LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--
Camping World Holdings, Inc. (NYSE:CWH) (“Camping World,” “Company,”
“we,” “us” or “our”) today reported results for the third quarter ended
September 30, 2016.
Third Quarter 2016 Summary
-
Total revenue increased 4.6% to $1.01 billion;
-
Gross profit increased 8.8% to $282.1 million and gross margin
increased 110 basis points to 28.0%;
-
Income from operations increased 14.4% to $87.0 million and operating
margin increased 74 basis points to 8.6%;
-
Net income increased 17.7% to $67.7 million and net income as a
percentage of revenue increased 75 basis points to 6.7%.
-
Pro forma earnings per unit(1) increased 17.7% to $0.94; and
-
Adjusted EBITDA(2) increased 16.1% to $89.5 million and
Adjusted EBITDA(2) margin increased 88 basis points to 8.9%.
(1) For a discussion of pro forma earnings per unit see “Pro Forma
Earnings Per Unit” below.
(2) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures.
For reconciliations of Adjusted EBITDA to GAAP net income, see “Non-GAAP
Financial Measures” below.
Marcus Lemonis, Chairman and Chief Executive Officer, stated, “We are
very pleased with our third quarter results and the underlying trends
across our business. We believe we have built a unique business that is
capable of delivering sustainable long-term earnings and cash flow
growth through a diversified operating model that offers a comprehensive
portfolio of RV-related services, protection plans, products and
resources across a growing base of proprietary customers. We believe we
are the only provider of a full suite of RV-related services and
products and are operating the largest national network of RV-centric
retail locations in the United States. As a result, we believe we are
well positioned to benefit from continued growth in the installed base
of RV owners that is being partially driven by higher levels of
first-time buyers and new younger consumers, as well as the aging of the
baby boomer demographic. Continued expansion of our business to include
younger consumers is benefiting our overall margins and flow-through to
our bottom line. We believe our third quarter results, where net income
increased 17.7% on a 4.6% increase in revenue over last year’s third
quarter results, demonstrate the strength in our underlying model and
the positive trends in our business.”
Presentation
This press release presents historical results, for the periods
presented, of CWGS Enterprises, LLC, the predecessor of Camping World
Holdings, Inc. for financial reporting purposes. The financial results
of Camping World Holdings, Inc. have not been included in this press
release as it is a newly incorporated entity and had not engaged in any
business or other activities during the periods presented. Accordingly,
these historical results do not purport to reflect what the results of
operations of Camping World Holdings, Inc. would have been had the
Company’s initial public offering (“IPO”) and related transactions
occurred prior to such periods. For example, these historical results do
not reflect the attribution of net income to non-controlling interests
or the provision for corporate income taxes on the income attributable
to Camping World Holdings, Inc. that Camping World Holdings, Inc.
expects to recognize in future periods. Unless otherwise indicated, all
financial comparisons in this press release compare our financial
results from the 2016 third quarter to our financial results from the
2015 third quarter.
Third Quarter 2016 Results
Units and Average Selling Prices
New vehicle units sold increased 22.0% to 14,333 units and the average
selling price of a new vehicle decreased 4.5% to $38,040. Used vehicle
units sold decreased 24.4% to 7,986 units and the average selling price
of a used vehicle increased 1.0% to $22,767. A trend toward a higher mix
of lower-priced towable units and first-time vehicle buyers continued to
positively impact new unit sales, negatively impact used unit sales,
decrease average selling prices of new vehicles, and positively impact
finance and insurance revenue and penetration rates.
Revenue
Total revenue increased 4.6% to $1.01 billion from $962.0 million in
last year’s third quarter. Consumer Services and Plans revenue increased
11.1% to $45.4 million and Retail revenue increased 4.3% to $960.5
million. The increase in Consumer Services and Plans revenue was
primarily attributable to increased marketing fee revenue from the
Company’s vehicle insurance and credit card programs. In the Retail
segment, new vehicle revenue increased 16.5% to $545.2 million, used
vehicle revenue decreased 23.6% to $181.8 million, parts, services and
other revenue increased 5.6% to $166.1 million and finance and insurance
revenue increased 16.7% to $67.4 million. Finance and insurance, net
revenue as a percentage of total new and used vehicle revenue increased
to 9.3% from 8.2% in last year’s third quarter.
