease cost | $29,376 | $28,081 | $58,581 | $56,577 | | Amortization of finance lease assets | $2,068 | $2,974 | $(745) | $5,665 | | Interest on finance lease liabilities | $1,540 | $1,152 | $2,939 | $2,139 | | Short-term lease cost | $550 | $555 | $1,064 | $1,018 | | Variable lease cost | $6,128 | $5,602 | $12,417 | $11,796 | | Sublease income | $(675) | $(306) | $(1,332) | $(699) | | **Net lease costs** | **$38,987** | **$38,058** | **$72,924** | **$76,496** | Supplemental Cash Flow Information Related to Leases (in thousands) | Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---| | Operating cash flows for operating leases | $58,227 | $57,181 | | Operating cash flows for finance leases | $2,934 | $2,072 | | Financing cash flows for finance leases | $2,847 | $3,042 | | New, remeasured and terminated operating leases | $18,872 | $(8,967) | | New, remeasured and terminated finance leases | $7,700 | $24,224 | - In February 2022, FRHP sold three properties for **$28.0 million** and leased them back for twenty years, which was accounted for as a financing transaction[263](index=263&type=chunk)[288](index=288&type=chunk)[492](index=492&type=chunk) [9. Fair Value Measurements](index=40&type=section&id=9.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[30](index=30&type=chunk) Fair Value Measurement of Financial Liabilities (in thousands) | Instrument | Fair Value Hierarchy | June 30, 2023 Carrying Value | June 30, 2023 Fair Value | Dec 31, 2022 Carrying Value | Dec 31, 2022 Fair Value | June 30, 2022 Carrying Value | June 30, 2022 Fair Value | |:---|:---|:---|:---|:---|:---|:---|:---| | Term Loan Facility | Level 2 | $1,351,543 | $1,383,674 | $1,360,454 | $1,394,290 | $1,361,853 | $1,397,829 | | Floor Plan Facility Revolving Line of Credit | Level 2 | $20,885 | $21,327 | $20,885 | $19,823 | $20,885 | $17,535 | | Real Estate Facilities | Level 2 | $192,574 | $200,797 | $145,911 | $145,664 | $22,076 | $19,812 | | Other Long-Term Debt | Level 2 | $8,403 | $6,947 | $3,280 | $2,944 | $3,341 | $3,055 | [10. Commitments and Contingencies](index=40&type=section&id=10.%20Commitments%20and%20Contingencies) - The Company is involved in litigation primarily related to 'The Profit' TV show, but management does not expect a material adverse effect on financial statements[463](index=463&type=chunk)[465](index=465&type=chunk)[496](index=496&type=chunk)[497](index=497&type=chunk) - As of June 30, 2023, outstanding standby letters of credit were **$11.4 million** (Floor Plan) and **$4.9 million** (Senior Secured), with **$23.4 million** in surety bonds[467](index=467&type=chunk) [11. Statement of Cash Flows](index=44&type=section&id=11.%20Statement%20of%20Cash%20Flows) Supplemental Cash Flow Information (in thousands) | Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---| | Cash paid for interest | $82,200 | $41,271 | | Cash paid for income taxes | $2,323 | $28,572 | | Purchase of real property through assumption of other long-term debt | $5,185 | $0 | | Cost of treasury stock issued for vested restricted stock units | $3,457 | $8,547 | [12. Acquisitions](index=44&type=section&id=12.%20Acquisitions) - During H1 2023, the RV and Outdoor Retail segment acquired eight RV dealerships for approximately **$74.4 million** and purchased **$42.2 million** in real property[36](index=36&type=chunk)[500](index=500&type=chunk) Acquired Assets and Liabilities (in thousands) | Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---| | Inventories, net | $40,391 | $11,775 | | Total tangible net assets acquired | $41,093 | $11,906 | | Total intangible assets acquired | $0 | $2,632 | | Goodwill | $33,321 | $23,650 | | Cash paid for acquisitions, net of cash acquired | $74,414 | $38,188 | | Inventory purchases financed via floor plan | $(31,188) | $(5,876) | | Cash payment net of floor plan financing | $43,226 | $32,312 | - Acquired goodwill of **$33.3 million** (2023) and **$23.7 million** (2022) primarily represents expected synergies and the acquired assembled workforce[471](index=471&type=chunk)[500](index=500&type=chunk) [13. Income Taxes](index=46&type=section&id=13.%20Income%20Taxes) - The LLC Conversion, effective January 2, 2023, allows C-Corp losses to offset Pass-Through income within CWGS, LLC, **reducing CWH's income tax expense**[108](index=108&type=chunk)[474](index=474&type=chunk) Income Tax Expense (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Income tax expense recorded by CWH | $(11,656) | $(28,661) | $(10,712) | $(48,771) | | Income tax expense recorded by CWGS, LLC | $(1,925) | $(3,714) | $(3,142) | $(4,640) | | **Total Income tax expense** | **$(13,581)** | **$(32,375)** | **$(13,854)** | **$(53,411)** | - The effective income tax rate was **16.6% for H1 2023**, compared to 14.9% for H1 2022, differing from the 21.0% federal rate due to state taxes and non-controlling interests[475](index=475&type=chunk)[507](index=507&type=chunk) - The Tax Receivable Agreement obligates the Company to pay **85% of realized tax benefits** to Continuing Equity Owners and Crestview Partners II GP, L.P[89](index=89&type=chunk)[90](index=90&type=chunk)[508](index=508&type=chunk) [14. Related Party Transactions](index=50&type=section&id=14.%20Related%20Party%20Transactions) - Related party lease expense for RV dealership locations leased from managers and officers was **$3.0 million for H1 2023**, up from $1.3 million in the prior year period[91](index=91&type=chunk) - Rental payments for the Lincolnshire Lease, personally guaranteed by the Chairman and CEO, were **$0.5 million for H1 2023**[45](index=45&type=chunk) [15. Stockholders' Equity](index=50&type=section&id=15.%20Stockholders'%20Equity) - **No Class A common stock was repurchased** in H1 2023; approximately **$120.2 million** remained available under the program as of June 30, 2023[47](index=47&type=chunk)[50](index=50&type=chunk)[103](index=103&type=chunk) - During H1 2022, the Company repurchased **2,592,524 shares** of Class A common stock for approximately **$79.8 million**[47](index=47&type=chunk) [16. Non-Controlling Interests](index=51&type=section&id=16.%20Non-Controlling%20Interests) - CWH consolidates CWGS, LLC's financial results and reports a non-controlling interest for common units held by Continuing Equity Owners[51](index=51&type=chunk) CWGS, LLC Common Unit Ownership | Entity | June 30, 2023 Common Units | June 30, 2023 Ownership % | Dec 31, 2022 Common Units | Dec 31, 2022 Ownership % | June 30, 2022 Common Units | June 30, 2022 Ownership % | |:---|:---|:---|:---|:---|:---|:---| | CWH | 44,525,108 | 52.6% | 42,440,940 | 50.2% | 41,789,323 | 49.8% | | Continuing Equity Owners | 40,044,536 | 47.4% | 42,044,536 | 49.8% | 42,044,536 | 50.2% | | **Total** | **84,569,644** | **100.0%** | **84,485,476** | **100.0%** | **83,833,859** | **100.0%** | - On January 1, 2023, **2.0 million common units** of CWGS, LLC were redeemed for 2.0 million shares of Class A common stock[57](index=57&type=chunk) [17. Equity-Based Compensation Plans](index=54&type=section&id=17.%20Equity-Based%20Compensation%20Plans) Equity-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Costs applicable to revenue | $222 | $222 | $354 | $363 | | Selling, general, and administrative | $6,270 | $8,746 | $12,497 | $20,279 | | **Total equity-based compensation expense** | **$6,492** | **$8,968** | **$12,850** | **$20,642** | Restricted Stock Units (RSUs) Activity (in thousands) | Metric | June 30, 2023 | |:---|:---| | Outstanding at December 31, 2022 | 2,549 | | Granted | 303 | | Vested | (99) | | Forfeited | (188) | | **Outstanding at June 30, 2023** | **2,565** | - During H1 2023, the Company granted **271,922 RSUs** to employees with an aggregate fair value of **$4.9 million**[20](index=20&type=chunk) [18. Earnings Per Share](index=54&type=section&id=18.%20Earnings%20Per%20Share) Basic and Diluted Earnings Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Net income attributable to Camping World Holdings, Inc — basic | $28,703 | $84,311 | $31,872 | $129,041 | | Net income attributable to Camping World Holdings, Inc — diluted | $28,804 | $84,716 | $60,441 | $129,779 | | Weighted-average shares of Class A common stock outstanding — basic | 44,490 | 41,737 | 44,473 | 42,640 | | Weighted-average shares of Class A common stock outstanding — diluted | 44,804 | 42,139 | 84,783 | 43,171 | | Earnings per share of Class A common stock — basic | $0.65 | $2.02 | $0.72 | $3.03 | | Earnings per share of Class A common stock — diluted | $0.64 | $2.01 | $0.71 | $3.01 | - Class B and Class C common stock do not share in earnings or losses and are not participating securities[23](index=23&type=chunk) [19. Segments Information](index=55&type=section&id=19.