Camping World Holdings Inc.
10/28/2024 | Press release | Distributed by Public on 10/28/2024 14:11
Camping World Holdings, Inc. Reports Third Quarter 2024 Results, Same Store New Unit Sales Increase 29% Year Over Year, Driving Record New Unit Market Share, Used Unit Volume[...]
Camping World Holdings, Inc. Reports Third Quarter 2024 Results, Same Store New Unit Sales Increase 29% Year-Over-Year, Driving Record New Unit Market Share, Used Unit Volume Trends Sequentially Improve in October
LINCOLNSHIRE, IL - October 28, 2024 (BUSINESS WIRE) -- Camping World Holdings, Inc. (NYSE: CWH) (the "Company" or "CWH"), America's Recreation Dealer, today reported results for the third quarter ended September 30, 2024.
Marcus Lemonis, Chairman and Chief Executive Officer of Camping World Holdings, Inc. stated, "Our combined new and used same store unit sales returned to positive growth for the first time in 10 quarters, with our record new unit market share(1) a direct result of our relentless focus on product development and affordability. I'm very encouraged by our October-to-date same store volume trends, with used units tracking to flat year-over-year, and new units remaining solidly up by a double-digit percentage, providing significant momentum as we focus on an improved 2025."
Matt Wagner, President of Camping World Holdings, Inc. commented, "As we drive toward 2025, our calculated approach to inventory has yielded market leading results. We believe this rigor will lead to a meaningful recovery in used unit volume next year, in excess of low double digits, as we lap our deliberate conservatism around used inventory procurement from 2024, with modest growth in new units. We see average selling prices modestly increasing year-over-year, with vehicle gross margins within our historical range and SG&A as a percentage of gross profit improving by mid to high single digits."
Mr. Lemonis concluded, "The strength and stability of our Good Sam and fixed operations businesses are proven differentiators throughout any cycle. As a growth company, we believe our standout momentum positions us exceptionally well for dealership M&A and organic growth in 2025 and beyond."
Third Quarter-over-Quarter Operating Highlights
| ● | Revenue was $1.7 billion for the third quarter, a decrease of $4.6 million, or 0.3%. |
| ● | New vehicle revenue was $824.9 million for the third quarter, an increase of $145.7 million, or 21.5%, and new vehicle unit sales were 19,943 units, an increase of 4,738 units, or 31.2%. Used vehicle revenue was $447.2 million for the third quarter, a decrease of $143.0 million, or 24.2%, and used vehicle unit sales were 14,065 units, a decrease of 3,060 units, or 17.9%. Combined new and used vehicle unit sales were 34,008, an increase of 1,678 units, or 5.2%. |
| ● | Average selling price of new vehicles declined 7.4% during the third quarter driven primarily by lower cost of 2024 model year travel trailers and discounting of pre-2024 model year new vehicles. Average selling price of used vehicles declined 7.7% during the third quarter due to discounting of used vehicles in response to declines in new vehicle prices. |
| ● | Same store new vehicle unit sales increased 28.8% for the third quarter and same store used vehicle unit sales decreased 20.5%. Combined same store new and used vehicle unit sales increased 2.3%. |
| ● | Products, services and other revenue was $224.8 million, a decline of $10.8 million, or 4.6%, driven largely by the divestiture of our RV furniture business in May 2024 and fewer used vehicles sold led to a decline in retail product attachment to vehicle sales. |
| ● | Gross profit was $498.5 million, a decrease of $24.6 million, or 4.7%, and total gross margin was 28.9%, a decrease of 134 basis points. The gross profit and gross margin decline was mainly driven by the lower average selling prices on new and used vehicles, which was partially offset by the lower average cost of new and used vehicles, and a nonrecurring $5.5 million exit arrangement with a service partner for Good Sam Services and Plans in 2023. These decreases were partially offset by improved gross margins for products, services and other driven largely by the divestiture of our RV furniture business in May 2024. |
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| ● | Selling, general and administrative expenses ("SG&A") were $414.2 million, a decrease of $1.1 million, or 0.3% and SG&A Excluding Equity-based Compensation(2) was relatively unchanged at $408.7 million, a decrease of $1.2 million, or 0.3%. These decreases were driven by $5.4 million of reduced employee compensation costs excluding equity-based compensation, $1.3 million of reduced nonbillable service work, and $1.0 million of reduced rent expense, partially offset by $3.3 million of additional advertising expenses and $3.0 million of increased expenses from other outside service providers, such as professional fees, consultants, and software service providers. |
| ● | Floor plan interest expense was $22.4 million, an increase of $2.6 million, or 12.9%, and other interest expense, net was $35.9 million, an increase of $0.6 million, or 1.8%. These increases were primarily as a result of higher principal balances, and, to a lesser extent an increase in the average floor plan borrowing rate. |
| ● | Net income was $8.1 million for the third quarter of 2024, a decrease of $22.8 million, or 73.9%. Adjusted EBITDA(2) was $67.5 million, a decrease of $27.5 million, or 28.9%. These decreases were driven primarily by the $24.6 million decrease in gross profit. |
| ● | Diluted earnings per share of Class A common stock was $0.09, a decrease of $0.23, or 71.9%. Adjusted earnings per share - diluted(2) of Class A common stock was $0.13, a decrease of $0.26, or 66.7%. |
| ● | The total number of our store locations was 207 as of September 30, 2024, a net decrease of two store locations from September 30, 2023, or 1.0%. |
| (1) | New unit market share is calculated as total volume of the Company's new units sold during any specified time period divided by the total number of new registrations as reported by SSI Data, LLC, d/b/a Statistical Surveys for that same specified time period. |
| (2) | Adjusted earnings per share - diluted, Adjusted EBITDA, and SG&A Excluding Equity-based Compensation are non-GAAP measures. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, see the "Non-GAAP Financial Measures" section later in this press release. |
Earnings Conference Call and Webcast Information
A conference call to discuss the Company's third quarter 2024 financial results is scheduled for October 29, 2024, at 7:30 am Central Time. Investors and analysts can participate on the conference call by dialing 1-844-826-3035 (international callers please dial 1-412-317-5195) and using conference ID# 10193590. Interested parties can also listen to a live webcast or replay of the conference call by logging on to the Investor Relations section on the Company's website at http://investor.campingworld.com. The replay of the conference call webcast will be available on the investor relations website for approximately 90 days.
Presentation
This press release presents historical results for the periods presented for the Company and its subsidiaries, which are presented in accordance with accounting principles generally accepted in the United States ("GAAP"), unless noted as a non-GAAP financial measure. The Company's initial public offering ("IPO") and related reorganization transactions ("Reorganization Transactions") that occurred on October 6, 2016 resulted in the Company as the sole managing member of CWGS Enterprises, LLC ("CWGS, LLC"), with sole voting power in and control of the management of CWGS, LLC. The Company's position as sole managing member of CWGS, LLC includes periods where the Company has held a minority economic interest in CWGS, LLC. As of September 30, 2024, the Company owned 53.1% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. Unless otherwise indicated, all financial comparisons in this press release compare our financial results for the third quarter ended September 30, 2024 to our financial results from the third quarter ended September 30, 2023.
About Camping World Holdings, Inc.