Same store sales for the base of 107 retail locations that were open
both at the end of the corresponding period and at the beginning of the
preceding fiscal year increased 5.8% to $831.2 million for the three
months ended September 30, 2016. The increase in same store sales was
primarily driven by a 13.5% increase in new vehicle same store sales, a
14.9% increase in finance and insurance same store sales, and a 4.7%
increase in parts, services and other same store sales, partially offset
by a 13.6% decrease in used vehicle same store sales.
The Company operated a total of 120 retail locations as of September 30,
2016 compared to 117 retail locations at September 30, 2015.
Gross Profit
Total gross profit increased 8.8% to $282.1 million, or 28.0% of total
revenue, from $259.2 million, or 26.9% of total revenue, in last year’s
third quarter. On a segment basis, Consumer Services and Plans gross
profit increased 18.6% to $25.5 million, or 56.1% of segment revenue,
from $21.5 million, or 52.6% of segment revenue, and Retail gross profit
increased 8.0% to $256.6 million, or 26.7% of segment revenue, from
$237.7 million, or 25.8% of segment revenue, in last year’s third
quarter. The majority of the 353 basis point improvement in Consumer
Services and Plans gross margin was driven by an increase in roadside
assistance file size, and reduced program costs, and an increase within
our vehicle insurance programs. The 91 basis point increase in Retail
gross margin was primarily driven by an increase in the finance and
insurance revenue as a percentage of vehicle sales increased to 9.3%
from 8.2% in last year’s third quarter.
Operating Expenses
Operating expenses increased 6.6% to $195.1 million from $183.1 million
in last year’s third quarter. Selling, general and administrative
(“SG&A”) expenses increased 7.0% to $188.9 million from $176.5 million
in last year’s third quarter. The increase in SG&A expenses was driven
by a $6.6 million increase in wage-related expenses, primarily related
to increased vehicle unit sales and five additional retail locations
opened through September 30, 2016 and one scheduled retail opening in
the fourth quarter of 2016, $4.9 million of additional lease expense
primarily attributable to right to use leases that were derecognized in
the fourth quarter of 2015, and a $0.9 million increase in store and
corporate overhead expenses. As a percentage of total gross profit, SG&A
expenses declined 114 basis points to 66.9% compared to last year’s
third quarter. Depreciation and amortization expense decreased 2.6% to
$6.2 million.
Floor Plan Interest & Other Interest Expenses
Floor plan interest expense increased 43.4% to $4.3 million from $3.0
million in last year’s third quarter. The increase was primarily
attributable to higher inventory from the five new dealerships added in
2016 and locations expecting higher unit sales, as well as a 41 basis
point increase in the average floor plan borrowing rate. Other interest
expense decreased 11.8% to $12.7 million from $14.4 million in last
year’s third quarter. The decrease was primarily attributable to a $2.7
million decrease in interest expense attributable to a decrease in right
to use liabilities, partially offset by a $1.1 million increase from
incremental borrowings under our term loan facility to acquire retail
locations and a 50 basis point increase in the borrowing margin under
our term loan facility on December 17, 2015.
Net Income and Pro Forma Earnings Per Unit
Net income increased 17.7% to $67.7 million from $57.5 million and pro
forma earnings per diluted unit increased 17.7% to $0.94 from $0.80 in
last year’s third quarter.
Select Balance Sheet and Cash Flow Items
The Company's working capital and cash balance at September 30, 2016
were $197.2 million and $115.1 million, respectively, compared to $195.1
million and $92.0 million, respectively, at December 31, 2015. At the
end of the third quarter 2016, the Company had no borrowings under its
$20 million revolving credit facility, $828.2 million of term loans
outstanding under the senior secured credit facilities (the “Senior
Secured Credit Facilities”) of CWGS Group, LLC, a wholly owned
subsidiary of CWGS Enterprises, LLC (“CWGS, LLC”), and $532.5 million of
floor plan notes payable outstanding under a floor plan financing
facility. RV inventory at the end of the third quarter of fiscal 2016
decreased 7.0% to $808.1 million compared to $868.9 million at the end
of fiscal 2015.