%20Segments%20Information) Segment Revenue (in thousands) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Good Sam Services and Plans | $51,038 | $49,593 | $97,405 | $94,152 | | RV and Outdoor Retail | $1,849,683 | $2,119,039 | $3,290,196 | $3,736,876 | | **Total consolidated revenue** | **$1,900,721** | **$2,168,632** | **$3,387,601** | **$3,831,028** | Segment Income (in thousands) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Good Sam Services and Plans | $26,840 | $22,124 | $50,459 | $43,296 | | RV and Outdoor Retail | $106,156 | $243,485 | $138,740 | $394,984 | | **Total segment income** | **$132,996** | **$265,609** | **$189,199** | **$438,280** | Total Assets by Segment (in thousands) | Segment | June 30, 2023 | Dec 31, 2022 | June 30, 2022 | |:---|:---|:---|:---| | Good Sam Services and Plans | $92,453 | $130,841 | $82,734 | | RV and Outdoor Retail | $4,538,440 | $4,448,354 | $4,261,031 | | **Total assets** | **$4,803,093** | **$4,800,147** | **$4,610,301** | [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, industry trends, and critical accounting policies [Overview](index=58&type=section&id=Overview) - Camping World Holdings, Inc is America's largest retailer of RVs, operating **203 locations** as of June 30, 2023[235](index=235&type=chunk) Retail Store Locations and Changes (June 30, 2022 to June 30, 2023) | Category | Dealerships | Retail Centers | Retail Stores | Total | |:---|:---|:---|:---|:---| | Number of store locations as of June 30, 2022 | 181 | 8 | 1 | 190 | | Opened | 16 | 2 | — | 18 | | Converted | 1 | (1) | — | — | | Closed | (1) | (2) | (2) | (5) | | **Number of store locations as of June 30, 2023** | **196** | **7** | **—** | **203** | - An 'Active Customer' is a customer who has transacted with the company in any of the eight most recently completed fiscal quarters[234](index=234&type=chunk) [Industry Trends](index=59&type=section&id=Industry%20Trends) - Wholesale shipments of new RVs **decreased 49.2%** in the first six months of 2023 compared to the same period in 2022[39](index=39&type=chunk) - New vehicle gross margins decreased in 2022 and H1 2023 due to higher per-unit costs and a **7.9% decrease in average selling price** in Q2 2023[41](index=41&type=chunk) - The company experienced inflation impacts on new vehicle costs and labor rates, which are expected to continue in 2023[43](index=43&type=chunk)[73](index=73&type=chunk) [Restructuring](index=59&type=section&id=Restructuring) - The 2019 Strategic Shift to refocus on core RV competencies is nearing completion, with most activities expected to conclude by December 31, 2023[75](index=75&type=chunk) - The Active Sports Restructuring, initiated March 1, 2023, is expected to be substantially completed by December 31, 2023, with estimated costs of **$3.8 million to $4.1 million**[523](index=523&type=chunk) [Comparison of Certain Trends to Pre-COVID-19 Pandemic Periods](index=60&type=section&id=Comparison%20of%20Certain%20Trends%20to%20Pre-COVID-19%20Pandemic%20Periods) - Q2 2023 new vehicle gross margins were slightly higher than pre-COVID-19 pandemic periods (2016-2019)[76](index=76&type=chunk) - The percentage of total unit sales from used vehicles was significantly higher in Q2 2023 compared to pre-COVID-19 periods[525](index=525&type=chunk) Vehicle Gross Margin and Unit Sale Mix (Three Months Ended June 30) | Metric | 2023 | 2019 | 2018 | 2017 | 2016 | |:---|:---|:---|:---|:---|:---| | **Gross margin:** |||||| | New vehicles | 15.4% | 12.5% | 13.6% | 15.1% | 14.9% | | Used vehicles | 22.9% | 21.6% | 22.9% | 25.9% | 20.4% | | **Unit sales mix:** |||||| | New vehicles | 51.5% | 67.9% | 72.7% | 70.7% | 61.6% | | Used vehicles | 48.5% | 32.1% | 27.3% | 29.3% | 38.4% | [Our Corporate Structure Impact on Income Taxes](index=61&type=section&id=Our%20Corporate%20Structure%20Impact%20on%20Income%20Taxes) - The company uses an 'Up-C' structure, with CWH (a C-Corp) being the public holding company and a **52.6% owner** of CWGS, LLC (a Pass-Through entity)[78](index=78&type=chunk)[526](index=526&type=chunk) - The LLC Conversion, completed by January 2, 2023, allows C-Corp losses to offset Pass-Through income, **reducing CWH's income tax expense**[108](index=108&type=chunk) - Effective income tax rates used for CWH income adjustments were **25.3% for 2023** and 25.4% for 2022[79](index=79&type=chunk) [Results of Operations](index=64&type=section&id=Results%20of%20Operations) Key Financial Highlights (Three Months Ended June 30, 2023 vs. 2022) (in thousands) | Metric | 2023 Amount | 2022 Amount | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Total revenue | $1,900,721 | $2,168,632 | $(267,911) | (12.4%) | | Total gross profit | $571,102 | $716,793 | $(145,691) | (20.3%) | | Income from operations | $132,677 | $254,100 | $(121,423) | (47.8%) | | Net income | $64,723 | $197,985 | $(133,262) | (67.3%) | | Net income attributable to Camping World Holdings, Inc | $28,703 | $84,311 | $(55,608) | (66.0%) | Key Financial Highlights (Six Months Ended June 30, 2023 vs. 2022) (in thousands) | Metric | 2023 Amount | 2022 Amount | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Total consolidated revenue | $3,387,601 | $3,831,028 | $(443,427) | (11.6%) | | Total gross profit | $1,012,122 | $1,276,995 | $(264,873) | (20.7%) | | Income from operations | $191,276 | $403,225 | $(211,949) | (52.6%) | | Net income | $69,626 | $305,284 | $(235,658) | (77.2%) | | Net income attributable to Camping World Holdings, Inc | $31,872 | $129,041 | $(97,169) | (75.3%) | - Good Sam Services and Plans revenue and gross profit increased due to more contracts in force for various programs[69](index=69&type=chunk)[97](index=97&type=chunk)[157](index=157&type=chunk)[199](index=199&type=chunk) - RV and Outdoor Retail revenue decreased due to lower new vehicle sales (**-19.3% in Q2**) and average selling prices (**-7.9% in Q2**), while used vehicle revenue increased from higher unit sales (**+14.3% in Q2**)[67](index=67&type=chunk)[158](index=158&type=chunk)[533](index=533&type=chunk)[534](index=534&type=chunk) - Floor plan interest expense **increased significantly by 136.7% in Q2** and 176.6% in H1, driven by a 429-430 basis point rate increase[195](index=195&type=chunk)[478](index=478&type=chunk) - Other interest expense, net, **increased by 124.4% in Q2** and 121.1% in H1, due to higher interest rates and principal balances[64](index=64&type=chunk)[196](index=196&type=chunk) - Selling, general and administrative expenses decreased due to reduced advertising and commissions, partially offset by higher wage expenses and professional fees[117](index=117&type=chunk)[163](index=163&type=chunk) - Income tax expense decreased due to lower income generated from CWGS, LLC[122](index=122&type=chunk)[197](index=197&type=chunk) [Non-GAAP Financial Measures](index=83&type=section&id=Non-GAAP%20Financial%20Measures) - The Company uses non-GAAP measures like EBITDA and Adjusted EBITDA to enhance understanding of performance and for internal decision-making[172](index=172&type=chunk)[207](index=207&type=chunk) - Adjusted EBITDA excludes items not considered in ongoing operating performance, such as asset impairment, restructuring costs, and equity-based compensation[207](index=207&type=chunk) EBITDA and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Net income | $64,723 | $197,985 | $69,626 | $305,284 | | Subtotal EBITDA | $129,028 | $262,922 | $179,954 | $431,093 | | Adjusted EBITDA | $139,295 | $277,687 | $200,136 | $459,782 | Adjusted EBITDA Margin | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Net income margin | 3.4% | 9.1% | 2.1% | 8.0% | | Subtotal EBITDA margin | 6.8% | 12.1% | 5.3% | 11.3% | | **Adjusted EBITDA margin** | **7.3%** | **12.8%** | **5.9%** | **12.0%** | Adjusted Earnings Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |:---|:---|:---|:---|:---| | Adjusted net income attributable to Camping World Holdings, Inc – basic | $32,739 | $90,626 | $39,805 | $141,116 | | Adjusted net income attributable to Camping World Holdings, Inc – diluted | $32,853 | $181,451 | $75,517 | $141,927 | | Adjusted earnings per share - basic | $0.74 | $2.17 | $0.90 | $3.31 | | Adjusted earnings per share - diluted | $0.73 | $2.16 | $0.89 | $3.29 | [Liquidity and Capital Resources](index=90&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity needs include working capital, acquisitions, and debt service, met through operations, cash, and credit facilities[215](index=215&type=chunk) - The Board approved a **decrease in the quarterly cash dividend to $0.125 per share** from $0.625 per share to support aggressive dealership acquisitions[519](index=519&type=chunk) - The company plans to spend **$150.0 million to $210.0 million** over the next twelve months on dealership expansion[245](index=245&type=chunk) - Working capital was **$601.9 million** at June 30, 2023, down from $697.4 million at June 30, 2022[224](index=224&type=chunk)[249](index=249&type=chunk) - Net cash provided by operating activities **increased by $44.0 million to $228.0 million** for H1 2023, mainly due to favorable working capital changes offsetting lower net income[521](index=521&type=chunk) Summary of Credit Facilities and Other Long-Term Debt (in thousands) | Facility | Outstanding | Current Portion | Remaining Available | |:---|:---|:---|:---| | Floor Plan Facility: Notes payable - floor plan | $1,155,356 | $1,155,356 | $322,498 | | Revolving line of credit | $20,885 | $0 | $49,115 | | Senior Secured Credit Facilities: Term Loan Facility | $1,351,543 | $14,015 | $0 | | Revolving Credit Facility | $0 | $0 | $22,750 | | Real Estate Facilities | $192,574 | $12,642 | $68,394 | | Other long-term debt | $8,403 | $315 | $0 | | Finance lease obligations | $104,678 | $5,337 | $0 | | **Total** | **$2,833,439** | **$1,187,665** | **$462,757** | - A **100 basis point increase** in effective interest rates would increase annual interest expense by **$13.9 million** for the Term Loan Facility and **$11.7 million** for the Floor Plan Facility[268](index=268&type=chunk) [Item 4. Controls and Procedures](index=104&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Disclosure controls and procedures were evaluated by management and deemed **effective at the reasonable assurance level** as of June 30, 2023[294](index=294&type=chunk) - **No material changes** in internal control over financial reporting were identified during the fiscal quarter ended June 30, 2023[295](index=295&type=chunk) [PART II. OTHER INFORMATION](index=104&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, equity security transactions, and a list of exhibits [Item 1. Legal Proceedings](index=104&type=section&id=Item%201.%20Legal%20Proceedings) - The company refers to Note 10 – Commitments and Contingencies for information on legal proceedings[273](index=273&type=chunk) [Item 1A. Risk Factors](index=104&type=section&id=Item%201A.%20Risk%20Factors) - **No material changes** to risk factors were disclosed from those previously reported in the Annual Report on Form 10-K for the year ended December 31, 2022[274](index=274&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=105&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Issuer Purchases of Equity Securities (Class A Common Stock) | Period | Total Number of Purchased Shares | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | |:---|:---|:---|:---|:---| | April 1, 2023 to April 30, 2023 | — | $— | — | $120,166,000 | | May 1, 2023 to May 31, 2023 | — | — | — | $120,166,000 | | June 1, 2023 to June 30, 2023 | — | — | — | $120,166,000 | | **Total** | **—** | **$—** | **—** | **$120,166,000** | - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2023[278](index=278&type=chunk) [Item 6. Exhibits](index=105&type=section&id=Item%206.%20Exhibits) - The exhibits include various corporate documents, employment agreements, CEO/CFO certifications, and Inline XBRL documents[282](index=282&type=chunk)[283](index=283&type=chunk)[299](index=299&type=chunk)[302](index=302&type=chunk)[305](index=305&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)