Camping World Holdings, Inc., headquartered in Lincolnshire, IL, (together with its subsidiaries) is the world's largest retailer of RVs and related products and services. Through Camping World and Good Sam brands, our
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vision is to build a business that makes RVing and other outdoor adventures fun and easy. We strive to build long-term value for our customers, employees, and stockholders by combining a unique and comprehensive assortment of RV products and services with a national network of RV dealerships, service centers and customer support centers along with the industry's most extensive online presence and a highly trained and knowledgeable team of associates serving our customers, the RV lifestyle, and the communities in which we operate. We also believe that our Good Sam organization and family of highly specialized services and plans, including roadside assistance, protection plans and insurance, uniquely enables us to connect with our customers as stewards of an outdoor and recreational lifestyle. With RV sales and service locations in 43 states, Camping World has grown to become the prime destination for everything RV. For more information, visit www.CampingWorld.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements about macroeconomic and industry trends, inventory strategy, business plans and goals, dealership M&A, and future financial results and position, including vehicle margins and volume. These forward-looking statements are based on management's current expectations.
These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: general economic conditions, including inflation and interest rates; the availability of financing to us and our customers; fuel shortages, high prices for fuel or changes in energy sources; the success of our manufacturers; changes in consumer preferences; risks related to our strategic review of our Good Sam business; competition in our industry; risks related to acquisitions, new store openings and expansion into new markets; our failure to maintain the strength and value of our brands; our ability to manage our inventory; fluctuations in our same store sales; the cyclical and seasonal nature of our business; our dependence on the availability of adequate capital and risks related to our debt; risks related to COVID-19; our ability to execute and achieve the expected benefits of our cost cutting or restructuring initiatives; our reliance on our fulfillment and distribution centers; natural disasters, including epidemic outbreaks; our dependence on our relationships with third party suppliers and lending institutions; risks associated with selling goods manufactured abroad; our ability to retain senior executives and attract and retain other qualified employees; risks associated with leasing substantial amounts of space; risks associated with our private brand offerings; we may incur asset impairment charges for goodwill, intangible assets or other long-lived assets; tax risks; our private brand offerings exposing us to various risks; regulatory risks; data privacy and cybersecurity risks; risks related to our intellectual property; the impact of ongoing or future lawsuits against us and certain of our officers and directors; risks related to climate change and other environmental, social and governance matters; and risks related to our organizational structure.
These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, as updated by our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management's estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required under applicable law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Future declarations of quarterly dividends, if any, are subject to the determination and discretion of the Company's Board of Directors based on its consideration of various factors, including the Company's results of operations, financial condition, level of indebtedness, anticipated capital requirements, contractual restrictions, restrictions in its debt agreements, restrictions under applicable law, receipt of excess tax distributions from
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CWGS Enterprises, LLC, its business prospects and other factors that the Company's Board of Directors may deem relevant.
We intend to use our official Facebook, X (formerly known as Twitter), and Instagram accounts, each at the handle @CampingWorld, as well as the investor page of our website, investor.campingworld.com, as a distribution channel of material information about the Company and for complying with our disclosure obligations under Regulation FD. The information we post through these social media channels and on our investor webpage may be deemed material. Accordingly, investors should subscribe to these accounts and our investor alerts, in addition to following our press releases, SEC filings, public conference calls and webcasts. These social media channels may be updated from time to time.
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Camping World Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In Thousands Except Per Share Amounts)
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
September 30, |
September 30, |
|||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||
|
Revenue: |
||||||||||||
|
Good Sam Services and Plans |
$ |
50,841 |
$ |
49,889 |
$ |
149,070 |
$ |
147,294 |
||||
|
RV and Outdoor Retail |
||||||||||||
|
New vehicles |
824,916 |
679,207 |
2,328,107 |
2,126,862 |
||||||||
|
Used vehicles |
447,242 |
590,227 |
1,265,701 |
1,657,935 |
||||||||
|
Products, service and other |
224,839 |
235,609 |
638,680 |
691,030 |
||||||||
|
Finance and insurance, net |
166,255 |
163,630 |
480,725 |
460,336 |
||||||||
|
Good Sam Club |
10,895 |
11,051 |
33,227 |
33,757 |
||||||||
|
Subtotal |
1,674,147 |
1,679,724 |
4,746,440 |
4,969,920 |
||||||||
|
Total revenue |
1,724,988 |