Subsequent Events
On October 13, 2016, the Company completed its IPO of 11,363,636 shares
of Class A common stock at a public offering price of $22.00 per share
and received $233.4 million in proceeds, net of underwriting discounts
and commissions. The Company used the net proceeds to purchase
11,363,636 newly-issued common units from CWGS, LLC at a price per unit
equal to the initial public offering price per share of Class A common
stock in the IPO less underwriting discounts and commissions. In
addition, on November 4, 2016, the underwriters exercised their option,
in part, to purchase an additional 508,564 shares of Class A common
stock. On November 9, 2016, the Company closed on the purchase of the
additional 508,564 shares of Class A common stock and received $10.4
million in additional proceeds, net of underwriting discounts and
commissions, which the Company used to purchase 508,564 newly-issued
common units from CWGS, LLC at a price per unit equal to the initial
public offering price per share of Class A common stock in the IPO less
underwriting discounts and commissions. CWGS, LLC used the proceeds it
received to repay $200.4 million of term loans under the Senior Secured
Credit Facilities and will use the remainder for general corporate
purposes, including the potential acquisition of dealerships.
On November 8, 2016, CWGS Group, LLC and CWGS, LLC (as parent guarantor)
entered into a new $680.0 million senior secured credit facility with
Goldman Sachs Bank USA, as administrative agent, and the other lenders
party thereto (the ‘‘New Senior Secured Credit Facilities’’) and used
the proceeds to extinguish the existing Senior Secured Credit
Facilities. The New Senior Secured Credit Facilities consist of a
seven-year $645.0 million new term loan facility (the “New Term Loan
Facility”) and a five-year $35.0 million new revolving credit facility
(the “New Revolving Credit Facility”). The New Term Loan Facility bears
interest at LIBOR plus 3.75% with a 0.75% floor, and outstanding
balances under the New Revolving Credit Facility currently bear interest
at LIBOR plus 3.50%. The New Term Loan Facility includes mandatory
amortization at 1% per annum in equal quarterly installments. This
refinance reduced the interest rate under the New Senior Secured Credit
Facilities by 1.0% compared to our existing Senior Secured Credit
Facilities, reduced the LIBOR floor by 0.25%, and reduced the mandatory
amortization by 4.6% per annum.
Conference Call Information
A conference call to discuss the fiscal 2016 third quarter financial
results is scheduled for today, November 10, 2016, at 4:30 p.m. Eastern
Time. Investors and analysts can participate on the conference call by
dialing 877-419-6594 or 1-719-325-4755 and using conference ID #8381649.
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 at the
investor relations Web site.
About Camping World
Camping World Holdings, Inc., is the only
provider of a comprehensive portfolio of services, protection plans,
products and resources for recreational vehicle (“RV”) enthusiasts.
Through its two iconic brands, Camping World and Good Sam, the company
offers new and used RVs for sale, vehicle service and maintenance along
with more than 10,000 products and services through our retail locations
and membership clubs. Good Sam branded offerings provide the industry’s
broadest and deepest range of services, protection plans, products and
resources while the Camping World brand operates the largest national
network of RV-centric retail locations in the United States through 120
retail locations in 36 states and an e-commerce platform. With both
brands founded in 1966, product and service offerings are based on 50
years of experience and customer feedback from RV enthusiasts.