Camping World Holdings, Inc. (NYSE:CWH) Q1 2023 Earnings Conference Call May 3, 2023 8:00 AM ET Company Participants Lindsey Christen - Executive Vice President & General Counsel Marcus Lemonis - Chairman and Chief Executive Officer Matthew Wagner - Executive Vice President Conference Call Participants Joe Altobello - Raymond James Daniel Imbro - Stephens, Inc. Michael Swartz - Truist Securities Noah Zatzkin - KeyBanc Capital Markets Ryan Brinkman - JPMorgan Tristan Thomas-Martin - BMO Capital Markets Brand ...

5 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements Unaudited Condensed Consolidated Statements of Stockholders' Equity (In Thousands) Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _______________ Commission file number: 001-37908 C ...

Camping World Holdings, Inc. (NYSE:CWH) Q4 2022 Results Conference Call February 22, 2023 8:30 AM ET Company Participants Lindsey Christen - Executive Vice President & General Counsel Marcus Lemonis - Chairman and Chief Executive Officer Matthew Wagner - Executive Vice President Conference Call Participants Joe Altobello - Raymond James Michael Swartz - Truist Securities Craig Kennison - Baird John Healy - Northcoast Research Bret Jordan - Jefferies Brandon Rolle - D. A. Davidson Tristan Thomas-Martin - BMO ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to_____ Commission file number: 001-37908 CAMPING WORLD HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other ...

Camping World Holdings, Inc. (NYSE:CWH) Q3 2022 Earnings Conference Call November 2, 2022 8:30 AM ET Company Participants Lindsey Christen - Executive Vice President & General Counsel Marcus Lemonis - Chairman and Chief Executive Officer Matthew Wagner - Executive Vice President Conference Call Participants Mike Swartz - Tourist Securities Joe Altobello - Ramon James Daniel Imbro - Stephens, Inc. Craig Kennison - Baird John Healy - Northcoast Research Ryan Brinkman - JPMorgan Brandon Rollé - D. A. Davidson ...

[FORM 10-Q Cover Page Information](index=1&type=section&id=FORM%2010-Q) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for Camping World Holdings, Inc., including its SEC filing status and contact information for the quarterly period ended September 30, 2022 - The registrant is CAMPING WORLD HOLDINGS, INC., a Delaware corporation, with its principal executive offices in Lincolnshire, IL[2](index=2&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Class A Common Stock, $0.01 par value per share | CWH | New York Stock Exchange | [Filer Status](index=1&type=section&id=Filer%20Status) The company is designated as a large accelerated filer and has complied with SEC filing requirements - The registrant is a large accelerated filer and has filed all required reports and submitted Interactive Data Files during the preceding 12 months[2](index=2&type=chunk)[3](index=3&type=chunk) [Outstanding Shares](index=1&type=section&id=Outstanding%20Shares) Details the number of outstanding shares for each class of common stock as of October 28, 2022 | Class of Common Stock | Shares Outstanding (as of October 28, 2022) | | :-------------------- | :------------------------------------------ | | Class A common stock | 42,132,228 | | Class B common stock | 41,466,964 | | Class C common stock | 1 | [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements for Camping World Holdings, Inc. and its subsidiaries for the quarterly period ended September 30, 2022, along with detailed notes on significant accounting policies, financial performance, and other relevant disclosures [Basis of Presentation](index=4&type=section&id=Basis%20of%20Presentation) This section defines key terms and entities used throughout the Form 10-Q, clarifying references to the Company, its subsidiaries, and specific agreements or groups of stakeholders - References to 'we,' 'us,' 'our,' 'CWH,' the 'Company,' 'Camping World' refer to Camping World Holdings, Inc. and its subsidiaries, including CWGS Enterprises, LLC[9](index=9&type=chunk) - The 'Annual Report' refers to the Company's Annual Report on Form 10-K for the year ended December 31, 2021[10](index=10&type=chunk) - Key terms like 'Continuing Equity Owners,' 'Crestview,' 'CWGS LLC Agreement,' 'Former Profits Unit Holders,' 'ML Acquisition,' and 'Tax Receivable Agreement' are defined to provide context for the financial statements[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. It lists numerous factors that could impact future performance, including economic conditions, industry trends, and operational risks - Forward-looking statements are covered by safe harbor provisions and relate to future results, financial position, business strategy, and operational objectives[16](index=16&type=chunk) - Key risks include the impact of COVID-19, the ability to execute the 2019 Strategic Shift, financing availability, fuel prices, general economic conditions (including inflation), competition, and cybersecurity risks[16](index=16&type=chunk)[18](index=18&type=chunk) - The Company undertakes no obligation to update any forward-looking statements after the date of the Form 10-Q[22](index=22&type=chunk) [Unaudited Condensed Consolidated Balance Sheets](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of the Company's financial position, showing a slight increase in total assets and liabilities, and a notable increase in total stockholders' equity from December 31, 2021, to September 30, 2022 | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Total assets | $4,511,386 | $4,372,929 | | Total liabilities | $4,173,888 | $4,139,035 | | Total stockholders' equity | $337,498 | $233,894 | | Current Assets (in thousands) | September 30, 2022 | December 31, 2021 | | :---------------------------- | :----------------- | :---------------- | | Cash and cash equivalents | $148,235 | $267,332 | | Inventories | $1,900,127 | $1,792,865 | | Total current assets | $2,300,146 | $2,283,877 | | Current Liabilities (in thousands) | September 30, 2022 | December 31, 2021 | | :--------------------------------- | :----------------- | :---------------- | | Accounts payable | $187,613 | $136,757 | | Notes payable – floor plan, net | $899,568 | $1,011,345 | | Total current liabilities | $1,624,612 | $1,598,323 | [Unaudited Condensed Consolidated Statements of Operations](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations show a decrease in total revenue and net income for the three and nine months ended September 30, 2022, compared to the same periods in 2021, primarily driven by reduced RV and Outdoor Retail performance and increased interest expenses | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | | Total revenue | $1,855,682 | $1,916,574 | | Income from operations | $155,532 | $242,674 | | Net income | $102,948 | $189,308 | | Net income attributable to Camping World Holdings, Inc. | $41,126 | $79,703 | | Basic EPS | $0.98 | $1.75 | | Diluted EPS | $0.97 | $1.72 | | Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Total revenue | $5,686,710 | $5,536,162 | | Income from operations | $558,757 | $716,203 | | Net income | $408,232 | $582,809 | | Net income attributable to Camping World Holdings, Inc. | $170,167 | $251,213 |\ | Basic EPS | $4.01 | $5.57 | | Diluted EPS | $3.99 | $5.49 | - Floor plan interest expense significantly increased for both the three-month (**203.5%** YoY) and nine-month (**147.7%** YoY) periods, contributing to lower net income[30](index=30&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=13&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) The statements of stockholders' equity show an increase in total equity from December 31, 2021, to September 30, 2022, driven by net income and equity-based compensation, despite share repurchases and dividend payments | Metric (in thousands) | December 31, 2021 | September 30, 2022 | | :-------------------- | :---------------- | :----------------- | | Total Stockholders' Equity | $233,894 | $337,498 | - Equity-based compensation contributed to an increase in additional paid-in capital, while repurchases of Class A common stock reduced treasury stock[32](index=32&type=chunk) - The Company declared quarterly dividends of **$0.625 per share** of Class A common stock for each of the three months ended March 31, June 30, and September 30, 2022[32](index=32&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements indicate a decrease in net cash provided by operating activities and an increase in net cash used in financing activities for the nine months ended September 30, 2022, compared to 2021, resulting in a larger overall decrease in cash and cash equivalents | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $523,919 | $571,876 | | Net cash used in investing activities | $(239,305) | $(256,315) | | Net cash used in financing activities | $(403,711) | $(348,838) | | Decrease in cash and cash equivalents | $(119,097) | $(33,277) | | Cash and cash equivalents at end of period | $148,235 | $132,795 | - The decrease in operating cash flow was primarily due to a reduction in net income and a decrease in working capital adjustments for accounts payable and deferred revenue, partially offset by changes in inventory and receivables[38](index=38&type=chunk) - Financing activities included significant member distributions, net payments on floor plan borrowings, and repurchases of Class A common stock[42](index=42&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information pertinent to the unaudited condensed consolidated financial statements, covering accounting policies, business operations, financial instruments, and other significant events affecting the Company's financial position and performance [Note 1. Summary of Significant Accounting Policies](index=17&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the foundational accounting principles and policies applied in preparing the financial statements, including consolidation, the impact of COVID-19, a cybersecurity incident, business description, seasonality, and recent accounting pronouncements [Principles of Consolidation and Basis of Presentation](index=17&type=section&id=Principles%20of%20Consolidation%20and%20Basis%20of%20Presentation) The Company consolidates its subsidiaries, including CWGS, LLC, where it holds a controlling interest, and presents financial statements in accordance with GAAP for interim reporting - Camping World Holdings, Inc. consolidates the financial results of CWGS, LLC, where it acts as the sole managing member and holds a non-controlling interest[48](index=48&type=chunk) | Entity | Ownership Interest (September 30, 2022) | Ownership Interest (December 31, 2021) | | :----- | :-------------------------------------- | :------------------------------------- | | CWH in CWGS, LLC | 50.1% | 51.2% | [COVID-19](index=17&type=section&id=COVID-19) The COVID-19 pandemic led to elevated demand for RVs and related services, with new towables inventory normalizing in early 2022. The Company adjusted its consumer show strategy to focus on supporting its own dealerships - Elevated demand for RVs and related products/services was experienced due to consumers viewing RVs as a safer alternative for travel and recreation[50](index=50&type=chunk) - New towables inventory levels normalized in early 2022 after demand outpaced supply for much of the pandemic[50](index=50&type=chunk) - The Company shifted its consumer show strategy to focus on supporting its own Camping World dealerships, expecting to host fewer than five ticketed in-person shows annually[54](index=54&type=chunk) [Cybersecurity Incident](index=19&type=section&id=Cybersecurity%20Incident) In February 2022, the Company experienced a cybersecurity incident resulting in IT system encryption and data theft affecting approximately 30,000 individuals. While costs for remediation are ongoing, no material impact on business or financial condition is expected - A cybersecurity incident in February 2022 led to encryption of IT Systems and unauthorized acquisition of personal information for approximately **30,000 individuals**[55](index=55&type=chunk) - The Company has incurred and expects to continue incurring costs for investigation, containment, remediation, and IT system enhancements[56](index=56&type=chunk) - Management does not expect the Cybersecurity Incident to cause future business disruptions or have a material impact on its business, results of operations, or financial condition[56](index=56&type=chunk) [Description of the Business](index=19&type=section&id=Description%20of%20the%20Business) Camping World Holdings, Inc. is America's largest RV retailer, operating through two segments: Good Sam Services and Plans, and RV and Outdoor Retail. The Company initiated a 2019 Strategic Shift to refocus on core RV competencies - The Company is America's largest retailer of RVs and related products and services, operating a national network of dealerships and an e-commerce platform[57](index=57&type=chunk) - Reportable segments are (i) Good Sam Services and Plans (e.g., roadside assistance, insurance, service contracts) and (ii) RV and Outdoor Retail (e.g., new/used RVs, F&I, parts, accessories, Good Sam Club memberships)[57](index=57&type=chunk) - In 2019, the Company approved a '2019 Strategic Shift' to refocus its business around core RV competencies, moving away from non-RV selling/servicing locations[58](index=58&type=chunk)[59](index=59&type=chunk) [Seasonality](index=21&type=section&id=Seasonality) The Company's business is seasonal, with higher revenue and profits in the spring and summer months (Q2 and Q3), and higher SG&A expenses as a percentage of gross profit in Q1 and Q4 due to acquisition timing and lower revenue - Revenue, net income, and cash flows vary due to annual seasonality, with sales and profits generally highest during the spring and summer months (Q2 and Q3)[60](index=60&type=chunk) - Selling, general, and administrative (SG&A) expenses as a percentage of gross profit tend to be higher in the first and fourth quarters due to the timing of acquisitions and lower revenue[60](index=60&type=chunk) [Reclassifications of Prior Period Amounts](index=21&type=section&id=Reclassifications%20of%20Prior%20Period%20Amounts) Certain prior-period financial statement amounts have been reclassified to align with the current period's presentation, specifically regarding equity-based compensation and non-controlling interest adjustments - Prior-period amounts for equity-based compensation and non-controlling interest adjustments in the condensed consolidated statements of stockholders' equity have been reclassified to conform to current period presentation[61](index=61&type=chunk) [Use of Estimates](index=21&type=section&id=Use%20of%20Estimates) The preparation of financial statements requires management to make significant estimates and assumptions, which are subject to future uncertainties and may differ from actual results - Management makes estimates and assumptions for financial statement preparation, including those related to accounts receivable, inventory, goodwill, intangible assets, and various reserves[62](index=62&type=chunk)[63](index=63&type=chunk) - Actual results may differ from these estimates, especially given uncertainties like COVID-19, and estimates are periodically evaluated and adjusted prospectively[62](index=62&type=chunk) [Recently Adopted Accounting Pronouncements](index=23&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) The Company early adopted ASU 2021-08, which changes the accounting for contract assets and liabilities in business combinations, with no material impact on its consolidated financial statements - The Company early adopted ASU 2021-08 (Business Combinations) as of January 1, 2022, which requires contract assets and liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606[65](index=65&type=chunk) - The adoption of ASU 2021-08 did not materially impact the Company's consolidated financial statements[65](index=65&type=chunk) [Recently Issued Accounting Pronouncements](index=23&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Recently issued accounting standards, ASU 2022-03 and ASU 2022-04, are not expected to have a material impact on the Company's consolidated financial statements - ASU 2022-03 (Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions) clarifies guidance on fair value measurement for equity securities with sale restrictions[66](index=66&type=chunk) - ASU 2022-04 (Liabilities—Supplier Finance Programs) requires buyers in supplier finance programs to disclose qualitative and quantitative information[66](index=66&type=chunk) - The Company does not expect the adoption of these new ASUs to have a material impact on its consolidated financial statements[66](index=66&type=chunk) [Note 2. Revenue](index=23&type=section&id=Note%202.%20Revenue) This note details the Company's contract assets and deferred revenues, primarily from long-term service plans and memberships, outlining the amounts and expected recognition periods [Contract Assets](index=23&type=section&id=Contract%20Assets) The Company reported an increase in contract assets related to RV service revenues, included within accounts receivable | Contract Asset (in millions) | September 30, 2022 | December 31, 2021 | | :--------------------------- | :----------------- | :---------------- | | RV service revenues | $19.5 | $16.2 | [Deferred Revenues](index=23&type=section&id=Deferred%20Revenues) Deferred revenues, primarily from roadside assistance, club memberships, and publications, totaled $175.2 million as of September 30, 2022, with a significant portion expected to be recognized in 2023 - Unsatisfied performance obligations, primarily from roadside assistance, Good Sam Club memberships, and publications, totaled **$175.2 million** as of September 30, 2022[68](index=68&type=chunk)[69](index=69&type=chunk) | Year | Expected Revenue Recognition (in thousands) | | :--- | :---------------------------------------- | | 2022 | $39,780 | | 2023 | $72,047 | | 2024 | $30,055 | | 2025 | $15,858 | | 2026 | $8,964 | | Thereafter | $8,507 | | Total | $175,211 | [Note 3. Inventories and Floor Plan Payables](index=25&type=section&id=Note%203.