1,729,613 |
4,895,510 |
5,117,214 |
||||||||
|
Costs applicable to revenue (exclusive of depreciation and amortization shown separately below): |
||||||||||||
|
Good Sam Services and Plans |
19,700 |
10,021 |
52,075 |
43,844 |
||||||||
|
RV and Outdoor Retail |
||||||||||||
|
New vehicles |
713,515 |
576,480 |
1,996,204 |
1,811,398 |
||||||||
|
Used vehicles |
366,067 |
478,595 |
1,034,201 |
1,300,961 |
||||||||
|
Products, service and other |
126,113 |
139,976 |
360,721 |
422,037 |
||||||||
|
Good Sam Club |
1,069 |
1,455 |
3,729 |
3,766 |
||||||||
|
Subtotal |
1,206,764 |
1,196,506 |
3,394,855 |
3,538,162 |
||||||||
|
Total costs applicable to revenue |
1,226,464 |
1,206,527 |
3,446,930 |
3,582,006 |
||||||||
|
Gross profit (exclusive of depreciation and amortization shown separately below): |
||||||||||||
|
Good Sam Services and Plans |
31,141 |
39,868 |
96,995 |
103,450 |
||||||||
|
RV and Outdoor Retail |
||||||||||||
|
New vehicles |
111,401 |
102,727 |
331,903 |
315,464 |
||||||||
|
Used vehicles |
81,175 |
111,632 |
231,500 |
356,974 |
||||||||
|
Products, service and other |
98,726 |
95,633 |
277,959 |
268,993 |
||||||||
|
Finance and insurance, net |
166,255 |
163,630 |
480,725 |
460,336 |
||||||||
|
Good Sam Club |
9,826 |
9,596 |
29,498 |
29,991 |
||||||||
|
Subtotal |
467,383 |
483,218 |
1,351,585 |
1,431,758 |
||||||||
|
Total gross profit |
498,524 |
523,086 |
1,448,580 |
1,535,208 |
||||||||
|
Operating expenses: |
||||||||||||
|
Selling, general, and administrative |
414,209 |
415,288 |
1,205,358 |
1,201,901 |
||||||||
|
Depreciation and amortization |
20,583 |
17,619 |
59,905 |
49,462 |
||||||||
|
Long-lived asset impairment |
1,944 |
1,747 |
12,355 |
9,269 |
||||||||
|
Lease termination |
(2,625) |
375 |
(2,585) |
375 |
||||||||
|
(Gain) loss on sale or disposal of assets |
(5) |
131 |
9,525 |
(5,001) |
||||||||
|
Total operating expenses |
434,106 |
435,160 |
1,284,558 |
1,256,006 |
||||||||
|
Income from operations |
64,418 |
87,926 |
164,022 |
279,202 |
||||||||
|
Other expense |
||||||||||||
|
Floor plan interest expense |
(22,372) |
(19,816) |
(78,053) |
(61,298) |
||||||||
|
Other interest expense, net |
(35,877) |
(35,242) |
(108,124) |
(99,873) |
||||||||
|
Tax Receivable Agreement liability adjustment |
- |
1,680 |
- |
1,680 |
||||||||
|
Other (expense) income, net |
(162) |
24 |
(337) |
(1,659) |
||||||||
|
Total other expense |
(58,411) |
(53,354) |
(186,514) |
(161,150) |
||||||||
|
Income (loss) before income taxes |
6,007 |
34,572 |
(22,492) |
118,052 |
||||||||
|
Income tax benefit (expense) |
2,049 |
(3,679) |
3,156 |
(17,533) |
||||||||
|
Net income (loss) |
8,056 |
30,893 |
(19,336) |
100,519 |
||||||||
|
Less: net income (loss) attributable to non-controlling interests |
(2,555) |
(14,932) |
12,301 |
(52,686) |
||||||||
|
Net income (loss) attributable to Camping World Holdings, Inc. |
$ |
5,501 |
$ |
15,961 |
$ |
(7,035) |
$ |
47,833 |
||||
|
Earnings (loss) per share of Class A common stock: |
||||||||||||
|
Basic |
$ |
0.12 |
$ |
0.36 |
$ |
(0.16) |
$ |
1.07 |
||||
|
Diluted |
$ |
0.09 |
$ |
0.32 |
$ |
(0.18) |
$ |
1.03 |
||||
|
Weighted average shares of Class A common stock outstanding: |
||||||||||||
|
Basic |
45,232 |
44,666 |
45,124 |
44,538 |
||||||||
|
Diluted |
85,618 |
85,180 |
85,169 |
84,917 |
5
Camping World Holdings, Inc. and Subsidiaries
Supplemental Data (unaudited)
|
Three Months Ended September 30, |
Increase |
Percent |
|||||||||||
|
2024 |
2023 |
(decrease) |
Change |
||||||||||
|
Unit sales |
|||||||||||||
|
New vehicles |
19,943 |
15,205 |
4,738 |
31.2% |
|||||||||
|
Used vehicles |
14,065 |
17,125 |
(3,060) |
(17.9%) |
|||||||||
|
Total |
34,008 |
32,330 |
1,678 |
5.2% |
|||||||||
|
Average selling price |
|||||||||||||
|
New vehicles |
$ |
41,364 |
$ |
44,670 |
$ |
(3,306) |
(7.4%) |
||||||
|
Used vehicles |
31,798 |
34,466 |
(2,668) |
(7.7%) |
|||||||||
|
Same store unit sales(1) |
|||||||||||||
|
New vehicles |
17,781 |
13,810 |
3,971 |
28.8% |
|||||||||
|
Used vehicles |
12,711 |
15,988 |
(3,277) |
(20.5%) |
|||||||||
|
Total |
30,492 |
29,798 |
694 |
2.3% |
|||||||||
|
Same store revenue(1) ($ in 000s) |
|||||||||||||
|
New vehicles |
$ |
737,070 |
$ |
618,483 |
$ |
118,587 |
19.2% |
||||||
|
Used vehicles |
399,525 |
551,480 |
(151,955) |
(27.6%) |
|||||||||
|
Products, service and other |
182,180 |
186,391 |
(4,211) |
(2.3%) |
|||||||||
|
Finance and insurance, net |
148,456 |
151,148 |
(2,692) |
(1.8%) |
|||||||||
|
Total |
$ |
1,467,231 |
$ |
1,507,502 |
$ |
(40,271) |
(2.7%) |
||||||
|
Average gross profit per unit |
|||||||||||||
|
New vehicles |
$ |
5,586 |
$ |
6,756 |
$ |
(1,170) |
(17.3%) |
||||||
|
Used vehicles |
5,771 |
6,519 |
(748) |
(11.5%) |
|||||||||
|
Finance and insurance, net per vehicle unit |
4,889 |
5,061 |
(172) |
(3.4%) |
|||||||||
|
Total vehicle front-end yield(2) |
10,551 |
11,692 |
(1,141) |
(9.8%) |
|||||||||
|
Gross margin |
|||||||||||||
|
Good Sam Services and Plans |
61.3% |
79.9% |
(1,866) |
bps |
|||||||||
|
New vehicles |
13.5% |
15.1% |
(162) |
bps |
|||||||||
|
Used vehicles |
18.2% |
18.9% |
(76) |
bps |
|||||||||
|
Products, service and other |
43.9% |
40.6% |
332 |
bps |
|||||||||
|
Finance and insurance, net |
100.0% |
100.0% |
unch. |
||||||||||
|
Good Sam Club |
90.2% |
86.8% |
335 |
bps |
|||||||||
|
Subtotal RV and Outdoor Retail |
27.9% |
28.8% |
(85) |
bps |
|||||||||
|
Total gross margin |
28.9% |
30.2% |
(134) |
bps |
|||||||||
|
Retail locations |
|||||||||||||
|
RV dealerships |
204 |
205 |
(1) |
(0.5%) |
|||||||||
|
RV service & retail centers |
3 |
4 |
(1) |
(25.0%) |
|||||||||
|
Total |
207 |
209 |
(2) |
(1.0%) |
|||||||||
|
RV and Outdoor Retail inventories ($ in 000s) |
|||||||||||||
|
New vehicles |
$ |
1,189,880 |
$ |
1,131,575 |
$ |
58,305 |
5.2% |
||||||
|
Used vehicles |
420,727 |
534,155 |
(113,428) |
(21.2%) |
|||||||||
|
Products, parts, accessories and misc. |
170,793 |
202,786 |
(31,993) |