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 regarding our ability to
generate sustainable long-term earnings and increase cash flow growth;
overall trends in our business and market; expectations and trends
regarding consumer behavior and growth; and our comparative advantages
and our plans and ability to expand consumer base. 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: the availability of financing to us and our
customers; fuel shortages, or high prices for fuel; the well-being, as
well as the continued popularity and reputation for quality, of our
manufacturers; general economic conditions in our markets, and ongoing
economic and financial uncertainties; our ability to attract and retain
customers; competition in the market for services, protection plans,
products and resources targeting the RV lifestyle or RV enthusiast; our
expansion into new, unfamiliar markets presents as well as delays in
opening or acquiring new retail locations; unforeseen expenses,
difficulties, and delays frequently encountered in connection with
expansion through acquisitions; our failure to maintain the strength and
value of our brands; our ability to successfully order and manage our
inventory to reflect consumer demand in a volatile market and anticipate
changing consumer preferences and buying trends; fluctuations in our
same store sales and whether they will be a meaningful indicator of
future performance; the cyclical and seasonal nature of our business;
our ability to operate and expand our business and to respond to
changing business and economic conditions, which depends on the
availability of adequate capital; the restrictive covenants in our New
Senior Secured Credit Facilities and our floorplan financial facility;
our reliance on two fulfillment and distribution centers for our retail,
e-commerce and catalog businesses; natural disasters, whether or not
caused by climate change, unusual weather condition, epidemic outbreaks,
terrorist acts and political events; our dependence on our relationships
with third party providers of services, protection plans, products and
resources and a disruption of these relationships or of these providers’
operations; whether third party lending institutions and insurance
companies will continue to provide financing for RV purchases; our
inability to retain senior executives and attract and retain other
qualified employees; our ability to meet our labor needs; our inability
to maintain the leases for our retail locations or locate alternative
sites for our stores in our target markets and on terms that are
acceptable to us; our business being subject to numerous federal, state
and local regulations; regulations applicable to the sale of extended
service contracts; our dealerships’ susceptibility to termination,
non-renewal or renegotiation of dealer agreements if state dealer laws
are repealed or weakened; our failure to comply with certain
environmental regulations; climate change legislation or regulations
restricting emission of ‘‘greenhouse gases;’’ a failure in our
e-commerce operations, security breaches and cybersecurity risks; our
inability to enforce our intellectual property rights and accusations of
our infringement on the intellectual property rights of third parties;
our inability to maintain or upgrade our information technology systems
or our inability to convert to alternate systems in an efficient and
timely manner; disruptions to our information technology systems or
breaches of our network security; Marcus Lemonis, through his beneficial
ownership of our shares directly or indirectly held by ML Acquisition
Company, LLC and ML RV Group, LLC, will have substantial control over us
and may approve or disapprove substantially all transactions and other
matters requiring approval by our stockholders, including, but not
limited to, the election of directors; the exemptions from certain
corporate governance requirements that we will qualify for, and intend
to rely on, due to the fact that we are a ‘‘controlled company’’ within
the meaning of the New York Stock Exchange, or NYSE, listing
requirements; and whether we are able to realize any tax benefits that
may arise from our organizational structure and any redemptions or
exchanges of CWGS Enterprises, LLC common units for cash or stock,
including in connection with our initial public offering.
These and other important factors discussed under the caption “Risk
Factors” in our final prospectus filed with the Securities and Exchange
Commission, or SEC, on October 11, 2016 relating to our Registration
Statement on Form S-1, 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. 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.