%20Inventories%20and%20Floor%20Plan%20Payables) This note details the composition of inventories and the Company's floor plan financing arrangements, highlighting an increase in new RV inventory and a significant rise in the floor plan interest rate | Inventory Type (in thousands) | September 30, 2022 | December 31, 2021 | | :---------------------------- | :----------------- | :---------------- | | New RVs | $1,180,364 | $1,108,836 | | Used RVs | $425,824 | $406,398 | | Products, parts, accessories and other | $293,588 | $277,631 | | Total Inventories | $1,900,127 | $1,792,865 | - Substantially all new RV inventory and certain used RV inventory are financed by a **$1.70 billion** Floor Plan Facility, maturing September 30, 2026[70](index=70&type=chunk)[71](index=71&type=chunk) | Floor Plan Metric | September 30, 2022 | December 31, 2021 | | :---------------- | :----------------- | :---------------- | | Applicable interest rate for floor plan notes payable | 4.30% | 1.96% | | FLAIR offset account (in millions) | $218.6 | $92.1 | | Unencumbered borrowing capacity (in thousands) | $504,175 | $533,899 | [Note 4. Restructuring and Long-Lived Asset Impairment](index=27&type=section&id=Note%204.%20Restructuring%20and%20Long-Lived%20Asset%20Impairment) This note details the costs and impacts of the 2019 Strategic Shift, which involved closing non-RV focused locations, and reports long-lived asset impairment charges resulting from performance reviews [Restructuring](index=27&type=section&id=Restructuring) The 2019 Strategic Shift, aimed at refocusing on core RV competencies, led to the closure or divestiture of 39 Outdoor Lifestyle Locations, two distribution centers, and 20 specialty retail locations. Total estimated restructuring costs range from $116.2 million to $132.6 million, with ongoing lease termination and associated costs expected - The 2019 Strategic Shift involved closing or divesting **39 Outdoor Lifestyle Locations**, two distribution centers, and **20 specialty retail locations**[79](index=79&type=chunk) | Restructuring Cost Category | Estimated Total Range (in millions) | Incurred Through Sep 30, 2022 (in millions) | | :-------------------------- | :---------------------------------- | :---------------------------------------- | | One-time employee termination benefits | $1.2 | $1.2 | | Lease termination costs | $20.0 - $34.0 | $15.4 | | Incremental inventory reserve charges | $57.4 | $57.4 | | Other associated costs | $37.6 - $40.0 | $37.4 | - The process of identifying subtenants and negotiating lease terminations has been delayed by the COVID-19 pandemic and is expected to continue[83](index=83&type=chunk) [Long-Lived Asset Impairment](index=30&type=section&id=Long-Lived%20Asset%20Impairment) The Company recognized long-lived asset impairment charges for certain locations based on performance reviews, indicating that fair values were below carrying values - Indicators of impairment were identified for long-lived assets at certain locations based on performance reviews[88](index=88&type=chunk) | Impairment Charges (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :----------------------------- | | Leasehold improvements | $0 | $2,557 | | Operating lease right-of-use assets | $887 | $887 | | Total long-lived asset impairment charges | $887 | $3,505 | [Note 5. Goodwill and Intangible Assets](index=32&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) This note provides details on the Company's goodwill and intangible assets, including increases from acquisitions and accelerated amortization of certain trademark and trade name assets [Goodwill](index=32&type=section&id=Goodwill) Goodwill increased to $533.2 million as of September 30, 2022, primarily due to acquisitions during the nine-month period | Metric (in thousands) | December 31, 2021 | September 30, 2022 | | :-------------------- | :---------------- | :----------------- | | Balance of Goodwill | $483,634 | $533,217 | | Acquisitions | — | $49,583 | - The primary items generating goodwill are the value of expected synergies and the acquired assembled workforce[136](index=136&type=chunk) [Intangible Assets](index=32&type=section&id=Intangible%20Assets) Net intangible assets decreased to $21.8 million as of September 30, 2022, largely due to $8.8 million of accelerated amortization in Q1 2022 for phasing out non-RV related trademark and trade name assets | Intangible Assets (in thousands) | September 30, 2022 (Net) | December 31, 2021 (Net) | | :------------------------------- | :----------------------- | :---------------------- | | Membership, customer lists and other | $739 | $392 | | Trademarks and trade names | $10,229 | $20,099 | | Websites | $2,477 | $2,247 | | Customer lists and domain names | $2,891 | $3,328 | | Supplier lists | $1,018 | $1,272 | | Total Net Intangible Assets | $21,819 | $30,970 | - During the first quarter of 2022, the Company recorded **$8.8 million** of incremental accelerated amortization from adjusting the useful lives of certain trademark and trade name intangible assets related to non-RV brands being phased out[94](index=94&type=chunk) [Note 6. Long-Term Debt](index=33&type=section&id=Note%206.%20Long-Term%20Debt) This note details the Company's long-term debt, including its Senior Secured Credit Facilities, Real Estate Facilities, and other long-term debt, and introduces a new $250.0 million Real Estate Facility entered into in October 2022 | Long-Term Debt (in thousands) | September 30, 2022 | December 31, 2021 | | :---------------------------- | :----------------- | :---------------- | | Term Loan Facility | $1,359,230 | $1,367,277 | | Real Estate Facilities | $21,666 | $22,896 | | Other Long-Term Debt | $3,311 | $3,400 | | Total (net of current portion) | $1,368,380 | $1,377,751 | [Senior Secured Credit Facilities](index=33&type=section&id=Senior%20Secured%20Credit%20Facilities) The Senior Secured Credit Facilities consist of a $1.4 billion Term Loan Facility and a $65.0 million Revolving Credit Facility, with the Company in compliance with all debt covenants as of September 30, 2022 - The Senior Secured Credit Facilities include a **$1.4 billion** Term Loan Facility (maturing June 2028) and a **$65.0 million** Revolving Credit Facility (maturing June 2026)[96](index=96&type=chunk)[97](index=97&type=chunk) - The Term Loan Facility requires mandatory principal payments of **$3.5 million** quarterly[97](index=97&type=chunk) - The Company was in compliance with all applicable debt covenants under the Senior Secured Credit Facilities at September 30, 2022, and December 31, 2021[102](index=102&type=chunk) [Real Estate Facilities](index=35&type=section&id=Real%20Estate%20Facilities) The Company has existing Real Estate Facilities with outstanding principal balances totaling $21.8 million as of September 30, 2022, and entered into a new $250.0 million 2022 Real Estate Facility in October 2022, with an expected initial draw in Q4 2022 | Real Estate Facility | Outstanding Principal Balance (Sep 30, 2022, in millions) | | :------------------- | :------------------------------------------------------ | | First Real Estate Facility | $4.0 | | Second Real Estate Facility | $8.1 | | Third Real Estate Facility | $9.7 | | Total | $21.8 | - A new **$250.0 million** 2022 Real Estate Facility was entered into in October 2022, with an option for an additional **$100.0 million**, maturing in October 2027[108](index=108&type=chunk) - The Company expects to borrow between **$100.0 million** and **$150.0 million** under the 2022 Real Estate Facility during the fourth quarter of 2022[108](index=108&type=chunk) [Other Long-Term Debt](index=37&type=section&id=Other%20Long-Term%20Debt) This section details a mortgage assumed in December 2021 as part of a real estate acquisition, with an outstanding balance of $3.3 million as of September 30, 2022 - A mortgage assumed in December 2021 had an outstanding principal balance of **$3.3 million** as of September 30, 2022, with an interest rate of **3.50%** and maturity in December 2026[109](index=109&type=chunk) [Note 7. Lease Obligations](index=37&type=section&id=Note%207.%20Lease%20Obligations) This note outlines the Company's lease costs for operating and finance leases, and describes a sale-leaseback arrangement accounted for as a financing transaction | Lease Cost (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :------------------------ | :------------------------------ | :----------------------------- | | Operating lease cost | $27,824 | $84,401 | | Finance lease cost | $4,606 | $12,410 | | Net lease costs | $38,268 | $114,764 | | Cash Flow Information (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Operating cash flows for operating leases | $85,175 | $87,812 | | Financing cash flows for finance leases | $4,541 | $2,188 | - In February 2022, the Company sold three properties for **$28.0 million** and leased them back for twenty years, accounting for the transaction as a financing arrangement[112](index=112&type=chunk) [Note 8. Fair Value Measurements](index=39&type=section&id=Note%208.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy used for financial instruments and presents the carrying and fair values of the Company's debt instruments, primarily classified as Level 2 - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[113](index=113&type=chunk) - The fair values for the Term Loan Facility are based on Level 2 inputs (quoted prices in inactive markets), while other debt instruments are estimated by discounting future contractual cash flows at current market interest rates[115](index=115&type=chunk) | Debt Instrument (in thousands) | Fair Value Measurement | September 30, 2022 (Carrying Value) | September 30, 2022 (Fair Value) | | :----------------------------- | :--------------------- | :---------------------------------- | :------------------------------ | | Term Loan Facility | Level 2 | $1,359,230 | $1,394,290 | | Floor Plan Facility Revolving Line of Credit | Level 2 | $20,885 | $18,191 | | Real Estate Facilities | Level 2 | $21,666 | $20,153 | [Note 9. Commitments and Contingencies](index=39&type=section&id=Note%209.