(15.8%) |
|||||||||
|
Total RV and Outdoor Retail inventories |
$ |
1,781,400 |
$ |
1,868,516 |
$ |
(87,116) |
(4.7%) |
||||||
|
Vehicle inventory per location ($ in 000s) |
|||||||||||||
|
New vehicle inventory per dealer location |
$ |
5,833 |
$ |
5,520 |
$ |
313 |
5.7% |
||||||
|
Used vehicle inventory per dealer location |
2,062 |
2,606 |
(544) |
(20.9%) |
|||||||||
|
Vehicle inventory turnover(3) |
|||||||||||||
|
New vehicle inventory turnover |
1.7 |
1.8 |
(0.1) |
(5.6%) |
|||||||||
|
Used vehicle inventory turnover |
3.2 |
3.0 |
0.2 |
6.7% |
|||||||||
|
Other data |
|||||||||||||
|
Active Customers(4) |
4,615,443 |
5,111,478 |
(496,035) |
(9.7%) |
|||||||||
|
Good Sam Club members (5) |
1,804,334 |
2,051,768 |
(247,434) |
(12.1%) |
|||||||||
|
Service bays (6) |
2,828 |
2,800 |
28 |
1.0% |
|||||||||
|
Finance and insurance gross profit as a % of total vehicle revenue |
13.1% |
12.9% |
18 |
bps |
n/a |
||||||||
|
Same store locations |
176 |
n/a |
n/a |
n/a |
6
|
Nine Months Ended September 30, |
Increase |
Percent |
|||||||||||
|
2024 |
2023 |
(decrease) |
Change |
||||||||||
|
Unit sales |
|||||||||||||
|
New vehicles |
58,909 |
48,014 |
10,895 |
22.7% |
|||||||||
|
Used vehicles |
40,459 |
47,331 |
(6,872) |
(14.5%) |
|||||||||
|
Total |
99,368 |
95,345 |
4,023 |
4.2% |
|||||||||
|
Average selling price |
|||||||||||||
|
New vehicles |
$ |
39,520 |
$ |
44,297 |
$ |
(4,776) |
(10.8%) |
||||||
|
Used vehicles |
31,284 |
35,029 |
(3,745) |
(10.7%) |
|||||||||
|
Same store unit sales(1) |
|||||||||||||
|
New vehicles |
52,786 |
45,002 |
7,784 |
17.3% |
|||||||||
|
Used vehicles |
36,707 |
45,034 |
(8,327) |
(18.5%) |
|||||||||
|
Total |
89,493 |
90,036 |
(543) |
(0.6%) |
|||||||||
|
Same store revenue(1) ($ in 000s) |
|||||||||||||
|
New vehicles |
$ |
2,089,246 |
$ |
2,000,904 |
$ |
88,342 |
4.4% |
||||||
|
Used vehicles |
1,140,260 |
1,580,117 |
(439,857) |
(27.8%) |
|||||||||
|
Products, service and other |
504,102 |
536,234 |
(32,132) |
(6.0%) |
|||||||||
|
Finance and insurance, net |
433,202 |
436,457 |
(3,255) |
(0.7%) |
|||||||||
|
Total |
$ |
4,166,810 |
$ |
4,553,712 |
$ |
(386,902) |
(8.5%) |
||||||
|
Average gross profit per unit |
|||||||||||||
|
New vehicles |
$ |
5,634 |
$ |
6,570 |
$ |
(936) |
(14.2%) |
||||||
|
Used vehicles |
5,722 |
7,542 |
(1,820) |
(24.1%) |
|||||||||
|
Finance and insurance, net per vehicle unit |
4,838 |
4,828 |
10 |
0.2% |
|||||||||
|
Total vehicle front-end yield(2) |
10,508 |
11,881 |
(1,373) |
(11.6%) |
|||||||||
|
Gross margin |
|||||||||||||
|
Good Sam Services and Plans |
65.1% |
70.2% |
(517) |
bps |
|||||||||
|
New vehicles |
14.3% |
14.8% |
(58) |
bps |
|||||||||
|
Used vehicles |
18.3% |
21.5% |
(324) |
bps |
|||||||||
|
Products, service and other |
43.5% |
38.9% |
460 |
bps |
|||||||||
|
Finance and insurance, net |
100.0% |
100.0% |
unch. |
bps |
|||||||||
|
Good Sam Club |
88.8% |
88.8% |
(7) |
bps |
|||||||||
|
Subtotal RV and Outdoor Retail |
28.5% |
28.8% |
(33) |
bps |
|||||||||
|
Total gross margin |
29.6% |
30.0% |
(41) |
bps |
|||||||||
|
Other data |
|||||||||||||
|
Finance and insurance gross profit as a % of total vehicle revenue |
13.4% |
12.2% |
121 |
bps |
n/a |
||||||||
|
Same store locations |
176 |
n/a |
n/a |
n/a |
unch - unchanged
bps - basis points
n/a - not applicable
| (1) | Our same store revenue and units calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year. |
| (2) | Front end yield is calculated as gross profit from new vehicles, used vehicles and finance and insurance (net), divided by combined new and used vehicle unit sales. |
| (3) | Inventory turnover is calculated as vehicle costs applicable to revenue over the last twelve months divided by the average quarterly ending vehicle inventory over the last twelve months. |
| (4) | An Active Customer is a customer who has transacted with us in any of the eight most recently completed fiscal quarters prior to the date of measurement. |
| (5) | Excludes Good Sam Club members under the free basic plan, which was introduced in November 2023 and provides for limited participation in the loyalty point program without access to the remaining member benefits. |
| (6) | A service bay is a fully-constructed bay dedicated to service, installation, and collision offerings. |
7
Camping World Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
(In Thousands Except Per Share Amounts)
|
September 30, |
December 31, |
September 30, |
|||||||
|
2024 |
2023 |
2023 |
|||||||
|
Assets |
|||||||||
|
Current assets: |
|||||||||
|
Cash and cash equivalents |
$ |
28,380 |
$ |
39,647 |
$ |
53,318 |
|||
|
Contracts in transit |
111,879 |
60,229 |
100,831 |
||||||
|
Accounts receivable, net |
118,300 |
128,070 |
135,832 |
||||||
|
Inventories |
1,781,656 |
2,042,949 |
1,869,042 |
||||||
|
Prepaid expenses and other assets |
57,158 |
48,353 |
38,979 |
||||||
|
Assets held for sale |
10,353 |
29,864 |
4,635 |
||||||
|
Total current assets |
2,107,726 |
2,349,112 |
2,202,637 |
||||||
|
Property and equipment, net |
836,824 |
834,426 |
841,548 |
||||||
|
Operating lease assets |
755,223 |
740,052 |
736,246 |
||||||
|
Deferred tax assets, net |
157,886 |
157,326 |
142,187 |
||||||
|
Intangible assets, net |
20,413 |
13,717 |
14,444 |
||||||
|
Goodwill |
732,813 |
711,222 |
688,139 |
||||||
|
Other assets |
34,339 |
39,829 |
32,058 |
||||||
|
Total assets |
$ |
4,645,224 |
$ |
4,845,684 |
$ |
4,657,259 |
|||
|
Liabilities and stockholders' equity |
|||||||||
|
Current liabilities: |
|||||||||
|
Accounts payable |
$ |
221,292 |
$ |
133,516 |
$ |
200,433 |
|||
|
Accrued liabilities |
182,926 |
149,096 |
171,956 |
||||||
|
Deferred revenues |
100,894 |
92,366 |
99,813 |
||||||
|
Current portion of operating lease liabilities |
60,481 |
63,695 |
62,987 |
||||||
|
Current portion of finance lease liabilities |
7,077 |
17,133 |
5,563 |
||||||
|
Current portion of Tax Receivable Agreement liability |
- |
12,943 |
13,999 |
||||||