Results of Operations for the Third Quarter of Fiscal 2016
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CWGS Enterprises, LLC and Subsidiaries
|
Condensed Consolidated Statements of Operations (unaudited)
|
(In thousands except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months Ended
|
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Nine Months Ended
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|
September 30,
|
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|
September 30,
|
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|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
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|
|
|
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|
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|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Services and Plans
|
|
|
$
|
45,442
|
|
|
|
$
|
40,902
|
|
|
|
$
|
135,868
|
|
|
|
$
|
127,747
|
|
Retail
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicles
|
|
|
|
545,231
|
|
|
|
|
468,084
|
|
|
|
|
1,533,463
|
|
|
|
|
1,314,742
|
|
Used vehicles
|
|
|
|
181,820
|
|
|
|
|
238,018
|
|
|
|
|
577,994
|
|
|
|
|
646,138
|
|
Parts, services and other
|
|
|
|
166,076
|
|
|
|
|
157,214
|
|
|
|
|
464,959
|
|
|
|
|
430,841
|
|
Finance and insurance, net
|
|
|
|
67,418
|
|
|
|
|
57,748
|
|
|
|
|
187,810
|
|
|
|
|
157,385
|
|
Subtotal
|
|
|
|
960,545
|
|
|
|
|
921,064
|
|
|
|
|
2,764,226
|
|
|
|
|
2,549,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
1,005,987
|
|
|
|
|
961,966
|
|
|
|
|
2,900,094
|
|
|
|
|
2,676,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs applicable to revenue (exclusive
|
|
|
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|
|
|
|
|
of depreciation and amortization
|
|
|
|
|
|
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|
shown separately below):
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Services and Plans
|
|
|
|
19,953
|
|
|
|
|
19,404
|
|
|
|
|
59,071
|
|
|
|
|
60,196
|
|
Retail
|
|
|
|
|
|
|
|
|
|
|
|
|
New vehicles
|
|
|
|
474,944
|
|
|
|
|
405,448
|
|
|
|
|
1,325,917
|
|
|
|
|
1,135,074
|
|
Used vehicles
|
|
|
|
140,516
|
|
|
|
|
192,119
|
|
|
|
|
461,750
|
|
|
|
|
522,115
|
|
Parts, services and other
|
|
|
|
88,473
|
|
|
|
|
85,825
|
|
|
|
|
244,734
|
|
|
|
|
230,045
|
|
Subtotal
|
|
|
|
703,933
|
|
|
|
|
683,392
|
|
|
|
|
2,032,401
|
|
|
|
|
1,887,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs applicable to revenue
|
|
|
|
723,886
|
|
|
|
|
702,796
|
|
|
|
|
2,091,472
|
|
|
|
|
1,947,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative
|
|
|
|
188,858
|
|
|
|
|
176,466
|
|
|
|
|
544,954
|
|
|
|
|
492,345
|
|
Depreciation and amortization
|
|
|
|
6,219
|
|
|
|
|
6,387
|
|
|
|
|
18,144
|
|
|
|
|
17,785
|
|
Loss (gain) on sale of assets
|
|
|
|
21
|
|
|
|
|
241
|
|
|
|
|
(227
|
)
|
|
|
|
(424
|
)
|
Total operating expenses
|
|
|
|
195,098
|
|
|
|
|
183,094
|
|
|
|
|
562,871
|
|
|
|
|
509,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
87,003
|
|
|
|
|
76,076
|
|
|
|
|
245,751
|
|
|
|
|
219,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Floor plan interest expense
|
|
|
|
(4,322
|
)
|
|
|
|
(3,013
|
)
|
|
|
|
(14,851
|
)
|
|
|
|
(9,394
|
)
|
Other interest expense, net
|
|
|
|
(12,715
|
)
|
|
|
|
(14,414
|
)
|
|
|
|
(38,040
|
)
|
|
|
|
(40,776
|
)
|
Other income (expense), net
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
(2
|
)
|
|
|
|
1
|
|
|
|
|
|
(17,037
|
)
|
|
|
|
(17,426
|
)
|
|
|
|
(52,893
|
)
|
|
|
|
(50,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
69,966
|
|
|
|
|
58,650
|
|
|
|
|
192,858
|
|
|
|
|
169,548
|
|
Income tax expense
|
|
|
|
(2,288
|
)
|
|
|
|
(1,145
|
)
|
|
|
|
(4,638
|
)
|
|
|
|
(3,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
67,678
|
|
|
|
$
|
57,505
|
|
|
|
$
|
188,220
|
|
|
|
$
|
166,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma earnings per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.94
|
|
|
|
$
|
0.80
|
|
|
|
$
|
2.62
|
|
|
|
$
|
2.31
|
|
Diluted
|
|
|
$
|
0.94
|
|
|
|
$
|
0.80
|
|
|
|
$
|
2.62
|
|
|
|
$
|
2.31
|
|
Pro forma weighted average units
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
Diluted
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
|
|
|
71,899,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CWGS ENTERPRISES, LLC AND SUBSIDIARIES
|
Condensed Consolidated Balance Sheets (unaudited)
|
(In thousands except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$ 115,066
|
|
|
$ 92,025
|
Contracts in transit
|
|
|
50,343
|
|
|
21,892
|
Accounts receivable, less allowance for doubtful accounts
|
|
|
|
|
|
|
of $5,917 and $5,119 in 2016 and 2015, respectively
|
|
|
64,271
|
|
|