%20Commitments%20and%20Contingencies) This note details various legal proceedings the Company is involved in, including shareholder derivative suits and claims related to a reality television show, and outlines financial assurances like standby letters of credit and surety bonds [Litigation](index=39&type=section&id=Litigation) The Company is involved in several lawsuits, including shareholder derivative suits (Hunnewell, LPPF, Janssen, Sandler) and claims related to 'The Profit' reality show (Weissmann, Tumbleweed, Precise). The Hunnewell and LPPF complaints were dismissed and affirmed on appeal. Management believes these matters are unlikely to have a material adverse effect on financial statements - Shareholder derivative suits (Hunnewell and LPPF Complaints) alleging breaches of fiduciary duty and insider trading were dismissed with prejudice and affirmed on appeal in October 2022[119](index=119&type=chunk)[120](index=120&type=chunk) - Other shareholder derivative suits (Janssen and Sandler Complaints) alleging violations of the Securities Exchange Act and fiduciary duty breaches are currently stayed[121](index=121&type=chunk) - The Company is facing counterclaims and arbitration demands in connection with appearances on 'The Profit' reality television show (Weissmann, Tumbleweed, Precise Complaints)[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - Management does not believe the disposition of any pending matters is likely to have a material adverse effect on the Company's financial statements, though a possible loss or range of loss cannot be estimated[127](index=127&type=chunk) [Financial Assurances](index=45&type=section&id=Financial%20Assurances) The Company maintains standby letters of credit and surety bonds to guarantee performance, with outstanding amounts of $16.3 million for letters of credit and $20.7 million for surety bonds as of September 30, 2022 | Financial Assurance (in millions) | September 30, 2022 | December 31, 2021 | | :-------------------------------- | :----------------- | :---------------- | | Standby letters of credit (Floor Plan Facility) | $11.4 | $11.5 | | Standby letters of credit (Senior Secured Credit Facilities) | $4.9 | $4.9 | | Outstanding surety bonds | $20.7 | $19.1 | [Note 10. Statement of Cash Flows](index=45&type=section&id=Note%2010.%20Statement%20of%20Cash%20Flows) This note provides supplemental disclosures for cash flow information, including cash paid for interest and income taxes during the nine months ended September 30, 2022 and 2021 | Cash Paid During the Period For (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | | Interest | $69,007 | $44,287 | | Income taxes | $40,925 | $88,339 | [Note 11. Acquisitions](index=45&type=section&id=Note%2011.%20Acquisitions) The Company completed several acquisitions of RV dealerships and an outdoor publication during the nine months ended September 30, 2022, and 2021, contributing to increased goodwill and expanding its business - During the nine months ended September 30, 2022, the RV and Outdoor Retail segment acquired **five RV dealerships** for approximately **$79.8 million**, and the Good Sam Services and Plans segment acquired an outdoor publication for **$3.4 million**[132](index=132&type=chunk) - During the nine months ended September 30, 2021, the RV and Outdoor Retail segment acquired **twelve RV dealerships** for approximately **$99.7 million**[135](index=135&type=chunk) | Acquisition Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total tangible net assets acquired | $31,012 | $29,319 | | Total intangible assets acquired | $2,632 | $0 | | Goodwill | $49,583 | $70,430 | | Cash paid for acquisitions, net of cash acquired | $83,227 | $99,749 | - In October 2022, the Company acquired a consortium of **five RV dealerships** and one RV service center[136](index=136&type=chunk) [Note 12. Income Taxes](index=47&type=section&id=Note%2012.%20Income%20Taxes) This note explains the Company's 'Up-C' corporate structure and its impact on income taxes, details the effective tax rates, and discusses the Tax Receivable Agreement liability and the potential impact of the Inflation Reduction Act of 2022 - CWH is a Subchapter C corporation and a **50.1%** owner of CWGS, LLC, which is treated as a partnership for tax purposes, impacting how income tax expense is recognized[137](index=137&type=chunk)[139](index=139&type=chunk) | Income Tax Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------- | :----------------------------- | :----------------------------- | | Effective income tax rate | 15.7% | 12.5% | | Income tax expense | $(75,808) thousand | $(83,259) thousand | - The Inflation Reduction Act of 2022, enacted in August 2022, includes a **15%** corporate minimum income tax and a **1%** excise tax on corporate stock repurchases (effective after December 31, 2022), but is not expected to have a material adverse effect[141](index=141&type=chunk) | Tax Receivable Agreement Liability (in millions) | September 30, 2022 | December 31, 2021 | | :--------------------------------------------- | :----------------- | :---------------- | | Total liability | $171.5 | $182.4 | [Note 13. Related Party Transactions](index=51&type=section&id=Note%2013.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including lease agreements with managers and officers, legal services from a board member's firm, and a property purchase from the Chairman and CEO [Transactions with Directors, Equity Holders and Executive Officers](index=51&type=section&id=Transactions%20with%20Directors%2C%20Equity%20Holders%20and%20Executive%20Officers) The Company engages in lease agreements with related parties, including its Chairman and Chief Executive Officer, and had an expense reimbursement payable to Mr. Lemonis | Related Party Lease Expense (in millions) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :---------------------------------------- | :------------------------------ | :----------------------------- | | Retail locations from managers and officers | $0.6 | $1.9 | | Lincolnshire Lease (CEO guaranteed) | $0.2 | $0.7 | | Expense Reimbursement Payable to Mr. Lemonis (in millions) | September 30, 2022 | December 31, 2021 | | :--------------------------------------------------------- | :----------------- | :---------------- | | Payable amount | $0 | $0.1 | - In October 2022, the Company purchased a property for **$4.5 million** from its Chairman and Chief Executive Officer for use as office space[154](index=154&type=chunk) [Other Transactions](index=53&type=section&id=Other%20Transactions) The Company conducts business with entities in which Mr. Lemonis previously held an interest and pays for legal services from a firm where a board member is a partner - The Company received **$0.2 million** in refunds from Precise Graphix in the nine months ended September 30, 2021, a company in which Mr. Lemonis previously held an economic interest[155](index=155&type=chunk) - The Company paid Kaplan, Strangis and Kaplan, P.A., a firm where a board member is a member, **$0.2 million** for legal services in both the nine months ended September 30, 2022 and 2021[156](index=156&type=chunk) [Note 14. Stockholders' Equity](index=53&type=section&id=Note%2014.%20Stockholders%27%20Equity) This note describes the Company's capital structure, including its Class A, B, and C common stock, and details the stock repurchase program, which was expanded and extended - CWH has authorized preferred stock and three classes of common stock (Class A, B, and C), with Class A holders having dividend and liquidation rights, and Class B and C holders having voting rights[157](index=157&type=chunk) - CWH is the sole managing member of CWGS, LLC, controlling its management and consolidating its financial results[158](index=158&type=chunk) [Stock Repurchase Program](index=53&type=section&id=Stock%20Repurchase%20Program) The Company's stock repurchase program was increased by $152.7 million and extended to December 31, 2025. During the nine months ended September 30, 2022, the Company repurchased $79.8 million of Class A common stock, with $120.2 million remaining authorization - The Board of Directors authorized an additional **$152.7 million** for Class A common stock repurchases, extending the program to expire on December 31, 2025[160](index=160&type=chunk) | Stock Repurchase Metric | Nine Months Ended Sep 30, 2022 | | :---------------------- | :----------------------------- | | Shares repurchased | 2,592,524 | | Cost of repurchases | $79.8 million | | Weighted average price per share | $30.76 | | Remaining approved amount for repurchases | $120.2 million | - The Inflation Reduction Act of 2022 imposes a **1%** excise tax on corporate stock repurchases in tax years beginning after December 31, 2022[164](index=164&type=chunk) [Note 15. Non-Controlling Interests](index=55&type=section&id=Note%2015.%20Non-Controlling%20Interests) This note details the ownership structure of CWGS, LLC, where CWH holds a controlling interest and reports non-controlling interests for common units held by Continuing Equity Owners - CWH is the sole managing member of CWGS, LLC, consolidating its financial results and reporting a non-controlling interest for common units held by Continuing Equity Owners[165](index=165&type=chunk) | CWGS, LLC Common Unit Ownership | September 30, 2022 (Common Units) | September 30, 2022 (Ownership %) | | :------------------------------ | :-------------------------------- | :------------------------------- | | CWH | 42,129,078 | 50.1% | | Continuing Equity Owners | 42,044,536 | 49.9% | | Total | 84,173,614 | 100.0% | - Changes in CWH's ownership interest in CWGS, LLC are accounted for as equity transactions, impacting non-controlling interest and additional paid-in capital[165](index=165&type=chunk) [Note 16. Equity-Based Compensation Plans](index=56&type=section&id=Note%2016.