|
Current portion of long-term debt |
23,798 |
22,121 |
23,257 |
||||||
|
Notes payable - floor plan, net |
1,030,187 |
1,371,145 |
1,017,543 |
||||||
|
Other current liabilities |
83,906 |
68,536 |
79,381 |
||||||
|
Liabilities related to assets held for sale |
- |
17,288 |
4,022 |
||||||
|
Total current liabilities |
1,710,561 |
1,947,839 |
1,678,954 |
||||||
|
Operating lease liabilities, net of current portion |
779,873 |
763,958 |
759,952 |
||||||
|
Finance lease liabilities, net of current portion |
132,784 |
97,751 |
99,060 |
||||||
|
Tax Receivable Agreement liability, net of current portion |
149,866 |
149,866 |
149,134 |
||||||
|
Revolving line of credit |
31,885 |
20,885 |
20,885 |
||||||
|
Long-term debt, net of current portion |
1,506,027 |
1,498,958 |
1,522,495 |
||||||
|
Deferred revenues |
67,647 |
66,780 |
70,214 |
||||||
|
Other long-term liabilities |
93,890 |
85,440 |
85,710 |
||||||
|
Total liabilities |
4,472,533 |
4,631,477 |
4,386,404 |
||||||
|
Commitments and contingencies |
|||||||||
|
Stockholders' equity: |
|||||||||
|
Preferred stock, par value $0.01 per share - 20,000 shares authorized; none issued and outstanding |
- |
- |
- |
||||||
|
Class A common stock, par value $0.01 per share - 250,000 shares authorized; 49,571, 49,571 and 49,571 shares issued, respectively; 45,342, 45,020 and 44,780 shares outstanding, respectively |
496 |
496 |
496 |
||||||
|
Class B common stock, par value $0.0001 per share - 75,000 shares authorized; 39,466, 39,466 and 39,466 shares issued, respectively; 39,466, 39,466 and 39,466 shares outstanding, respectively |
4 |
4 |
4 |
||||||
|
Class C common stock, par value $0.0001 per share - 0.001 share authorized, issued and outstanding |
- |
- |
- |
||||||
|
Additional paid-in capital |
94,217 |
98,280 |
108,942 |
||||||
|
Treasury stock, at cost; 4,229, 4,551, and 4,791 shares, respectively |
(148,170) |
(159,440) |
(167,847) |
||||||
|
Retained earnings |
161,269 |
185,244 |
207,657 |
||||||
|
Total stockholders' equity attributable to Camping World Holdings, Inc. |
107,816 |
124,584 |
149,252 |
||||||
|
Non-controlling interests |
64,875 |
89,623 |
121,603 |
||||||
|
Total stockholders' equity |
172,691 |
214,207 |
270,855 |
||||||
|
Total liabilities and stockholders' equity |
$ |
4,645,224 |
$ |
4,845,684 |
$ |
4,657,259 |
8
Camping World Holdings, Inc. and Subsidiaries
Summary of Consolidated Statements of Cash Flows (unaudited)
(In Thousands)
|
Nine Months Ended September 30, |
||||||
|
2024 |
2023 |
|||||
|
Net cash provided by operating activities |
$ |
408,541 |
$ |
543,273 |
||
|
Investing activities |
||||||
|
Purchases of property and equipment |
(68,194) |
(95,641) |
||||
|
Proceeds from sale of property and equipment |
3,820 |
2,723 |
||||
|
Purchases of real property |
(1,243) |
(64,302) |
||||
|
Proceeds from the sale of real property |
48,434 |
35,603 |
||||
|
Purchases of businesses, net of cash acquired |
(62,323) |
(150,475) |
||||
|
Proceeds from divestiture of business |
19,957 |
- |
||||
|
Purchases of and loans to other investments |
- |
(3,444) |
||||
|
Purchases of intangible assets |
(142) |
(1,999) |
||||
|
Proceeds from sale of intangible assets |
2,595 |
- |
||||
|
Net cash used in investing activities |
(57,096) |
(277,535) |
||||
|
Financing activities |
||||||
|
Proceeds from long-term debt |
55,624 |
59,227 |
||||
|
Payments on long-term debt |
(66,763) |
(26,556) |
||||
|
Net payments on notes payable - floor plan, net |
(317,519) |
(273,478) |
||||
|
Borrowings on revolving line of credit |
43,000 |
- |
||||
|
Payments on revolving line of credit |
(32,000) |
- |
||||
|
Payments on finance leases |
(5,684) |
(4,160) |
||||
|
Payments on sale-leaseback arrangement |
(147) |
(139) |
||||
|
Payment of debt issuance costs |
(876) |
(881) |
||||
|
Dividends on Class A common stock |
(16,940) |
(61,207) |
||||
|
Proceeds from exercise of stock options |
549 |
319 |
||||
|
RSU shares withheld for tax |
(3,110) |
(4,083) |
||||
|
Distributions to holders of LLC common units |
(18,846) |
(31,593) |
||||
|
Net cash used in financing activities |
(362,712) |
(342,551) |
||||
|
Decrease in cash and cash equivalents |
(11,267) |
(76,813) |
||||
|
Cash and cash equivalents at beginning of the period |
39,647 |
130,131 |
||||
|
Cash and cash equivalents at end of the period |
$ |
28,380 |
$ |
53,318 |
9
Comparison of Certain Trends to Pre-COVID-19 Pandemic Periods
New vehicle gross margins in the third quarter of 2024 were within the range of gross margins for the pre-COVID-19 pandemic periods presented in the table below. Additionally, used vehicle gross margins were negatively impacted in the third quarter of 2024 from the discounting necessary to maintain used vehicles as a lower cost alternative for our customers. Beginning primarily in the fourth quarter of 2023, we adjusted our acceptable procurement cost of used vehicles to reflect the lower average market price of RVs that was driven by the lower cost 2024 models.
The following table presents vehicle gross margin and unit sales mix for the three months ended September 30, 2024 and pre-COVID-19 pandemic periods for the three months ended September 30, 2019, 2018, 2017, and 2016 (unaudited):
|
Three Months Ended September 30, |
||||||||||
|
2024 |
2019(1) |
2018(1) |
2017(1) |
2016(1) |
||||||
|
Gross margin: |
||||||||||
|
New vehicles |
13.5% |
12.0% |
12.6% |
14.3% |
13.9% |
|||||
|
Used vehicles |
18.2% |
21.1% |
22.9% |
25.3% |
23.0% |
|||||
|
Unit sales mix: |
||||||||||
|
New vehicles |
58.6% |
64.9% |
69.0% |
69.1% |
64.2% |
|||||
|
Used vehicles |
41.4% |
35.1% |
31.0% |
30.9% |
35.8% |
(1) These periods were prior to the COVID-19 pandemic.
Earnings (Loss) Per Share
Basic earnings (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Camping World Holdings, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Camping World Holdings, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.