56,356
|
Inventories, net
|
|
|
808,089
|
|
|
868,939
|
Prepaid expenses and other assets
|
|
|
25,630
|
|
|
18,861
|
Deferred tax asset
|
|
|
168
|
|
|
123
|
Total current assets
|
|
|
1,063,567
|
|
|
1,058,196
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
130,647
|
|
|
149,725
|
Deferred tax asset
|
|
|
2,977
|
|
|
6,111
|
Intangibles assets, net
|
|
|
3,721
|
|
|
1,652
|
Goodwill
|
|
|
148,726
|
|
|
112,940
|
Other assets
|
|
|
17,870
|
|
|
15,394
|
Total assets
|
|
|
$ 1,367,508
|
|
|
$ 1,344,018
|
|
|
|
|
|
|
|
Liabilities and members' deficit
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$ 91,749
|
|
|
$ 56,789
|
Accrued liabilities
|
|
|
96,315
|
|
|
77,552
|
Deferred revenues and gains
|
|
|
74,695
|
|
|
63,616
|
Current portion of capital lease obligations
|
|
|
1,329
|
|
|
771
|
Current portion of long-term debt
|
|
|
46,922
|
|
|
52,089
|
Notes payable – floor plan
|
|
|
532,453
|
|
|
598,420
|
Other current liabilities
|
|
|
22,873
|
|
|
13,861
|
Total current liabilities
|
|
|
866,336
|
|
|
863,098
|
|
|
|
|
|
|
|
Capital lease obligations
|
|
|
1,089
|
|
|
751
|
Right to use liabilities
|
|
|
10,379
|
|
|
30,599
|
Long-term debt, net of current portion
|
|
|
769,423
|
|
|
673,304
|
Deferred revenues and gains
|
|
|
54,019
|
|
|
52,151
|
Other long-term liabilities
|
|
|
20,549
|
|
|
13,062
|
Total liabilities
|
|
|
1,721,795
|
|
|
1,632,965
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Membership units, 153,796 authorized and 153,796 units
|
|
|
|
|
|
|
issued, and 155,559 units authorized and 155,559 units
|
|
|
|
|
|
|
issued as of September 30, 2016 and December 31, 2015,
|
|
|
|
|
|
|
respectively
|
|
|
-
|
|
|
-
|
Members' deficit
|
|
|
(354,287)
|
|
|
(288,947)
|
|
|
|
|
|
|
|
Total liabilities and members' deficit
|
|
|
$ 1,367,508
|
|
|
$ 1,344,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not measures recognized under
generally accepted accounting principles (“GAAP”). EBITDA and Adjusted
EBITDA are metrics management uses to evaluate the financial performance
of our business. Analysts, investors and other interested parties which
evaluate companies in our industry, also frequently use EBITDA and
Adjusted EBITDA. We use EBITDA and Adjusted EBITDA to supplement GAAP
measures of performance as measurements of operating performance to
assist us in comparing the operating performance of our business on a
consistent basis, and remove the impact of items not directly resulting
from our core operations; for planning purposes, including the
preparation of our internal annual operating budget and financial
projections; to evaluate the performance and effectiveness of our
operational strategies; and to evaluate our capacity to fund capital
expenditures and expand our business.
EBITDA increased 11.9% to $88.9 million, or 8.8% of total revenue, and
Adjusted EBITDA increased 16.1% to $89.5 million, or 8.9% of total
revenue, in the third quarter of 2016 compared to $79.5 million, or 8.3%
of total revenue, and $77.1 million, or 8.0% of total revenue,
respectively, in last year’s third quarter. We define EBITDA as net
income plus interest expense (other than floor plan interest expense),
provision for income taxes, depreciation and amortization. We define
Adjusted EBITDA as net income plus interest expense (other than floor
plan interest expense), provision for income taxes, depreciation and
amortization, loss (gain) on debt repayment, loss (gain) on sale of
assets and disposition of stores, monitoring fees, an adjustment to rent
on right to use assets and other unusual or one-time items.
EBITDA and Adjusted EBITDA are not GAAP measures of our financial
performance and should not be considered as an alternative to net income
as a measure of financial performance, or any other performance measure
derived in accordance with GAAP. EBITDA and Adjusted EBITDA should not
be construed as an inference that our future results will be unaffected
by unusual or non-recurring items. Additionally, EBITDA and Adjusted
EBITDA are not intended to be a measure of discretionary cash to invest
in the growth of our business, as they do not reflect tax payments, debt
service requirements, capital expenditures and certain other cash costs
that may recur in the future, including, among other things, cash
requirements for working capital needs and cash costs to replace assets
being depreciated and amortized. Management compensates for these
limitations by relying on our GAAP results in addition to using EBITDA
and Adjusted EBITDA supplementally. Our measure of EBITDA and Adjusted
EBITDA are not necessarily comparable to similarly titled captions of
other companies due to different methods of calculation.