%20Equity-Based%20Compensation%20Plans) This note summarizes the Company's equity-based compensation expense and activity for stock options and restricted stock units (RSUs), including grants to employees and non-employee directors | Equity-Based Compensation Expense (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :----------------------------------------------- | :------------------------------ | :----------------------------- | | Costs applicable to revenue | $196 | $559 | | Selling, general, and administrative | $6,596 | $26,875 | | Total equity-based compensation expense | $6,792 | $27,434 | | Restricted Stock Units (in thousands) | December 31, 2021 | September 30, 2022 | | :------------------------------------ | :---------------- | :----------------- | | Outstanding | 4,177 | 3,156 | | Granted | — | 195 | | Vested | — | (741) | | Forfeited | — | (475) | - During the nine months ended September 30, 2022, the Company granted **162,333 RSUs** to employees with an aggregate fair value of **$3.6 million** and granted **5,478 RSUs** to each of six non-employee directors[169](index=169&type=chunk)[171](index=171&type=chunk) [Note 17. Earnings Per Share](index=58&type=section&id=Note%2017.%20Earnings%20Per%20Share) This note provides the reconciliation of basic and diluted earnings per share for Class A common stock, showing a decrease in both basic and diluted EPS for the three and nine months ended September 30, 2022, compared to 2021 | Earnings Per Share (Class A common stock) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $0.98 | $1.75 | | Diluted EPS | $0.97 | $1.72 | | Earnings Per Share (Class A common stock) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $4.01 | $5.57 | | Diluted EPS | $3.99 | $5.49 | - Weighted-average anti-dilutive securities excluded from diluted EPS calculation include **42,045 thousand** common units of CWGS, LLC (9M 2022) convertible into Class A common stock[173](index=173&type=chunk) [Note 18. Segments Information](index=58&type=section&id=Note%2018.%20Segments%20Information) This note provides financial information for the Company's two reportable segments: Good Sam Services and Plans, and RV and Outdoor Retail, detailing their respective revenues, segment income, and total assets - The Company operates two reportable segments: Good Sam Services and Plans, and RV and Outdoor Retail[174](index=174&type=chunk) | Segment Revenue (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :----------------------------- | :------------------------------ | :----------------------------- | | Good Sam Services and Plans | $50,413 | $144,914 | | RV and Outdoor Retail | $1,812,830 | $5,566,061 | | Segment Income (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :---------------------------- | :------------------------------ | :----------------------------- | | Good Sam Services and Plans | $23,946 | $67,242 | | RV and Outdoor Retail | $143,098 | $538,082 | | Segment Assets (in thousands) | September 30, 2022 | | :---------------------------- | :----------------- | | Good Sam Services and Plans | $93,539 | | RV and Outdoor Retail | $4,150,947 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, discussing key business developments, industry trends, financial performance drivers, liquidity, and capital resources for the periods presented [Overview](index=62&type=section&id=Overview) Camping World Holdings, Inc. is America's largest RV retailer, focused on making RVing accessible through its national network and online platforms. The Company is expanding its digital offerings and physical footprint, operating 193 retail locations as of September 30, 2022 - Camping World Holdings, Inc. is America's largest retailer of RVs and related products and services, aiming to build a long-term legacy business focused on the RV lifestyle[182](index=182&type=chunk) - As of September 30, 2022, the Company operated a total of **193 retail locations**, with **192** selling and/or servicing RVs[182](index=182&type=chunk) - The Company launched Good Sam Rentals in Q3 2021 and executed a limited rollout of its online RV sales process (RVs.com) in Q2 2022, with plans for expansion[183](index=183&type=chunk) [COVID-19](index=64&type=section&id=COVID-19) The COVID-19 pandemic favorably impacted the Company's business by increasing RV demand, though this demand has moderated from peak levels. New towables inventory normalized in early 2022, and the Company adjusted its consumer show strategy - The COVID-19 pandemic had a primarily favorable impact on the business, leading to elevated demand for RVs and related products/services[187](index=187&type=chunk)[188](index=188&type=chunk) - New towables inventory levels normalized in early 2022, and increased demand, while still elevated, has not remained at peak levels[188](index=188&type=chunk) - The Company shifted its consumer show strategy to focus on supporting its own dealerships, expecting to host fewer than five in-person shows annually[189](index=189&type=chunk) [Cybersecurity Incident](index=64&type=section&id=Cybersecurity%20Incident) A cybersecurity incident in February 2022 resulted in IT system encryption and data theft affecting approximately 30,000 individuals. The Company is incurring remediation costs but does not anticipate a material impact on its business or financial condition - A cybersecurity incident in February 2022 led to the encryption of IT Systems and unauthorized acquisition of personal information for approximately **30,000 individuals**[190](index=190&type=chunk) - The Company has incurred and expects to continue incurring costs for investigation, containment, remediation, and IT system security enhancements[193](index=193&type=chunk) - Management does not expect the Cybersecurity Incident to cause future business disruptions or have a material impact on its business, results of operations, or financial condition[193](index=193&type=chunk) [Industry Trends](index=66&type=section&id=Industry%20Trends) RV wholesale shipments set a new record in 2021 but declined in the first nine months of 2022. Higher per-unit costs for new vehicles, driven by supply constraints and inflation, are expected to continue, potentially reducing new vehicle gross margins as supply normalizes - RV wholesale shipments reached a record **600,240 units** in 2021, but declined **8.2%** for the nine months ended September 2022 compared to the prior year[194](index=194&type=chunk) - Thor Industries' North American RV order backlog declined **55%** from July 31, 2021, to July 31, 2022, indicating improved dealer stocking and anticipated future consumer demand[195](index=195&type=chunk) - The per unit cost of new vehicles remains significantly higher due to supply constraints, strong demand, inflation, and increased interest rates, which is expected to continue reducing new vehicle gross margins as supply normalizes[196](index=196&type=chunk) [Inflation](index=66&type=section&id=Inflation) The Company is experiencing inflationary impacts on product and overhead costs, particularly for new vehicles, freight, and labor. These pressures are expected to continue into 2023, affecting operating results and increasing variable interest rates on floor plan arrangements - Inflation has increased the cost of new vehicles, freight, logistics, labor, and fuel, with these cost pressures expected to continue into 2023[197](index=197&type=chunk) - Operating results may be adversely affected if selling prices do not increase proportionately with rising product and overhead costs[198](index=198&type=chunk) - Variable interest rates on floor plan arrangements are increasing during periods of rising inflation[198](index=198&type=chunk) [Strategic Shift](index=66&type=section&id=Strategic%20Shift) The Company's 2019 Strategic Shift to refocus on core RV competencies is largely finalized regarding location closures and one-time charges. Remaining ongoing charges relate to lease termination costs for previously closed locations, with negotiations ongoing and delayed by the pandemic - The 2019 Strategic Shift, aimed at refocusing on core RV competencies, is effectively finalized regarding closing locations, one-time termination benefits, and incremental reserve charges[199](index=199&type=chunk)[201](index=201&type=chunk) - Remaining ongoing charges relate to lease termination costs and other associated costs for previously closed locations, with negotiations for subtenants and terminations delayed by the COVID-19 pandemic[201](index=201&type=chunk) [Our Corporate Structure Impact on Income Taxes](index=68&type=section&id=Our%20Corporate%20Structure%20Impact%20on%20Income%20Taxes) The Company's 'Up-C' corporate structure, where CWH (a Subchapter C corporation) owns a majority interest in CWGS, LLC (a partnership for tax purposes), results in a unique income tax expense recognition. CWH recognizes tax on its allocated share of CWGS, LLC's taxable income, while non-controlling interests receive tax distributions - The 'Up-C' corporate structure, with CWH as a Subchapter C corporation owning **50.1%** of CWGS, LLC (a partnership for tax purposes), creates a distinct relationship between pre-tax income and income tax expense[202](index=202&type=chunk)[203](index=203&type=chunk) - CWH recognizes income tax expense on its allocable share of CWGS, LLC's taxable income, primarily from Pass-Through entities, at prevailing corporate tax rates[204](index=204&type=chunk) - No income tax expense is recognized by the Company for the portion of CWGS, LLC's net income allocated to non-controlling interests; instead, tax distributions