The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (loss) per share of Class A common stock (unaudited):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
(In thousands except per share amounts) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Numerator: |
||||||||||||
|
Net income (loss) |
$ |
8,056 |
$ |
30,893 |
$ |
(19,336) |
$ |
100,519 |
||||
|
Less: net income (loss) attributable to non-controlling interests |
(2,555) |
(14,932) |
12,301 |
(52,686) |
||||||||
|
Net income (loss) attributable to Camping World Holdings, Inc. - basic |
$ |
5,501 |
$ |
15,961 |
$ |
(7,035) |
$ |
47,833 |
||||
|
Add: reallocation of net income (loss) attributable to non-controlling interests from the assumed redemption of common units of CWGS, LLC for Class A common stock |
2,127 |
11,468 |
(8,525) |
40,037 |
||||||||
|
Net income (loss) attributable to Camping World Holdings, Inc. - diluted |
$ |
7,628 |
$ |
27,429 |
$ |
(15,560) |
$ |
87,870 |
||||
|
Denominator: |
||||||||||||
|
Weighted-average shares of Class A common stock outstanding - basic |
45,232 |
44,666 |
45,124 |
44,538 |
||||||||
|
Dilutive options to purchase Class A common stock |
- |
35 |
- |
26 |
||||||||
|
Dilutive restricted stock units |
341 |
434 |
- |
308 |
||||||||
|
Dilutive common units of CWGS, LLC that are convertible into Class A common stock |
40,045 |
40,045 |
40,045 |
40,045 |
||||||||
|
Weighted-average shares of Class A common stock outstanding - diluted |
85,618 |
85,180 |
85,169 |
84,917 |
||||||||
|
Earnings (loss) per share of Class A common stock - basic |
$ |
0.12 |
$ |
0.36 |
$ |
(0.16) |
$ |
1.07 |
||||
|
Earnings (loss) per share of Class A common stock - diluted |
$ |
0.09 |
$ |
0.32 |
$ |
(0.18) |
$ |
1.03 |
||||
|
Weighted-average anti-dilutive securities excluded from the computation of diluted earnings (loss) per share of Class A common stock: |
||||||||||||
|
Stock options to purchase Class A common stock |
158 |
- |
182 |
- |
||||||||
|
Restricted stock units |
890 |
852 |
2,031 |
1,353 |
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we use the following non-GAAP financial measures: EBITDA; Adjusted EBITDA; Adjusted EBITDA Margin; trailing twelve-month
10
("TTM") Adjusted EBITDA; Adjusted NetIncome Attributable to Camping World Holdings, Inc. - Basic; Adjusted NetIncome Attributable to Camping World Holdings, Inc. - Diluted; AdjustedEarnings Per Share - Basic; AdjustedEarnings Per Share - Diluted; and SG&A Excluding Equity-based Compensation (collectively the "Non-GAAP Financial Measures"). We believe that these Non-GAAP Financial Measures, when used in conjunction with GAAP financial measures, provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics we use in our financial and operational decision making. Certain of these Non-GAAP Financial Measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company's industry and are used by management to evaluate our operating performance, to evaluate the effectiveness of strategic initiatives and for planning purposes. By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition, our Senior Secured Credit Facilities use Adjusted EBITDA, as calculated for our subsidiary CWGS Group, LLC, to measure our compliance with covenants such as the consolidated leverage ratio. The Non-GAAP Financial Measures have limitations as analytical tools, and the presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.They should not be construed as an inference that the Company's future results will be unaffected by any items adjusted for in these Non-GAAP Financial Measures. In evaluating these Non-GAAP Financial Measures, it is reasonable to expect that certain of these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other companies over time. Each of the normal recurring adjustments and other adjustments described in this section and in the reconciliation tables below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.
For periods beginning after December 31, 2022 for the 2019 Strategic Shift and for periods beginning after December 31, 2023 for the Active Sports Restructuring, we are no longer including the other associated costs category of expenses relating to those restructuring activities as restructuring costs for purposes of our Non-GAAP Financial Measures, since these costs are not expected to be significant in future periods.
Our earnings call on October 29, 2024 may present guidance that includes Adjusted EBITDA. A full reconciliation of the forecasted Adjusted EBITDA to its most-directly comparable GAAP metric cannot be provided without unreasonable efforts due to the inherent difficulty in forecasting and quantifying with reasonable accuracy significant items required for the reconciliations.
The Non-GAAP Financial Measures that we use are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
We define "EBITDA" as net income (loss) before other interest expense, net (excluding floor plan interest expense), provision for income tax benefit (expense) and depreciation and amortization. We define "Adjusted EBITDA" as EBITDA further adjusted for the impact of certain noncash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, long-lived asset impairment, lease termination, gains and losses on sale or disposal of assets, net, equity-based compensation, Tax Receivable Agreement liability adjustment, restructuring costs, losses and gains and impairment on investments in equity securities, restructuring costs related to the Active Sports Restructuring, and other unusual or one-time items. We define "Adjusted EBITDA Margin" as Adjusted EBITDA as a percentage of total revenue. We caution investors that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin in the same manner. We present EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin because we consider them to be
11
important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.
The following table reconciles EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial performance measures (unaudited):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
|
($ in thousands) |
2024 |
2023 |
2024 |
2023 |
|||||||||
|
EBITDA and Adjusted EBITDA: |
|||||||||||||
|
Net income (loss) |
$ |
8,056 |
$ |
30,893 |
$ |
(19,336) |
$ |
100,519 |
|||||
|
Other interest expense, net |
35,877 |
35,242 |
108,124 |
99,873 |
|||||||||
|
Depreciation and amortization |
20,583 |
17,619 |
59,905 |
49,462 |
|||||||||
|
Income tax (benefit) expense |
(2,049) |
3,679 |
(3,156) |
17,533 |
|||||||||
|
Subtotal EBITDA |
62,467 |
87,433 |
145,537 |
267,387 |
|||||||||
|
Long-lived asset impairment (a) |
1,944 |
1,747 |
12,355 |
9,269 |
|||||||||
|
Lease termination (b) |
(2,625) |
375 |
(2,585) |
375 |
|||||||||
|
(Gain) loss on sale or disposal of assets, net (c) |
(5) |
131 |
9,525 |
(5,001) |
|||||||||
|
Equity-based compensation (d) |
5,573 |
5,466 |
16,167 |
18,316 |
|||||||||
|
Tax Receivable Agreement liability adjustment (e) |
- |
(1,680) |
- |
(1,680) |
|||||||||
|
Restructuring costs (f) |
- |
1,549 |
- |
4,808 |
|||||||||
|
Loss (gain) and impairment on investments in equity securities (g) |
162 |
(23) |
337 |
1,660 |
|||||||||
|
Adjusted EBITDA |
$ |
67,516 |
$ |
94,998 |
$ |
181,336 |
$ |
295,134 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
|
(as percentage of total revenue) |
2024 |
2023 |
2024 |
2023 |
||||
|
Adjusted EBITDA margin: |
||||||||
|
Net income (loss) margin |
0.5% |
1.8% |
(0.4%) |
2.0% |
||||
|
Other interest expense, net |
2.1% |
2.0% |
2.2% |
2.0% |
||||
|
Depreciation and amortization |
1.2% |
1.0% |
1.2% |
1.0% |
||||
|
Income tax (benefit) expense |
(0.1%) |
0.2% |
(0.1%) |
0.3% |
||||
|