The following is a reconciliation of net income to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
($ in thousands)
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
$
|
67,678
|
|
|
$
|
57,505
|
|
|
$
|
188,220
|
|
|
$
|
166,195
|
Other interest expense, net
|
|
|
|
12,715
|
|
|
|
14,414
|
|
|
|
38,040
|
|
|
|
40,776
|
Income tax expense
|
|
|
|
2,288
|
|
|
|
1,145
|
|
|
|
4,638
|
|
|
|
3,353
|
Depreciation and amortization
|
|
|
|
6,219
|
|
|
|
6,387
|
|
|
|
18,144
|
|
|
|
17,785
|
EBITDA
|
|
|
|
|
88,900
|
|
|
|
79,451
|
|
|
|
249,042
|
|
|
|
228,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (gain) on sale of assets and
|
|
|
|
|
|
|
|
|
|
|
|
|
disposition of stores (a)
|
|
|
|
21
|
|
|
|
5
|
|
|
|
(225)
|
|
|
|
151
|
Monitoring fee (b)
|
|
|
|
625
|
|
|
|
625
|
|
|
|
1,875
|
|
|
|
1,875
|
Adjustment to rent on right
|
|
|
|
|
|
|
|
|
|
|
|
|
to use assets (c)
|
|
|
|
–
|
|
|
|
(2,935)
|
|
|
|
–
|
|
|
|
(7,598)
|
Adjusted EBITDA
|
|
|
$
|
89,546
|
|
|
$
|
77,146
|
|
|
$
|
250,692
|
|
|
$
|
222,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________________________________
(a) Represents an adjustment to eliminate the gains and
losses on sales of various assets and aggregate non-recurring losses
from two non-performing locations that were sold in 2015.
(b) Represents monitoring fees paid pursuant to a monitoring
agreement to Crestview and Stephen Adams. We terminated the monitoring
agreement upon the consummation of the IPO.
(c) Represents an adjustment to rent expense for the periods
presented for certain right to use assets that were derecognized in the
fourth quarter of 2015 due to lease modifications that resulted in the
leases meeting the requirements to be reported as operating leases. The
adjustments represent additional rent expense that would have been
incurred for the periods presented had the leases previously been
classified as operating leases.
Pro Forma Earnings Per Unit
On October 6, 2016, the limited liability company agreement of CWGS, LLC
was amended and restated to, among other things, (i) provide for a new
single class of common membership interests in CWGS, LLC, and (ii)
exchange all of the existing membership interests of certain then
existing members of CWGS, LLC into 71,899,630 common units of CWGS, LLC,
and (iii) appoint Camping World Holdings, Inc. as the sole managing
member of CWGS, LLC upon its acquisition of common units in connection
with the IPO. For the purposes of calculating pro forma earnings per
unit, we have adjusted the number of outstanding membership units
retroactively for all periods presented to give effect to the
above-mentioned amendment and resulting recapitalization.
Pro forma basic earnings per unit is computed by dividing net income by
the pro forma weighted-average number of units outstanding during the
period. Pro forma diluted earnings per unit is computed by dividing net
income by the pro forma weighted-average number of units outstanding
adjusted to give effect to potentially dilutive securities. There were
no potentially dilutive securities at September 30, 2016.
The following table sets forth a reconciliation of the numerators and
denominators used to compute pro forma basic and diluted earnings per
unit for the three and nine months ended September 30, 2016 and 2015.
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
(in thousands, except per unit amounts)
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
$
|
67,678
|
|
|
$
|
57,505
|
|
|
$
|
188,220
|
|
|
$
|
166,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted average units outstanding - basic
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
Pro Forma Weighted average units outstanding - diluted
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
|
|
|
71,899,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma earnings per unit - basic
|
|
|
|
|
$
|
0.94
|
|
|
$
|
0.80
|
|
|
$
|
2.62
|
|
|
$
|
2.31
|
Pro forma earnings per unit - diluted
|
|
|
|
|
$
|
0.94
|
|
|
$
|
0.80
|
|
|
$
|
2.62
|
|
|
$
|
2.31
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161110005447/en/
Source: Camping World Holdings, Inc.