are paid to these holders[204](index=204&type=chunk) | Income Tax Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense recorded by CWH | $(69,582) | $(90,296) | | Income tax (expense) benefit recorded by CWGS, LLC | $(6,226) | $7,037 | | Total Income tax expense | $(75,808) | $(83,259) | [Results of Operations](index=70&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the Company's financial performance for the three and nine months ended September 30, 2022, versus 2021, analyzing revenue, gross profit, operating expenses, and segment results [Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021](index=70&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20Three%20Months%20Ended%20September%2030%2C%202021) For the three months ended September 30, 2022, total revenue and net income decreased significantly compared to 2021, driven by lower new vehicle sales, increased costs, and higher interest expenses, despite growth in Good Sam Services and Plans [Revenue and Gross Profit](index=70&type=section&id=Revenue%20and%20Gross%20Profit) Total revenue decreased by 3.2% and total gross profit by 14.1%. Good Sam Services and Plans saw revenue and gross profit increases, while RV and Outdoor Retail experienced declines in new vehicle revenue and gross profit due to higher costs and lower unit sales, partially offset by increased used vehicle sales volume | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Total revenue | $1,855,682 | $1,916,574 | $(60,892) | (3.2%) | | Total gross profit | $593,688 | $691,376 | $(97,688) | (14.1%) | | Segment/Category (in thousands) | Sep 30, 2022 Revenue | Sep 30, 2021 Revenue | Change (%) | | :------------------------------ | :------------------- | :------------------- | :--------- | | Good Sam Services and Plans | $50,352 | $46,581 | 8.1% | | New vehicles | $834,112 | $864,303 | (3.5%) | | Used vehicles | $525,988 | $519,550 | 1.2% | | Products, service and other | $268,940 | $305,882 | (12.1%) | | Segment/Category Gross Margin | Sep 30, 2022 | Sep 30, 2021 | Change (bps) | | :---------------------------- | :----------- | :----------- | :----------- | | Good Sam Services and Plans | 62.5% | 53.5% | 897 | | New vehicles | 19.1% | 29.1% | (1,008) | | Used vehicles | 24.2% | 27.5% | (330) | | Products, service and other | 37.8% | 30.5% | 725 | [Operating Expenses and Other](index=76&type=section&id=Operating%20Expenses%20and%20Other) Selling, general and administrative expenses decreased slightly due to reduced variable compensation, while depreciation and amortization also declined. However, floor plan interest expense and other interest expense significantly increased due to higher borrowings and rising interest rates, contributing to a substantial decrease in income before income taxes | Expense (in thousands) | Sep 30, 2022 | Sep 30, 2021 | Change ($) | Change (%) | | :--------------------- | :----------- | :----------- | :--------- | :--------- | | Selling, general and administrative expenses | $419,102 | $424,385 | $5,283 | 1.2% | | Depreciation and amortization | $18,207 | $23,552 | $5,345 | 22.7% | | Floor plan interest expense | $(9,484) | $(3,125) | $(6,359) | (203.5%) | | Other interest expense, net | $(20,526) | $(11,250) | $(9,276) | (82.5%) | | Income before income taxes | $125,345 | $228,177 | $(102,832) | (45.1%) | - Floor plan interest expense increased due to a **64.2%** increase in average floor plan borrowings and a **186 basis point** increase in the average borrowing rate[232](index=232&type=chunk) - Other interest expense increased primarily due to a **141 basis point** increase in the Term Loan Facility average interest rate and increased average debt outstanding[233](index=233&type=chunk) [Segment results](index=78&type=section&id=Segment%20results) Good Sam Services and Plans segment income increased by 32.8%, driven by roadside assistance programs. Conversely, RV and Outdoor Retail segment income decreased by 42.2% due to lower gross profit, increased unit costs, and higher floor plan interest expense | Segment Income (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change ($) | Change (%) | | :---------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Good Sam Services and Plans | $23,946 | $18,030 | $5,916 | 32.8% | | RV and Outdoor Retail | $143,098 | $247,762 | $(104,664) | (42.2%) | - Good Sam Services and Plans segment income increased due to increased contracts in force, favorable cancellation assumptions, and reduced marketing costs for roadside assistance programs[240](index=240&type=chunk) - RV and Outdoor Retail segment income decreased primarily due to lower gross profit from increased unit costs and reduced average sales prices, along with a **$6.4 million** increase in floor plan interest expense[241](index=241&type=chunk) [Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021](index=81&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20Nine%20Months%20Ended%20September%2030%2C%202021) For the nine months ended September 30, 2022, total revenue increased, but net income significantly decreased compared to 2021. This was primarily due to higher operating expenses, increased interest costs, and a decline in new vehicle gross profit, despite growth in used vehicle revenue and Good Sam Services [Revenue and Gross Profit](index=81&type=section&id=Revenue%20and%20Gross%20Profit) Total revenue increased by 2.7%, but total gross profit decreased by 5.1%. Good Sam Services and Plans saw revenue and gross profit increases. In RV and Outdoor Retail, new vehicle revenue was flat with increased ASP but decreased units, while used vehicle revenue and gross profit increased. Products, service and other revenue decreased due to exiting non-RV categories | Metric (in thousands) | Sep 30, 2022 | Sep 30, 2021 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :--------- | :--------- | | Total revenue | $5,686,710 | $5,536,162 | $150,548 | 2.7% | | Total gross profit | $1,870,683 | $1,971,713 | $(101,030) | (5.1%) | | Segment/Category (in thousands) | Sep 30, 2022 Revenue | Sep 30, 2021 Revenue | Change (%) | | :------------------------------ | :------------------- | :------------------- | :--------- | | Good Sam Services and Plans | $144,504 | $134,354 | 7.6% | | New vehicles | $2,746,323 | $2,745,057 | 0.0% | | Used vehicles | $1,484,978 | $1,273,944 | 16.6% | | Products, service and other | $761,914 | $862,706 | (11.7%) | | Segment/Category Gross Margin | Sep 30, 2022 | Sep 30, 2021 | Change (bps) | | :---------------------------- | :----------- | :----------- | :----------- | | Good Sam Services and Plans | 62.3% | 60.4% | 189 | | New vehicles | 20.9% | 26.6% | (570) | | Used vehicles | 24.9% | 26.6% | (176) | | Products, service and other | 38.6% | 35.5% | 313 | [Operating Expenses and Other](index=87&type=section&id=Operating%20Expenses%20and%20Other) Selling, general and administrative expenses increased due to higher selling, insurance, occupancy, and professional fees, as well as Cybersecurity Incident costs and equity-based compensation. Depreciation and amortization also rose, partly due to accelerated amortization of intangible assets. Floor plan and other interest expenses saw significant increases, while debt restructure and Tax Receivable Agreement liability adjustments were non-recurring in 2022 | Expense (in thousands) | Sep 30, 2022 | Sep 30, 2021 | Change ($) | Change (%) | | :--------------------- | :----------- | :----------- | :--------- | :--------- | | Selling, general and administrative expenses | $1,245,540 | $1,193,668 | $(51,872) | (4.3%) | | Depreciation and amortization | $61,369 | $49,297 | $(12,072) | (24.5%) | | Floor plan interest expense | $(24,483) | $(9,886) | $(14,597) | (147.7%) | | Other interest expense, net | $(49,762) | $(35,262) | $(14,500) | (41.1%) | | Income before income taxes | $484,040 | $666,068 | $(182,028) | (27.3%) | - Selling, general and administrative expenses increased due to higher selling expenses, insurance costs, occupancy expenses, professional fees, personal property expenses, and costs associated with the February 2022 Cybersecurity Incident[261](index=261&type=chunk) - Depreciation and amortization increased primarily due to **$8.8 million** of incremental accelerated amortization of certain trademark and trade name intangible assets and higher average property and equipment balances[263](index=263&type=chunk) - Floor plan interest expense increased due to a **90.2%** increase in average floor plan borrowings and a **66 basis point** increase in the average borrowing rate[267](index=267&type=chunk) [Segment results](index=91&type=section&id=Segment%20results) Good Sam Services and Plans segment income increased by 7.7%, driven by roadside assistance programs. RV and Outdoor Retail segment income decreased by 24.2% due to lower gross profit from increased vehicle costs and reduced sales, coupled with higher selling, general and administrative expenses and floor plan interest | Segment Income (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change ($) | Change (%) | | :---------------------------- |

Camping World Holdings, Inc. (NYSE:CWH) Q2 2022 Earnings Conference Call August 3, 2022 8:30 AM ET Company Participants Lindsey Christen – Executive Vice President and General Counsel Marcus Lemonis – Chairman and Chief Executive Officer Matthew Wagner – Executive Vice President Conference Call Participants Daniel Imbro – Stephens, Inc. Brett Andress – KeyBanc Joe Altobello – Raymond James Mike Swartz – Truist Gerrick Johnson – BMO Capital Markets Ryan Brinkman – JPMorgan Operator Good morning, and welcome ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _______________ Commission file number: 001-37908 CAMPING WORLD HOLDINGS, INC. (Exact name of registrant as specified in its charter) D ...