Subtotal EBITDA margin |
3.6% |
5.1% |
3.0% |
5.2% |
||||
|
Long-lived asset impairment (a) |
0.1% |
0.1% |
0.3% |
0.2% |
||||
|
Lease termination (b) |
(0.2%) |
0.0% |
(0.1%) |
0.0% |
||||
|
(Gain) loss on sale or disposal of assets, net (c) |
(0.0%) |
0.0% |
0.2% |
(0.1%) |
||||
|
Equity-based compensation (d) |
0.3% |
0.3% |
0.3% |
0.4% |
||||
|
Tax Receivable Agreement liability adjustment (e) |
- |
(0.1%) |
- |
(0.0%) |
||||
|
Restructuring costs (f) |
- |
0.1% |
- |
0.1% |
||||
|
Loss (gain) and impairment on investments in equity securities (g) |
0.0% |
(0.0%) |
0.0% |
0.0% |
||||
|
Adjusted EBITDA margin |
3.9% |
5.5% |
3.7% |
5.8% |
|
Three Months Ended |
TTM Ended |
|||||||||||||
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||
|
($ in thousands) |
2024 |
2024 |
2024 |
2023 |
2024 |
|||||||||
|
Adjusted EBITDA: |
||||||||||||||
|
Net income (loss) |
$ |
8,056 |
$ |
23,414 |
$ |
(50,806) |
$ |
(49,918) |
$ |
(69,254) |
||||
|
Other interest expense, net |
35,877 |
36,153 |
36,094 |
35,397 |
143,521 |
|||||||||
|
Depreciation and amortization |
20,583 |
20,032 |
19,290 |
19,181 |
79,086 |
|||||||||
|
Income tax (benefit) expense |
(2,049) |
7,935 |
(9,042) |
(18,732) |
(21,888) |
|||||||||
|
Subtotal EBITDA |
62,467 |
87,534 |
(4,464) |
(14,072) |
131,465 |
|||||||||
|
Long-lived asset impairment (a) |
1,944 |
4,584 |
5,827 |
- |
12,355 |
|||||||||
|
Lease termination (b) |
(2,625) |
40 |
- |
(478) |
(3,063) |
|||||||||
|
(Gain) loss on sale or disposal of assets, net (c) |
(5) |
7,945 |
1,585 |
(221) |
9,304 |
|||||||||
|
Equity-based compensation (d) |
5,573 |
5,397 |
5,197 |
5,770 |
21,937 |
|||||||||
|
Tax Receivable Agreement liability adjustment (e) |
- |
- |
- |
(762) |
(762) |
|||||||||
|
Restructuring costs (f) |
- |
- |
- |
732 |
732 |
|||||||||
|
Loss (gain) and impairment on investments in equity securities (g) |
162 |
81 |
94 |
110 |
447 |
|||||||||
|
Adjusted EBITDA |
$ |
67,516 |
$ |
105,581 |
$ |
8,239 |
$ |
(8,921) |
$ |
172,415 |
12
| (a) | Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment. |
| (b) | Represents the gains and losses on the termination of operating leases resulting from lease termination fees and the derecognition of the operating lease assets and liabilities. |
|
(c) |
Represents an adjustment to eliminate the gains and losses on disposals and sales of various assets. |
|
(d) |
Represents non-cash equity-based compensation expense relating to employees, directors, and consultants of the Company. |
|
(e) |
Represents an adjustment to eliminate the gains on remeasurement of the Tax Receivable Agreement primarily due to changes in the Company's blended statutory income tax rate. |
|
(f) |
Represents restructuring costs relating to the Active Sports Restructuring. These restructuring costs include one-time termination benefits, incremental inventory reserve charges, and other associated costs. These costs exclude lease termination costs, which are presented separately above. |
|
(g) |
Represents losses and gains and impairment on investments in equity securities and interest income relating to any notes receivables with those investments. These amounts are included in other expense, net in the consolidated statements of operations. During the nine months ended September 30, 2023, this amount included a $1.3 million impairment on an equity method investment. |
Adjusted Net Income Attributable to Camping World Holdings, Inc. and Adjusted Earnings Per Share
We define "Adjusted Net Income Attributable to Camping World Holdings, Inc. - Basic" as net income (loss) attributable to Camping World Holdings, Inc. adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, long-lived asset impairment, lease termination costs, gains and losses on sale or disposal of assets, net, equity-based compensation, Tax Receivable Agreement liability adjustment, restructuring costs, loss (gain) and impairment on investments in equity securities, other unusual or one-time items, the income tax (expense) benefit effect of these adjustments, and the effect of net income attributable to non-controlling interests from these adjustments.
We define "Adjusted Net Income Attributable to Camping World Holdings, Inc. - Diluted" as Adjusted Net Income Attributable to Camping World Holdings, Inc. - Basic adjusted for the reallocation of net income (loss) attributable to non-controlling interests from stock options and restricted stock units, if dilutive, or the assumed redemption, if dilutive, of all outstanding common units in CWGS, LLC for shares of newly-issued Class A common stock of Camping World Holdings, Inc.
We define "Adjusted Earnings Per Share - Basic" as Adjusted Net Income Attributable to Camping World Holdings, Inc. - Basic divided by the weighted-average shares of Class A common stock outstanding. We define "Adjusted Earnings Per Share - Diluted" as Adjusted Net Income Attributable to Camping World Holdings, Inc. - Diluted divided by the weighted-average shares of Class A common stock outstanding, assuming (i) the redemption of all outstanding common units in CWGS, LLC for newly-issued shares of Class A common stock of Camping World Holdings, Inc., if dilutive, and (ii) the dilutive effect of stock options and restricted stock units, if any. We present Adjusted Net Income Attributable to Camping World Holdings, Inc. - Basic, Adjusted Net Income Attributable to Camping World Holdings, Inc. - Diluted, Adjusted Earnings Per Share - Basic, and Adjusted Earnings Per Share - Diluted because we consider them to be important supplemental measures of our performance and we believe that investors' understanding of our performance is enhanced by including these Non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.
13
The following table reconciles Adjusted Net Income Attributable to Camping World Holdings, Inc. - Basic, Adjusted Net Income Attributable to Camping World Holdings, Inc. - Diluted, Adjusted Earnings Per Share - Basic, and Adjusted Earnings Per Share - Diluted to the most directly comparable GAAP financial performance measure:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
(In thousands except per share amounts) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
Numerator: |
||||||||||||
|
Net income (loss) attributable to Camping World Holdings, Inc. |
$ |
5,501 |
$ |
15,961 |
$ |
(7,035) |
$ |
47,833 |
||||
|
Adjustments related to basic calculation: |
||||||||||||
|
Long-lived asset impairment (a): |
||||||||||||
|
Gross adjustment |
1,944 |
1,747 |
12,355 |
9,269 |
||||||||
|
Income tax expense for above adjustment (b) |
(258) |
(231) |
(1,636) |
(1,233) |
||||||||
|
Lease termination (c): |
||||||||||||
|
Gross adjustment |
(2,625) |
375 |
(2,585) |
375 |
||||||||
|
Income tax benefit (expense) for above adjustment (b) |
348 |
(50) |
343 |
(50) |
||||||||
|
(Gain) loss on sale or disposal of assets (d): |
||||||||||||
|
Gross adjustment |
(5) |
131 |
9,525 |
(5,001) |
||||||||
|
Income tax benefit (expense) for above adjustment (b) |
1 |
(17) |
(1,261) |
667 |
||||||||
|
Equity-based compensation (e): |
||||||||||||
|
Gross adjustment |
5,573 |
5,466 |
16,167 |
18,316 |
||||||||
|
Income tax expense for above adjustment (b) |
(746) |
(730) |
(2,163) |
(2,459) |
||||||||
|
Tax Receivable Agreement liability adjustment (f): |
||||||||||||
|
Gross adjustment |
- |
(1,680) |
- |
(1,680) |
||||||||
|
Income tax benefit for above adjustment (b) |
- |
422 |
- |
422 |
||||||||
|
Restructuring costs (g): |
||||||||||||
|
Gross adjustment |
- |
1,549 |
- |
4,808 |
||||||||
|
Income tax expense for above adjustment (b) |
- |
(205) |
- |
(639) |
||||||||
|
Loss (gain) and impairment on investments in equity securities (h): |
||||||||||||
|
Gross adjustment |
162 |
(23) |
337 |
1,660 |
||||||||
|
Income tax (expense) benefit for above adjustment (b) |
(21) |
3 |
(44) |
(222) |
||||||||
|
Adjustment to net income attributable to non-controlling interests resulting from the above adjustments (i) |
(2,365) |
(4,364) |
(16,817) |
(13,907) |
||||||||
|
Adjusted net income attributable to Camping World Holdings, Inc. - basic |
7,509 |
18,354 |
7,186 |
58,159 |
||||||||
|
Adjustments related to diluted calculation: |
||||||||||||
|
Reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (j) |
4,920 |
19,296 |
4,516 |
66,593 |
||||||||
|
Income tax on reallocation of net income attributable to non-controlling interests from the dilutive redemption of common units in CWGS, LLC (k) |
(1,015) |
(4,554) |
(413) |
(16,140) |
||||||||
|
Adjusted net income attributable to Camping World Holdings, Inc. - diluted |
$ |
11,414 |
$ |
33,096 |
$ |
11,289 |
$ |
108,612 |
||||
|
Denominator: |
||||||||||||
|
Weighted-average Class A common shares outstanding - basic |
45,232 |
44,666 |
45,124 |
44,538 |
||||||||
|
Adjustments related to diluted calculation: |
||||||||||||
|
Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (l) |
40,045 |
40,045 |
40,045 |
40,045 |
||||||||
|
Dilutive options to purchase Class A common stock (l) |
- |
35 |
10 |
26 |
||||||||
|
Dilutive restricted stock units (l) |
341 |
434 |
252 |
308 |
||||||||
|
Adjusted weighted average Class A common shares outstanding - diluted |
85,618 |
85,180 |
85,431 |
84,917 |
||||||||
|
Adjusted earnings per share - basic |
$ |
0.17 |
$ |
0.41 |
$ |
0.16 |
$ |
1.31 |
||||
|
Adjusted earnings per share - diluted |
$ |
0.13 |
$ |
0.39 |
$ |
0.13 |
$ |
1.28 |
||||
|
Reconciliation of per share amounts: |
||||||||||||
|
Earnings (loss) per share of Class A common stock - basic |
$ |
0.12 |
$ |
0.36 |
$ |
(0.16) |
$ |
1.07 |
||||
|
Non-GAAP Adjustments (m) |
0.05 |
0.05 |
0.32 |
0.24 |
||||||||
|
Adjusted earnings per share - basic |
$ |
0.17 |
$ |
0.41 |
$ |
0.16 |
$ |
1.31 |
||||
|
Earnings (loss) per share of Class A common stock - diluted |
$ |
0.09 |
$ |
0.32 |
$ |
(0.18) |
$ |
1.03 |
||||
|
Non-GAAP Adjustments (m) |
0.04 |
0.05 |
0.31 |
0.23 |
||||||||
|
Dilutive redemption of common units in CWGS, LLC for shares of Class A common stock (n) |
- |
0.02 |
- |
0.02 |
||||||||
|
Adjusted earnings per share - diluted |
$ |
0.13 |
$ |
0.39 |
$ |
0.13 |
$ |
1.28 |
| (a) | Represents long-lived asset impairment charges related to the RV and Outdoor Retail segment. |
| (b) | Represents the current and deferred income tax expense or benefit effect of the above adjustments. This assumption uses blended statutory tax rates of 25.0% and 25.1% for the adjustments for the 2024 and 2023 periods, which represent the estimated tax rates that would apply had the above adjustments been included in the determination of our non-GAAP metric. |
| (c) | Represents the gains and losses on the termination of operating leases resulting from lease termination fees and the derecognition of the operating lease assets and liabilities. |
| (d) | Represents an adjustment to eliminate the gains and losses on disposals and sales of various assets. |
14
| (e) | Represents non-cash equity-based compensation expense relating to employees, directors, and consultants of the Company. |
| (f) | Represents an adjustment to eliminate the gain on remeasurement of the Tax Receivable Agreement primarily due to changes in the Company's blended statutory income tax rate. |
| (g) | Represents restructuring costs relating to Active Sports Restructuring during the three and nine months ended September 30, 2023. These restructuring costs include one-time termination benefits, incremental inventory reserve charges, and other associated costs. These costs exclude lease termination costs. |
| (h) | Represents losses and gains and impairment on investments in equity securities and interest income relating to any notes receivables with those investments. During the nine months ended September 30, 2023, this amount included a $1.3 million impairment on an equity method investment. |
| (i) | Represents the adjustment to net income attributable to non-controlling interests resulting from the above adjustments that impact the net income (loss) of CWGS, LLC. This adjustment uses the non-controlling interest's weighted average ownership of CWGS, LLC of 46.8% and 47.3% for the three months ended September 30, 2024 and 2023, respectively, and 46.9% and 47.3% for the nine months ended September 30, 2024 and 2023, respectively. |
| (j) | Represents the reallocation of net income attributable to non-controlling interests from the impact of the assumed change in ownership of CWGS, LLC from stock options, restricted stock units, and/or common units of CWGS, LLC. |
| (k) | Represents the income tax expense effect of the above adjustment for reallocation of net income attributable to non-controlling interests. This assumption uses blended statutory tax rates of 25.0% and 25.1% for the adjustments for 2024 and 2023 periods. |
| (l) | Represents the impact to the denominator for stock options, restricted stock units, and/or common units of CWGS, LLC. |
| (m) | Represents the per share impact of the Non-GAAP adjustments to net income (loss) detailed above (see (a) through (i) above). |
| (n) | Represents the per share impact of stock options, restricted stock units, and/or common units of CWGS, LLC from the difference in their dilutive impact between the GAAP and Non-GAAP earnings per share calculations. |
Our "Up-C" corporate structure may make it difficult to compare our results with those of companies with a more traditional corporate structure. There can be a significant fluctuation in the numerator and denominator for the calculation of our adjusted earnings per share - diluted depending on if the common units in CWGS, LLC are considered dilutive or anti-dilutive for a given period. To improve comparability of our financial results, users of our financial statements may find it useful to review our earnings per share assuming the full redemption of common units in CWGS, LLC for all periods, even when those common units would be anti-dilutive.
SG&A Excluding Equity-based Compensation
We define "SG&A Excluding Equity-based Compensation" as SG&A before Equity-based Compensation relating to SG&A. We caution investors that amounts presented in accordance with our definition of SG&A Excluding Equity-based Compensation may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate SG&A Excluding Equity-based Compensation in the same manner. We present SG&A Excluding Equity-based Compensation because we believe that investors' understanding of our performance and drivers of our other Non-GAAP Financial Measures, such as Adjusted EBITDA, is enhanced by including this Non-GAAP Financial Measure as a reasonable basis for comparing our ongoing results of operations.
The following table reconciles SG&A Excluding Equity-based Compensation to the most directly comparable GAAP financial performance measure:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
($ in thousands) |
2024 |
2023 |
2024 |
2023 |
||||||||
|
SG&A Excluding Equity-based Compensation: |
||||||||||||
|
SG&A |
$ |
414,209 |
$ |
415,288 |
$ |
1,205,358 |
$ |
1,201,901 |
||||
|
Equity-based Compensation - SG&A |
(5,478) |
(5,324) |
(15,891) |
(17,820) |
||||||||
|
SG&A Excluding Equity-based Compensation |
$ |
408,731 |
$ |
409,964 |
$ |
1,189,467 |
$ |
1,184,081 |
||||
|
As a percentage of gross profit |
82.0% |
78.4% |
82.1% |
77.1% |
15
16